/ 20 October 2003

‘We lack real power’

The government has political power, but not enough influence on the mechanisms of the state to turn them into real tools of social and economic development.

This is a crucial finding of the government’s 10-year review of the first decade of freedom released on Thursday. ”The dichotomy between power and influence is most profound, because although the elements (the institutions, practices and procedures) over which the government has control are in place, areas where the government has less direct influence, such as with the behaviour of the civil service and interaction with civil society, are much slower to show improvement,” says the review.

One reason for its lack of influence is that it doesn’t have a permanent skills base able to carry out its development programme, making it necessary for it to hire consultants, which now effectively comprise a parallel bureaucracy.

The state bureaucracy remains short of the management and other technical skills it needs to be an effective civil service and tool of government policy, despite repeated government attempts to overhaul, retrain and retrench state employees.

Another reason is that the three spheres of government — national, provincial and local — are not operating as a seamless whole, but often unintentionally obstruct each other’s development programmes.

The theme of power and influence runs through the review. ”Government’s successes occur more often in areas where it has significant control and its lack of immediate success occurs more often in those areas where it may only have indirect influence.”

The review suggests the national government may more often intervene in flailing provinces as it did in the Eastern Cape earlier this year and establish delivery structures, like the National Social Security Agency, which take over powers vested in provinces and municipalities.

In the agency’s case, it will in time be responsible for all social welfare payments, now the function of the provinces. This is one among the ”Big Ideas” the government wants to put forward as it plans for the next decade.

Mooting changes like these bring out the bulls in the china shop that is South Africa’s democracy.

The opposition sees any attempt to change provincial powers as the work of an avaricious ruling party wanting more power, but this is something that a more self-confident government appears ready to tackle.

”The review suggests that the capacity and performance of all spheres of the state need to be more critically assessed in the second decade and that national or provincial government may need to be ready to intervene more quickly where there is evidence of poor performance.

”In line with current interventions in the Eastern Cape, the national government may have to show its strong commitment to improving performance where institutions persistently demonstrate weaknesses of governance.”

According to the review, the majority of municipalities — a key mechanism through which the government hopes to improve living standards in communities — do not ”have the capacity nor are likely to gain the capacity to perform their delivery functions in future … although [the] government should make every effort to work within the current framework of institutions and practices. If serious capacity constraints persist, the government may need to consider changing current responsibilities and structures.”

On the other hand, if a province or a municipality shows itself able to perform, it could take on additional powers and responsibilities, says the review.

The review is honest, though not modest, in its assessment of the African National Congress’s first 10 years in office.

”It should be evident that in most instances the government is making progress in achieving its stated objectives and most of these are the correct objectives.”

In other words: President Thabo Mbeki will undertake no major policy changes when he is inaugurated next year.

The major finding is that poverty, as measured by income, has increased but that inequality is narrowing; that social welfare grants (primarily the old age pension and the child support grant) have had a demonstrable effect on poverty and housing, electricity and water extension programmes are all on track.

The housing and land programmes, together with service expansion, have decreased asset poverty, says the government. It says it has transferred R50-billion worth of asset capital through land and housing.

Jobs must be the ”Big Idea” for the next decade, says the review, since the economic indicators were all dragged down by unemployment.

But the government has still been able to reduce the Gini coefficient (charting the inequality in income between rich and poor) because R34,8-billion worth of grants have been ”exceptionally well-targeted. The poorest 20% of households receive the largest amount from grants, not just as a proportion of income, but also in absolute terms.”

This finding is likely to stir debate — last year the University of Stellenbosch’s economics professor, Sampie Terreblanche, made the opposite finding in his book A History of Inequality.

While the government has mothballed the basic income grant (BIG) recommendation contained in the Taylor Commission of Inquiry into Social Security, the effectiveness of grants as a measure of poverty alleviation and, more importantly, as one that reduces income inequality quite substantially suggests it may want to look again.

The government objected to the BIG because Cabinet wants to encourage able-bodied adults to be active in the economy. But as an economic policy measure grants have clearly trumped public works in impact. Public works programmes are mooted as an important short- to medium-term plan to mop up the unemployed who lack the skills necessary for the new economic growth areas.

But only 3 500 permanent jobs (which pay lower than prescribed wages) have been created since 1998 — an additional 119 000 jobs were temporary.

”Thus, public works programmes while increasing the provision of assets to the community, are not as efficient as income grants in alleviating income poverty,” says the review.

In general, the labour market was expanded by 1,6-million new jobs between 1995 and 2002, but here’s the rub: ”During the same period, the number of unemployed people grew from 1,9-million to 4,2-million, an increase of 2,3-million.”

The government is also looking to use the state’s levers to boost growth and investment. This has started to happen with more being spent on stimulating the small and medium-sized business sector as well as on black economic empowerment.

Investment holds the key to the 6% growth needed to create jobs at a scale that will dent the net effect of the past 10 years. ”[The] government investment was constrained by the tight fiscal policy in pursuit of macroeconomic stability whilst parastatal investment was constrained by the restructuring of state enterprises.”

There are strong words about private sector investment. ”The relatively low level of private sector investment seems to derive from general concerns about the direction of government policy (more an expression of mistrust than reality) … several of these factors have eased, and the country has entered a period of higher private sector investment.”

The country starts its second decade of freedom looking like a normal developing country with all the concomitant challenges: how to cope with a unipolar world; rapid urbanisation; entrenched poverty and high unemployment; creeping corruption and a dual economy.

The country, says the review, though politically stable, is still striving for the optimal balance among the judiciary, executive and Parliament.

In these debates, South Africa is the same as Kenya, Nigeria, Brazil or India. Ten years later, this is perhaps South Africa’s biggest gain: no longer a pariah; no longer remarkable for the wrong reasons; just normal. And normal’s nice, given our history.

Ten years of democracy

  • Past 10 years has been a ”social transition … more profound than any other in South Africa’s history”.

  • One in three households is poverty-stricken (28% in 1995).

  • Gini coefficient — the inequality in the income between rich and poor — has been reduced.

  • Spending on grants increased from R10-billion in 1994 to R34,8-billion.

  • School-feeding programme reaches 94% of targeted children, up from 89% in 1994.

  • Infant mortality, underweight children and stunted-growth statistics have all increased.

  • Clean water extended to 85% of households in 2001 from 60% in 1996.

  • Electricity extended to 70% of households in 2001 from 32% in 1996.

  • Sanitation extended to 63% of households in 2001 from 49% in 1994.

  • Total number of households expanded to 11,8-million from 9,1-million in 1996.

    In addition the government:

  • Will introduce a black-list of corrupt individuals and organisations.

  • Has established a central database of corrupt businesses.

  • Is concerned with creeping forms of taxation likethe skills levy.

  • Will establish benchmarks for ”progressive realisation” of development goals.