South African President Thabo Mbeki says his government has taken a cue from the European Union’s (EU) model to inject funds to poor regions and social groups.
Speaking in the National Council of Provinces, Mbeki said that at its lekgotla (extended meeting) in July the Cabinet had focused on the “critically important issue of the struggle against poverty and had observed that South Africa was characterised by two parallel economies”.
Underscoring his regular theme, he said the first economy “is modern, produces the bulk of our country’s wealth and is integrated within the global economy”.
The second economy “is characterised by underdevelopment, contributes little to the GDP, contains a big percentage of our population, incorporates the poorest of our rural and urban poor, is structurally disconnected from both the first and the global economy and is incapable of self-generated growth and development”.
“To respond to the challenge of this second economy, we have examined the system of structural funds instituted by the EU in respect of its regional policy, which is based on financial solidarity of transferring a portion of the EU’s budget to the less prosperous regions and social groups within the EU.”
“The EU programme is premised on the reality that the market cannot be relied upon to meet the development needs of the ‘less favoured regions’ within the EU, guarantee the achievement of the centrally important objective of social cohesion, and provide the means for the implementation of ‘strategies for catching up’.”
He noted that in the same spirit, the cabinet had resolved that the development of the marginalised economy requires the infusion of capital and other resources by the democratic state to ensure the integration of this economy within the developed sector.
Mbeki’s said the Cabinet’s decisions “will necessarily involve active partnership with provincial and local governments and other social partners”.
The key strategies to meet the growth and development challenges of the second economy, included:
the Integrated and Sustainable Rural Development Programme;
the Urban Renewal Programme;
the Expanded Public Works Programme;
a major boost to infrastructure spending, with an emphasis on improved underdeveloped regions and communities;
further support to local government’s preparation and implementation of integrated development plans;
the development of SMMEs and cooperatives, in both urban and rural areas;
black economic empowerment, and special programmes for women’s economic development;
the expansion of micro-credit to enable the poorest to engage in productive economic activity;
the incorporation of the unemployed within the Skills Development Programme, especially as implemented by the Seta’s;
the continued restructuring of the system of education so that it gives the youth the necessary skills to engage in economic activities of benefit to them;
agrarian reform, including a Farmers Support Programme and forestry development in the interests of communities; and
the creation of the echelon of community development workers to help build social cohesion in the second economy, and to help to develop strategies and forge links that can transform the second economy.
– I-Net Bridge