What does it mean to govern effectively in a highly unequal society? For the ANC, governing is about changing the social and economic conditions created under apartheid, by tackling the structural nature of poverty, in-equality and unemployment.
There has been real progress in these areas, evidenced in significant improvements in access to services and a substantial increase in social grants. Poverty has fallen from 50,8% in 2000 to 43,2% in 2006. Underlying these improvements has been a moderately expansionary fiscal stance since 2000.
Yet these advances are fragile. Many families remain vulnerable to shocks either at the household level (for example, death and unemployment) or at the macroeconomic level (a decline of commodity prices, a sudden revaluation of the rand). With about 5% of the population living slightly above the poverty level, any large-scale shocks could lead to a substantial increase in South Africa’s official poverty rate.
In addition, income inequality has risen. While the bottom 10% of South Africans received only 0,6% of total income in 2006 (the exact percentage they received in 1993!), the richest 10% got 55,9%, slightly up from 1993.
To its credit, the government recognises that the expansion of social grants and increased job creation have not been sufficient to reduce inequality. But persistent inequality has important policy implications. Firstly, any economic growth strategy must change this distribution pattern if poverty reduction and employment creation are to be sustainable. Secondly, involving the poor in the economy requires strategies for inclusion and redistribution.
Yet South Africa’s interventions have been very modest. Other countries — both developed and developing — have crafted redistribution strategies that are significantly more ambitious than our own. India, for example, is experimenting with a large-scale employment guarantee scheme which, unlike our expanded public works programme, provides for longer-term employment and certainty of income.
The argument for more direct state redistribution, primarily through the fiscus, is reinforced by the absence of market-based opportunities for the poor. Consider black economic empowerment. While some BEE companies are venturing into productive activities and actually employing people, the vast majority of BEE deals provide for significant changes in share ownership without any material impact on job creation. There are, of course, important motivations for BEE, but there must be a quid pro quo: these businesses must promise mass employment and sustained investment.
Only the ANC, by virtue of its political dominance, can implement a more aggressive redistribution strategy. Yet political dominance is not enough; there has to be the will to use it. Political leadership is needed to build support across classes for economic growth and to tackle inequality. A more aggressive redistributive stance is not a one-way bet, because poorly designed redistributive programmes could backfire, or the redistributive outcomes might benefit not the poor, but the elite. Here again, political leadership is vital.
So far, the ANC has failed to build consensus on a national development strategy. In the absence of such a national pact, society cannot be mobilised around a common programme, hindering more redistributive efforts.
For our country to move forward, the ANC must tackle the politics of redistribution, and a process for developing a comprehensive development strategy. In the run-up to Polokwane, delegates must do more than wear competing T-shirts and consider the candidates. They need to focus on what programme the elected leadership of the ANC will be implementing.
Ebrahim-Khalil Hassen is an independent policy analyst and a research associate at the Employment, Growth and Development Initiative. He writes in a personal capacity