Adriano Campolina of ActionAid
As a social justice campaigner who suffered under a dictatorship, it is a privilege to live in South Africa, a country whose victory over apartheid continues to inspire the world. South Africa has shown it can bring radical change. It can do so over inequality too. The evidence is clear: to create an inclusive society both poverty eradication measures and incentives to entrepreneurs are required. Based on my Brazilian experience, I put entrepreneurship in a wider context of building a more equal and just society. It is about building an environment for inclusive growth together. This paradigm change is crucial in a world where the 200 wealthiest people around the globe own more than the entire African economy.
Inequality remains a critical challenge
Brazil and South Africa are two of the most unequal societies in the world. Leading business people like Richard Maponya have stressed that trickledown economics has not worked to reduce inequalities. They have also highlighted that unprecedented levels of inequality are now an impediment to sustainable growth. Institutions like the IMF (International Monetary Fund) and OECD (Organisation for Economic Co-operation and Development) and even the World Economic Forum have recognised inequality as one of the biggest challenges of our time.
At the UN Sustainable Development summit in September, all governments adopted an agenda for social justice: the Sustainable Development Goals (SDGs). One of the goals is the reduction of inequality. From ActionAid’s work on the ground we are clear that promoting entrepreneurship is one of the measures required to fight inequality. But we also need to invest in opening up pathways to public education, better public healthcare and access to social security so that no-one is left behind in South Africa as we aim to generate economic growth which addresses the needs of people, especially women, as well as protecting our environment.
From my experience in ActionAid, and particularly in Brazil, I will dare to say that eradicating poverty and hunger is not just a distant dream — it can be done. In the past decade, Brazil saw extreme poverty reduced from 8.3% of the population in 2002 to 1.1% in 2013, and it continues to fall. In that period, 15.6 million people moved from living in hunger to having access to food supplies and 35 million Brazilians moved out of poverty and into the middle class. Brazil’s poverty eradication achievements were a result of a combination of factors: an active role by the state in implementing social policies, job creation in public and private spheres, real increases in the minimum wage and support to entrepreneurism.
Each country is unique
No country’s experience can be “exported” as a recipe to other countries, due to the vast differences in history and context; however, some principles of Brazil’s experience can bring valuable reflections to South Africa, for instance, the crucial role of social policies in bringing people into the formal economy. In Brazil, the social welfare system was strengthened over the past 13 years. The creation of a cash transfer program now benefits 14 million families and a focus on housing and simple technology to ensure access to water in drought-prone areas. The public service had to improve its co-ordination capacity and also create a unified process of registration to ensure that all citizens below the poverty line could access government support programmes.
South Africa has many of these ingredients already in place, through the social grant system and has built millions of houses, but the move from rural areas to urban for education and work continues to put a strain on public services. Putting money into the hands of poor people in Brazil through cash grants helped to increase economic activity in poorer villages and regions, reducing poverty and the need to re-locate to cities.
A credit program for small holder farmers was increased substantially (400% from 2002) and benefited 3.5 million small holder farmers. A new procurement policy made it compulsory for public schools to buy at least 30% of the food required for the schools’ feeding program from small farmers’ produce, creating a vast institutional market for the farmers with predictable prices and diverse demand.
Job creation
During this time, Brazil had a strong emphasis on job creation, resulting in 18 million new jobs between 2002 and 2012. The minimum wage underwent a real increase of 72% from 2003 to 2013. The combination of formalised jobs (with all the social security benefits this encompasses) and improved salaries had a crucial impact on poverty reduction.
In tertiary education Brazil created new universities and quotas for access and funding. South Africa is doing similarly but the #FeesMustFall protests call for deeper transformation, meaning a mixed funding model and innovation in the ways young people can get qualifications. Brazil created, “Programa Nacional de Acesso ao Ensino Técnico e Emprego” (PRONATEC), a training programme that combined expansion of the professional education system and provision of free professional courses to the poorest people. Eight million people attended PRONATEC courses and an estimated 60% of these people now have jobs.
Using a similar method, re-training people who are losing jobs in shrinking industries, such as the mining sector, is an obvious target group for South Africa to address before people fall into unemployment. In addition, through entrepreneurship and technical and vocational education, 400 000 Brazilians receiving cash transfer grants become individual entrepreneurs who in turn grew the local economy.
Collaboration key
These principles and strategies used in Brazil did not originate from one political party alone. In fact, they were a result of decades of popular movements’ mobilisation, organisation and knowledge development. For example: the smallholder farmer credit policy was a result of at least 10 years of mobilisation by small farmer’s groups which had been claiming the need for such a policy since the late 80s. After many marches through the capital and huge mobilisation across the country, small and micro farmers achieved the right for specific credit with special conditions. When a government with a pro-poor commitment took office, there was already a strong social movement with clear proposals and demands that could be brought to negotiations. In other words, workers movements’ capacity to mobilise and present policy proposals was crucial in achieving transformational changes.
My top three areas for action would include:
1) Stopping the illicit flow of funds out of the country. According to the Mbeki panel on Illicit Flows from Africa, over $50-billion leaves the continent annually. Stopping this will ensure more revenue is retained in the public purse. The review of tax policy in South Africa via the Davis Tax Committee provides a good opportunity to ensure that high net worth individuals and multinational companies pay their fair share. We also need to ensure these resources are effectively used to deliver quality public services that are gender responsive, and ensure better accountability among our public servants.
These re-directed funds allocated to free and high quality public education and health will ensure inequality does not travel down the generations. South African economists have shown how private services drain public services and limit access.
2) Land reform within a broad strategy of rural development is central to tackling rural poverty. Women accessing, controlling and owning land will unlock the potential to fundamentally reduce inequalities.
3) Relevant support to entrepreneurship: targeted credit and investment to small and medium enterprises. Encourage more ‘green’ low tech solutions especially in peri-urban communities; less focus on formal qualifications and massively expand practical training in hard business skills and so called ‘soft skills’ such as customer service, team work and problem solving. Leadership and vision from icons of industry such as Richard Maponya is crucial and will certainly help in creating new types of models and collaborations.
Renewing the vision for change
Collective action by civil society organisations, trade unions, faith groups, peoples’ movements and students is vital to ensure relevant policies are developed and implemented, which reflect the priorities of people still excluded from the main economy. ActionAid South Africa partners with poor communities so they can engage local municipalities and others to achieve this at the grassroots level. Nationally the government’s commitment and willingness to engage with citizens groups to claim their rights literally determines whether collaboration or confrontation will ensue. If the political will is strong enough, and the private sector, including shareholders, engages, as the Companies Act envisages, with stakeholders – workers, communities and civil society, then profound societal changes can happen.
My reflection at the end of this turbulent, yet encouraging year is that South Africa has the means, and in private investors such as Richard Maponya, the role models, for deeper social transformation. We need others, including public servants, to renew commitments to movements for change, including Bobby Godsell’s Citizen’s Charter initiative, so that the promise of the South African constitution is realised for all.