transformation for human development

h u m a n d e v e l o p m e n t r e p o r t 2000

overview

i

Contents

Foreword ii

Acknowledgements v

Overview vi

Chapter 1: The political economy of transformation and humandevelopment 1

Chapter 2: The state of human development in South Africa:Key indicators of development and transformation 43

Chapter 3: Transforming governance: Institutional change andhuman development 70

Chapter 4: Transforming the public sector: People first for humandevelopment 99

Chapter 5: Transforming processes for human development:Some sites, instruments and modes of empowerment 129

Chapter 6: Transformation: Our shared responsibility 165

References 193

Appendices 204

Technical notes 206

Acronyms 218

Glossary 220

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overview

ii

S ince 1990, UNDP at

the global level has

sponsored the produc-

tion of eleven Human

Development Reports

(HDR), contributing

facts, figures and analysis

to the discourse on people-

centred approaches to develop-

ment. Challenging the world-

view that economic growth

alone can lead to develop-

ment, the reports have illus-

trated the importance of pro-

moting national policies that

expand peoples’ choices, en-

hance their capabilities and

broaden opportunities to

ensure that all can achieve

their full potential, contribute

to and benefit from human

development.

Foreword

foreword


overview

iii

Each year, the reports have providedinsight into a particular theme that isrelevant at a global level, ranging fromgender inequality to human rights,poverty and the nature of economicgrowth itself. The series has served as acatalyst for dialogue all over the world,prompting nations to review their per-formance in human development againstthe data and the facts of other nationswith similar resources, helping to setrealistic targets and encouraging im-proved performance and achievements inthe future.

The success of the global reports inpromoting dialogue on human develop-ment has been replicated at nationallevel. Over 120 countries have preparedNational Human Development Reportsthat review progress and setbacks inhuman development while exploring, indepth, the particular challenges faced bythe country.

In South Africa, the first HumanDevelopment Report jointly sponsored bythe UNDP and UNAIDS focused on thedevastating impact of HIV/AIDS and itspotential to reverse recent gains inhuman development. The main messageof the report was one of hope – hopethat the further rapid spread of theepidemic could be contained if nationalleadership combined with the activeparticipation of people living with HIV/AIDS, others affected by it and all rel-evant civil society and public servicepartners channelled their resources tofight the scourge. The report highlightedthe fact that, with South Africa’s history ofsocial mobilisation against the seeminglyinsurmountable odds of the apartheidsystem, it could equally address andovercome the threat of HIV and AIDS.

The present report takes on a verydifferent challenge. It is one that againcalls on South African society to reachdeep into the experiences of the struggleagainst apartheid, this time to ensure thatthe gains celebrated in the short periodof democratic governance are shared by

all in an equitable manner. The report forthe year 2000 focuses on transformationand human development. It challenges allSouth Africans to commit themselvesanew to a shared vision that transcendsthe deep inequalities that remain so tragicand deep-seated an aspect of the legacyof apartheid.

The 2000 report reviews the funda-mental changes and significant achieve-ments made in the political sphere,mainly through the adaptation and reformof institutions in both the public and theprivate sector. Impressive institutions ofdemocracy, such as the ConstitutionalCourt, one of the most representativeParliaments in the world and one of itsmost progressive Constitutions have justlyfilled South Africans with pride. Theseachievements have been applauded bythe international community and havewon the profound admiration of those,including myself, who have had theprivilege of observing the process anddiscreetly contributing to practical expres-sions of international solidarity with thenew South Africa.

The report also highlights transforma-tion in the public service as well as someof the new sites and instruments forchange established by government inpartnership with civil society, labour andbusiness, notably NEDLAC.

But this impressive record and thegeneral rhetoric of transformation masksthe continuing inequalities experienced inaccessing the new opportunities that theseinstitutions represent. Those who arebetter equipped or positioned to haveready access to the processes of change,either through better education or throughpositions of privilege in political move-ments, have benefited most. The vastmajority of the population remains, inmany essential respects, isolated from thecountry’s historic renewal. Levels ofpoverty and inequality are still growing.The economy continues to shed jobs –reducing the choices and opportunities ofthose who are already deprived.

foreword


overview

iv

Successes in the political sphere needto be monitored against the broaderobjective of building a society thatprioritises human development. The 2000report suggests that these politicalachievements can indeed be echoed inthe economic and social spheres if thedevelopment path is adjusted to promotefeasible, realistic changes that ensurepositive outcomes for all. The reportunderlines the need for shared responsi-bility in promoting transformation. Itsuggests some priorities for collectiveaction as further attempts are made todeliver on the promises embedded in theReconstruction and Development Pro-gramme, the strategy that remains theagreed national framework for humandevelopment in South Africa.

As elsewhere in the world, the reporthas been prepared by a group of sometwenty independent national researchers.Its substantive preparation has been co-ordinated and authored by ProfessorViviene Taylor of the University of CapeTown’s Department for Social Develop-ment. As an eminent International Re-searcher and Adviser to the Minister ofSocial Development, Viviene Taylor hasconsistently displayed outstanding leader-

ship in the discourse and the applicationof human development in South Africa.Both here and internationally, she contin-ues to guide many researchers and stu-dents in this growing field.

Preparations have included consulta-tions with eminent members of an Advi-sory Panel, with representatives of gov-ernment and civil society and of theUnited Nations system in South Africa.The independence of views, the profes-sional integrity of the authors and theparticipatory nature of the exercise guar-antee that the conclusions and recom-mendations are relevant and timely. Weare convinced that they will prove usefulfor policy makers throughout SouthAfrican society.

We hope that the report will stimulatefurther dialogue on the processes andoutcomes of human development and ofthe transformation process and that itoffers options that will be useful to thecontinuing efforts of the leadership andinstitutions of democratic governance asthey strive forward to provide a better lifefor all.

J. David WhaleyFormer Resident Representative

Team for the preparation of the

South Africa Human Development Report

Principal Author and Coordinator:Viviene Taylor

Panel of Researchers: UNDP Team:Antonio Hercules, Asghar Adelzadeh, Bethuel Sethai, Former Resident Representative:Blade Nzimande, Devaki Jain, Edgar Pieterse, J. David WhaleyFrancis Kornegay, Hein Marais, John Bardill, Resident Representative:Matthew Colangelo, Natasha Primo, Paul Graham, Paul André de la PortePaul Wheelan, Penny McKenzie, Ravi Naidoo, Coordinating Team:Richard Calland, Robert Shaw, Ruth Teer-Tomasseli, Anne Githuku-Shongwe, VuyiswaSam Bonti-Ankomah, Samia Ahmad Sidzumo, Kgomotso Maditse

Technical Editor: Susan de VilliersCreative Design and Layout: Fiona Adams (Page Arts)

foreword


overview

v

Acknowledgements for the 2000

Human Development Report

The preparation of the report wouldnot have been possible without the

support and valuable contributions of alarge number of individuals and organi-sations.

Advisory panelThe report benefited greatly from adviceand suggestions provided by a broadadvisory panel of specialists in humandevelopment. Members of the AdvisoryPanel were Frene Ginwala, Ruth Bengu,Saki Macozoma, Mampela Ramphela,Blade Nzimande, Vukani Mthintso, MarkOrkin, Ben Turok, Allan Taylor, PhumzileNtombela-Nzimande and Pundy Pillay.

ContributorsResearch contributions were made byDeevy Holcomb, Alta Folscher, ShaunJacobs, Warren Kraftchik, SiyabongaMemela and Albert van Zyl, Keyan G.Tomaselli, Dirk and Claudia Haarmanand Peter La Roux.

Others who contributed throughparticipation at a main messages work-shop included Seatla Nkosi, PhekwaneMashilwane, Mark Hefferman, KiariLiman-Tinguiri, Tarik Muftic, RichardHumphries, Akua Dua-Agyeman, JayParsons, Rozanne Chorlton, Neville Josie,Luis Honwana, Metsi Makhetha, NatalieJacklin, Julia de Bruyn, Ros Hirshowitz,John de Beer, Lipalesa Motjope andLynette Hlongwane.

A special word of thanks is alsoextended to participants who contributedto the process of identifying transforma-tion indicators. The list includes KoosMogotsi, Sibongile Makhanya, J. Makita,Maria van Driel, Joe Matshete, MaudDlomo, Andrew Mogoai, Maria Molatji,Rose Molokoane, Andrius Kamaomang,

Livingstone Mantanga, TimothyMzoboshe, Alina Msiza, NofumeneMqweba, Jacob Zitha, Virginia Lebea,Andre Marais, Elliot Nduzulwa, IshmaelKangware, Thabo Mosikidi, Longa Mosidi,and Saki Mofokeng. We acknowledge thecontributions made by various individualsfrom the UN family in South Africa, inparticular Sue Godt, Mandla Dube,Giacomo Pirozzi from UNICEF whoshared all their photographs; UrsulaWagner and Johanna Lengwati fromUNDP. A special word of thanks toLynette Pritchard and Monica Adams fortheir dedicated administrative support.

Acknowledgements must also be madeto the University of Cape Town, Depart-ment of Social Development, and SADEP,for their support. Various governmentdepartments provided information andassistance in the research process, butparticular mention must be made of thePolicy Coordination Unit of the Office ofthe President and the National Minister ofSocial Development (formerly SocialWelfare and Population Development),Dr. Z.S.T. Skweyiya.

The author and principal co-ordinatorwishes to express her sincere appreciationto David Whaley, former Resident Repre-sentative of the UNDP South Africacountry office, for his commitment to andsupport for an independent and stimulat-ing report. Anne Githuku-Shongwecontributed throughout, setting up sys-tems and processes to support and en-courage thinking about human develop-ment, both within UNDP and morebroadly. Her assistance is also gratefullyappreciated. The team wishes to thankeveryone who supported the writing ofthis report and assumes full responsibilityfor the opinions it expresses.

acknowledgem

ents


overview

vi

Human Development is

about transformation

to promote the interests

of all, especially the most

marginalised and poorest

members of society. While

South Africa’s first na-

tional Human Develop-

ment Report in 1998 focused

on HIV/AIDS and its devastat-

ing impacts on all spheres of

life, this Report focuses on trans-

formation. Six years after its

first democratic elections, South

Africa is moving from the

politics of transition to the

consolidation of state power

within a representative democ-

racy. Government has em-

barked on a significant pro-

gramme of state restructuring

in order to advance and protect

the fledgling democracy. That

South Africa is being trans-

formed is beyond dispute. But

what is the character of this

transformation? Can it be

sustained under current condi-

tions? Does it contain fractures

and fissures? And if so, what

can be done to repair them?

South Africa’s Human Develop-

ment Report 2000 provides a

critical analysis of these ques-

tions.

Overview


overview

vii

The Report reviews the processes oftransformation through the institutionalframeworks established by government,as well as through the prism of race,class, gender and spatial inequalities. Italso looks at the question of whodetermines the transformation agendaand who benefits from the outcomes.

The Changed Geo-PoliticalEnvironmentAs it takes its place in a changed geo-political landscape, South Africa isconfronted with multiple challenges.New alignments amongst regional andglobal institutions of, largely, economicgovernance pose complex challengesfor the democratic state. Globalisationcreates new opportunities and generatesgreater risks as national borders becomepermeable and the traditional role of thenation state is challenged. At the sametime, processes of social transformationand poverty eradication depend on theextent to which South Africa is able tomanage the process of global integrationin the interests of human development.This Report reflects on how transform-ing the state within a global system thatincreasingly sets the pace of develop-ment has created new tensions andmodes of engagement between thestate, civil society and the businesssector.

From Racial Discrimination to‘Rainbow Nation’ andDemocratic GovernanceSouth Africa travelled a remarkable pathin the 1990s. It avoided the civil warmany had thought inevitable and, in sixshort years, established a new, demo-cratic political order, buttressed by socialand political stability. The rights andliberties enshrined in its Constitutionhave justifiably earned respect all overthe world. Only a shadow of the legaledifice that supported the apartheid

system remains. A disdainful and indif-ferent civil service is slowly beingtransformed into a servant of the public.State institutions are being modified toperform tasks they were previouslyexplicitly designed to prevent. Formillions of South Africans, there isevidence of change and improvement –from a de-racialised school system andfree medical care for small children andpregnant mothers, to electricity gridsand water lines that now reach house-holds living in new houses built withstate subsidies.

This Report reveals some of the mainelements of transformation and democ-ratisation and their relationship togovernance in South Africa. It highlightskey features of the state, its instrumentsand the way it engages with civil societyand market forces as it responds tohuman development imperatives at thebeginning of the new millennium. Theanalysis of the state of human develop-ment in South Africa is located withinSouth Africa’s experiences of colonial-ism, racism, patriarchy and culturaldomination. It is precisely because ofthe fragmentation and gross inequalitiesthat characterise South Africa that theReport calls for the implementation of ashared vision of transformation, one thatmay be implemented through collectiveendeavours. As broadly sketched byformer President Nelson Mandela,government committed itself:

to bring fundamental change to thelives of all South Africans, especially thepoor; to recognise the actual

The Report reviews the

processes of transformation

through institutional frame-

works, as well as through the

prism of race, class, gender and

spatial inequalities.


overview

viii

contradictions in our society and tostate them boldly, the better to searchfor their resolution; to avoid steps thatfurther worsen social conflict, and tobuild our new nation by continuallyand consciously exorcising the demonof tribalism, racism and religiousintolerance.1

Three salient goals emerge: improv-ing the lives of the poor majority,maintaining social stability and buildinga nation that is inclusive and non-discriminatory.

Thus, formal democratisation, statereform, expanded delivery of socialservices, job creation, poverty alleviationand all aspects of development mayconstitute elements of transformation.The achievement of these goals may,however, be ephemeral and limitedunless it occurs within the framework ofa transfer of power – particularly eco-nomic power.

Government Indicators ofTransformationThe benchmark for the new govern-ment’s economic and social policies andinitiatives was contained in the Recon-struction and Development Programme(RDP) and the Growth, Employmentand Redistribution (GEAR) plan. In theRDP White Paper, government commit-ted itself to:• Creating productive employment

opportunities for all citizens at aliving wage;

• Alleviating poverty, low wages andextreme inequalities in wages andwealth;

• Meeting basic needs and ensuringthat every citizen enjoys a decentstandard of living and economicsecurity;

• Democratising the economy andempowering the historically op-pressed, particularly workers andtheir organisations;

• Removing racial and gender discrimi-nation in the workplace;

• Developing a balanced and prosper-ous regional economy in SouthernAfrica, based on the principle ofequity and mutual benefit.2

Together, these commitments consti-tuted the government’s yardstick forsocio-economic transformation. Offi-cially, they remain key goals for theANC3 . The fundamental question theReport examines is the extent to whichthese commitments are understood andimplemented across all sectors of gov-ernment, business and civil society morebroadly. Theoretically, transformation iscaptured in the notion that the SouthAfrican state and society must changefundamentally if they are to move fromautocracy, dictatorship, extreme povertyand inequality to substantive democracyand people-centred development. Many,however, have experienced transforma-tion differently.

The various chapters in the Reportexpress a new urgency for transforma-tion. They highlight the need to extendbeyond the political sphere in order todeal with people’s experiences of eco-nomic and social marginalisation. Thefact that the benefits of democracy areneither shared nor experienced by thepoorest members of society is reflectedthroughout. However, in Chapter Two,both subjective and objective indicatorsof human development amply demon-strate the increasing poverty, inequalityand alienation of people from the state.

Formal democratisation,

state reform, expanded

delivery of social services,

job creation, poverty allevia-

tion and all aspects of develop-

ment may constitute elements of transforma-

tion.


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ix

An Agenda for a HumanDevelopment Driven Societyby 2010The promise of the struggle for emanci-pation will ring hollow if South Africadoes not translate political freedom intohuman development. Human develop-ment is not an option. Indeed, if thereis to be social and political stability andeconomic growth, it is an imperative.Human development is the process ofenlarging people’s choices and raisinglevels of well-being.4 It is a holistic,integrated process in which economicand political forces continually interactwith one other in dynamic and diverseways to improve the lives of and op-portunities available to the poorestpeople.

For South Africa, sustainable humandevelopment implies a rapid process ofredress, social reconciliation, nation-building and economic growth withequity, alongside the sustainable utilisa-tion of natural resources. South Africa’sjourney of liberation and transformationhighlights the importance of pursuingthe human development process in anenvironment that promotes equity,affirmation, self-respect, participationand human rights. If this is not done,the time bomb of poverty, accompaniedby related pathologies and some of theworst forms of violence – particularlyagainst children, women and the eld-erly – will erode the legitimacy andpower of the democratic state. Thegeneral rhetoric of transformation canno longer mask the continuing inequali-ties and pain visited on families, house-holds and communities, where fear,survival, food security and violence arepervasive.

The Report also cautions against theuse of conventional economic indica-tors to provide evaluations and fore-casts of economic performance withoutexamining what is happening within

the household sphere. The applicationof conventional measures not onlydepoliticises, but also desocialises, theeconomy, in line with a logic that sepa-rates the economic from the social. Thechallenge posed in this Report is forgovernment to go beyond measuringthe aggregate well-being of individualsand to measure, in addition, changes ininstitutional and structural conditions.Furthermore, an attempt is made todevelop both objective and subjectivecriteria in order to measure humanprogress and transformation.

The central question is, therefore,how to measure transformation andsustainable human development? Whattypes of proxy indicators can be used tomeasure development and transforma-tion? In this Report institutional/struc-tural (policies/systems), normative(values, standards, attitudinal or changein organisational behaviour/culture,social solidarity/cohesion) or functional(service delivery/distribution of goodsand services) measures are used asindicators of development and transfor-mation. Further, in order to provide ahuman face to the indicators used, theviews of people are profiled.

South Africa is considered to have amedium human development ranking,comparing well with other countries.The 1999 Human Development Reportranks South Africa at 101 behind Brazil.The estimated Human DevelopmentIndex value of 0.628 (calculated with1997 statistics) placed South Africa at116 in the ranking. Based on this esti-mate, South Africa compares well withother African countries and ranks sev-enth behind Mauritius, Tunisia, CapeVerde, Algeria, Swaziland and Namibia.

In the southern African region, SouthAfrica ranks third behind Swaziland andNamibia. South Africa’s estimated HDIof 0.628 is also higher relative to theaverage HDI of 0.430 for Sub-SaharanAfrica, but slightly lower than the aver-age of 0.637 for all developing coun-


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tries. If one assumes no HIV and aconstant growth rate in population andincomes, then South Africa’s humandevelopment is expected to be 0.645 in1999 and 0.654 by the year 20105 –based on a growth rate of 0.3 percentper year between 1996 and 2010.However, this prediction drops drasti-cally with HIV/AIDS.

South Africa’s rate of poverty6 (ameasurement of the extent of absolutepoverty) is 45 percent. This translatesinto 3,126,000 households or more than18-million citizens living below thepoverty line (pegged at an income ofR353). In mainly rural provinces, thefigure rises above 50 percent.

A closer look at measures of humandevelopment reveals more precisecontours of inequality and poverty. Theexperience of extreme poverty is dra-matically concentrated among Africans:57.2 percent of Africans live below thepoverty threshold, compared to 2.1percent of whites. The poorest 40percent of citizens remain overwhelm-ingly African, female and rural. Accord-ing to Statistics South Africa, twice asmany female-headed as male-headedhouseholds are in the bottom quintile(26 percent compared to 13 percent).When race and gender are aggregated,the figure rises to 31 percent of African,female-headed households in thelowest quintile, compared to 19 percentof African, male-headed households.7

Overall, the poverty rate among female-headed households is 60 percent,compared with 31 percent for

male-headed households. This under-lines the need to prioritise Africanwomen in social welfare, job creation,training and small business develop-ment programmes.

Views of a cross section of some ofthe poorest citizens canvassed duringthe preparation of the Report were alsoilluminating. Their perceptions of trans-formation since 1994 – of what haschanged and what has remained thesame for the poorest in the country –were mixed. All those interviewedindicated that there are fundamentalchanges at the political level. People arebeginning to see themselves as citizenswith the right (if not the ability) toparticipate actively in all aspects of life.However, they indicated that this right ismeaningless when, for many, grindingpoverty remains the reality. Peopleexperience transformation as slow,contradictory and insufficiently partici-patory (inclusive of ordinary people). Asignificant trend that emerges is a deepsense of despondency, alienation anddisenchantment and the sense of a slowpace of change.

Significant advances have beenachieved in establishing democraticinstitutions, transforming policies andlegislation and developing new proc-esses for labour, business, and govern-ment to negotiate competing interests.Yet, although these gains entailedpolitically acceptable risks, the realisa-tion of some of these rights may bestymied by retreats made in other policyareas, especially that of macroeconomicpolicy. The power of international andlocal organised business to set the paceof change in a market economy im-poses severe constraints on govern-ment’s capacity to reduce social in-equality. The extent to which macro-economic policies leave existing powerrelations intact and reinforce the subor-dinate position of women and poorpeople remains a concern.

Macroeconomic policies

leave existing power rela-

tions intact and reinforce

the subordinate position of

women and poor people.


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Overcoming the Constraintsand Understanding theContradictionsAt the heart of the transition stood two,potentially contradictory, imperatives: aformative break with the old order and,at the same time, a considerable degreeof continuity with it. In some cases, thecontradictions could be resolved. Forexample, the protection of minoritygroups’ cultural and language rightscould fit neatly into the liberal-demo-cratic frame of the new political system.Other constraints related to the retain-ing of the apartheid civil service andthe internal government debt.

The purpose of the ‘sunset clause’that protected incumbent civil servantsfrom retrenchment was to removeinsecurities that might stoke ‘counter-revolutionary’ mobilisation. However,while much has been made of theeffects of this ‘sunset clause’ on initia-tives to transform state structures, itscost to the fiscus has been its mostdebilitating outcome. Voluntary re-trenchments and golden handshakesbecame the only ‘broom’ with whichthe new government could ‘clean out’the civil service bureaucracies.

Linked to this was one of the mostfar-reaching oversights (or compro-mises) of the negotiations period: theleaving intact of the 1989 conversion ofthe Civil Service Pension Fund from apay-as-you-go system into a fullyfunded entity. This guaranteed fullpayouts to as many civil servants aschose to leave the service. The effectwas to inflate government debt hugely.In 1994, the debt stood at R189,9-billion; by March 1999, it had bal-looned to R375,9-billion. Approximately96 percent of the debt is owed to SouthAfrican creditors. Crucially, 40 percentof the debt load is absorbed by theCivil Service Pension Fund.8 Debt

obligations to the Civil Service PensionFund swelled from R31-billion in 1989to R136-billion in 1996.9

The result was to strengthen calls forfiscal stringency dramatically. Highinterest payments siphon off funds thatcould and should be directed at socialspending. The contradiction is that,while government is determined tolower the amounts devoted to debtservicing by reducing the budget deficit,this has a direct impact on its ability tolever funds for much needed basicsocial infrastructure and poverty eradi-cation.

Another important factor influencingSouth Africa’s development path is theprevailing view that there are no alter-natives to the orthodoxies that shapeddevelopment directions in the past.

South Africa marched the final stepsof its liberation struggle in an eramarked by the collapse or decay of thethree main development models thatheld sway for most of the century.These were the Soviet model (associ-ated with ‘really existing socialist’states), the welfarist model (that at timescharacterised North America, the UnitedKingdom and Western Europe) and thedevelopmentalist model (expressed in avariety of experiments in Africa, Asiaand Latin America). The lack of anappropriate model that, theoretically,privileged human development overpure economic growth (or at leastattempted a ‘humane’ balance betweenthe two imperatives) and the hindsightafforded by the dissolution of thesedevelopment models has severelyconstrained government in its search fora development path.

The perception was that, in thecurrent phase of globalisation, aneconomy stricken with weaknesses hasno choice but to bend visibly to marketsentiments if it is to avoid chronicinstability. Government’s overarchingframework and vision for development,


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the RDP, was consequently adaptedthrough the GEAR strategy.

Stripped to basics, GEAR sand-wiched government spending betweentwo stringent and fundamental prescrip-tions. First, fiscal austerity (reflected ina drive to bring the budget deficit downto 3 percent of gross domestic productby the year 2000) is pursued in order toreduce the total public sector debt,which stood at 56 percent of grossdomestic product in 1996.10 Resourcesspent on interest payments would goinstead towards increased social spend-ing, while the share of GDP taken bytax revenue would not exceed a ceilingof 25 percent. Second, increased gov-ernment revenue would result fromhigher economic growth and, in theshort term, increased revenue collec-tion.

Growth would be propelled mainlyby an anticipated massive increase inprivate investment, with real govern-ment investment increasing only in thelast two years of the five-year plan.Overall, the plan was intended to shiftthe economy from a dependency onprimary commodities onto a pathcharacterised by strong, export-ledgrowth in the manufacturing sector.Government has attempted to achieveadvances in that realm mainly viasupply-side industrial measures and bydesigning and promoting several majorcapital-intensive projects that form partof its Spatial Development Initiatives(SDIs).

Although promoted as an integratedeconomic strategy – with its variouselements allegedly harmonising into adynamic programme – the plan’s mainthrust is, in fact, political/ideological inthe sense that it constitutes a bid toaccommodate diverse market forceswith what are considered acceptableadjustments. As many11 have pointedout, GEAR pivots on an amorphous andintangible variable – investor sentiment– that is presumed to respond favour-

ably to an attractive policy environment.There is international debate about

what combinations of factors attractinvestment, with strong evidence that,rather than being a direct function ofinvestor sentiment, investment is “pri-marily determined by profitability ofinvestment and the complementaritybetween investment by the state and theprivate sector”.12 Another considerationconcerns what attracts specific kinds ofinvestment.

The conclusion is that, within thecurrent economic framework, FDI willremain highly inconsistent and driven,not by South Africa’s job creation needs,but by external factors. The only advan-tage government has created for itself inthis respect are the market-driven SDIs13

and the accelerated privatisation of big-ticket state assets. The latter is a finitevariable that risks evoking strong resist-ance from the labour movement ifextended to parastatals like the electric-ity utility, Eskom.

In order to make significant inroadsinto the South African unemploymentrate, a sustained annual GDP growthrate of about 6 percent is required. This,in turn, demands high levels of totalinvestment – exceeding 25 percent ofGDP. Yet in the 1990s, domestic fixedinvestment hovered between 15.5 and17.8 percent of GDP, reflecting thereluctance of South African firms toinvest in the productive sectors of thelocal economy and the state’s gradualretreat from a similar role. This trendwas fuelled in the early to mid-1990s bydeclining profit rates and trepidationabout the political future of the country.

Propelled by rising unemploymentand lower per capita disposable income,demand levels entered a long-termslump. Also inhibiting demand were theapartheid patterns of social infrastruc-ture provision. The shortage of formalhousing and lack of access to electricity,for example, stymied demand for dura-ble and semi-durable goods, stunting


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the growth potential of the local manu-facturing sector. However, a demand-led growth path requires significantlevels of state intervention.

Statistics seemed to support theneed to boost savings levels. Savingsoverall had sunk from 30 percent ofGDP in 1979-80 to 16.5 percent in1996, while government dissaving roseas high as 5 percent of GDP in the mid-1990s. Private sector saving had alsodropped – from 25 percent of GDP inthe late 1970s to 19.2 percent in 1996.In line with a monetarist view, positivereal interest rates came to be seen asan essential instrument for boostingsavings levels, with little regard fortheir throttling effect on investment,output growth and job creation. A highdegree of continuity with post-1989Reserve Bank policies was affirmed.Importantly, these measures enjoyedthe approval of local and internationalfinancial networks.

Working towards aDevelopment Framework toPromote Growth and EquityNew advocacy agenda to respond toold problemsThe possibility of marshalling newSouth-South (and even South-North)alliances in pursuit of a more equitableglobal economic order exists andshould be pursued with vigour. Simul-taneously, practicable, realistic revisionsare possible at the national level. Thisentails a review of the assumptions thatunderpin current economic policy.These assumptions range from thetruism that the economy is ‘savingsconstrained’ (as opposed to ‘investmentconstrained’) to the utility of currentmonetary policy, the relaxation ofcapital controls, the role of foreigninvestment in the economy and theenvisaged revisions to the labour

regime. South Africa’s economic poten-tial – and importance – within theAfrican context, its low levels of foreigndebt and the organised, popular supportthat can be harnessed behind a questfor alternatives constitute a sound basisfor such an endeavour.

This work must be converted into acall for urgent shared action to reversethe economy’s job-shedding character, astructural feature that predates theintroduction of GEAR and the advent ofthe democratic order.

Along with the HIV/AIDS pandemic,unemployment poses the gravest threatto South Africa’s developmentalachievements and goals. Successfullyaddressing these crises requires urgentaction that extends beyond the labourmarket to macroeconomic policy,industrial strategy, investment frame-works, poverty eradication, an inte-grated HIV/AIDS strategy and a ruraldevelopment strategy. In all theserespects, there seems to be a substantialneed and latitude for more directivestate intervention. This must be sup-ported by civil society and business,which must share responsibility for suchinterventions.

At the same time, the socio-economichardships and disruption that radiatethrough households, families and com-munities when jobs are lost make theprotection of existing formal employ-ment a priority for government. Theprotection and promotion of workopportunities as an effective measure toaddress income poverty must be sup-ported by agreements between labour,business and the community sectors.Government’s ability to come up withcoherent consensus-based strategies andto manage its responsibilities is a crucialvariable in any development path. Thetransformation achieved in the politicalsphere can be extended to the eco-nomic and social spheres, provided thatgovernment, business and civil society


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xiv

organisations, including labour, sharethe responsibility for negotiating andimplementing the required changes.

Strategies Available forSustained Economic Growthwith Human DevelopmentStrategies available include proposals14

aimed at addressing systemic con-straints on economic growth, job crea-tion and redistribution in the economy.These hinge on a set of integrated(short- and long-term) policies that seekto link macroeconomic policy andindustrial strategy with human develop-ment. Prominent in them are recom-mendations that:• the fiscal deficit be allowed to fluctu-

ate within a band – depending onthe size of the social deficit and thelevel of unemployment – rather thanobserve the rigid target of 3 percentcurrently pursued by government;

• a ‘solidarity tax’ be levied onwealthier South Africans as ashort-term measure to deal with thefinancing of apartheid backlogs;

• a prescribed asset requirement beimposed on the financial sector,including worker provident/pensionfunds, to raise capital for socialinvestment.The primary challenge for govern-

ment is to devise ways to lever higherlevels of domestic private investmentand to harmonise them with an

overarching development path that isgeared to reducing inequality andpoverty

Monetary policyProgressive adjustments to monetarypolicy are part of a realistic route.During 1998, a broad consensus devel-oped around the need to revise mon-etary policy.

Capital controlsAt the moment, government remainscommitted to the gradual but eventualcomplete lifting of capital controls.There is a pressing case for a revision ofthis stance.

Industrial policyIndustrial policy needs to be synchro-nised more closely with macroeconomicadjustments. The current broad frame-work already offers several opportuni-ties for more directive steps. Incentivesbuilt into investment promotion andindustrial development programmes(particularly SDIs) should explicitly andstrongly favour job creation.

Effective labour market policiesLabour market policies critically requireshared commitment. A piecemeal dis-mantling of the post-apartheid labourregime must be prevented. It is in thecrucible of labour relations that theenigmatic dynamics of class, gender andrace in South Africa become manifest.The guiding principle must be therecognition that the “transformation of theapartheid labour market, characterised bysegmentation, inequality and exploitativerelationships is an important aspect ofbroader social transformation”.15

National budgetAnother essential element of macropolicy management is the nationalbudget. The budget has the potential tobecome one of the most effective

The protection and promo-

tion of work opportunities

as an effective measure to

address income poverty must

be supported by agreements

between labour, business and the commu-

nity sectors.


overview

xv

redistributive policy instruments. How-ever, while government actively pro-motes budget reprioritisation in favourof critical social and political impera-tives, the budget process itself needs tobe transformed in order to promotegreater transparency, accountability andnegotiation on priorities between govern-ment, Parliament and civil society.

Addressing inter- and intra-provincialinequalitiesNeither inter- nor intra-provincialinequalities have been fully addressed.While the former may be addressed atthe national level by making adjust-ments in the allocation formula, thelatter lies within the control of prov-inces and is thus more difficult toaddress through national policy. Thenational norms and standards provi-sion, designed to deal with intra-provincial inequalities, has not beenimplemented. Addressing staffingrigidities could provide more opportu-nities for defining national norms andstandards.

Strengthening intergovernmentalfinancial relationsThe use of the section 100 constitu-tional powers of oversight and supervi-sion by the national government whenallocating ‘bailouts’ to assist provinceswith expenditure shortfalls points touneven relationships between nationaland provincial governments. Stringentconditions have been attached to these‘bailouts’. Asymmetry is acceptable andmay even be required to build thecapacity of provinces, provided thebounds of intervention are strictlydefined and their mode supportive.

Prioritising collective responsibility forpoverty eradicationThe scale and depth of poverty and itsrelated problems calls for shared actionwithin an integrated comprehensive

strategy that is responsive to the needsof the most vulnerable and excludedpeople. Such a response must includethe following features:

Addressing income povertyMeasures to ensure that there is ad-equate social protection for all, includ-ing the working poor and those not inpaid work, are critical interventionsrequired of government, business andcitizens. Such measures should combineemployer/employee-based contribu-tions, as well as social assistance ortransfers provided by the state wherepaid work is not available.

Generating sustainable livelihoodsThere must be concerted attempts toensure that the majority of the poor inSouth Africa gain access to remunerativeemployment. Central to such attempts isthe need to ensure economic accessand productive returns for those whohave been outside mainstream eco-nomic activity. Livelihood generationmust involve sustained and creativeways of securing both income andmeaningful work roles that build on thecapacity and ingenuity of poor peoplethemselves.

Asset development and effective redistributionIncome measures and sustainablelivelihoods depend on the asset base ofhouseholds and communities. Access toland, credit, training and education iscritical. Furthermore, effective redistri-bution of assets requires that poorwomen are able to acquire assets aswell as have control over them. Build-ing the asset base of households andcommunities also involves providingtenure (land, housing) and the capacityfor household and community self-management. Such measures are key toboth economic empowerment and foodsecurity. In this regard, governmentneeds to accelerate its land redistribu-tion initiative.


overview

xvi

Promoting capability measuresAccess to education (both formal andnon-formal), health care, basic socialservices and social infrastructure areessential requirements for human devel-opment and effective participation bypeople in all spheres of activity. Na-tional agreement on minimum require-ments in respect of social service provi-sion is urgently required.

Facilitating social and economic integrationHigh levels of violence, crime and socialalienation are the result of the wantonbreakdown of black family and commu-nity life during apartheid. They remain afeature of South African society. Growingand persistent inequalities and joblessnesshave eroded the moral and social valuesof communities. Crushing poverty, fuelledby anger that the benefits of democracyhave not resulted in tangible gains for thepoorest, perpetuates an environment offear and increases social marginalisation.

Government, business and civil societyorganisations need to come together tonegotiate policy and programme shifts toensure that economic growth strategieswithin a market economy do not lead toa market-driven society. Promoting acompetitive environment in which the‘survival of the fittest’ is ensured willsimply reinforce and reproduce theinequalities of apartheid. Consequently,the promotion of social integration needsto be understood as a national imperativeand to become a shared responsibilitythat spans all sectors of society.

The Challenge: ReclaimingGovernance for HumaneDevelopmentExtending the achievements andsuccesses in transformationGovernment’s commitment to institu-tional transformation has been demon-strated at the policy level through a setof wide-ranging policy documents

(Green and White Papers) and legisla-tive interventions. These are designed totransform the public sector into anagency that is coherent, transparent andrepresentative, as well as capable ofachieving the crucial goals set for it bythe people and government of SouthAfrica.

Many of these policy initiatives havebeen in line with, and have sometimesexceeded, international best practice. Inaddition, the 1996 Constitution (includ-ing the Bill of Rights) has been widelyacclaimed as one of the most liberal andprogressive examples of its kind. Thegovernment’s new labour legislationconforms to ILO standards. The promo-tion of women’s empowerment andgender equality (as exemplified, forexample, in the establishment of theGender Commission, the ratification ofCEDAW) is a significant milestone. Inaddition, South Africa has risen from141st to seventh in the world in terms ofrepresentation of female MPs.

Moreover, the move to establishtransparent and accountable govern-ment has been demonstrated by Gov-ernment’s willingness to submit itself toscrutiny not only through a free press,but also through critical investigationsand the enactment of the Open Democ-racy and Administrative Justice Acts.

Impressive though some of theseachievements have been, they have, inmany ways, done little more thanscratch the surface of the many socio-economic problems and imbalancesbequeathed by apartheid. Seriousproblems of unemployment, povertyand inequality continue to exist and, asthe government itself has acknowl-edged, much more needs to be done toaddress them. This is, in many respects,hardly surprising, given the dauntingtask faced by the new democraticregime in tackling the apartheid legacy.

The challenges are many. Theyinclude the urgent need to satisfy thepopular expectations raised by the


overview

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transition to democratic rule. Effectiveways of mediating the wide range ofcompeting political, social and eco-nomic pressures that continue to beadvanced by different social forces inthe country must be strengthened.There is a need to work together toreconcile the almost universal tensionbetween the internal needs of bureauc-racy and the needs of citizens, in orderto accelerate service provision within acaring society. There is also a need tonegotiate the difficult path betweenpolitical democratisation and economicliberalisation and to confront the manychallenges posed by South Africa’sintegration into the region and globaleconomy.

Moreover, if government is to re-solve the discontinuity between policyobjectives and outcomes, it will need todistinguish more clearly between inef-fective implementation (resulting from alack of capacity, particularly funds,rather than a commitment to the imple-mentation of government policy) andnon-implementation (resulting from alack of compliance with such policy).As the decentralisation process movesforward, it will be important to deviseappropriate and differentiated strategiesfor addressing these two issues. Whilstmore effective forms of support fordepartmental, provincial and localgovernment capacity building will helpaddress the issue of ineffective imple-mentation, it is also necessary to intro-duce a more rigorous system to tacklethe issue of non-compliance with thetransformation agenda.

Greater energy needs to be devotedto forging the kinds of creative partner-ships between the state and civil societyenvisaged in the RDP. Since 1994, therehas been discernible movement fromthe inclusive civil society forums thatcharacterised the early phases of thetransition towards a more socialcorporatist approach (particularlythrough the NEDLAC framework) that

has privileged business and labour overother civil society organisations.

The need for more effective forms ofpartnership between the state and civilsociety has been bolstered by recentresearch,16 which has demonstrated thatthe increased capacity of the state ispositively, rather than inversely, corre-lated with the increased vitality of civilsociety. As civil society grows morerobust, the capacity of the state togovern is increased.

During the period of negotiationsand the government’s first term in office,efforts were made to build a consensualbasis for post-apartheid rule and trans-formation endeavours. Institutionally,these attempts were most marked in therealm of labour relations and economicpolicy, with various mediation andarbitration structures and the NationalEconomic, Development and LabourCouncil (NEDLAC) constituting the flag-ships of those efforts. Although transfor-mation in the first six years of post-apartheid South Africa has been domi-nated – indeed, defined – by govern-ment-initiated and -managed changes,there are strong signs that the next fewyears will be shaped more decisively bystruggles mounted from within civilsociety, in particular the labour andcivic movements. There are cracks inthe edifice of the progressive alliancethat shaped post-apartheid social andpolitical organisation. This must also beexamined alongside the demobilisationand depoliticisation of the non-govern-mental development sector.

The participation of communityrepresentatives and organisations innew partnerships with government andbusiness could be enhanced throughthe provision of financial assistance andby identifying connecting points forengagement. Furthermore, the tendencyto substitute issues of distribution(power and resources) with the needfor efficient management within thepublic and non-governmental sectors is


overview

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Africa’, Transformation No 31, Durban;Davies [1997] Engaging with Gear (SACPdiscussion document), March, Cape Town;Adelzadeh [1998] ‘The Costs of Staying theCourse’, Ngqo! Bulletin, National Institutefor Economic Policy, June; Marais [1998]South Africa: Limits to Change – ThePolitical-Economy of Transition, UCT Pressand Zed Books: Cape Town and London

12 ILO [1996] Restructuing the Labour Market:The South African Challenge, ILO CountryReview, Geneva

13 The Ministry of Trade and Industry claimsthe eleven local SDIs could create as many104,000 jobs.

14 These can be found at http://www.cosatu.org.za

15 As stated by Creamer, K in Cosatu 1998]Cosatu’s Response to the 1998/99 Budget,Cape Town, 12 March, 5

16 Rodrik [1996] ‘Why do more open econo-mies have bigger governments?’ WorkingPaper 5537 of the National Bureau ofEconomic Research, Cambridge: Massachu-setts; Evans [1996] ‘Government Action,Social Capital and Development: Review-ing the Evidence on Synergy’ in The WorldBank [1997]; World Development Report1997: The State in a Changing World,Oxford: Oxford University

cause for concern. In developing ashared responsibility for transformation,it is important for all partners to under-stand that different sectors bring differ-ent but critical qualities to the process.The role of government cannot besubstituted by civil society organisationsor by market forces on the basis ofefficiency arguments.

Attempts to shore up a platform of

stability have encountered the enduringreality that post-apartheid society isshaped not only by the activities of abenign state committed to fulfilling theaspirations of the majority, but also by theactivated interests and demands of con-flicting social forces. It is within this realitythat the priorities outlined in the Reportcall for shared responsibility if democraticgains are to be experienced by all.

Notes1 Address at Closing Session of the 50th

National Conference of the ANC,Mafikeng, 20th December 1997, 2-3.

2 Government of South Africa [1994] RDPWhite Paper, 24

3 Statement of the National ExecutiveCommittee on the 87th birthday of theANC, 8 January, 11

4 UNDP [1997] Human Development Report,Oxford University Press: Oxford, 15

5 This assumes a GDP per capita growthrate of 2 percent per annum.

6 A measurement of the extent of absolutepoverty

7 Statistics South Africa figures, using the1995 Income and Expenditure Survey andcited in Mbeki in his address to the NUMCongress, 28 March 1998, 2.

8 40 percent is owed to the Public Invest-ment Commission, which invests statepension funds.

9 See F Meer [1999] ‘It’s not right that SA isstill paying for past wrongs’, SundayTimes, 11 July

10 In OECD countries, the average at thetime was 72 percent of GDP, begging thequestion as to whether this was unaccept-ably high.

11 Nattrass [1996] ‘Gambling on Investment:Competing Economic Strategies in South


political economy of transform

ation

1The political economyof transformation andhuman development

1



ation

2

“The liberation of

South Africa was

both a local expression

of a changing world and

part of the catalyst to

renewed efforts aimed at

attaining international

consensus on the most urgent

questions facing humanity.

Our transition took place in

the context of a dynamic and

changing political process...” 1



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3

Six years after its first democraticelections, South Africa is moving

from the politics of transition to theconsolidation of state power within arepresentative democracy. In order toadvance and protect this fledgling de-mocracy, government has embarked on asignificant programme of state restructur-ing. That South Africa is being trans-formed is beyond dispute. But what isthe character of this transformation? Canit be sustained under current conditions?Does it contain fractures and fissures?And if so, what can be done to repairthem?

This National Human DevelopmentReport (NHDR) reviews some of themain elements of transformation anddemocratisation and their relationship togovernance in South Africa. It interro-gates the nature of the state, its instru-ments and the way it engages with civilsociety and market forces as it respondsto human development imperatives at thebeginning of the new millennium. Factorssuch as colonialism, culture, racism,narrow nationalism and globalisation allinfluence South Africa’s current develop-ment path.

The chapter also surveys the politicaleconomy of transformation in post-apartheid South Africa and examines, inparticular, the main features of the devel-opment path on which the country hasembarked. The transformation anddevelopment process is measured againstthe official vision reflected in the docu-ments of the African National Congress(ANC) and government. The chapter alsoexamines the extent to which the macropolicy and planning framework takesaccount of the opportunities provided bythe global system and mitigates its nega-tive effects. The experience of governingand being governed poses new chal-lenges for the democratic movement and

for those previously excluded fromgovernment. It is, therefore, important toreview how the different sectors thatformed part of the broad alliance againstthe apartheid state are responding tothese challenges. Attention is also paid tothe way in which new social movementsarticulate with the democratic state anduse institutional and other opportunitiesto represent the interests of the poorest.

Given the country’s history of colonial-ism, racial discrimination and nationaldomination, transformation is a complexprocess2 . It is, therefore, important tounderstand both the conceptual aspectsand the emerging political economy oftransformation in South Africa.

As it takes its place in a changed geo-political landscape, South Africa is con-fronted with multiple challenges.Globalisation creates new opportunitiesand generates greater risks as nationalborders become permeable and theconcept of the nation state is challenged.3

Social transformation and the eradicationof poverty are shaped by the extent towhich South Africa is able to manage theprocess of global integration in the inter-ests of human development.

TransformationTransformation literally means to changethe appearance or character4 – in thisinstance – of state or society. Theoreti-cally, transformation is captured in thenotion that South African state and societymust change fundamentally if they are tomove from autocracy, dictatorship, ex-treme poverty and inequality to substan-tive democracy and people-centreddevelopment. Transformation should,therefore, deal with economic, politicaland social relations and should result infundamental freedoms and improvementin the lives of all, especially those of thepoorest people.

Introduction



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4

Transformation as a process must,however, take account of the fact thatsocieties are not homogenous. In SouthAfrica, society is stratified along fourmajor lines of inequality: ‘race’, class,gender and spatial. The degree towhich change can occur in a givensociety is dependent on the balance offorces between social classes or interestgroups, as well as its relationship to thebalance of forces between and amongother countries in the world. There aredifferent interpretations of transforma-tion. These are dependent on andshaped by the social location, socialexperience and social interests of agiven social class or formation.

Human developmentHuman development is the process ofenlarging people’s choices and raisinglevels of well-being.5 It is a holistic,integrated process in which economicand political forces continually interactwith one another in dynamic anddiverse ways to improve the lives of,and opportunities available to, thepoorest people.

Led by the pioneering work of theUnited Nations Development Pro-gramme (UNDP), the United Nations(UN) system has presented a significantchallenge to mainstream developmentperspectives focusing purely on eco-nomic growth. A central contribution tothe process has been the UN’s advocacyof a sustainable human developmentperspective (SHD) as an essential strat-egy for the future of human existence.For South Africa, SHD implies a rapidprocess of redress, social reconciliation,nation building, economic growth andhuman development alongside the sus-tainable utilisation of natural resources.

The process of enlarging people’schoices is central to human develop-ment. Such choices are related, not onlyto goods and services, but to expandinghuman capabilities. The human devel-opment index measures a person’scapability to lead a healthy life, to haveaccess to resources and opportunitiesand to be knowledgeable. Humandevelopment is also about political,social, economic and cultural freedom,a sense of community and opportunitiesto be creative and productive. In short,human development is about whatpeople do and can do in their lives6 .South Africa’s journey of liberation andtransformation provides an explicitexample of the importance of pursuingthe human development process in anenvironment that promotes equity,affirmation, self-respect, participationand human rights.

Human development in South AfricaHuman development in South Africa isabout achieving an overall improvementin the quality of life for all people,giving priority to those who are thepoorest and most excluded from main-stream society. The human develop-ment framework, therefore, needs to besensitive to the multi-dimensionalcharacter of South African society. Thismeans that the historical, political and

Box 1The human development paradigmcontains four main components7 :

• Productivity. People must beenabled to increase theirproductivity and to participatefully in the process of incomegeneration and remunerativeemployment ...

• Equity. People must have access to equal opportunities…

• Sustainability. Access to opportunities must be ensurednot only for the present generations but for future genera-tions as well …

• Empowerment. Development must be by people, not onlyfor them ...



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5

The Environment forTransformation: Factors andConstraints

A negotiated political settlementFar from constructing a new SouthAfrica on the ruins of a defeated order,the ANC and its allies found themselvestrying to shape the terms on which theywould be incorporated into the state asa new ruling group. The latitude toproceed by edict was not available. Thereality of the negotiated settlement andthe need for stability eclipsed the im-pulses of political triumphalism, de-manding a high degree of accommoda-tion between the chief antagonists andlimiting the pace and scope for transfor-mation. Instead of constructing a newstate (a vision that underpinned theprofound challenges of the mid-1980s),the ANC government found itself assimi-lated into a matrix of institutions bur-dened with personnel, systems, organi-sational policies and an ethos contraryto its own ideals of transformation.

Political threats during the negotiationsprocessA prime concern during the negotia-tions process was the fear that, if itsmain antagonists rejected the terms of apolitical settlement or abandoned thenegotiations process, South Africa couldimplode and fragment.

The threats were certainly numerous.At minimum, the aim of the ANC’santagonists was to destabilise the coun-try to the degree that the ANC and itsallies would be forced to accept asettlement that fell well short of their‘bottom-line’. There was also a per-ceived threat of a possible counter-revolution or of persistentdestabilisation and organised hostilityby right-wing groups. Powerful ele-ments in the Inkatha Freedom Party(IFP) favoured the option of secession

economic arrangements that lie at thecore of the social system (relationsbetween groups) must be analysed.Thus, poverty and other social issuesmust be examined against a landscapeof colonialism, apartheid, inequality,power, class, gender and ‘race’. Usingthe human development framework isnecessary to encourage new forms ofsocial mobilisation and social organisa-tion in order to effect fundamentalsocial transformation.

Transformation for human developmentTransforming the state within a globalsystem that increasingly sets the paceof development has created new ten-sions and modes of engagement be-tween the state, civil society and thebusiness sector. The central challenge iswhether South Africa’s transformationwill attain the objectives of humandevelopment for the majority of thosewho have been excluded from main-stream society.

South Africa travelled a remarkablepath in the 1990s. It avoided the civilwar many had thought inevitable and,in six short years, established a new,democratic political order, buttressedby social and political stability. Therights and liberties enshrined in itsConstitution have justifiably earnedenvy and admiration all over the world.Only a shadow of the legal edifice thatsupported the apartheid system re-mains. A disdainful and indifferent civilservice is slowly being transformed intoa servant of the public. State institu-tions are being modified to performtasks they were previously explicitlydesigned to prevent. For millions ofSouth Africans, there is evidence ofchange and improvement – from a de-racialised school system and freemedical care for small children andpregnant mothers, to electricity gridsand water lines that now reach house-holds living in new houses built withstate subsidies.



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6

for KwaZulu-Natal, if necessary byviolent means. Far-right paramilitarymobilisation and attacks became com-monplace, spurred by motives rangingfrom Afrikaner homeland fantasies toscorched earth objectives. Elements ofthe apartheid security forces wereinvolved in violence that engulfedhundreds of black townships as theysided with IFP forces and vigilantegangs. Widespread, too, was the viewthat a military coup could not be ruledout.

The ANC continued to regard thespectre of a ‘counter-revolutionary’campaign by opponents of change asone of the main obstacles to transfor-mation. Thus, the eventual settlementmust be understood “as an attempt tohold it all together and avoid aBosnia”.8 As a result, during the politi-cal negotiations, agreement wasreached on some thirty-three constitu-tional principles that had to be incorpo-rated, in one form or another, into thefinal Constitution. They were all com-promises, aimed at addressing poten-tially destabilising demands and anxie-ties.

Threats to deliveryStressing the overarching goals of theRDP and its six basic principles9 , thetrade union movement, the SouthAfrican Communist Party (SACP), com-munity based organisations and reli-gious and development organisationscontend that the economic policiesadopted by government – specificallythe GEAR strategy – conflict with, andeven negate the RDP.

At the heart of the transition stoodtwo, potentially contradictory impera-tives: a formative break with the oldorder and, at the same time, a consider-able degree of continuity with it. Insome cases, the contradiction could beresolved. For example, the protection ofminority groups’ cultural and languagerights could fit neatly into the liberal-

democratic frame of the new politicalsystem. Accordingly, a cultural commis-sion was set up to ensure that thevarious cultural interests of these groupswould be respected. This deflected andchannelled the more extensive demandfor a territorial Afrikaner volkstaat.

The impressive gains in women’srights could also occur with minor riskto stability. This was demonstrated bythe relatively weak and fragmented,opposition to the guarantee of repro-ductive rights. The establishment of aCommission for Gender Equality, theOffice on the Status of Women withinthe Presidency, the requirement thateach government department appoint agender officer or unit – all these ad-vances were greeted with wide acclaim.Such advances were not consideredthreats to the existing power relations.

Yet, although these gains entailedpolitically acceptable risks, the realisa-tion of some of these rights may bestymied by retreats made in other policyareas, especially that of macro-eco-nomic policy. The power of interna-tional and local organised business toset the pace of change in a marketeconomy imposes severe constraints ongovernment’s capacity to reduce socialinequality. The extent to which macro-economic policies leave existing powerrelations intact and reinforce the subor-dinate position of women and poorpeople is of particular concern.

The Government of National UnityThe ANC’s exercise of political powerwas limited by the creation of a five-year government of national unity,which included in the executive repre-sentatives of the National Party (NP)and the IFP.

There were other, more powerfulconstraints on the exercise of politicalpower. Chief amongst these was theneed to shore up stability and avoidpotentially destabilising reactions from



ation

7

other social, political and economicforces, especially in the light of the(temporary) shortfall of policy frame-works, institutional systems and per-sonnel capacity required to translatewill into action. Indeed, the Congressof South African Trade Unions(COSATU) 1996 Programme for theAlliance discussion paper noted that:

the power of the apartheid-era rulingclass remains largely entrenched incritical areas: the security forces, themedia, the bureaucracy, and above allin the commanding heights of theeconomy ... The new democraticgovernment, while fully legitimate,popular and apparently in full control,neither has its hand decisively on alltillers of state power (the securityforces, bureaucracy, parastatals,reserve bank, judiciary etc.) nor has itbeen able to strategically direct theeconomy of the country based on ourown agenda.10

All in all, the ANC was prepared tomake considerable concessions toensure a smooth transition.11 Thiscommitment to govern on a platform ofinclusivity, reconciliation and modera-tion was to earn it credence with itspolitical opponents and the privatesector.

The apartheid debtThe objective of the ‘sunset clause’ thatprotected incumbent civil servants fromretrenchment was to remove insecuri-ties that might stoke ‘counter-revolu-tionary’ mobilisation. However, whilemuch has been made of the effects ofthis ‘sunset clause’ on initiatives totransform state structures, its cost to thefiscus has been its most debilitatingoutcome. Voluntary retrenchments and‘golden handshakes’ became the only‘broom’ with which the new govern-ment could ‘clean out’ the civil servicebureaucracies.

Linked to this was one of the mostfar-reaching oversights (or compro-mises) of the negotiations period: the

leaving intact of the 1989 conversion ofthe Civil Service Pension Fund from apay-as-you-go system into a fullyfunded entity. This guaranteed fullpayouts to as many civil servants aschose to leave the service, hugelyinflating government debt. In 1994, thedebt stood at R189,9-billion; by March1999, it had ballooned to R375,9-billion.Approximately 96 percent of the debt isowed to South African creditors. Abreakdown of this reveals that 40 per-cent of the debt load is absorbed by thecivil service pension fund, with a further40 percent owed to the Public Invest-ment Commission (which invests statepension funds). Debt obligations to thecivil service pension fund swelled fromR31-billion in 1989 to R136-billion in1996.12

The effect was dramatically tostrengthen calls for fiscal stringency.High interest payments siphon off fundsthat could and should be directed atsocial spending and government wasdetermined to lower the amounts de-voted to debt servicing by reducing thebudget deficit.

GlobalisationGlobalisation is based on an ideologythat eschews a directive role for thestate in the economy. It also demandsthe removal of obstacles that impedetransnational production and the freeflow of commodities, investment andfinance. The Bretton Woods Institutions(BWI) have sought to enforce conform-ity in this respect and their stance isreinforced by transnational investmentand credit rating agencies. Conformity isencouraged by the capricious opera-tions of financial markets and the abilityof both local and foreign capital towithhold investment.

Not all emerging markets (as SouthAfrica has become classified) havecomplied with these prescriptions to thesame extent.13 However, the costs ofnon-conformity appear daunting to



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8

policymakers in a society-in-transition,where the swift achievement of social,political and economic stability ranks asan overriding priority. There was,further, a need to lever a weakenedeconomy rapidly out of a prolongedphase of stagnation. Acquiescence toBWI prescriptions seemed to hold thepromise of boosted investment levels. Itwas assumed that these, in concert withan array of supply-side adjustments andinitiatives, would lay the foundation forsustained economic revival. From ahuman development perspective, thecritical question is whether SouthAfrica’s emphasis on economic integra-tion into the global system and thesecuring of markets takes full accountof the social, cultural and politicalconsequences of this strategy.

Another influential factor was thestructural shift in the global economicsystem. From the early 1970s, fallingprofit margins led to severe adjustments– most notably in production. Furtherchanges were triggered by the startlingsurge in financial transactions and the‘transnationalisation’ of production anddistribution.

Local and international businessSouth African business recognised that“economic growth would not occurwithout a political settlement, and long-term peace and stability demandspolicies that can restore political andsocial conditions for economicgrowth”.14 Merely resolving one aspectwas insufficient.

The first requirement was a politicalsettlement that was inclusive and con-sensual, managed thereafter by (a)political force(s) capable of marshallingcompliance and stability. The secondwas a development path that wouldguide South Africa out of its economicand social malaise. Its character, too,would be determined by an overridingneed to maintain stability. The macro-economic parameters of that path may

be seen as highly conservative andaccommodating of the interests ofcapital.15

The sentiments of local capital to-wards the new government were seenas one of the key variables in the proc-ess of compromise. While politicalnegotiators worked towards a settle-ment to usher in the new South Africa,the short-term fortunes of the new orderwere being engineered elsewhere – in aseries of engagements with local andinternational business representatives inthe early 1990s. The ANC was demon-strably disadvantaged in these earlyencounters by its lack of an agreedpost-apartheid economic framework.The report of the Macro-EconomicResearch Group (MERG) – MakingDemocracy Work – provided a compre-hensive framework. However, by thetime it was completed in late 1993, thekey principles of a post-apartheideconomic policy had already beenestablished with the business sector.

A dearth of appropriate developmentmodelsSouth Africa marched the final steps ofits liberation struggle in an era markedby the collapse or decay of the threemain development models that had heldsway for most of the century. Thesewere the Soviet model (associated with‘really existing socialist’ states), thewelfarist model (that at times character-ised North America, the United King-dom and Western Europe) and thedevelopmentalist model (expressed in avariety of experiments in Africa, Asiaand Latin America). The lack of anappropriate, approved model that,theoretically, privileged human develop-ment over pure economic growth (or atleast attempted a ‘humane’ balancebetween the two imperatives) and thehindsight afforded by the dissolution ofthese development models severelydisarmed the ANC in its search for adevelopment path.



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In this environment, the ANC’svision for transformation and its devel-opment path as represented in theReconstruction and DevelopmentProgramme retain their significance.However, government’s attempts toimplement a development path thatwould be responsive to poverty, socialinequality and economic growth havebeen disjointed. While espousing theneed for a democratic developmentalstate, South Africa has, however, trav-elled a path of incremental changewithin a dominant market economicsystem, for reasons discussed later inthis chapter.

A Vision for TransformationThe ANC government’s vision of trans-formation is informed by its past princi-ples and ideals, reflecting a directrelationship with the rousing goalssketched in the Freedom Charter. Thisis most apparent in the emphasis onnon-racial inclusivity within a demo-cratic system of governance based onan equal franchise. It is also evident inthe guarantee of human rights (includ-ing language and cultural rights) andequal access to learning opportunities.Indeed, the Charter’s success as atouchstone for popular mobilisationgrew out of the expansive allure ofaffirmations that echoed the needs anddemands of the poor majority.

By 1998, however, ANC policy hadshifted from the more radical injunc-tions of the Freedom Charter. This isnot to imply that the ANC has aban-doned its broad transformative ideals.Simply, the horizons of realisabletransformation have shrunk as thegovernment has sought to align itspolicies and activities to an inhibitingdomestic and global context. Some ofthese factors and constraints are incon-testably ‘real’. Others are ‘putative’,gaining their potency from particularperceptions which, in turn, arise out ofspecific analyses.

The broad commitments of govern-ment are, as described by former Presi-dent Nelson Mandela, to:

bring fundamental change to the livesof all South Africans, especially thepoor; to recognise the actual contradic-tions in our society and to state themboldly, the better to search for theirresolution; to avoid steps that furtherworsen social conflict, and to build ournew nation by continually and con-sciously exorcising the demon oftribalism, racism and religious intoler-ance.16

Three salient goals emerge: improv-ing the lives of the poor majority,maintaining social stability and buildinga nation that is inclusive and non-discriminatory. These goals are broadlyconsistent with the central thrust of theFreedom Charter.

The SACP, however, defines transfor-mation not only in terms of develop-mental goals reached, but also asprogress towards transforming thecountry’s capitalist state into a ‘nationaldemocratic state’. Such a state has beendescribed as:

one in which the political and eco-nomic power decisively shifts from thecapitalist class and its allies into thehands of an alliance of the workingclass, the landless rural masses andelements of the middle strata, particu-larly the black middle strata [andwhere] the interests of women and thetransformation of gender relations areplaced at the centre of the interests ofthe state. This is the actual meaning ofthe transfer of power to the people.17

Thus, although formal democratisa-tion, state reform, expanded delivery ofsocial services, job creation, povertyalleviation and all aspects of develop-ment may constitute elements of trans-formation, the achievement of thesegoals may, however, be ephemeral andlimited unless it occurs within theframework of a transfer of power –particularly economic power – as de-fined above.18



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The Reconstruction and DevelopmentProgrammeIn early 1994, the ANC adopted theReconstruction and DevelopmentProgramme (RDP) as a detailed map fortransformation. The RDP sought toreorder politics, the economy andsociety along democratic and highlyparticipatory lines. The original RDP, anANC alliance document, captured thehopes and aspirations of the majorityand was informed by a vision of trans-formation led by:

A people-centred society of liberty thatbinds us to the pursuit of goals offreedom from want, freedom fromhunger, freedom from deprivation,freedom from ignorance, freedom fromsuppression and freedom from fear.They will therefore constitute part of

the centrepiece of what this Govern-ment will seek to achieve, the focalpoint on which our attention will becontinuously focused.19

This vision is entirely consistent witha human development perspective (seeBox 1 above).

The RDP reflected the imperatives ofbuilding consensus, compromise andstability that guided the quest for apolitical settlement. It was the outcomeof wide-ranging consultation, an attemptto harmonise a rich variety of demandsand concerns. As a result, “the policyframework was beset by enough frag-mented voices, multiple identities andcompeting discourses to leave evenpost-modern analysts confounded”.20

The RDP base document was, indeed,sufficiently ambiguous to allow fordifferently navigated voyages towardsits goals. As a vision for transformation,it hinged on a mutually reinforcingdynamic between basic needs provi-sion, economic growth, vigorous civilsociety participation and initiative and ademocratised state servicing the needsof all citizens.21 Significantly, the RDPpromoted the principle of economicgrowth with human development.According to a participant in the draft-ing process:

the broad presumption was that whenthe market failed, as it so often did inSouth Africa, the state would step in toboth force capital to follow a long-termrational, non-racial capitalist logic, andto facilitate access to basic goods andservices, to environmental and con-sumer protection, or to industrial andtechnological development. This wasultimately no profound challenge to themarket, but rather an affirmation of itshegemonic role in the ordering ofsociety. Corporatism in this spiritpervaded the document.22

The document also advocated strictlimits on state spending, endorsed adrive towards international competitive-ness and approved calls for an ‘inde-pendent’ Reserve Bank.23

Box 2The RDP document listed a setof targets, amongst them:

• Creating 2,5-million jobs in10 years;

• Building one-million low-costhouses by the year 2000;

• Providing electricity to 2,5-million homes by the year2000, thereby the number of homes linked to theelectricity grid;

• Providing potable water and sewage systems to one-million households;

• Redistributing 30 percent of arable agricultural land toblack farmers within five years;

• Shifting the health system from curative services toprimary health care, with free medical services at statefacilities for children under six years and pregnantmothers;

• Providing 10 years of compulsory, free education, aswell as revising the curriculum, reducing class sizes andinstituting adult basic education and training pro-grammes;

• Democratising and restructuring state institutions toreflect the racial, class and gender composition ofsociety.



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The RDP White PaperThe ambiguities in the RDP becameeven more pronounced when it wastranslated into a White Paper (releasedby government in late 1994). The WhitePaper also laid more emphasis on theconstraints that would determine howeconomic growth and redistributionwould be pursued. RDP objectiveswould be “achieved through the lead-ing and enabling role of the State, athriving private sector and active in-volvement by all sectors of civil soci-ety”24 . The overriding economic goalswere for:

sustainable growth, viable employmentcreation and a movement to fullemployment, greater participation inthe economy leading to reducedincome disparities, and a labourmarket characterised by effectivecollective bargaining, an equitablesystem of rights, active policies toaddress employment patterns, andstability.25

The RDP White Paper highlightedseveral structural barriers that inhibitthe growth prospects of the SouthAfrican economy, including “highunemployment, poor social infrastruc-ture, inequitable income distribution,primary product export dependenceand excessive protection”26 . It alsohighlighted impediments such as “isola-tion from the world economy”, lowskills levels, “excessive concentration ofeconomic power” and “governmentdissaving”. Also listed were “low ex-ports and high import propensity”,alarmingly low levels of net domesticsavings and net domestic investment,stagnating productivity, “falling rates ofreturn”, “capital outflows”27 and anunstable current account of the Balanceof Payments. Against these goals of theRDP and the recognition of the struc-tural barriers that constrain SouthAfrica’s development, it is necessary to

identify the benchmarks or indicatorsused to measure progress.

Government indicators of transformationThe benchmark for the new govern-ment’s economic and social policies andinitiatives was contained in the RDP andthe Growth, Employment and Redistri-bution (GEAR) plan. Governmentcommitted itself to:• Creating productive employment

opportunities for all citizens at aliving wage;

• Alleviating poverty, low wages andextreme inequalities in wages andwealth;

• Meeting basic needs and ensuringthat every citizen enjoys a decentliving standard and economic secu-rity;

• Democratising the economy andempowering the historically op-pressed, particularly workers andtheir organisations;

• Removing racial and gender discrimi-nation in the workplace;

• Developing a balanced and prosper-ous regional economy in southernAfrica, based on the principle ofequity and mutual benefit.28

Together, these commitments consti-tuted the government’s yardstick forsocio-economic transformation. Offi-cially, they remain key goals for theANC.29

As a vision for transformation,

the RDP hinged on a mutually

reinforcing dynamic between

basic needs provision, eco-

nomic growth, vigorous civil society

participation and initiative and a democra-

tised state servicing the needs of all citizens.



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The Economy andTransformationAs indicated earlier, even before assum-ing power, the ANC became highlysensitive to the potential reactions ofmarket forces. This sensitivity deter-mined the design of the parameters ofeconomic policy and, hence, the frame-work of reconstruction and development.

Official ANC speeches and docu-ments have consistently attested todeep concern about the inherited,structural weaknesses of the economyand the pressing need to revive eco-nomic growth. Equally evident from1991 onwards was a growing convictionthat the choice of adjustments would beguided by the imperative of nourishingthe confidence of domestic and interna-tional capital. By 1993, the ‘growththrough redistribution’ approach hadbeen sidelined. It was now seen asrisking ‘macroeconomic populism’which would, allegedly, saddle theeconomy with new debilities andscuttle the prospects of more equitabledevelopment.

Government economic policieswere, therefore, designed to conform toa market-driven approach within thereigning orthodoxy. These policieswere contained in GEAR. The percep-tion was that, in the current phase ofglobalisation, an economy stricken withweaknesses has no choice but to bendvisibly to market sentiments if it is toavoid chronic instability. As a partici-pant in the drafting of the government’smacroeconomic plan, GEAR, has writ-ten:

The immediate aim of the GEARstrategy was to signal to potentialinvestors the government’s (andspecifically the ANC’s) commitment tothe prevailing orthodoxy.30

However, even within the logic ofGEAR, it is acknowledged that eco-nomic growth and development aredependent on social and political

stability, which are, in turn, outcomes ofhuman development and a reduction inpoverty and inequality. In implementingGEAR, the challenge for government isto achieve an effective balance betweensocial development needs and macr-oeconomic stability.

Launching GEARA prime characteristic of post-1994economic policies has been the desireto create a favourable environment formarket-led economic growth. Thegovernment is justified in its view that ithas shown “commendable determina-tion”31 on this front. Adopted in June1996, the GEAR strategy is the centre-piece of South Africa’s growth path and,consequently, its broader developmentpath. It is premised on core economicpriorities that establish the key terms onwhich development and reconstructionwill be pursued. It is not, however, theonly source of those terms. The over-haul of the state system and govern-ment policies, the roles assigned toorganised popular forces and the widerimperatives of stability and inclusivityhave all helped shape the terrain onwhich transformation endeavours haveproceeded. These factors combine toinfluence the basic template of eco-nomic policies in important respects.

Underpinning the new ‘integratedstrategy’ of GEAR was the need toaddress structural economic weaknessesas raised in the RDP. The options avail-able to government to address thesestructural barriers had to meet theexternal requirements set for integrationinto the global system. Consequently,the plan’s market-based measureshinged on a bid to build market confi-dence by introducing adjustments inline with the edicts of the WashingtonConsensus.

Economic structural adjustmentsInvoking RDP goals, the GEAR strategyoutlines several structural adjustments



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13

that are required to achieve higher andmore labour-absorbing economicgrowth, thereby reducing povertylevels. According to the GEAR docu-ment33 , its core elements are:• a renewed focus on budget reform

to strengthen the redistributive thrustof expenditure;

• a faster fiscal deficit reduction pro-gramme to contain debt serviceobligations, counter inflation andfree resources for investment;

• an exchange rate policy to keep thereal effective rate stable at a com-petitive level;

• consistent monetary policy to pre-vent a resurgence of inflation;

• liberalised financial controls, eventu-ally including the complete lifting ofexchange controls;

• a privatisation programme whichwould see the complete privatisationof ‘non-essential’ state enterprisesand the partial privatisation of somestate-run utilities;

• a liberalised trade regime whichwould see most tariffs and otherforms of protection drastically re-duced (and, in several cases, com-pletely removed) by the early part ofthe next century;

• tax incentives to stimulate newinvestment in competitive andlabour absorbing projects;

• an expansionary infrastructureprogramme to address servicedeficiencies and backlogs;

• wage restraint by organised workersand the introduction of ‘regulatedflexibility’ in the labour market.

These adjustments are seen asconstituting an ‘integrated approach’and were expected to achieve aneconomic growth rate of 6 percent bythe year 2000 and an average of400,000 jobs a year. A sustained growthrate “in the 5,6 or 7 percent range” waspredicted while, according to theMinister of Finance, Trevor Manuel34 ,redistribution would emerge from “job

Even within the logic of GEAR, it

is acknowledged that economic

growth and development are

dependent on social and political

stability, which are, in turn, outcomes

of human development and a reduction in

poverty and inequality. In implementing GEAR,

the challenge for government is to achieve an

effective balance between social development

needs and macroeconomic stability.

creation and more focused publicexpenditure.” The foundation for thestrategy was a set of macroeconomictargets that, government argued, wouldcreate a ‘bedrock’ of confidence andstability in the economy. The GEAR

Box 3South Africa’s Basic EconomicTemplateBoth the Business Growth for Alldocument and the government GEARplan:

• view the world economy as anintegrated capitalist system where market forces reignsupreme, punishing countries which do not obey theunwritten code of ‘sound’ fiscal, monetary and labour-marketpolicies;

• stress the need for privatisation in order to reduce debt and tosignal government’s clear commitment to market-orientedpolicies;

• recognise that some government policies promote redistribu-tion (such as land reform and the provision of basic socialservices);

• see job creation through greater labour-market flexibility asthe most sustainable and effective means of loweringinequality. It is here that the moral claim (most bluntlyexpressed by the South Africa Foundation (SAF)) that lowerwages are good for the poor is evident.32



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document describes the nub of thestrategy as follows:

The higher growth path depends inpart on attracting foreign direct invest-ment, but also requires a higherdomestic saving effort. Greater indus-trial competitiveness, a tighter fiscalstance, moderation of wage increases,accelerated public investment, efficientservice delivery and a major expansionof private investment are integralaspects of the strategy. An exchangerate policy consistent with improvedinternational competitiveness, responsi-ble monetary policies and targetedindustrial incentives characterises thenew policy environment. A strongexport performance underpins themacroeconomic sustainability of thegrowth path.35

These adjustments are aligned tofour, long-term goals:• a competitive, fast-growing economy

which creates sufficient jobs for allwork seekers;

• a redistribution of income andopportunities in favour of the poor;

• a society in which sound health,education and other services areavailable to all, and

• an environment in which homes aresecure and places of work are pro-ductive.36

Stripped to basics, GEAR sand-wiched government spending betweentwo stringent and fundamental prescrip-tions. First, fiscal austerity (reflected ina drive to bring the budget deficit downto 3 percent of gross domestic productby the year 2000) is pursued in order toreduce the total public sector debt,which stood at 56 percent of grossdomestic product in 1996.37 Resourcesspent on interest payments would goinstead towards increased social spend-ing; while the share of GDP taken bytax revenue would not exceed a ceilingof 25 percent. Second, increased gov-ernment revenue would result fromhigher economic growth and, in the shortterm, increased revenue collection.

Growth would be propelled mainlyby an anticipated massive increase inprivate investment, with real govern-ment investment increasing only in thelast two years of the five-year plan.Overall, the plan hopes to shift theeconomy from a dependency on pri-mary commodities onto a path charac-terised by strong, export-led growth inthe manufacturing sector. Governmenthas attempted to achieve advances inthat realm mainly via supply-side indus-trial measures and by designing andpromoting several major capital-inten-sive projects that form part of its SpatialDevelopment Initiatives (SDIs).

Spatial Development InitiativesSouth Africa’s industrial strategy isfocused sectorally by promoting, viasupply-side measures, industrial ‘clus-ters’ with the potential of producinghigh value-added products, and spa-tially by catalysing economic activity incertain geographical areas via SDIs.Importantly, these initiatives are tooccur within the fiscal and other con-straints embodied in the GEAR macr-oeconomic strategy and are, therefore,largely dependent on private invest-ment.38

SDIs hinge on large ‘anchor projects’,recommended by the existing (or poten-tial) advantages in an area – transportlinks, mineral deposits, natural re-sources, energy supplies and so on. Theprojects are conceptualised by govern-ment teams and marketed to privateinvestors. Government inputs are minor(not exceeding 10 percent of costs) andare generally restricted to infrastructureprovision (such as roads and expandingelectricity supplies), conducting feasibil-ity studies and marketing projects toprospective investors. Projects aredesigned along the lines of ‘clusterindustrialisation’, in terms of whichproject viability is enhanced by thespecific features of each ‘cluster’ of



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15

projects, creating a concentrated disper-sion of advantages.

Criticisms of GEARGrowth that does not feed the poorwill collapse in on itself, economicprogress without social developmentwill be both hollow and short-lived,redistribution without expandedproduction cannot be sustained, andprosperity without security of life andproperty holds no appeal.39

Criticisms of GEAR can be separatedinto two categories: the plan’s failure toreach its key targets (most importantlyin job creation, economic growth andredistribution) and technical flaws inher-ent in the plan and its assumptions.

Technical flawsCritics have charged that GEAR doesnot constitute an integrated strategyand that it conflicts with government’sbroader developmental goals. Theycontend that GEAR is bereft of meas-ures to ensure that investment occurs inways that will help achieve the docu-ment’s stated economic and socio-economic goals.

It has been noted that one of themodels used in GEAR’s projectionscontradicted the eventual plan. Accord-ing to Gibson and Van Seventer’sDevelopment Bank model, “if the goalis to reduce the public sector borrow-ing requirements as a share of GDP, theresult must be a fall in income, outputand employment, all other things beingequal”. 40 Commenting on other similartechnical inconsistencies, Nattrass hasconcluded that there are:

so many ‘shift parameters’ in GEAR’sintegrated scenario projection that its‘technical’ status is severely compro-mised. The growth and employmentoutcomes are in large part the productof a set of optimistic guesses about thelikely effects of the economic policypackage.41

The Chair of the parliamentaryPortfolio Committee on Trade andIndustry, Rob Davies, has said thatGEAR’s various measures do not meshinto a coherent, integrated strategy:

The integrated scenario projections donot guarantee that if the above-describedmeasures are implemented we willachieve (GEAR’s targets). These resultsdepend on assumptions that lie beyondthe macro-economic policy measuresproposed, viz. that the new policiesgenerate ‘confidence’ among domesticand foreign private investors, whorespond by significantly increasinginvestment. There is thus no causallinkage between the budget deficitreduction, tariff liberalisation measures,etc. and the assumptions (that targets willbe reached).42

Thus, although promoted as an‘integrated economic strategy’ – with itsvarious elements allegedly harmonisinginto a dynamic programme – the plan’smain thrust is, in fact, political/ideologi-cal in the sense that it constitutes a bidto assuage diverse market forces withan appealing set of gestures and signals.As many43 have pointed out, GEARpivots on an amorphous and intangiblevariable – investor sentiment – that ispresumed to respond favourably to anattractive policy environment.

In defence of GEARInitial opposition to GEAR was answeredwith the claim that the impact of the planwould require some time to mature. Inlate 1996, Manuel stated that “in thecourse of the next two years, not months”the fruits would be readily visible.44 Thattwo-year ‘pay-off’ period now seems tohave been indefinitely postponed. In themidst of the mid-1998 market upheavals,Manuel conceded that “the results, in theshort term, have not always reached thetargets we set for ourselves”, adding thatsome of the targets could become “evenmore elusive”. However, it was “preciselyat times like this that our resolve andcommitment is tested”.45



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While government initially declaredthe GEAR plan to be ‘non-negotiable’,as opposition grew the arguments madein its defence appeared to vacillate.During 1997, official faith in the essen-tial soundness of the policy was shad-owed by explanations that the drop inthe currency’s value in the first half of1996 had required an immediate andemphatic effort to calm the markets.

Overall, government’s defence ofGEAR rests on two arguments – the onepolitical, the other economic. Politically,the GEAR plan is presented as anelaboration of the principles and per-spectives contained in the RDP. Themore pliant version of this argumentholds that the overriding goals of theRDP and GEAR are identical – attackingpoverty and deprivation. By launchingthe economy quickly into a new growthcycle, GEAR “provides a foundation tounderpin accelerated RDP delivery”.46

However, ANC government leaders takethis argument further, saying that themeasures in the GEAR plan are merelyrefinements of positions established inthe RDP. As Thabo Mbeki put it in mid-1998:

In clear and straight forward language,the RDP identified a high deficit, ahigh level of borrowing and thegeneral taxation level as … ‘part of ourmacro-economic problem’ … For somestrange reason, when work is thendone to translate the perspectivecontained in the RDP into actualfigures, this is then interpreted as areplacement of the RDP by Gear.47

Thus, it is argued, far from deviatingfrom the RDP, the GEAR plan is intrinsi-cally loyal to its goals and injunctions.GEAR “simply seeks to set out clearlyand unambiguously the key economicrequirement for achieving [the RDP]goals”48 These allegedly identical goalscan be achieved only “in the context ofsustained economic growth, a stablemacroeconomic environment and athriving competitive sector”.49

Recognising the economy’s failure torespond to the need for higher growthand job creation, government officialshave, since 1997, preferred to empha-sise the plan’s contribution to economicstability and the achievement of ‘soundfundamentals’. Indeed, the declarationthat “it was employment creation thatbecame the central focus of the macro-economic strategy”50 has subsequentlybeen replaced by claims that the planhas steeled the economy against theupheavals and instabilities that haverocked other emerging markets since1997. Sound economic policies andeconomic institutions are seen, there-fore, as the most formidable defenceagainst the kinds of tremors that rockedThailand, Malaysia, South Korea, Indo-nesia and later Russia and Brazil.51 Theliberalising and deregulatory adjust-ments codified in the GEAR plan arenot, it is argued, negative factors, butkey ingredients in a successful defenceagainst upheaval:

Since our own savings levels areinadequate, we have to attract foreignsavings … in a rapidly globalisingworld where capital moves relativelyfreely across borders ... We are a smallopen economy and … shall remaincaught in this vortex of rapid capitalmovement until we can successfullyaddress all of the structural difficulties... The lesson we draw from all theseexperiences is that what matters aresound economic policies and solideconomic institutions.52

This emphasis on economic adjust-ments in response to financial marketvolatility appears to relegate the humandevelopment side of the strategy to thebackground. It also does not recognisethat, in countries with similar character-istics to South Africa, economic growthinitiatives were underpinned by signifi-cant land reform, land redistributionand education programmes as well aseffective social safety nets to meet thebasic needs of the poor majority.



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Economic TrendsForeign direct investmentThere is international debate about whatcombinations of factors attract invest-ment, with strong evidence that, ratherthan being a direct function of investorsentiment, investment is “primarilydetermined by profitability of investmentand the complementarity between invest-ment by the state and the private sec-tor”.53 In other words, investment tendsto follow investment, in a kind of waltztypically initiated by the state and domes-tic private sector. GEAR, however, re-duces the state’s role as a key source ofinvestment (until a higher growth rate isachieved) and fails to establish a directchain of causation between its measuresand boosted domestic private investment.

The second consideration concernswhat attracts specific kinds of invest-ment. Despite its explicit goal of stimu-lating productive and labour-absorbinginvestment, GEAR does not promotemeasures that favour one type ofinvestment over another.

After government began liftingexchange controls in 1996, capitalflows surged – from 0.7 percent ofGDP in 1996 to 4.2 percent in 1997.Foreign direct investment (FDI) rosefrom R4.7-billion in 1994 to R5.4-billionin 1995 and R5.8-billion in 1996.54

According to the SA Reserve Bank’sApril 1999 Quarterly Bulletin, FDI inSouth African assets soared to R17.6billion in 1997,55 exceeding govern-ment estimates. However, the destina-tions of the inflows should have tem-pered reactions, lured as they were byprivatisation ventures (notably theselling of a 30 percent stake in thetelecommunications giant Telkom in1997) and the unbundling of large localconglomerates. The other main destina-tion for FDI was the capital-intensiveoil and energy sector. Moreover, about60 percent of FDI in 1997 went towardsmergers and acquisitions.

Although these kinds of investmentrose by 160 percent in 1996 and 130percent in 1997, their benefits to theproductive capacity of the economy andjob creation are dubious. Meanwhile,new investments in 1997 were peggedmore or less at 1996 levels, while ex-pansion activities decreased. In 1998,FDI plummeted to R3.1-billion.

The conclusion must be that, withinthe current economic framework, FDI willremain highly inconsistent and driven, notby South Africa’s job creation needs, butby external factors. The onlyadvantage government hascreated for itself in thisrespect are the market-drivenSDIs56 (discussed above) andthe accelerated privatisationof ‘big-ticket’ state assets. Thelatter is a finite variable thatrisks evoking strong resist-ance from the labour move-ment if extended toparastatals like the electricityutility, Eskom.

Believing that it hasestablished the requisite“climate of attraction”57 ,government is disappointedby the unsatisfactory andfluctuating levels of FDIentering South Africa. Alsotroubling is the changingcomposition of capital in-flows. Since 1995, SouthAfrica has witnessed a dra-matic rise in net short-termcapital inflows, mostly des-tined for the bond and equity

Sound economic policies and

economic institutions are seen

as the most formidable defence

against the kinds of tremors that

rocked Thailand, Malaysia, South

Korea, Indonesia and later Russia and Brazil.

0.7%

4.2%

1996 1997

1

0

0.5

1.5

2

2.5

3

3.5

44.5

Perc

enta

geFigure 1.1: Capital flows as

% of GDP, 1996–7

4.7

5.85.7

0

1

2

3

4

5

6

7

1994 1995 1996

R Bi

llion

Figure 1.2:Foreign Direct Investment, 1994–6



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18markets. Their value increased five-foldsince 1996-97, overshadowing FDI.

The provisional benefits of net short-term capital inflows register mainly inthe capital account of the balance ofpayments. However, their volatilenature was confirmed in the thirdquarter of 1998, when R5,4-billion leftthe country. This triggered seriousexchange rate instability and prompteda series of interest rate hikes that badlydepressed economic growth and againencouraged short-term capital inflows.Conditions were stabilised in the fourthquarter of 1998, although this wasalmost exclusively due to bond andequity purchases. This ‘revolving door’phenomenon is supported by therelaxation of capital controls.

As asserted by the ANC:

The preoccupation of the previousperiod was to open the economy totrade and capital markets, and toremove the structural distortions thatwere causing stagnation and wouldhave caused deindustrialisation. Thiswas accompanied by the pressing needto deliver social infrastructure to thosepreviously deprived of it….we now needto ensure that we attain higher levels ofdirect investment, accelerated economic

growth and a greater degreeof job creation.”58

The critical challenge ofensuring investment thatcreates jobs and addressesissues of poverty remains.

Private sector investmentIn order to make signifi-cant inroads into theSouth African unemploy-

ment rate, a sustained annual GDPgrowth rate of about 6 percent is re-quired. This, in turn, demands highlevels of total investment – exceeding 25percent of GDP. Yet in the 1990s, do-mestic fixed investment hovered be-tween 15.5 and 17.8 percent of GDP,reflecting the reluctance of South Afri-can firms to invest in the productivesectors of the local economy and thestate’s gradual retreat from a similar role.This trend was fuelled in the early tomid-1990s by declining profit rates andtrepidation about the political future ofthe country.

Economic policy shifts in line withmarket needs were designed to endwhat has been described as an ‘invest-ment strike’ by the domestic privatesector. Real private sector investmentgrowth was forecast to rise by morethan 9 percent between 1996 and 1998,before soaring by 13.9 percent in 1999.Instead, it has dropped sharply in thepast three years – from a 6.1 percentgrowth rate in 1996 to -0.7 percent in1998. Overall, the sector’s share of totalfixed investment has fallen from 73 to68 percent.59 Most of this investment isin the category of ‘machinery andequipment’. According to the ReserveBank, this is “in all likelihood a reflec-tion of the continuous process of substi-tuting capital for labour”60 . Except inthe mining and construction sectors,says the Bank, “the private sector heldback its fixed investment spending in allthe other major sectors of economicactivity”. It attributes this tendency toweak domestic demand conditions,poor prospects for an immediate recov-ery in export demand, falling outputvolumes, greater under-utilisation ofproduction capacity and the high usercost of capital. This validates Gibsonand Van Seventer’s conclusion:

The critical element necessary tomotivate private investment, whetherdomestic or foreign, are markets.Ultimately it is the ability to sell what is

Within the current economic

framework, FDI will remain

highly inconsistent and driven,

not by South Africa’s job crea-

tion needs, but by external factors.

Perc

enta

ge

6.1%

-0.7%

1996 1998-2

0

2

4

6

8

Figure 1.3: Private sectorinvestment growth, 1996–8



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produced that guides the investmentdecision, not available savings, eitherprivate or government ... Fiscal policywhich increasingly withdraws demandand shrinks markets will lead to acontraction in the level of economicactivity.61

Meanwhile, local corporations areshowing a strong propensity for off-shore investments, a tendency facili-tated by the lifting of capital controls.South African firms made $2.3 billion ofoutward investments in 1997, con-trasted with a mere $57-million in1996.62 This is a clear indication thatthe objectives of corporations havelittle if anything to do with socialdevelopment. This disjuncture betweenmacroeconomic objectives and socialdevelopment imperatives requires thatgovernment play a more directive rolein guiding monetary policy if it is toaddress social inequality and poverty.

Slow economic growthThe modest economic recovery of1994-96 ground to a halt by mid-1998,with total real output for the year stuckat 1997 levels. The mild upturn of1994-1996 began reversing in 1997when GDP growth of 1.7 percent wasregistered. The adjusted figure wouldbe 2.2 to 2.7 percent, against GEAR’starget of 2.9 percent. In 1998, theadjusted figure would be between 0.5and 1 percent, against GEAR’s 3.8percent. Most economists were predict-ing 1 to 1.5 percent growth in 1999, asagainst GEAR’s 4.9 percent. Indeed,initial GDP growth figures for the thirdand fourth quarters of 1998 placedSouth Africa in an official recession.

However, using a new accountingframework to adjust sectoral contribu-tions to GDP, Statistics SA was able toshow 0.2 percent GDP growth in thefinal quarter and growth in each of thepast five years (except 1995) to havebeen 0.5-1 percent higher than previ-ously estimated. For the first time,government infrastructure provision

(roads, bridges and dams) was incorpo-rated into calculations, while informalactivities in respective sectors are alleg-edly better measured.63 GDP over thefive-year period has consequentlyincreased from 2.2 to 2.7 percent a year– though it is still well short of the 6percent annual growth needed for thesignificant reduction of poverty levels.64

Presenting the figures, the Departmentof Finance claimed that the economywas more buoyant and resilient thanwas previously believed. The new datasupported expectations of better growthand proved that South Africa was ben-efiting from globalisation.65 At the time, itwas predicted that the debt-to-GDP ratiofor 1997/98 would be 48 percent (not 55.6percent as measured in the previous data)and that the fiscal deficit for 1998/99could drop to 2.9 percent of GDP (not theinitial estimate of 3.3 percent). Govern-ment said the changes would enable it toincrease capital expenditures.

With GDP growth lagging and theoverall tax level set at no higher than 25percent of GDP, the means for fundinggreater social spending are limited totwo factors: improved revenue collec-tion (a finite variable once ‘maximumefficiency’ is attained) and reduced debtservice obligations (as long as spendingcuts can depress the budget deficit,another finite variable). This has seriousimplications for poverty reduction andhuman development. The post-apart-heid development path was premised oneconomic growth and social develop-ment. Its implementation through theGEAR strategy must be measured againstthe government’s understanding of trans-formation and development benchmarksreflected earlier on in this chapter.

Declining demandPropelled by rising unemployment andlower per capita disposable income,demand levels entered a long-termslump. Also inhibiting demand were theapartheid patterns of social infrastruc-



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20

ture provision. The shortage of formalhousing and lack of access to electricity,for example, stymies demand for dura-ble and semi-durable goods, stuntingthe growth potential of the local manu-facturing sector. However, a demand-ledgrowth path required levels of stateintervention that, ANC economic policy-makers feared, would undermine inves-tor confidence in a period dominatedby the orthodox policies associated withthe Washington Consensus. Steadily, theemphasis shifted towards the introduc-tion of supply-side stimulants.

Low domestic savingsIn stark contrast to a Keynesian, invest-ment-led approach (where rapid growthis promoted “through a low and stablecost of capital and a high expectedgrowth rate in effective demand”66 ), theANC adopted a neo-liberal view, high-lighting low savings levels as one of themain growth constraints in theeconomy. In this analysis, low savingsmeans less investment. Statistics seemedto support this view. Savings overall hadsunk from 30 percent of GDP in 1979-80to 16.5 percent in 1996, while govern-ment dissaving rose as high as 5 percentof GDP in the mid-1990s. Private sectorsaving had also dropped – from 25percent of GDP in the late 1970s to 19.2percent in 1996.

In line with a monetarist view,positive real interest rates came to beseen as an essential instrument forboosting savings levels, with littleregard for their throttling effect oninvestment, output growth and jobcreation. A high degree of continuitywith post-1989 Reserve Bank policieswas affirmed. Importantly, these meas-ures enjoyed the approval of local andinternational financial networks.

Balance of payments constraintsSouth Africa’s unstable balance ofpayments situation stems in part fromthe fact that foreign revenue generation

depended to a large extent on mineralexports (at volatile prices determined inthe metropoles of the industrialisedworld) and the economy’s heavy reli-ance on capital goods imports67 .

Historically, South Africa has copedwith deficits on the current account ofthe balance of payments by encourag-ing foreign capital inflows and, occa-sionally, inhibiting import demand. Inthe 1990s, high real interest rates havebeen used to help finance current accountdeficits, but at the cost of restrictinginvestment and retarding economicgrowth. Government sees robust exportgrowth and large foreign capital inflowsas the main counterweights to chronicbalance of payment difficulties.

Other structural weaknessesAmong the other structural weaknessesplaguing the South African economywere:• a dependency on strong perform-

ance in the agricultural and miningsectors (the former notoriouslyinconsistent; the latter in long-termdecline);

• vulnerability to declining prices ofgold and other precious minerals onthe world market;

• poor labour, managerial and capitalproductivity (although assessmentsgenerally tend to focus only on thefirst area);

• a very low rate of labour absorption;• an industrial sector exhibiting very

uneven competitiveness and depend-ent on imported technologies, capitalgoods and even product components.Remedies to address these weak-

nesses have been heavily influenced bythe sentiments, analyses and pressuresof corporate business, internationalinvestment and credit ratings agenciesand international finance institutions.68

They are based on the perception that,in the current phase of globalisation,there is minimal scope for risk-taking oreven selective ‘violation’ of dominant



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21

economic forces for an emergingmarket like South Africa. Market volatil-ity, chronic balance of payments con-straints and low levels of domesticsavings and investment seemed tounderline the need to ‘play by therules’. This stance was underscored bythe sudden currency devaluation inearly 1996 and the instability thatcoursed through emerging markets inthe wake of the so-called Asian Finan-cial Crisis.

Trade and Industry minister, AlecErwin, has said that the route of rapidindustrialisation via strong state inter-vention – as followed in, for example,South Korea and Malaysia – is unavail-able to South Africa69. Importantly, manyof these countries’ economic strategieswere supported by strong social develop-ment programmes that included basicneeds provision, land redistribution andagricultural development as well ashuman resource development.

Despite these economic trends,South Africa has been able to makesignificant advances in the political andsocial spheres. These advances must,however, be viewed against the gov-ernment and ANC’s stated commitmentto transformation. South Africa’s com-mitments to transformation are bestreflected in the statement made byPresident Thabo Mbeki on the respon-sibilities of government and the ANC asagents of change. As stated these are:

• … to transform South Africa into anon-racial country, non-racial in allelements of human activity …

• … to transform ours into a societycharacterised by real gender equality …

• … to entrench and deepen democracy… and ensure that the conditions existsuch that none resort to force to solveany social problem …

• … to conduct a sustained campaign toend poverty and ensure a decent andcontinuously improving standard ofliving for all … without discrimination…

• … the deracialisation of the economy[and its] transformation into a modern,

dynamic and competitive economy …• … to work for the construction of a

caring society, sensitive to the needs ofthe most vulnerable, including children,the youth and the disabled …

• … to place ourselves among the forcesin Africa and act together with theseforces for peace, democracy and thereconstruction and development of ourcontinent …

• … to act together with all other like-minded forces to impact on the processof globalisation so that the institutionsof global governance that accompanythis process work to end poverty andunderdevelopment …70

Political AchievementsConstitution-makingSouth Africa’s new Constitution wassigned into law by President NelsonMandela on December 10, 1996 andcame into effect on February 4, 1997.Guaranteed in its Bill of Rights is anexemplary range of civil and politicalliberties, including the rights to freedomof speech, assembly, expression, asso-ciation and religion. The Constitutionplaces at the hub of the new politicalsystem the principles and guidelines forpolitical accountability and democraticgovernance. It differs from the interimconstitution (1993) in several respects,amongst them:• In certain instances, the Bill of Rights

applies ‘horizontally’; in other words,it binds not only the state, but alsoprivate persons and entities in civilsociety.

• It includes some socio-economicrights and grants citizens the right of‘access’ to housing, health care, food,water and social security.

• It recognises traditional authorities andcustomary law, subject to other consti-tutional provisions and legislation.

• It sets out complicated measures toresolve disputes between the NationalAssembly and the National Council ofProvinces (which replaced the oldSenate).



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• It safeguards the language and culturalrights of minorities and the reproduc-tive rights of women.Quick progress was made in building

a constitutional state and several inde-pendent constitutional bodies wereestablished. These include the Office ofthe Public Protector, the ConstitutionalCourt, the Human Rights Commission, theCommission on Gender Equality, theIndependent Electoral Commission andthe Independent Broadcasting Authority(now to be disbanded in favour of theIndependent Communications Authorityof South Africa (ICASA)).

Recasting the political and ideologicalbasis of state powerAs discussed earlier, the chief feature ofthe transition was to introduce an inclu-sive political system based on the princi-ples of democracy, non-racism and non-sexism.71 Inclusive approaches were bothconsciously mustered and compelled bythe very nature of the transition. “[T]hiswas a war without absolute winners ...the two major political forces in SouthAfrica had fought to a draw,” said ANCveteran Govan Mbeki. “And so it hap-pened that the oppressor and the op-pressed came together to chart the roadto a democratic South Africa.”72

However, the shift from a nationalliberation movement to a party politicalorganisation changed the character of theANC’s engagement with its allies andopponents. Moving from contestation andchallenge to political accommodation and

electoral politics set the scene for a rangeof tensions among former allies. Thesetensions are seen as a part of the normalprocesses of transition as well as a neces-sary factor in the alliance.

For decades, South Africa representedperhaps the paradigmatic case of racistdiscrimination and discord. Without anenveloping national identity to subsumeor at least muffle narrower racial andethnic identities, there is still the dangerthat diverse grievances and tensions maybe opportunistically translated into racial-ist and ethnic reactions.

A prime challenge was to resolve andtranscend these defining features ofsociety – a challenge that came, in thediscourse of the democratic movement, tobe referred to as the ‘national question’.That quest rested firmly in the historicalprinciples and ideals of the Congressmovement. In the 1990s, however, itgained wider acceptance and strongermomentum from the pragmatic awarenessof the need for stability. Unity and recon-ciliation became the beacons of post-apartheid South Africa, and the ‘rainbownation’ became the metaphor for thedesired outcome.

Dealing with diverse interestsBy and large, the architects of the post-apartheid order have adopted the view73

that democratic consolidation requires theinstitutionalisation of conflict. The broadpolitical framework is explicitly geared toachieve this. More narrowly, a host ofstructures and institutions have been setup to serve as forums for the arbitrationand resolution of conflicts and differ-ences. These range from statutory bodieslike the Constitutional Court, the PublicProtector’s Office, the Commission forConciliation, Mediation and Arbitration,the Commission for Gender Equalityand the Human Rights Commission tocivil society bodies like the Broadcast-ing Complaints Committee of SouthAfrica. In addition, institutions like theNational Economic, Development and

In countries like South Korea and

Malaysia economic strategies

were supported by strong social

development programmes that

included basic needs provision, land

redistribution and agricultural development

as well as human resource development.



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23

Labour Council (NEDLAC) offer inclu-sive arenas where broad agreement onpolicies can be negotiated. Bilateral,voluntary bodies like the Gold CrisisCommittee (comprising the mininghouses and major mineworkers’ un-ions) exist to hammer out and monitorsector-specific agreements. In theory, aslong as difference and conflict can befunnelled into such bodies – and aslong as they retain legitimacy and trust– the prospects for further democraticconsolidation are enhanced.

The electoral system serves a similarrole. During elections, the party politi-cal landscape was healthily diverse –ranging from the dominant ANC to thesmaller opposition parties and a me-nagerie of parties representing minorityethnic, regional and issue-specificinterests. The ANC’s ongoing ability toattract and serve as an abode for di-verse groups, ideologies and interests iswidely viewed as one of the mainpillars of stability.

The efficacy of these institutionaledifices is profoundly dependent onthe economy’s capacity to generatesurplus resources for redistribution, inorder to blunt or overcome discrepan-cies rooted in material inequality. Inother words, even where a transforma-tion project is cast mainly in a political-institutional idiom, its fate depends onpolitical-economic dynamics. In SouthAfrica’s case, such an understanding ishardly novel. It is, indeed, explicit inboth the thinking and the policies ofgovernment and in the strategies andactivities of its main allies.

Despite teething problems, post-apartheid South Africa’s most resound-ing accomplishments reside in thederacialisation of the political-institu-tional realm. There has been lessprogress in fostering a national basisfor consent or a national politicalconsciousness in which the politicalpotency of parochial identities can becontained. Less decisive still is progress

towards de-racialising the economicsystem – not simply in terms of owner-ship patterns but in the redistribution ofopportunities to participate (as workersand entrepreneurs) and share moreequitably in the surpluses generated.

Prospects for HumanDevelopmentThe ANC seeks to construct a societythat, in its own slogan, offers “A betterlife for all”. After six years in power, thenew policy edifice is largely in place.The restructuring of government andthe overhaul of state institutions are nolonger reflexive activities, but form partof strategic-change plans. Threats ofdestabilisation can be assessed on factsrather than on anxieties. Moreover, theprovisional outcomes of the chosenpath of transformation can be meas-ured. The following questions can nowbe asked:• What are the chief characteristics of

South Africa’s development path?• Does it hold the promise of a society

that expands the choices and oppor-tunities of the majority of citizensand enhances their opportunities tolive fulfilling and dignified lives?

• If it does not, what are the alternatives?

The macroeconomic framework, socialspending and povertyInsufficient financial resources lie at theheart of government’s difficulties inaddressing the crisis of poverty andinequality in South Africa. According to

Unity and reconciliation

became the beacons of post-

apartheid South Africa, and

the ‘rainbow nation’ became the

metaphor for the desired outcome.



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Table 1.1: Percentage Share of Total Government Revenues (MainRevenue Sources)

1995/96 1996/97 1997/98 1998/99

Individuals 40.7 39.6 40.2 42.4

Gold Mines 0.7 0.4 0.5 0.1

Other Mines 0.6 0.9 0.8 0.7

Companies 11.2 12.4 13.0 12.0

Value-Added Tax 26.0 24.8 24.9 24.8

Source: COSATU, 1998, Fact Sheet – 1998/99 Budget and the MTEFprojections

COSATU, however, it “has becomeobvious that it is not possible to have adevelopmental budget within an anti-developmental economic framework”.74

Simply put, macroeconomic policiescannot be managed without a socialpolicy programme that ensures humandevelopment and an effective socialsafety net.

Commenting on the 1998/99 Budget,COSATU’s President highlighted one ofGEAR’s central (though often over-looked) strictures: that of a conservativetax regime heavily impregnated withcorporate tax incentives and conces-sions.75 Increased corporate tax reliefhas been a consistent feature of na-tional budgets drawn up in accordancewith the GEAR plan. COSATU claimsthat the country (read ‘the corporatesector’) is under-taxed by up to 3percent of GDP.

This remains the pattern. In the1999/2000 Budget, the relief extendedto low- and middle-income earners wasmatched by a lower rate of companytax. The latter move favours richerindividuals, who are able to shift per-sonal income to lower-taxed corporateentities. This recreates, according to

one analyst, “a form of tax arbitragepractised in the 1960s and 1970s (and)widely felt to offer unfair advantage tohigh earners”76 . This revenue cap (struc-tured around a bias towards the privatesector) limits the funding pool availablefor government expenditure in favour ofstimulating an ideological climate forstronger private investment. Far frombeing over-taxed, the private businesssector is dramatically under-taxed byinternational standards.77

The effects of fiscal policy are mani-fest in government expenditure. It isgenerally accepted that there is a needto redistribute and align overall budgetspending to the goals of combatingpoverty and inequality and successivecuts in defence spending since 1994 arein line with that commitment. But theneed to limit government spending hasclearly constrained the degree of redis-tribution achieved in the areas of educa-tion, health,welfare and land reform,while inhibiting capital expendituresaimed at improving infrastructure.

Impact of budget reprioritisation onpoverty and servicesGovernment asserts that “achievingfiscal discipline has not been at theexpense of delivery”. This claim isaccurate in that overall, social spendinghas stayed above 14 percent of GDP.Measured as a percentage of total non-interest spending by government, socialservices expenditure rose from 58percent in 1995/96 to about 61 percentin 1999/2000. Government provides asocial pension of R540 per month toabout two-and-a-half million citizens(including 700,000 who qualify fordisability pensions). In its 1999 budget,government allocated R1 billion fortargeted poverty relief programmes. Thisis set to increase to R1.2 billion this year(2000) and R1.5 billion in 2001.78 As akey sector in this programme, the Wel-fare Department in 1999 funded 1,933poverty relief projects in provinces and

Post-apartheid South Africa’s

most resounding accomplish-

ments reside in the

deracialisation of the political-

institutional realm.



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15 national programmes, assisting11,197 women, 2,904 men, and 2,055youth. Also assisted were older persons,people with disabilities and those inpoor rural communities, particularly inKwa-Zulu Natal, Eastern Cape and theNorthern Province. Poverty relief pro-grammes are beset by a number ofproblems including government’s abilityto disburse the funds and a lack ofcommunity and government capacity.However, budget allocations for pov-erty eradication are available. Morethan eight million children have beenimmunised against measles, five millionagainst polio and government claimsthat seven out of ten children are fullyimmunised.79 Thus, fiscal austerity insome sectors has not come at the costof slashing social spending.

Table 1.2 shows that spending oneducation and social security andwelfare, measured as a percentage ofGDP, has dropped marginally since1996, and has risen for health, housingand community development. How-ever, because they are cast against suchlarge backdrops, these measurementstend to ‘lose’ or ‘diminish’ importantspending shifts. These become moreapparent when looking at year-by-yearreal changes in categories of expendi-ture.

As Table 1.3 shows, measurement ofthe year-on-year percentage change inexpenditure (in real terms) reveals adifferent picture. While overall socialspending rose slightly until 1998,several allocations decline in the 1999/2000 Budget. Such shifts show that,even within government’s mainstreameconomic framework, some of thehuman development goals are notgiven the priority indicated in themacroeconomic plan. This providesfurther evidence that GEAR’s emphasison the need for an effective socialsafety net to cushion the impact of themarket on the poorest has yet to berealised.

Social spending as a proportion oftotal non-interest expenditure remainsslightly above 60 percent. However, itdrops in real terms by 2.6 percent in the1999/2000 Budget (at the average 1998inflation rate of 7.6 percent) or by 0.5percent (at the Department of Finance’sprojection of a 5.5 percent inflationrate), while state personnel expendituregrowth falls from 9.5 to 5.1 percent. Atthe same time, however, the Minister ofFinance budgeted R1-billion for povertyrelief and almost R3-billion for employ-ment creation programmes. In realterms, the percentage year-on-yearchange in expenditure has been consid-erably more pronounced in spendingon defence, water affairs, fuel andenergy, transport and communication,and mining, manufacturing and con-struction. Each of these functions hasexperienced significant, negative ex-penditure growth in at least two of thethree budgets passed since the introduc-

Table 1.2: Consolidated Provincial and National Spending – SocialServices only (as % of GDP)Function 1999/2000

Social services 14.9 14.6 15.1 14.6

Education 7.0 6.6 7.1 6.9

Health 3.3 3.3 3.6 3.4

Social security &welfare

2.9 3.0 2.9 2.8

Housing & communitydevelopment.

0.3 0.7 1.3 1.4

Source: Department of Finance Budget Review 1998 and 1999

Table 1.3: Consolidated Provincial and National Spending – RealPercentage Change from Previous Year Social Services OnlyFunction 1996/97 1997/98 1998/99 1999/2000

Social services 2.0 1.2 3.9 -2.6

Education 5.2 -4.8 7.4 -2.9

Health 6.8 1.6 7.4 -4.1

Social security &welfare

-0.2 4.6 -2.9 -4.7

Housing & communitydevelopment.

-54.8 154.9 95.6 7.9

Other 3.7 -11.1 -81.2 -6.3

Source: Department of Finance Budget Review 1998 and 1999.



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tion of GEAR. The social sector’s shareof total government expenditure isnonetheless over 60 per cent, reflectinggovernment’s desire to combat poverty.

The question is whether govern-ment’s economic policies will give realeffect to the twin strategies of economicgrowth and human development. In acountry trapped in a low-growth trackand requiring massive funding infusionsto reduce inherited social backlogs, thedevelopment template must give equalemphasis to both.

Down-sizing the public sectorGovernment intends reducing thepublic service wage bill substantially.Personnel costs account for about 40percent of total expenditure (or 51percent of non-interest spending). Theratio is even higher in the social serv-ices as reflected in education for exam-ple, which accounts for roughly 75percent of total expenditure.

There are approximately 1,1-millioncivil servants – a national ratio of onecivil servant to every thirty-six citizens,which is consistent with internationalstandards.81 Moreover, social servicesare, by their nature, personnel inten-sive. If driven strictly by fiscal consid-erations, labour cuts may substantiallycompromise service provision. COSATUargues that, rather than ‘down-sizing’,government should be ‘right-sizing’,which:

entails that expenditure be guided (forexample) by targeted teacher/pupilratios rather than these ratios simplybeing determined – devoid ofreconstructive vision – by expenditurelevels.82

Workforce reduction needs to beassessed holistically. Cuts should ob-serve the service delivery objectivesoutlined in the RDP and should occurin tandem with or follow adjustmentsaimed at improving work performance.These should include the overhaul ofmanagement systems, skills develop-

ment and the democratisation ofworker-management relations.

The social impact of large-scalepublic service cuts has been consider-able, particularly in provinces saddledwith the remnants of several homelandadministrations. Northern Province andEastern Cape rank among the poorestand most depressed regions of thecountry and, in provinces such as these,government has been the only netemployer over the past five years. “Thewages and benefits the public serviceprovides have a massive impact oneffective demand”, says Adler83 . Accord-ing to the provincial audit reports, re-leased in August 1997, provincial adminis-trations are plagued by inefficiency,surplus staff, poor management, lack ofskills and corruption. Adjustments need tobe tied to the specific realities of particularsections of these administrations, with theoverriding aim of expanding and improv-ing services to the public.

The direct relationship between the‘sunset clause’ protecting civil servantsand the tightened fiscal squeeze in thepublic sector is often overlooked. Yet,despite a drop of nearly 13 per cent inthe number of public servants in Sep-tember 1995, government’s wage billincreased.84 It is instructive todisaggregate that bill, which comprisespayments in four main areas:• non-wage benefits like pension

contributions, medical aid and 13th

cheques;• often lucrative voluntary retrenchment

packages and golden handshakesissued in line with the ‘sunset clause’;

• an elite layer of highly-paid techno-crats, appointed to restructure stateinstitutions and draft new policies;

• above-inflation wage increases wonby rank-and-file public servants,ranging from the publicly demonised‘pen-pushers’ and ‘paper-shufflers’(in reality only 10 percent of the civilservice) to teachers, health workers,police officers and the like.



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The government-commissioned 1998Poverty and Inequality in South Africareport notes that “the attempt torefocus the budget and reduce costssimultaneously may prove very difficultto achieve”. The report proposes:

a mechanism to monitor the impact ofpolicies very closely to ensure thatpoverty and inequality reduction is anintegral part of the focus of the poli-cies and their implementation. Further-more, the country must develop theinstitutional capacity to take correctiveaction quickly should policies fall shortof expectations.

The ‘capacity constraint’The scope and efficiency of stateservices is affected not only by fiscalconstraints, but also by the difficultiesof transforming an inherited and largelydysfunctional apartheid state sector.

There are widespread institutionalcapacity problems. As indicated, theseare worst in provinces that had toamalgamate Bantustan administrationswith provincial ones. Not least of thedifficulties is the need to harmonisedifferent financial management systemsin the midst of central governmentconcern about provincial governmentoverspending.

The provincial audit reports gaveonly two provinces (Gauteng andWestern Cape) relatively ‘clean bills ofhealth’, while warning that the North-ern Province, Eastern Cape andKwaZulu-Natal were on the verge ofcollapse. Serious problems alsoplagued the Northern Cape and FreeState administrations and, to a lesserextent, Mpumalanga and North-West.

The reports illustrated the extent towhich provincial public services areaffected by grossly inadequate finan-cial, information and human resourcemanagement systems and highlighted achronic shortage of appropriatelyskilled staff. “The lack of discipline andthe prevalence of misconduct (such asfraud and theft) are major problems in

many departments and provincialadministrations”, and procedures tomanage misconduct are ineffective. Theprimary cause was the lack of invest-ment in skills development in precedingdecades. The reports found that govern-ment had made “a lot of dangerousassumptions” in 1994, thinking it coulddepend for skills on the country’s1,27-million public servants.

Another factor was the centralisationof financial and personnel managementfunctions in provinces, hindering thedepartments’ ability to deliver servicesand implement national governmentpolicies.85

Estimates indicated that it would take adecade to nurture the management skillsneeded to reverse the sometimes-chaoticstate of provincial administrations.86

Closer collaboration between the publicand private sectors was seen as a way ofresolving the problem. A training levy onbusiness was proposed, as were steps toprevent the private sector from ‘poaching’state-trained personnel. Yet, although theskills shortage requires that 22,000 publicservants be trained annually, progress onthis front is slow.

The provinces have the potential toplay an important role in formal politicsby serving as a less remote tier ofelected government, particularly in anelectoral system based on proportionalrepresentation. Provinces can boostopportunities for citizens’ groups toinfluence government policies andconduct – a ‘luxury’ few are able toexercise in relation to national govern-ment.

In an effort to deal with administra-tive problems and political jousting atthe provincial level, the ANC leadershiphas begun nominating premiers inprovinces governed by the party. Thereare also calls for a revised system tosupport politically-weak provincialadministrations sandwiched betweendelivery-oriented municipalities andmega-cities and a national government



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responsible for policymaking andresource allocations.

Initiatives are also underway tostrengthen the capacity of local govern-ment to accelerate service delivery. InJuly 1999, the Department of LocalGovernment and Housing announced atransfer of more than 2,800 civil serv-ants to local councils. This was accom-panied by a transfer of assets held bynational and provincial departments “inorder to restructure and facilitate localgovernment, [in ways that would ensurethey are] better placed to addressdevelopmental needs of the new mil-lennium”.87

Human DevelopmentAchievements and Trends

It would be difficult to find exampleselsewhere in the world where anegotiated transfer of power tookplace, where such progress wasachieved in so short a period of timeto redefine the nature of the newsociety.88

Despite many difficulties, governmenthas made admirable progress towardsfulfilling many of its 1994 electionpromises. According to the Minister ofFinance, “we now deliver more andbetter services to more people (and)importantly, we are doing this within anaffordable budget framework”.89 Gov-ernment says it has made good onabout 60 percent of its 1994 electionpromises, as the following snapshot ofdelivery successes by early 1999shows:90

• In 1994, some 30 percent of SouthAfricans lacked access to a safesupply of water near their homes.Today, three million people havebenefited from the government’swater supply programme, reducingthe figure to 20 percent.

• In 1994, fewer than 40 percent ofSouth African households had accessto electricity. Today, after more than

two million connections, 63 percent ofhouseholds are connected to theelectricity grid.

• In 1994, about a quarter of homes hadtelephones. Today, after 1.3-millionconnections, 35 percent are linked tothe telephone system.

• On an average, each day since 1994 afurther 1,300 homes have been electri-fied, a further 750 telephones havebeen installed and a further 1,700people have gained access to cleanwater.

• The Primary School Nutrition Pro-gramme reaches about five millionchildren, and about 10,000 classroomshave been built or repaired.

• Pregnant women and children undersix years qualify for free medical care,and 638 clinics have been built since1994.

• The government has now developedthe capacity to build 15,000 housesevery month. At March 1999, thehousing subsidy scheme had contrib-uted to the building of 630,000 houses.Almost 40 percent of approved subsi-dies were registered to women.

Setbacks in advancing humandevelopmentYet, despite significant advances,sustainability has proved a problem.Thousands of electricity and waterconnections are being cut off becauseusers cannot afford to pay service fees.Three out of four newly installed tel-ephone lines in rural areas are discon-nected each month because userscannot afford to pay their bills.91 Thehousing tally reflects both built (brickand mortar) homes and the transfer oftitle deeds for tiny serviced stands.According to news reports92 , the Ministerof Housing has declared many of thesehouses substandard (either poorly con-structed or smaller than the minimum sizedesignated by government). In the mean-while, the total housing backlog has longpassed the 2,5-million mark.



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WaterA May 1999 study by the Department ofWater Affairs reported that several of itswater provision projects had becomedysfunctional or fallen into disrepair.According to the South African Munici-pal Workers’ Union (SAMWU), as manyas two million of the taps installed havefallen into disrepair. Government is alsoconcerned with problems in the mainte-nance of new connections.

EducationThe education system has proved oneof the more difficult areas to transform.It requires, on the one hand, an over-haul of the entire education system.93

On the other, it must redress the huge,apartheid-bequeathed discrepancies inthe availability of teaching sites, materi-als and personnel within a limited fiscalframe. Repaired township classroomsare still overcrowded, and teachers inpoor areas struggle under increasedworkloads as the Department of Educa-tion tries to lower its salary bill. Schoolfees have rocketed and, in some prov-inces, those students fortunate enoughto receive textbooks at all may wait fordelivery until midway through theschool year. A recent study by theDepartment of Education claims that, atsome surveyed schools, there is noteaching on 90 percent of school days.This is further complicated by the severedecay of an ethos of teaching and learn-ing at many institutions. With laudablecandour, (the new) Minister of Education,Kader Asmal, declared in July 1999 thatthe system was “in crisis” and announcedits comprehensive overhaul.

Education is looked at in greaterdetail, both as a site of and as an instru-ment for transformation in Chapter 5.

Land ReformLand reform lags furthest behind 1994targets. The National Land Committee(NLC) says that less than 1 percent ofSouth Africa’s farmland has been redis-

tributed to poor, black households. Thetarget set by the ANC in 1994 was 30percent. Of the 54,000 land claimslodged, only twenty-seven have beensettled in favour of claimants (involving167,534 ha of land and about 70,000people). The Department of Land Affairsanticipates that most of the backlog willbe dealt with in two or three years.94

HealthHealth clinics are severely understaffedand many lack even the most basicmedicines, particularly in rural areas.The scaling back of curative services infavour of primary healthcare has putpublic hospitals under severe strain.“We have fewer doctors, fewer beds,fewer resources and more patients thanever before,” the principal surgeon atone of Johannesburg’s largest publichospitals has complained.95

The limits to what legislation canachieve emerge clearly in the healthcontext. The entrenchment of women’srights in the Constitution and newlegislation has been deservedly praised.In law, for instance, every woman hasthe right to terminate her pregnancy.Yet, the health budget prevents mostfrom claiming this right, as state hospi-tals cannot afford to provide the service.In the meantime, women who canafford private healthcare can and doclaim that right. Hence, “benefits madeto this homogenous notion of womenare benefits in danger of being reapedby the most powerful within this group- that is white (and some black) middle-class women”.96 Thus, the parameters of

Estimates indicated that it

would take a decade to nurture

the management skills needed

to reverse the sometimes-chaotic

state of provincial administrations.



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the economic growth path pursued bygovernment could diminish the realisa-tion of new rights and replicate existingcontours of inequality within socialgroups.

Once the yardstick of human develop-ment is applied, positive changes andachievements appear to be eclipsed byother, overwhelmingly negative, develop-ments. Because of their cascading directand side effects, the unemployment crisisand the HIV/AIDS pandemic rank high inthat category.

The Unemployment CrisisEstimates of unemployment in the early1990s ranged between one quarter andone third of the South Africanworkforce. By 1994, only seven out ofevery 100 school leavers were able tofind formal employment. A complex setof factors has sent unemployment ratessoaring steadily since the early 1980s.These include lower economic growthas well as:

policies which decreased the cost ofcapital relative to labour, therebyencouraging more capital-intensiveproduction, and increasing demand forskilled rather than unskilled labour; therising cost of unskilled labour in theformal sector due to increasing union-isation and labour market regulation;apartheid spatial policies which in-creased the difficulty and cost ofjob-seeking by those living in remoteareas; and under-investment in educa-tion, which limits the opportunitiesopen to many of the unemployed.97

New job creation, therefore, requiredeconomic adjustments. However, asnoted above, the options available to thenew government would be determinedmainly by the extent to which these werelikely to be endorsed by the privatesector. Thus, job creation graduallybecame subsumed within a broader questfor market-led economic growth. Yetultimately, the efficacy of improved GDPgrowth (and of GEAR’s subsidiary targets)

will be measured in the social realm – injob creation and income redistribution.The indicators are of concern.

Rising unemployment has seriousimplications for South Africa’s develop-ment path. Since 1994, more than half amillion jobs have been lost, many ofthem during the mild economic recov-ery of 1994-96. Because black wagepackets tend to be shared extensivelywithin family and kin circles, the effecton consumer demand is strong. It isestimated that each formal job lost has anegative impact on the living standardsof at least five other citizens.

In 1998, the official (non-agricultural)unemployment rate stood at 22.9 per-cent. If one includes unemployedworkers who did not seek work in themonth prior to polling, the ‘expandedunemployment rate’ rises to 37.6 per-cent (up from 35.6 percent in 1996).The fact that 69 percent of unemployedworkers have never held a formal jobtestifies to the structural nature of thistrend. Hardest hit are those sectors thatcontribute about 80 percent of totalformal non-agricultural employment:manufacturing, mining and quarrying,construction, and transport and electric-ity. Business leaders indicate that thesetrends are unlikely to be reversed in thenear future.

According to the National Union ofMineworkers (NUM), some 20,000mining jobs were lost in the first half of1999. The July slump in the gold priceto its lowest level in twenty years put afurther 17,000 jobs under immediatethreat; the mining sector could shed asmany as 50,000 jobs by the millennium.98

Meanwhile, the projected trimming of25-50,000 jobs in the public service willprobably raise unemployment figureseven higher in the current year.

Although government seems con-vinced that its structural adjustmentswill eventually solve the unemploymentcrisis, the evidence makes this question-



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able. There are persistent, long-termvigorous contrary trends in the manu-facturing sector, including the continu-ing substitution of machinery for labourand a strong shift towards outsourcing,casual and contract labour. Thesesupport business leaders’ explicitreminders that the manufacturing sectorwill not become a key source for jobcreation in the near future. Between1989 and 1996, the manufacturingsector spent R30-billion on additionalplant and equipment (over and abovethe upgrading of old machinery); duringthat period some 145,000 jobs were shedin the sector while output rose onlymarginally.99 Within the current economicframework, tourism appears to be theonly area with significant job creationpotential.

The 1999 Budget included R3-billion“linked directly to job creation pro-grammes”. These include the Workingfor Water programme, municipal infra-structure programmes, rural watersupply and sanitation, community-based public works programmes,income-generating welfare programmesand training for the unemployed andemployment services. However, al-though almost all the programmeslisted by the Minister of Finance couldcreate short-term employment opportu-nities, few if any are likely to createsustainable jobs. This crucial distinctionis too often overlooked.

A false dualism: formal and informaljobsThe government’s increasing tendencyto promote the alleged advantages ofsemi-formal and informal modes ofemployment needs to be reviewed.Addressing the Central Committee ofCOSATU in June 1998, Mbeki chal-lenged the view that “the economy isnot growing and that this stagnanteconomy is shedding jobs”. Nothing, hesaid, was being reported of the

so-called ‘grey economy’ of informaltrading and other small-scale enterpriseswhich, he claimed, had resulted both injob creation and growth.100 According toManuel, much employment growth isnot being captured in conventionalstatistical measurements.101 Govern-ment’s efforts to stimulate the develop-ment of small, medium, micro enter-prises is linked (though not reducible)to such thinking.102

Erwin indicates that, with the conver-sion of formal jobs to ‘casualisation’ andsub-contracting, the number of de factojobless workers might be lower, Hewarns that this may give rise to the“danger of creating further divisions ofrights and income inequality in thelabour market”103 .

It must be pointed out that merelyworking – whether in informal, semi-formal or formal settings – is not neces-sarily an antidote to poverty. Wagesearned by most farm and domesticworkers do not enable them to escapeimpoverishment. The National SpeakOut on Poverty Hearings heard thatwomen employed at a fruit packingplant in Trichardsdal, for example,earned a monthly wage of R340, ofwhich R140 was spent on transporta-tion.104 Indeed, studies by the ILO haveconfirmed a strong correlation betweenpoverty and wage employment, with adownward pressure on wage demandsin the context of high unemployment.According to the Minister of Trade andIndustry:

What this meant is that people had sofew resources that they were preparedto accept any payment for work despitethe fact that this only served to impov-erish them. A policy that says that evensuch jobs are justified is tantamount tofeeding someone poison and thengiving them painkillers. This govern-ment does not have such a policy. Ourpolicy is to generate the conditionswherein real and sustainable employ-ment activity takes place throughout theeconomy and to create employment



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and business opportunities that providea reasonable income that can continueover time.105

Informal sector activities are numerousand varied, ranging from street sellers tosmall-scale manufacturing. Although themost common activities are retail andservice-oriented, a relatively small propor-tion of self-employment is in manufactur-ing. Competition is intense, with mostinformal ‘entrepreneurs’ providing similarservices or selling identical products. Theabsence of affordable transport meansthat activities are spatially concentrated inareas with narrow commercial horizons.Diversification and risk-taking are inhib-ited by the lack of access to finance andcredit.106

Figures from Statistics SA indicatethat 80 percent of South Africa’s grow-ing informal sector is survivalist andthat most who are active in it livebelow the poverty line, earning averagewages of below R500 a month. Nordoes the sector appear to be a hiddengenerator of growth. It contributesUS$6.7-billion (R30 billion at 1995exchange rates) to South Africa’s GDPannually, about 7 percent of the totalvalue added to the economy. CitingSouth African Labour and DevelopmentResearch Unit (SALDRU) studies, thePoverty and Inequality in South Africareport107 noted that:

average monthly net return to theself-employed was R826, while themedian monthly income was muchlower at R200 ... A minimum of 45% ofthe self-employed are earning anincome lower than the SupplementalLiving Level (SLL) poverty line, set atR220.10 per month ... the sector con-tains a high proportion of the workingpoor who would readily take upemployment in the formal sector.

The report also found that the mostdisadvantaged among the self-employedare African women aged 15-24 living inrural areas, of whom 80 percent earn lessthan the SLL. According to Jabu Ntuli ofthe Self-Employed Women’s Union,

gender discrimination is acute and perva-sive in the informal sector:

We are competing with men who areselling. Some of them are fresh fromemployment so they have money withwhich to buy stock. But we have none.If a buyer sees what you, as a woman,are selling, he will hurry to buy from aman. We are unable to go to the banksand get a loan, no matter how meagre.So it’s impossible for us to purchasematerial at a lower price.108

Analysts have also disputed theportrayal of the informal sector as SouthAfrica’s entrepreneurial hub, pointingout that workers lack job security andmost forms of benefits, while workinglong hours in poor conditions. Thepurported benefit to the economy andsociety is also undermined, as mostenterprises fail to pay taxes and bypasssocial security and other laws.

From its cross-country surveys, theILO has concluded that “no economyhas successfully industrialised orboosted its productive employmentprimarily or largely through a massiveexpansion of informal own-account orpetty activities”.109 It has also warnedagainst conceptually stratifying the labourmarket into formal and informal sectors,saying that this creates an ideologicalframework that falsely pits a so-called‘labour aristocracy’ against the un- andunderemployed. These dualisms:

tend to lead to debates about the meritof removing or exempting the ‘informal’from regulations and of providing creditor subsidies to small-scale (informal)units on a preferential basis, paradoxi-cally introducing arbitrary distortions intothe market structure ... in reality, nothingis quite so simple. Increasingly, evenlarge-scale firms resort to ‘informal’ formsof employment, through sub-contracting,out-sourcing, use of casual labour and soon.110

By endorsing ‘regulated flexibility’ inthe labour market, GEAR supportsbusiness’ demands for a two-tier laboursystem or, at the very least, the removal



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of alleged rigidities in the labour market.Despite this, business leaders havecriticised the ‘labour-friendly’ bills passedsince 1995,111 and pressure is mountingfor the relaxation of aspects of the La-bour Relations Act (LRA), aimed at givingthe Minister of Labour greater discretionon whether collective bargaining agree-ments should be extended to non-parties.Yet, according to COSATU’s research, thisis “a marginal issue”:

Research shows that industrial councilagreements cover only 10% of SouthAfrica’s workforce and that only 1% ofthis 10% work for employers who haveagreements imposed on them throughextensions. No one can seriously arguethat this is a prime cause of unemploy-ment in South Africa.112

The desire to reduce the power oforganised labour is an importantsubtext of the (inter-related) calls forgreater labour market flexibility113 , asare claims that unionised workersrepresent a ‘labour elite’ whose jobs,wages and work conditions are main-tained at the expense of the unem-ployed. Meanwhile, retrenchmentsweaken union power in workplacesand have, in some instances, led to thederegulation of key sectors throughprivatisation and the outsourcing ofservices. Hence, COSATU’s demandthat retrenchments be made a collectivebargaining issue.

The Job SummitGovernment’s willingness to re-examinelabour policies reflects the problems itfaces in devising a job creation strategywithout also revising key aspects of itsbroader economic policy. At the long-awaited Job Summit in October 1998,government, labour and business agreedon a range of employment-creatinginitiatives. Changes in macroeconomicpolicy were not, however, on the agendaand an earlier push by business forgreater labour market flexibility suffered

a similar fate. Although grand expecta-tions were initially vested in this initiative(the President called it “perhaps the mostimportant event since our first democraticelections”114 ), the structural dynamics thatled to job shedding and discouraged jobcreation were not addressed.

In one critical assessment, the Sum-mit “turned out to be much more of apolitical spectacle than an economicoperating room”, with a thrust more“towards consensus-building and deter-mined but circumspect moves” to softenthe unemployment crisis than towardssetting in place the rudiments of a jobcreation strategy.116 Eight months later,practical evidence of the Job Summitagreements stood thin on the ground. Ajob creation trust fund (financed byone-day wage contributions from work-ers) was still being legally constituted,while three ministries had startedprojects geared towards implementationof the agreements.

Yet, on the fringes of the Summit,there were signs of a tentative shifttowards a less rigid stance towardsmeeting some of the macroeconomictargets set in GEAR. The Minister ofFinance announced that the reductionof the budget deficit to 3 percent ofGDP would be delayed slightly and therevenue target was increased from 25 to26.5 percent of GDP. The Summit alsoagreed on the need for a “counter-cyclical package to compensate for theeffects of lower growth and the currentinternational crisis”.117 ,118

Indications of a more flexible ap-proach on government’s part emerged

The fact that 69 percent of

unemployed workers have

never held a formal job testifies

to the structural nature of

unemployment.



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in late 1998, when it announced plansto spend between R170 and R323-billion on public infrastructure in thenext five years. If executed, the planscould increase gross domestic fixedinvestment three- to five-fold.119

The adjustments agreed to at the JobSummit may contribute to an effectivejob creation strategy. However, in theimmediate term, the unemploymentcrisis and its effect on the poorestremain a daunting blot on South Afri-ca’s development path.

The HIV/AIDS PandemicAdvances in human development arethreatened by the spread of the HIV/AIDS pandemic. Even if more concertedand effective counter-measures arerapidly introduced, its effects on thehuman development prospects of SouthAfrica’s citizens will be traumatic. Theseimpacts have been thoroughly docu-mented elsewhere, including in theHIV/AIDS and Human Development inSouth Africa Report (1998).

Currently there are approximately3.5 million South Africans living withHIV.120 It is reported that the virus isspreading at a rate of 1,500 new infec-tions every day, though this may be agross under-count. According to anUNAIDS report, fewer than 10 per centof all people with HIV in Africa havebeen tested and know their HIV status.

More than 100,000 people willdevelop full-blown AIDS this yearalone. Unless the disease is checked,one in every four citizens is expected tobe HIV-positive by the year 2010. Morethan half of the new tuberculosis casesbeing reported in South Africa areattributable to HIV. Clearly, SouthAfrica’s formal health system will beunable to cope with increasing demand.New research shows that the HIV/AIDSpandemic is spreading at such a ratethat deaths now outstrip births for thefirst time in the country’s most popu-lous province. There is an almost four-

fold rise in HIV infection levels inKwaZulu-Natal, home to more than afifth of the population. The trend isbeing repeated in the rest of the coun-try, albeit it at a slightly slower pace121 .

It is clear that South Africa stands onthe brink of a major social and eco-nomic disaster. Already HIV is havingan incremental impact on GDP and it isestimated that growth rates will plum-met from 3.2 to 2 percent per annum.Projected life expectancy has fallenfrom 68.2 years in the absence of AIDSto 48. Already, a sharp reduction in lifeexpectancy has dropped South Africafourteen slots down the UNDP’s humandevelopment index: it now ranks 103rdout of 174 countries. UNDP’s 2000Human Development Report estimatedthat 25.9 percent of South Africans werenot expected to live to the age of forty,compared with 3.9 percent of thoseliving in industrialised countries and anaverage of 14.3 percent for all develop-ing countries.122

The efforts mounted by governmentand civil society organisations havefailed to curb the spread of the disease.Until 1999, combating HIV/AIDS wasnot demonstrably elevated to the statusof a national priority by government orcivil society. This represents a saddeterioration of the constructive climatein 1994. In the early 1990s, the impetusfor a cogent AIDS prevention strategywas generated within the NGO sectorand revolved around the National AIDSCo-ordinating Committee of SouthAfrica (NACOSA). Its National AIDS Planwould eventually form the basis ofgovernment’s 1995/96 strategy, businessand structure plans within the HIV/AIDSand STD (Sexually Transmitted Dis-eases) programme.

However, the plan met with a numberof difficulties. Implementation proveddifficult, particularly at the provinciallevel, and the national Department ofHealth displayed a gradually diminishingenthusiasm for the AIDS plan. Matters

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were compounded by mishaps. One fifthof the Department’s AIDS budget wenttowards the abortive Sarafina II musical.Next, it became involved in the Virodenecontroversy, throwing its weight behindthe alleged ‘wonder drug’. In October1998, the Department announced that itwould not be funding an R80-millionprogramme offering free AZT treatmentto HIV-positive pregnant women (part ofa bid to reduce mother-to-child HIVtransmission).

Soon afterwards, government an-nounced a new initiative, the Partner-ship against AIDS, which would drawon some of the strategies detailed inthe original National AIDS plan. Gov-ernment has more recently been in-volved in the design of a NationalIntegrated HIV/AIDS Strategy thatbrings together related governmentdepartments. A new determination toact decisively against the pandemicappeared finally to have taken hold ingovernment. This does not, however,obscure the failure to harness and linkthe energies and resources of both stateand civil society both at a political andprogramme level earlier in the courseof the pandemic. This initial responsefrom Government has minimised theimpact of innovative strategies andefforts within communities and civilsociety.

South Africa in the WorldEconomic SystemGovernment – especially the Ministry ofFinance – believes that the volatilityassociated with the current phase ofglobalisation poses a threat to eco-nomic growth and development indeveloping countries, which have littlecapacity to mount remedies and de-fences. Heterodox policies at the na-tional level (or, importantly, evenregional and continental levels) areruled out by the punitive might ofmarket forces. The result is a reading of

the world economic system – and ofSouth Africa’s place in that system –which seems hedged, to say the least. Inthe words of the Minister Finance,Trevor Manuel, globalisation hasbrought:

greater prosperity than ever before,further advances in democracy, butalso greater uncertainty, more dramaticswings in the fortunes of nations, thanwe have ever known. So this is a timewhen the nations of the world, rich

and poor, are searching for a new

cohesion, a balance between exuber-

ance and order, between the dynamism

of the market and the constraints of

prudent governance.123

In his political report to the ANC’s1997 national conference, NelsonMandela made repeated reference toglobalisation, particularly to the integra-tion of capital markets which “make itimpossible ... to decide national eco-nomic policy without regard for thelikely response of the markets”. He andother ANC figures have spoken of the“loss of sovereignty” experienced bystates in the current phase ofglobalisation.

Government economic thinking dis-plays an idealism rooted in an expectantreading of the global economic systemand the grudging acceptance that SouthAfrica is confronted with no alternativebut to conform to global prescriptions.Opening Parliament in February 1998,President Mandela stated that “there is noother route to sustainable development”than the market-led policies adopted byhis government. The political/ideological

The most disadvantaged among

the self-employed are African

women aged 15-24 living in

rural areas, of whom 80 percent

earn less than the SLL.



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dimension of this stance should not beoverlooked. In one view:

emphasis on the loss of sovereignty

makes it possible to shift some of the

blame for domestically unpopular

policies to faceless international forces

(while convincing) doubters that what

is happening is to a large extent

inevitable.124

Consequently, government’s eco-nomic policies exhibit a determinationto maintain ‘sound economic funda-mentals’ by complying with the check-lists drafted by international investment

and credit rating agencies. As arguedearlier, these indicators closely matchthe “standard set of policy prescriptionsassociated with the Washington Consen-sus”.125

Thus, government policy positionsare shaped by the conditions set forengagement in a global system domi-nated by the powerful northern coun-tries. President Thabo Mbeki has em-phasised the need to seize opportunitiesthrown up by an “irreversible” process.A document issued by Mbeki’s office in1998 declared that Africa had to “createthe conditions for becoming part of theglobalisation process”, but remindedthat “this will essentially depend on thecompetitiveness of its economies andthe adoption of successful industrialisa-tion strategies”.126 Although this per-spective does not call for mere, obedi-ently suborned postures, at its heart liesan idealised prospect of equal partner-ship and mutual reward:

With regard to economic reform, thereare many issues that are of commonconcern, including the liberalisation oftrade, the reform of financial, commod-ity and other markets, the functioningof multilateral institutions, and develop-ment assistance and resource transfersfrom the developed to the developingworld. We are interested that thesematters be discussed in an atmospherethat recognises the legitimate interestsof the poor. In this context, we alsorecognise the importance of our ownAfrican business sector, which has acritical role in continuing the AfricanRenaissance into the 21st century and iscapable of both acting on its own andin partnership with internationalinvestors.127

South Africa’s economic interests arelinked “to Africa through the registerprovided by the meta-narrative ofglobalisation with its seemingly endlessvistas, shrinking horizons andeconomistic logic”.128 The centrality of(still mainly) white South African capitalin such ventures is noteworthy – its role

Box 4The Job Summit agreed that:

• Some funds generated byprivatisation, as well asdirect government contribu-tions, would go into theNational Empowerment Fund.The Fund aims mainly to assistblack South Africans in launching small andmedium-sized business ventures.

• About R1-bn would go to public works programmes in1998/99, increasing to R1.8-bn by the year 2000 or2002.

• A dedicated fund would be set up to help finance growthin the tourism sector, to which government is looking forthe bulk of new jobs.115 The private sector is expected tocontribute matching funds.

• Workers would donate one day’s wages annually to aspecial job creation fund.

• The effects of tariff reductions would be monitored andpossibly reviewed in industries where jobs are threatenedby trade liberalisation.

• A series of tourism projects would be designed to link intothe Department of Trade and Industry’s Spatial Develop-ment Initiatives (with, according to government, thepotential of creating 130,000 jobs).

• Business would train 5,000 new apprentices in traveland tourism over three years.

• A ‘social plan’ aimed at avoiding further job losses wouldbe designed.



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not merely invited, but demanded. Thekey to integration in Africa is the estab-lishment of South Africa as the “anchor”for a “chain of economies that, withtime, might become the African equiva-lent of the Asian Tigers… through thedevelopment of trade, strategic partner-ships and the like”.129

Prominent in such pronouncementsis the view that conformity to economicorthodoxy (if harmonised with other,subsidiary measures aimed at safe-guarding or promoting the interests ofnational economic elites and the poorwrit large) will achieve more equitableparticipation in the global economicsystem. Apparently discounted, saysAmin130 , are analyses that detect in thatsystem “an immanent tendency ...towards polarisation into centres and(variegated) peripheries” – a state ofaffairs in which “the centres ‘restruc-ture’ themselves while the peripheries‘are adjusted’ ... Never the opposite”.Thus, government policy adviserscould, until 1998, uphold “the East Asiamiracle” as “one of the most importantsocio-economic developments of the20th century”. Yet, six months later,Amin’s bold synopsis was validated asthe financial markets lodged in the‘centre’ adjusted Asia’s ‘miracles’.

Business, meanwhile, argues thatgovernment measures are insufficientlyresolute. Some business economistshave accused government of “decision-making paralysis”, arguing that “coun-tries that have taken aggressive correc-tive action against a bad backdrop havefared best”131 . Business wants lowerdirect taxes, higher indirect taxes, moreand speedier privatisation (including ofparastatals like Eskom), massive reduc-tions in the size of the civil service and asubstantial relaxation of labour regula-tions. Calls for greater governmentexpenditure are paradoxically accompa-nied by ongoing demands for fiscalstringency (‘paradoxically’, because this

implies staying within the fiscal envelopeby cutting other spending functions).Social spending is seen to be occurring atthe expense of lower expenditure oneconomic services, which business be-lieves should be increased – specificallycapital investment. Some economists havesuggested that government should beborrowing to finance more investment onthat front.

While there is virtual unanimity aroundthe call for substantial relaxation of thelabour regime, areas like trade liberalisa-tion elicit different responses, dependingon the vulnerability of the sector toforeign competition. Similarly, an insist-ence on driving the inflation rate lower ismost pronounced among financial institu-tions. Interestingly, while the relaxation ofcapital controls is widely supported, thereis also a push for “strict financial andprudential regulation governing, forexample, financial companies”132 Businesshas also tended to ignore the specificcircumstances of individual SADC (SouthAfrican Development Community) coun-tries.

Since 1998, government has grownmore sensitive to what it calls “shortcom-ings in the international institutionalenvironment”. These pertain mainly toglobal capital markets, which, accordingto the Minister of Finance’s 1999 BudgetSpeech, require “improved financialregulation domestically and internation-ally”. “We believe that regulation andoversight of all financial institutions (yes,including hedge funds) is necessary”,Manuel said, adding that South Africa will“continue to review and update our ownfinancial regulation and supervision toensure that it remains state of the art”.133

The wording appears to be in line withagreements reached at a tripartite alliancesummit meeting in October 1998, wherethe need for “contra-cyclical measures” toavert economic crises was emphasised.

However, it seems equally clear thatgovernment is reluctant to move on its



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own, preferring to follow the lead ofadjustments it hopes the G-7 countriesand Bretton Woods institutions will intro-duce. Addressing an Organisation ofAfrican Unity summit meeting in July1999, Mbeki urged African countries todevelop a “sovereign continental capacity”to participate in processes that establishedthe rules and institutions of global eco-nomic governance.134

Government remains committed tocontinuing to lift exchange controls.Judging by Erwin’s broadly endorsingattitude towards measures in the contro-versial Multilateral Agreement on Invest-ment (MAI)135 , the fundamental resolveto open the South African economy onboth the trade and capital flow fronts isunlikely to be tempered.

ConclusionReviewed against government’s visionand indicators of transformation, it isclear that significant structural advanceshave been made. There have beenimpressive achievements, potentiallyimproving aspects of the lives of mil-lions of poor South Africans. The gov-ernment has been particularly successfulin dispensing demonstrable gains to avariety of constituencies, classes anddistinct interest groups.

Along with the quantifiable changesdiscussed in this chapter, are other impor-tant gains. Though women are still thinlyrepresented in social life, women’s rights

enjoy constitutional and legislative protec-tion. The Labour Relations Act, the Em-ployment Equity Bill and the Basic Condi-tions of Employment Bill constitute thelegislative pillars of a post-apartheidlabour market, benefiting millions ofworkers. Under the banner of blackeconomic empowerment, government hasenthusiastically promoted the ascent andgrowth of an African corporate class, aswell as creating space and support for thegrowth of a small- and medium-scaleAfrican entrepreneurial class. Meanwhile,established corporations operate within amarket-friendly economic framework.These and other advances form part ofthe material basis of the ruling party’spolitical power.

The political realm provided most ofthe drama of the early 1990s. As crucialand far-reaching, however, were the lessformalised bids and engagements todefine the basic terms of a post-apartheiddevelopment path. This path is stillcontested and has yet to find coherencein an explicit implementation programmeacross government, the private andcommunity sectors.

The question, therefore, remains asto whether the achievements attainedcan be expanded and improved to theextent needed within a current develop-ment path that reinforces social andeconomic inequalities. Indeed, the veryprospects of robust growth along thatpath are questionable. For, as James K.Galbraith recently reflected on the pasttwo decades of orthodox economicadjustment:

Where are the continuing successstories of liberalization, privatization,deregulation, sound money and bal-anced budgets? Where are the emerg-ing markets that have emerged, thedeveloping countries that have devel-oped, the transition economies thathave truly completed a successful andhappy transition? Look closely. Lookhard. They do not exist.136

Government’s economic policies

exhibit a determination to

maintain ‘sound economic

fundamentals’ by complying with

the checklists drafted by international

investment and credit rating agencies.



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If left unrevised, the developmentpath embarked upon seems destined toyield what historian Colin Bundy hascalled “a lop-sided structure - twonations disguised as one, a hybridsocial formation consisting of increas-ingly deracialised insiders and persist-ently black outsiders”.137 Such anoutcome would bear little resemblanceto the visions that informed the longstruggle against apartheid and continueto propel the transformative efforts ofgovernment and its allies.

New benefits will continue to accrueto sections of the poor majority. Butavailable evidence suggests that thiswill occur on terms and amid condi-tions that recreate underfoot the veryinequalities which threaten socialstability. It was this awareness thatprompted Mbeki to warn, in 1997, thatSouth Africa could face race revolts if theliving standards of impoverished blackpeople did not improve dramatically.138

In summary, it is easier to detectwhich routes must be avoided than to

map those that should be followed. Thecharts foisted upon countries of theSouth since the late 1970s have failedemphatically to improve the lives of themajority of citizens. The disintegrationof the economic consensus that hasdefined and, in many cases, furtherruined societal developmental aroundthe globe offers great scope for alterna-tives which, a decade ago, seemedmerely fanciful. Amassed in the wealthof civil society formations committed tolasting and definitive change that canbreak SA’s insider/outsider mould, areinvaluable resources, creativity andenergies. They are crucial componentsin the dialogue of transformation SouthAfrica is seeking.

In tandem with their counterparts inother countries of the South (and theindustrialised North) South Africa canfulfil its promise – for the seeds of analternative can still be sown domesti-cally, but their fate depends on unifiedinternational action. It is onto this stagethat South Africa has to step.



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Notes1 ANC [2000a]2 Taylor [1997]3 Taylor [2000]4 Oxford Advanced Learners Dictionary [1995]5 UNDP [1997], 156 Streeten [1999], 16-177 UNDP [1995], 128 Jeremy Cronin quoted in Marais [1998], 879 Government of South Africa [1994], 6-710 Cosatu [1996], 311 When fears that it would not hold the

redistributive demands of its constituency incheck led to a clamour for a property rightsclause and the protection of the ReserveBank’s ‘independence’ in the early 1990s,the ANC granted both demands.

12 See Meer, F [1999]13 South, south-east and east Asia contained

numerous examples of ‘deviance’; somefavourably considered and even applaudedby the BWI.

14 Morris [1993], 915 Kraak [1997], iii16 Mandela [1997], 2-317 Nzimande [1997], 7. Emphasis in original.18 In such an exposition, privatisation of key

state assets is seen as anathema to transfor-mation because its augments the capitalistcharacter of the state.

19 Mandela [1994]20 Bond [1999]. Bond participated in the

drafting of sections of the RDP base docu-ment.

21 In essence, the document answered to thedescription ‘Keynesian’, although someaspects expressed more radical impulses –the provision of certain basic goods andservices through non-market mechanisms,the partial decommodification of low-income housing and the like.

22 Bond [1999]23 It did not provide guidelines on monetary

policy or the apartheid debt, about which ithad no detailed information before 1994.Industrial policies and macroeconomicconcerns were not integrated. Nor did theRDP translate its proposed land reformprogramme into a rural developmentstrategy.

24 Government of South Africa [1994], 2425 Government of South Africa [1994], 27.

Emphasis added.26 Government of South Africa [1994], 2927 Government of South Africa [1994], 9,2828 Government of South Africa [1994] : 2429 ANC [1999b], 1130 Gelb [1998], 1631 Mandela [1998], 532 Nattrass [1996], 2633 Department of Finance [1996]34 Manuel [1996]35 Department of Finance [1996], 2136 Manuel [1996], 2

37 In OECD countries, the average at the timewas 72 percent of GDP, begging the ques-tion as to whether this was unacceptablyhigh.

38 See Jourdan, Gordhan, Arkwright & De Beer[1997]

39 Manuel [1996]40 Gibson & Van Seventer [1995], 2141 Nattrass, N. [1996], 3842 Davies [1997]43 Nattrass [1996], Davies [1997], Adelzadeh

[1998] and Marais [1998].44 Manuel [1996], 445 Manuel [1998b], 346 Manuel [1996], 447 Mbeki [1998d], 448 Manuel [1996], 249 Manuel [1996], 150 Manuel [1996], 151 See, for example, Manuel [1998a]52 Manuel [1998a], 2-353 ILO [1996], 2954 Erwin [1999a], 455 ‘Massive job losses on mines and in industry

signal crisis for Mbeki’. SouthScan, Vol 14 No14. London: 9 July 1999

56 The Ministry of Trade and Industry claimsthe eleven local SDIs could create as many104,000 jobs.

57 According to a 1997 study by the EconomistIntelligence Unit, of 32 middle-incomecountries surveyed, South Africa was thecheapest place to do business.

58 ANC [2000b]59 Adelzadeh [1999], 260 SA Reserve Bank [1998], 1061 Press briefing cited in Nattrass [1996], 3762 The logic for supporting these offshore

investments is worth noting. Governmenteconomic policy is, in important respects,premised on large, sustained flows of FDIinto the country. However, foreign investorseyeing post-1994 opportunities found aneconomy dominated by sprawling localcorporations, with little space for bulkyforeign entrants. By encouraging offshoreinvestments, government may have hoped tocreate ‘space’ for foreign investors (and blackeconomic empowerment consortia). Thisspace is created when firms shifting abroadare pressured into selling non-core localoperations in order to raise investmentcapital. Some foreign investors took theopportunity (evident in the large share ofFDI acquisitions). However, without robustlocal demand to trigger further new invest-ments, the rush soon became languid.

63 The latter include the (private) commutertaxi industry, use of firewood, micro lendingand traditional health practices. 64 Accordingto Mark Orkin [1999], the main sources ofthe minor improvement in GDP growth lie inthe greater weight accorded to three sectorsin the GDP basket: transport and communi-cation (share of GDP in the 1995 base year



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41

rose from 7.4 to 8.9 percent between 1993and 1998); finance, real estate and businessservices (up from 14.5 to 16.4 percent);general government services (up from 13.8to 16.2 percent). Opposite trends held in thetraditional mainstay sectors of the economy:agriculture (down from 5.3 to 3.9 percent);mining and quarrying (down from 9.7 to 7percent); manufacturing (down from 25.2 to21.2 percent). Thus, the relative output ofgoods-producing sectors continues todecline, while that of service sectors is onthe rise.

65 Statements attributed to Department ofFinance Director General, Maria Ramos in‘GDP defies expectations’, Business Day, 22June 1999

66 Edwards [1998], 5967 Thus the capital account of balance of

payments could swing from a negativeUS$4,665-million in 1993 to a positiveUS$5,303-million in 1995, before plummet-ing to a positive US$35-million. SADC [1998]: 82

68 For more, see Marais [1998], 146-17669 Erwin [1999c], 1970 Thabo Mbeki, 12 July 2000, p3, in his

statement made at the ANC NationalGovernance Council, Port Elizabeth.

71 Its consolidation and survival is based onthe ability to forge national consensus –underpinned by the principles of reconcilia-tion and nation building. These wereexpressed in both deed and affirmation: inthe (rhetorical) acknowledgement ofAfrikaners’ right to seek self-determination;steadfast attempts to achieve a rapproche-ment with the IFP, and the Truth andReconciliation Commission trade-offbetween amnesty, accountability anddisclosure. The dramatisation of unifyingsports and cultural spectacles and gesturesof goodwill by Nelson Mandela were alsoexpressions of reconciliation and nationbuilding. The political/ideological project ofnation building and stability was alsoadvanced through a welter of consensus-building ventures and structures.

72 Mbeki [1996], 11973 Przeworski et al [1995]74 Cosatu [1998], 275 According to Vavi the contribution of

corporate taxes to total government revenueplummeted from about 50 percent in 1970to 13 percent in 1995. The opposite held forpersonal taxes: an 18 percent share in 1970rose to 40 percent in 1995. Vavi [1998], 2

76 ‘Of course it’s an election budget. So what?’.Financial Mail, 19 February, 1999

77 Financial Mail, as above78 Department of Finance, Budget Review,

1999 and 2000.79 Figures cited by Manuel [1998b], 280 Calculated at 1998 average inflation rate of

7.6 percent.

81 ‘Less means more - and more less’. BusinessDay, 28 July 1999

82 Creamer [1998], 383 Glen Adler, Quoted in SouthScan, Vol 14 No

14. London: 23 July 199984 ‘Less means more - and more less’. Business

Day, 28 July 199985 ‘Three provinces on verge of collapse’.

Business Day, 21 August 199786 ‘Administration of provinces chaotic’.

Business Day, 14 August 199787 Department of Local Government and

Housing [1999]88 Mbeki [1998a], 489 Manuel [1999], 290 Based on ANC [1999], SouthScan ‘ANC’s

achievements and failures’. Vol 14 No 11,London: 28 May 1999 and Manuel [1999]

91 ‘Drive to get Africa in touch’. Mail & Guard-ian, 12 March 1999

92 ‘R6bn housing rip-off’, Sunday Times, 14March 1999. Almost all were built by privatedevelopers, underwritten by state subsidiesschemes.

93 Deracialising it, aligning it to skills needs inthe broader economy and society anddeveloping new curricula and teachingmaterials.

94 National Land Committee, 200095 Quoted in The Star, 19 March 1999.96 Meer, S [1999]97 UNDP [1998b], 998 ‘Mines may shed 11,700 jobs’. Business Day,

7 July 1999. The figure did not include the5,000 jobs threatened by the provisionalliquidation of another mine.

99 ‘No one has really thought about new bill’seffects’. Business Day, 31 October 1997.

100 ‘Virtues of grey economy questioned’,SouthScan Vol 13 No 14. 10 July 1998.

101 Manuel [1999], 3102 These include the activities of Khula Finance

(which approved R57-million in loans tosmall businesses in 1997/98) and the 1998launch of the KhulaStart programme, aimedat providing small amounts of credit to ruralcommunities, with an emphasis on women.Information and counselling services havealso been established for new small busi-nesses.

103 Erwin [1999b], 4-5104 Sangoco, CGE & SAHRC [1998], 16105 Erwin [1999b], 4-5106 The 1995 October Household Survey

reported that 1.1-million people were eitheremployers or self-employed in the informalsector; 413,000 worked as employees in thesector, while some 129 000 people in full-time formal sector jobs were also moonlight-ing in the informal sector. About 86 percentof these was African and 7 percent Coloured.

107 UNDP [1998b]108 Sangoco, CGE & SAHRC [1998], 18109 See ILO [1996], 11110 ILO [1996], 11



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111 The sentiment is not restricted to domi-nant white business. Speaking as SABreweries’ acting chairperson, formertrade union and ANC leader CyrilRamaphosa, for instance, has describedaspects of the new labour regime as“unduly prescriptive, let alonecost-burdensome”. The JohannesburgChamber of Commerce and Industry’s1999 Survey of Member Companies askedmembers for their opinion of the effectson their businesses of the Labour Rela-tions Act (LRA), the Basic Conditions ofEmployment Act and the EmploymentEquity Bill. The results revealed that over60 percent of them believed the newlabour laws would further shrink thelabour market, reduce productivity andretard new investment. {‘Business pessi-mism on laws’. SouthScan Vol 13 No 22,30 October 1998.) The small businesssector, especially, indicated that it wouldreduce dependence on labour by cuttingstaff, mechanising and using contractors.

112 Creamer, K [1998], 4113 A shibboleth, according to the ILO’s 1996

and 1998 studies of the South Africanlabour market.

114 Mandela [1998], 5115 In 1998, Mandela estimated that the

industry could create 300,000 new jobs bythe turn of the century.

116 ‘Job creation projects planned as morelosses loom’. SouthScan Vol 13 No 23, 13November 1998.

117 This provision grew out of a tripartitealliance meeting a few weeks earlier andreflected an attempt to accommodate theviews and concerns of the ANC’s mainallies to the GEAR plan. The meetingendorsed an economic discussion paperthat highlighted the ‘paradigm crisis forthe simplistic ‘one-size-fits-all’ strictures ofthe so-called ‘Washington Consensus’’ andadded that ‘world-wide ... there is anacknowledgement that there is a need for

fresh thinking, new leadership and greaterflexibility in economic policy-making’.

118 ‘First cracks appear in officialmacro-economic strategy’. SouthScan Vol13 No 22. 30 October 1998.

119 SouthScan, 30 October 1998, as above.120 This is according to a government “HIV/

AIDS Strategic Plan for South Africa, 2000– 2005”, published in May 2000. On theother hand, a UNAIDS “Report o theGlobal HIV/AIDS Epidemic”, published inJune 2000, estimates that at the end of1999, more than 4,2 million South Africanswere living with HIV/AIDS.

121 UNDP [1998a]122 UNDP [2000]123 Manuel [1999], 1124 Nel [1999], 23125 Maziya [1999]126 The document was issued after Mbeki

attended meetings of the World Bank’sForum for Development in Africa. Quotedin Nel, P [1999], 23

127 Mbeki [1997], 36128 Maseko & Vale [1998], 6129 Maseko & Vale [1998], 8130 Amin, S [1993], 79131 SG Frankel Pollak Securities. Czypionka

[1999]132 FBC Fidelity Investment Bank’s Hania

Farhan in Czypionka [1999]133 Manuel [1999], 2134 ‘Africa must embrace globalisation –

Mbeki’. Business Day. 14 July 1999.135 Which foundered in the OECD in 1998,

but is due to be revived in the MillenniumRound of the World Trade Organisation.

136 Galbraith, James K., 1999, “The Crisis ofGlobalization”, Dissent Vol 46 No 3(summer), New York, p 2

137 Bundy, C., 1999, “Truth .... or Reconcilia-tion”, Southern Africa Report (August),Toronto, p 11.

138 “Mbeki says race riots ahead if whites failto redistribute wealth”, SouthScan Vol 12No 41, 7 November 1997.


indicators of development and transform

ation

43The state of humandevelopment in SouthAfrica: Key indicators ofdevelopment andtransformation

2



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The winds of change are

not blowing for everybody

The fresh smell of hope isnot breezing through the

mud hutIn Xitlakati

Not even the grass is shaking aninch further from this windIn GaSekhukhuniThe poor remain poor, the desti-tute remain destituteThe hungry remain hungry, thevoiceless remain voicelessBut the winds of change areblowing faster day by dayWhy then? The old man askshimselfWhy is it that four years agothey came and made theSame promises?Why is it that they came andtold us that we will haverunning water?Why is it that they told us thatwe would have electricityin our homes?Why is it that we were told ourculture would beenriched and respected?Has that got anything to do withthe votes we cast fourYears ago?Or maybe it has a lot to do withvotes we will be castingNext week

Extract from “The Winds of Change”

by Thwadi Komane



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Introduction

Human development is the processof enlarging people’s choices as

well as raising their levels of well-being1 . The human development proc-ess in South Africa is, therefore, aboutan overall improvement in the qualityof life of the poor. The human develop-ment framework is used as a concep-tual and indicative tool to encouragesocial mobilisation and social organisa-tion in the direction of fundamentalsocial transformation. Within this frame-work, sustainability is critical. Sustain-able Human Development (SHD)implies that different aspects of life, theenvironment and people’s participationare taken into account. Simply put,development is not sustainable, nor willit be human-centred, if it is futureless,voiceless, anti-poor people, discrimina-tory and not gendered in ways thatempower women.

In applying a human developmentframework to the South African reality,it is necessary to focus on the multi-dimensional character of society. Thisimplies that the historical, political andeconomic arrangements that lie at thecore of the social system (relationsbetween groups) must be analysed toprovide the basis upon which furtherinquiry can be structured. For example,institutional change and governance aswell as processes of transformationneed to be reviewed against conceptsand notions of colonialism, apartheid,inequality, power, class, gender and‘race’. This is the landscape againstwhich poverty and other social issuesmust be examined.

The political economy of transforma-tion in South Africa discussed in Chap-ter One sets the conceptual frameworkfor an assessment of the progress ofand setbacks to human development.This chapter provides an analysis of the

key indicators of human developmentand transformation. In doing so, itattempts to go beyond conventionalindicators and to introduce the views ofrepresentatives of the poorest SouthAfricans on transformation and develop-ment. In addition, the chapter focuseson South Africa’s performance in respectof basic needs provision, poverty andinequality, especially along race, gender,rural/urban and income lines. The stateof human development is assessed usingthe following tools: Human Develop-ment Indices (HDIs), Gender Develop-ment Indices (GDIs), Human PovertyIndices (HPIs) and Gender Empower-ment Measures (GEMs).

Conventional Indicators andHuman DevelopmentConventional economic indicatorsprovide evaluations and forecasts ofeconomic performance. They tend tomeasure progress and development bymonitoring economic output and relateddata, as well as the quantitative outputsof government in relation to key socialprogrammes. As elsewhere in the world,the dominant conception of ‘progress’ or‘development’ in South Africa is basedon economic growth indicators such asgross domestic product (GDP)2 . Typi-cally, the health and vitality of theeconomy is measured against GDPgrowth figures, fractional variations inthe inflation rate, per capita GDP statis-tics and the like. Hence, a shrinkingbudget deficit may be seen as a positiveoutcome or rising capital inflows asproof that the economy has ‘turned thecorner’.

Conventional measures and indica-tors do not, however, accurately reflectthe development or quality of life ofcitizens. A high GDP does not imply



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46

equal distribution, nor does a growth inGDP mean an improvement in stand-ards of living. Indeed, a higher GDPmay even imply lower standards ofliving for the majority of the people. Inmany countries, economic growth hasbeen followed by widespread inequali-ties, with the rich getting richer and thepoor getting poorer.

Thus, the application of conventionalmeasures means that the economy isnot only depoliticised, but alsodesocialised in line with a logic thatseparates the economic from the social.The economic sphere is assumed to bea site of neutral science stripped ofnormative distractions. Government’srole is confined to administering andpolitically defending the required eco-nomic adjustments, while managingsocial policies that blunt the torment of‘the poorest of the poor’ or provide asocial safety net. The eventual benefi-cence of the current growth path ispresumed and the correlation betweenthe fundamental economic imperativesbeing pursued and the socio-economicrealities they generate is seldom con-fronted. Citizens are called upon todisplay “further discipline”, while bothgovernment and business pronouncethemselves “confident that it is thecorrect road and that it will lead to thefuture that this country deserves”.3

Unable to increase social spending inline with manifest need, governmentfinds itself acclaiming the success withwhich it has “protected spending oneducation, health and welfare”.4

National income accounts and GDPare market-oriented. With just a fewexceptions, these indicators are confinedto the value – measured at market prices– of goods and services produced for themarket5 . Such conventional indicators dis-play an obvious gender bias and discountthe roles that women play in the econ-omy and in the continuous reproductionof society. Thus much of women’s workbecomes invisible, and is ‘lost’ in the

counting of formal economic transactions.Not only is the value of total produc-

tion undercounted, but errors are alsomade in comparisons across time andacross countries. For example, GDP hasbeen rising in the United States andmany other northern countries, largelybecause more and more women areleaving the home to join the labourforce and participate in market produc-tion. It is misleading to count the in-crease in business production withouttaking account of the associated loss inhousehold production; to count restau-rant meals and the services of day-carecentres without noting that they havereplaced home cooking and childcare.

A further problem with the conven-tional measure of GDP is its treatment ofdomestic investment. This is limited togross ‘private domestic investment’ andincludes only the acquisition of tangibleassets – such as machinery – by busi-ness and non-profit-making institutions.The acquisition of tangible assets byhouseholds and government is notincluded. Also uncounted are hugeinvestments in intangible and ‘humancapital’ by all sectors – business,households, non-profit organisationsand government. These include invest-ment in research and development, ineducation and training, in knowledgeand in health. South Africa’s apartheidhistory makes investments in humancapital an essential issue for redress andhuman development, especially for theblack majority. All of these areas con-tribute to building people’s capabilitiesand are proxies in the calculation ofhuman development indicators. If theseinvestments are not counted, nationalresource allocations to human develop-ment appear as pure consumption.

Popular notions of progress tend tobe heavily interlaced with the material-ideological outputs of an increasinglyglobalised environment. This posesanother hurdle in the measurement ofprogress and transformation. A recog-



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nised consequence of economicglobalisation has been the tendencytowards increased cultural and socialuniformity resulting from a consumerculture mediated through movies,television, music, sport, fashion and soforth. Brand names, such as Nike, Coca-Cola, Wrangler, MacDonalds, Philipsand Toyota, are the high priests of thisglobal consumer culture. Accordingly,economists might define developmentas the achievement of economic growthand hence improved living standards6 –as an improvement in the use made ofa country’s human, natural and institu-tional resources. In this sense, grossnational product (GNP) provides theobvious measurement of progress. Butfor many people, the visible consumersigns of brand names and popularculture are the symbols of having ‘madeit out of poverty’.

However, these definitions do notcapture other critical aspects of devel-opment, such as the social capacity ofpeople. As decades of experience haveshown, economic growth does not ofitself lead to improved living standardsfor the majority7 , nor does it automati-cally result in increasing their socialcapacity or their participation in main-stream activity. The challenge, there-fore, is to move beyond these notionsand to develop simple alternatives toensure that:

development is not a commodity to beweighed or measured by GNP statistics.It is a process of change that enablespeople to take charge of their owndestinies and realise their full potential.It requires building up in the people theconfidence, skills, assets and freedomsnecessary to achieve this goal. 8

Thus, a country’s human developmentstatus (in contrast to that measured byconventional indicators) is its ability totake care of its citizens and provide anenvironment in which they are able toaccess opportunities and resources andmake choices that enhance their opportu-

nity to live decent lives. This implies thathuman development is not aboutprioritising one aspect of life – such as theeconomy – over others. It is the recogni-tion that, for human beings to develop totheir fullest and lead meaningful lives,they must have economic, social, cultural,political and human rights.

Exploring New Measures ofHuman DevelopmentIt is estimated that a broader measure ofgross capital formation – including allinvestment, tangible and intangible,market and non-market, by all sectorsof the economy – would total morethan four times the conventional meas-ure of gross private investment9 . Such ameasure would take into account thecontributions of all sectors of society –both productive and social reproductive– and add value to the country’s totaloutput. Government inputs or invest-ments in people and in human capitalformation would be seen, not as pureconsumption, but as essential to eco-nomic growth and total output.

Connections need to be made be-tween economic opportunity, socialprogress and human rights, especially ina country like South Africa, where thesewere denied to the majority of thepeople. Transforming the process ofdevelopment requires an analysis ofconcrete and verifiable measures toensure that deprivation and oppressionare being addressed. Social indicatorsprovide standards or goals according towhich progress and regress can beevaluated. The challenge in this reportis to go beyond measuring the aggre-gate well-being of individuals and tomeasure, in addition, changes in institu-tional and structural conditions. Further-more, an attempt is made to developboth objective and subjective criteria inorder to measure human progress andtransformation.



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When considering alternative orpeople-centred indicators of humandevelopment that go beyond normativeor expert-driven criteria, it is importantto examine the perceptions that peoplethemselves have of change and trans-formation.

How ordinary South Africans viewtransformation in South AfricaPeople’s perceptions of transformationare important because it is these percep-tions that determine how they engage inthe process of change. Ordinary SouthAfricans drawn from working class rankstend to hold different views on transfor-mation and change to those held byofficials in the public sphere. Thus, theviews of grassroots or community-basedorganisations are critical.

At a workshop entitled People’s Indi-cators of Transformation and Develop-ment held in Johannesburg in 1999,participants were asked to discuss theirexperiences of change and transforma-tion. In sharing their views, some com-mon and some unique aspects werehighlighted. Listed below are some of thekey elements they saw as fundamental totransformation (see Table 2.1).

The list in Table 2.1 reveals a view oftransformation as understood by ordi-nary South Africans, demonstrating thatpeople are able to articulate a vision ofchange and transformation which ispractical, passionate and searches forempirical, visible evidence of progres-sive change at local (community) level.Such a vision and understanding linksto that of the Freedom Charter and theRDP. However, participants’ perceptionsof transformation since 1994 – of whathas changed and what has remained thesame for the poorest in the country –were mixed. All those interviewedindicated that there are fundamentalchanges at the political level; people arebeginning to see themselves as citizenswith the right to participate actively inall aspects of life. However, this right ismeaningless when, for many, grindingpoverty remains the reality. Some saw“the rich getting richer and the poorgetting poorer”; “globalisation, usury,retrenchments, and the closing of smallbusinesses”; “resources concentrated inthe hands of the rich” and “slow changein rural areas”. The focus on access toeducation, to health care, work oppor-tunities, housing, basic necessities suchas food and water, as needs reflected bypoor people themselves, underscoresthe significance of human developmentindicators.

People experience transformation asslow, contradictory and insufficientlyparticipatory (inclusive of ordinarypeople). The economic policy frame-work (GEAR) is viewed as an obstacleto change. Rural development, or thelack thereof, is a clear concern. Whileparticipants acknowledged the signifi-cant constitutional, policy and legislativechanges that have laid the basis for theattainment of human rights, such demo-cratic gains need to be translated intochanged living conditions for the poor-est.

Table 2.1: People’s Perspectives of Transformation

Transformation entails the following:

• must be practical and visible

• the basic needs of people are met

• rural development and livelihoods

• freedom – bringing life to people

• national unity

• women’s empowerment and liberation

• eradicating poverty and inequality

• government creating an enabling environment for people’sparticipation in their own development

• transmission of information to the masses

• NGO participation

• political, social and economic freedom

• being able to vote

• engaging in policy debate and formulation

• people’s organisation at the grassroots

• a human rights culture

• increasing individual liberties and control

• eradicating the apartheid legacy

• redistribution of wealth.



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‘People’s indicators’ and socialcapacity measuresAs noted, conventional indicators oftransformation and social progress arenot seen to relate directly to the livesand experiences of ordinary citizens.Since transformation and human devel-opment are more than just indicatorsand statistics, they need to be under-stood against the lived experiences andviews of the poorest. A significant trendthat emerges is a deep sense of de-spondency, alienation and disenchant-ment and the sense of a slow pace ofchange. While aggregate indicators reflectchanges in overall conditions, they donot reveal what is happening withinhouseholds and poor communities.

It is for this reason that SouthAfrican indicators of transformationneed to go beyond existing conven-tional indicators (such as GDP) andexisting national-level indicators toinclude social, environmental and(broad) political trends (such as legisla-tive and policy reform and peoples’expressions of satisfaction or dissatis-faction). Such indicators would enable

policy makers to understand the extentof alienation or lack of social capacitythat exists in communities. Social capac-ity measures include the capacity ofindividuals and communities to partici-pate, as active and informed citizens ororganised formations, in decision-making structures at every level ofsociety.

‘People’s indicators’ or social capac-ity measures could add value to theprocess of transformation by providingrich detail and a means of makingcomparative assessments. The capacityof civil society to engage in develop-ment processes is also an indication ofits ability to monitor and assess its owncontribution to development as well asthat of the government and privatesectors. This, in turn, creates a frame-work that facilitates policy debate andeffective communication betweenpolicy-makers and the grassroots. Suchindicators and measures could be usedin national monitoring systems, enhancesocial progress towards SHD and en-hance the participation of the masses inthe development process.

People’s indicators

(community level)

Human

Development Indicators

– Provincial comparisons,

trends in basic needs provision

Household

(household level)

Provincial level

National ldevel

International

comparability

Participation in decision making, organisationalcapacity

Market and non-market

Figure 2.1: A hierarchy of indicators for transformation



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Indicators and measures oftransformation and sustainable humandevelopmentThe central question is, therefore, how tomeasure transformation and sustainablehuman development? What types ofproxy indicators can be used to measuredevelopment and transformation? In thisreport, institutional or structural transfor-mation is examined through nationalmacro policies, legislation, systems,procedures, institutions and structures.Efforts are made to examine the type ofinstitutional and structural changes thathave been made against the ANC’s statedvision and objectives of transformation.Chapter One has reviewed the super-structure and Chapters Three and Four

provide an over-view of institu-tional changesunderway at otherlevels of govern-ance.

Linked toinstitutionalchange measuresand indicators arenormative stand-ards and assess-ments. Thesenormative stand-ards reflect theminimum levelsof provisionrequired for an

improved standard of living. Normativemeasures (qualitative through puts ofgovernment) also provide an indicationof the types of values, standards, orattitudinal change that are required inorganisational behaviour/culture topromote social solidarity and cohesion.Functional measures (quantitative andqualitative inputs and outputs of gov-ernment) are used in this NHDR as toolsto analyse the extent to which servicedelivery, the distribution and redistribu-tion of goods and services, benefit themost vulnerable and marginalisedsectors of society. In addition to thesemeasures and tools of analysis, the HDIis used to provide the basis for compari-son of South Africa’s basic humandevelopment between provinces andcountries.

Measuring HumanDevelopment

The Human Development IndexThe Human Development Index (HDI)has been developed as a measure ofaverage achievements in basic humandevelopment10 . The HDI is a compositemeasure of a country’s development,measured in terms of income, level ofeducational attainment and life expect-ancy (health). As proxy indicators forhuman well-being, they provide a usefultool for analysis since they are measurableand verifiable across countries and time.GDP, therefore, becomes just one of thevariables used in calculating the HDI. As avalue, the HDI ranges between 0 and 1.Where the three proxy indicators orvariables are high, the HDI value will alsobe high. Within these parameters, thehigher the HDI value, the better thecountry’s achievements in basic standardsof living. Human development indices forcountries with the available data rangefrom as high as 0.935 in Canada to as lowas 0.252 in Sierra Leone (Figure 2.2).

Social capacity measures

include the capacity of indi-

viduals and communities to

participate, as active and

informed citizens or organised formations,

in decision-making structures at every level

of society.

Cana

da

Sie

rra L

eone

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1 0.932

0.628

0.430

0.254

0.637

All

deve

lopi

ngco

untri

es

Sout

h Af

rica

Sub-

Saha

ran

Afric

a

Figure 2.2: Human Development Indices:Selected countries



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South Africa is considered to have amedium human development ranking,comparing well with other countries.The estimated HDI value of 0.697 for199811 placed South Africa at 103 in theHDI ranking. Based on this estimate,South Africa compares well with otherAfrican countries and ranks fourth inAfrica behind Seychelles, Mauritius andTunisia. However, calculations done inSouth Africa, based on the latest avail-able data, reflect a HDI of 0.628 (referto Table 2.2). The significance of theNHDR calculation of the HDI is that itplaces South Africa third afterSwaziland and Namibia.

South Africa’s estimated HDI of0.697, calculated in South Africa as0.628, is also higher relative to theaverage HDI of 0.464 for Sub-SaharanAfrica. If one assumes no HIV and aconstant growth rate in population andincomes, then South Africa’s humandevelopment is expected to be 0.654by the year 201012 – based on a growthrate of 0.3 percent per year between1996 and 2010.

This cautious upward trend will onlyacquire real significance if South Africais able to translate economic growthinto improvements in the quality of lifeof the poorest people and address theHIV/AIDS pandemic in a significantway.

The provincial human developmentindicesHDI varies across geographical regionsor provinces in South Africa. As can beseen in Table 2.3, certain provincesperform better than others in terms ofhuman development. Gauteng has thehighest HDI in South Africa and North-ern Province the lowest at 0.531.Gauteng and Western Cape have HDIvalues above 0.7. These put the twoprovinces in the medium HDI value andrank them at around 95 and 102 respec-tively in the world rankings. The rela-tively higher ranking of these twoprovinces highlights the links betweeninfrastructural development, the re-source and asset base and the potentialto be self-sustaining. The growing

Table 2.2: Comparison of HDI estimates with Southern African countriesh

COUNTRIES Lifeexpectancy

at birth(years)

Adult literacyrate%

Real GDPper capita(PPP$)

LifeExpectancy

Index

Educationindex

GDPIndex

(HDI)value

South Africa 53.2 84.6 8,488 0.47 0.88 0.74 0.697

South Africa* 54.7 81* 3,056r 0.50 0.81* 0.58 0.628*

Swaziland 60.7 78.3 3,816 0.60 0.76 0.61 0.655

Namibia 50.1 80.8 5,176 0.42 0.82 0.66 0.632

Botswana 46.2 75.6 6,103 0.35 0.74 0.69 0.593

Lesotho 55.2 82.4 1,626 0.50 0.74 0.47 0.569

Zimbabwe 43.5 87.2 2,669 0.31 0.81 0.55 0.555

Congo, DemocraticRepublic of the

51.2 58.9 822 0.44 0.50 0.35 0.430

Zambia 40.5 76.3 719 0.26 0.67 0.33 0.420

Uganda 40.7 65.0 1,074 0.26 0.57 0.40 0.409

Angola 47 42.0 1,821 0.37 0.36 0.48 0.405

Malawi 39.5 58.2 523 0.24 0.64 0.28 0.385

Mozambique 43.8 42.3 782 0.31 0.37 0.34 0.341

* Estimates based on the 1996 Censusr Based on data obtained from the Reserve Bank of South Africah From the Human Development Report 2000



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inequality between rich and poor in theprovinces is blurred in the aggregateindicators.

There is also a close relationshipbetween HDI values and rural areas.Although HDI has not been computedfor rural and urban areas, a close lookat the provincial HDI values gives someindication of the relationship betweenhuman development status and thequality of life of rural people. As illus-trated in Table 2.3 below, NorthernProvince has the highest proportion ofrural population and the lowest HDI. InGauteng and Western Cape, where only3 percent and 11 percent respectively ofthe populations are rural, there arerelatively high corresponding HDIvalues of 0.712 and 0.702. This is nocoincidence. Poverty is very closelyrelated to unequal development interms of infrastructural and administra-tive capacity, assets, access to informa-tion, knowledge and opportunities.

There is, furthermore, a clear rela-tionship between former homelandareas and HDI values. According to the1996 Census, Northern Province andEastern Cape account for 32 percentand 29 percent respectively of the

population of South Africans living informer homeland areas. These twoprovinces also have the lowest HDI inthe country. Gauteng, Western Cape andNorthern Cape have no former home-land areas incorporated into their prov-inces and have relatively high HDIvalues compared to the other six prov-inces. Low human development corre-lates with high levels of poverty andinequality as shown in the next section.Further, lack of access to basic servicesand infrastructure, including housing,water, electricity, roads and transport,also has a devastating impact on poorpeople.

Poverty and HumanDevelopment

How poor is South Africa?South Africa’s rate of poverty13 (a meas-urement of the extent of absolute pov-erty) is 45 percent. This translates into3,126,000 households or more than 18-million citizens living below the povertyline (pegged at an income of R353). Inmainly rural provinces, the figure risesabove 50 percent. These differences are

3%

31.4% 30%

61%

89%

46%

11%

57%63%

0.712

0.65 0.63 0.628 0.628

0.702

Gau

teng

Wes

tern

Cap

e

Free

Sta

te

Nor

ther

n Ca

pe

Mpu

mal

anga

KwaZ

ulu-

Nat

al

East

ern

Cape

Nor

ther

n Pr

ovin

ce

Sout

h Af

rica

Gau

teng

Wes

tern

Cap

e

Free

Sta

te

Nor

ther

n Ca

pe

Mpu

mal

anga

KwaZ

ulu-

Nat

al

East

ern

Cape

Nor

ther

n Pr

ovin

ce

Sout

h Af

rica

0.6020.531

0.596

Provincial HDI Rural populationby province

Table 2.3: Human Developmentand Rural Population, 1996

Province HDI % of RuralPopulation

Gauteng 0.712 3

Western Cape 0.702 11

Free State 0.650 31.4

Northern Cape 0.630 30

Mpumalanga 0.628 61

KwaZulu-Natal 0.602 57

Eastern Cape 0.596 63

Northern Province 0.531 89

South Africa 0.628 46



ation

53

0

10

20

30

40

50

60

70

Female-headed

households

Male-headed

households

60%

31%

Figure 2.6: Poverty rate amongfemale- and male-headed

households

discussed in a 1999 study by Whitefordand Van Seventer14 and are illustratedin Figures 2.3 and 2.4

Another study, the Poverty andInequality Report (PIR) concluded that,although South Africa is an upper-middle-income country in per capitaterms, most households experienceeither outright poverty or vulnerabilityto poverty. It found that:• 18 million people live in poor

households which earn belowR352,53 per month, per adult;

• 10 million people live in ultra-poorhouseholds earning earn less thanR193,77 per month, per adult;

• 45 percent of the population is rural,but 72 percent of poor people livein rural areas;

• 71 percent of people in rural areasfall below the poverty line;

• three in five children live in poorhouseholds15.Poverty has spatial, racial and gender

dimensions. The human developmentindices for the provinces vary consider-ably. Provincial poverty rates are high-est for the Northern Province (77.9%),Eastern Cape (74.3%), and Mpumalanga(63.9%), and lowest for Western Cape(29.1%) and Gauteng (32.3%). Thus,poverty is deepest in the NorthernProvince, Eastern Cape andMpumalanga, which together accountfor 48 percent of the total povertygap.16 Furthermore, 61 percent ofAfricans are poor compared with 1percent of whites. Womenare more likely than mento be poor: the povertyrate among female-headedhouseholds is 60 percent,compared with 31 percentfor male-headed house-holds.17

Statistics paint a worldof averages, patterns andcontours. They cannotconvey the realities ofintense poverty and in-equality:

its texture: the dull ache

of deprivation, the acute

tensions generated by

violence and insecurity,

the intricacies of survival

and all its emotions -

despair, hope, resentment,

apathy, futility and fury.18

The 1995 South AfricanParticipatory PovertyAssessment described thereality behind the statistics.It reported that millions ofcitizens are plagued bycontinuous ill health,experience extraordinarylevels of anxiety and stress

Figure 2.4: Provincial shares of poverty gap

Western Cape4%

North-West9%

KwaZulu-Natal21%Mpumalanga

8%

EasternCape22%

NorthernProvince

18%

Source: Whiteford and van Seventer - 1999: iv

Gauteng10%

NorthernCape2%

Free State6%

29.1

54.1

57.5

60.9

63

63.9

74.3

77.9

32.3

0 10 20 30 40 50 60 70 80 90

Figure 2.3: Percentage of population in poverty

Percentage

Western Cape

Gauteng

Free State

Northern Cape

North-West

KwaZulu-Natal

Mpumalanga

Eastern Cape

Northern Province

Source: Whiteford and van Seventer - 1999: iv

61%

1%

0

10

20

30

40

50

60

70

Africans Whites

Figure 2.5: % of Africansand whites who are poor



ation

54

(and the accompanying realities ofviolence and abuse vented mainly onwomen and children) and performharsh and dangerous work for lowincomes. There is pervasive demoralisa-tion and fatalism. A sense of hopeless-ness and an inability to alter the condi-tions of life is a defining feature. Yet allthis is matched by the courage andperseverance with which South Africa’spoor attempt to hold these ravages atbay.

Describing her life at the Speak Outon Poverty Hearings in 1998, EmmaMakhaza told commissioners:

I am having seven children and noth-

ing to depend on. I am making bricks

and sometimes it rains and then I can’t

do it. And I collect food and take it to

people. I fetch wood and collect cans

of cold drink and sell them. When I am

without food then I go next door and

if they don’t have, then the children

will have empty stomachs and I cry.

Yesterday I left with my children fast

asleep because they will ask me what

we are going to eat. I am very thin,

because when I bought a bucket of

mielie meal, I won’t eat at all if I am

thinking of the children. They say:

“Mum, you are going to die”.19

Poverty and resource allocationPoverty and standard of living aredirectly related to resource allocationand income. Improved accessibility toresources can contribute to improve-ments in standards of living for manySouth Africans. Human developmentinvolves such basic ingredients asaccess to water, knowledge, health care,employment and other productiveresources. In all cases, one needs to gobeyond the basic statistics and evaluatethe distribution of services betweenraces, provinces and gender.

Government aims to meet the basicneeds of communities through theprovision of basic education (pre-primary and primary), basic health(primary and district level services),housing, water and sanitation. It reportsthe following successes in meeting basicneeds:• 46 percent of the total education

budget is spent on basic education;

Table 2.4: Housing indicators by province, 1998 (Rand value in thousands)EasternCape

FreeState

Gauteng KwaZulu-Natal

Mpuma-langa

NorthernCape

NorthernProvince

NorthWest

WesternCape

RSA

Approved formalresidentialbuilding plansfinanced by theprivate sector1

623 077 570 642 3 200 887 1 000 328 570 589 1 354 662 457 359 524 245 2 633 404 10 935 193

Expected capitalexpenditure bythe public sectoron formalresidentialbuildings

141 704 51 365 358 495 127 787 8 527 50 721 23 478 9 908 228 164 1 000 149

Formal residential buildings completed by the private sector:1

Dwelling-houses 357 792 321 943 1 572 508 479 430 262 610 110 747 208 675 150 802 1 269 788 4 734 295

Flats 9 394 10 902 98 323 36 849 1 673 - - 6 587 177 536 341 264

Townhouses 38 153 22 733 584 008 225 771 32 165 4 047 15 305 45 574 265 294 1 233 050

Other 18 902 762 142 740 354 933 20 942 950 11 198 - 193 792 744 219

Total 424 241 356 340 2 397 579 1 096 983 317 390 115 744 235 178 202 963 1 906 4107 052 828

1 Estimates.- Nil or not applicable.

Source: Stats SA



ation

55

Wat

er d

raw

n fro

m d

ams,

river

s, s

tream

s

Acce

ss to

saf

e w

ater

Pipe

d w

ater

in d

wel

lings

Acce

ss to

tap

wat

er

0102030405060708090

10087%

81%

45%

0

20

40

60

80

100

Whi

teBl

ack

0

20

40

60

80

100

Afric

anIn

dian

Whi

te

97%

75%

27%

98% 96%

12.5%

Figure 2.7: Access to water• 20 percent of the total health budgetis spent on basic health care;

• there is free health care for pregnantwomen and children under six;

• 12 000 primary schools are reachedby a nutrition programme;

• two million people have access tosafe water;

• 491 000 houses have been builtsince 1994;

• the Consolidated Municipal Infra-structure Fund subsidises the cost ofcapital investment in municipalinfrastructure;

• an ‘equitable share’ of nationalrevenue is provided for local gov-ernment; funds are transferred tomunicipalities on the basis of needto enable them to provide servicesto poor communities.The situation in respect of housing

and distribution of services is reflectedin Tables 2.4, 2.5 and 2.6.20

The following analysis of resourceallocation looks at overall provision,then at the disparities between groupsand provinces.

WaterAccess to clean water is a necessity.About 87 percent of the populationhave access to safe water21,22. Approxi-mately 81 percent of the population

have access to tapwater and about 12.5percent of the popula-tion still draw waterfrom dams, rivers andstreams. Forty-fivepercent of SouthAfrica’s populationhave piped water intheir dwellings.

Access to cleanwater varies acrosspopulation groups.Approximately 97percent of whites and75 percent of blackshave access to tapwater. However, only27 percent of theAfrican population havepiped water in theirdwellings, compared toabout 98 percent ofIndians and 96 percentof whites. Access towater also varies acrossprovinces. Almost thetotal population ofGauteng, Free State andWestern Cape canaccess clean water,compared to only 59percent in the Eastern Cape.

Table 2.5: Housing indicators by province, 1998 (numbers)EasternCape

FreeState

Gauteng KwaZulu-Natal

Mpuma-langa

NorthernCape

NorthernProvince

NorthWest

WesternCape

RSA

Approved formalresidentialbuilding plansfinanced by theprivate sector1

16 732 18 871 31 720 8 712 9 660 2 871 5 353 7 339 21 293 122 551

Formal residential buildings completed by the private sector:1

Dwelling-houses 8 460 13 992 17 240 5 349 5 123 3 480 9 374 6 659 11 682 81 359

Flats (units) 78 111 935 188 15 - - 161 2 287 3 775

Townhouses(units) 420 184 4 728 1 628 314 31 105 448 1 653 9 511

Other 15 3 10 104 16 4 11 - 63 226

Total 8 973 14 290 22 913 7 269 5 468 3 515 9 490 7 268 15 685 94 871

1 Estimates.- Nil or not applicable.

Source: Stats SA



ation

56

Table 2.6: Distribution of services by population group of head of household, 19961

Africans Coloureds Indians Whites Unspecified/other

Total

Energy source for cooking

Electricity direct from authority 1 973 996 557 655 237 670 1 437 864 39 503 4 246 688

Electricity from other source 13 687 1 880 274 2 641 136 18 617

Gas 212 989 42 618 2 600 26 723 1 727 286 657

Paraffin 1 886 002 49 117 1 228 1 714 5 800 1 943 862

Wood 1 981 251 80 553 640 3 084 7 692 2 073 219

Coal 314 074 4 046 145 1 623 943 320 830

Animal dung 105 345 351 29 125 219 106 068

Unspecified/Other 46 652 4 987 1 055 8 717 2 218 63 629Total 6 533 998 741 206 243 639 1 482 492 58 237 9 059 571

Energy source for heating



Gas 74 525 8 769 848 22 894 654 107 689

Paraffin 1 254 009 31 559 975 4 612 3 809 1 294 964

Wood 2 275 112 122 616 1 291 9 941 8 764 2 417 724

Coal 715 856 10 547 546 6 360 2 323 735 632

Animal dung 83 680 409 17 174 166 84 447

Unspecified/Other 305 277 39 311 3 270 35 710 4 698 388 266

Total 6 533 998 741 206 243 639 1 482 492 58 237 9 059 571

Energy source for lighting



Gas 32 342 1 867 141 1 043 118 35 512

Paraffin 1 105 936 32 482 862 1 537 3 196 1 144 014

Candles 2 485 860 83 205 1 369 3 174 9 423 2 583 031

Unspecified/Other 57 375 4 197 1 147 11 155 2 316 76 190Total 6 533 998 741 206 243 639 1 482 492 58 237 9 059 571

Main water supply

Piped water in dwelling 1 745 954 532 953 236 805 1 422 557 38 587 3 976 855

Piped water on site or in yard 1 335 644 137 337 2 894 9 467 5 886 1 491 228

Public tap 1 721 853 36 023 924 2 062 5 084 1 765 945

Water-carrier/tanker 106 053 3 949 235 600 367 111 204

Borehole/rain-water tank/well 386 987 13 797 1 386 38 137 1 576 441 884

Dam/river/stream/spring 1 096 334 11 975 493 3 428 4 255 1 116 484

Unspecified/Other 141 173 5 172 903 6 241 2 481 155 970

Total 6 533 998 741 206 243 639 1 482 492 58 237 9 059 571

Toilet facilities

Flush toilet or chemical toilet 2 212 402 590 484 237 838 1 470 664 41 465 4 552 854

Pit latrine 2 844 863 57 716 4 447 3 869 8 699 2 919 594

Bucket latrine 364 605 52 927 280 638 1 734 420 185

None of the above 1 074 691 37 539 428 1 335 4 139 1 118 132

Unspecified/Other 37 437 2 539 647 5 985 2 199 48 807

Total 6 533 998 741 206 243 639 1 482 492 58 237 9 059 571

Refuse removal

Removed by local authority at least once a week 2 430 509 595 389 233 415 1 340 728 41 074 4 641 115

Removed by local authority less often 182 987 8 919 888 6 928 754 200 477

Communal refuse dump 241 012 31 334 658 13 023 1 173 287 199

Own refuse dump 2 719 220 80 172 5 404 91 910 8 879 2 905 586

No rubbish disposal 838 801 12 575 1 287 6 855 3 207 862 726

Unspecified/Other 121 470 12 816 1 987 23 046 3 150 162 469

Total 6 533 998 741 206 243 639 1 482 492 58 237 9 059 5711 Excluding institutions and hostels

Source: Census '96



ation

57

14%People aged 18-22in tertiary education

Figure 2.9: Tertiary education

EducationThe 1996 Census shows that 19.3percent of the population of twentyyears and over have had no access toschooling. Schooling also varies acrosspopulation groups. About 24.3 percent ofthe African population of twenty yearsand over have had no schooling, com-pared to only 1.2 percent of the whitepopulation. Only 3 percent of the Africanpopulation of 20 years and over haveaccessed higher education, compared to24.1 percent of the white population.

The combined gross school enrol-ment ratio for South Africa is 80 per-cent. This implies that 80 percent of thepopulation of school-going age (6-22)are in school. The enrolment ratio forprimary school is 123 percent, indicat-ing that there are people older than theprimary school age who are still inprimary school. Only 14 percent ofpeople aged 18-22 are in tertiary educa-tion23.

About 84.6 percent of the adultpopulation are considered literate.24

Education is looked at in greaterdetail, as both a site and an instrumentfor transformation, in Chapter Five.

LandLand redistribution can play a major rolein human development, particularly inrural areas where land use can contributeto sustainable livelihoods, food, securityand an asset base for rural households.Whereas farming contributes minimallyto rural incomes, many householdswith access to land produce enoughfood for the household to survive25 .This is an important contribution tohousehold food security, householdincome, standard of living and conse-quently human development.

The Restitution of Land Rights Actwas passed in November 1994. Itestablished the Commission on theRestitution of Land Rights and the LandClaims Court, both instruments for

dealing withcases of landalienationthat resultedfrom theenactment ofthe Land Actof 1913 andother relatedpieces ofapartheidlegislation.The LandClaims Courtwas given the samestatus as the SupremeCourt, with the right toappeal either to theConstitutional Court orthe Appellate divisionof the Supreme Court.Successful claimantseither have their accessto or their ownership of land restored, arecompensated, or are granted other stateor publicly owned land.

The land restitution process has beensharply criticised for its slow pace ofdelivery. Less than 1 percent of land hasbeen redistributed through the landreform programme and the greaterproportion of land remains in the handsof a few South Africans. By July 1998,the Land Claims Court had settled onlyten out of more than 26,000 claimslodged with the Commission. A reviewprocess was subsequently instituted toinvestigate bottlenecks in restitution.According to the Department of LandAffairs, by 1999, of the 54,000 landclaims lodged, only twenty-seven weresettled in favour of the claimants (in-volving 167,534 ha of land and about70,000 people).

Land reform, restitution and redistri-bution has been slow to take off andhas not contributed significantly tobuilding the assets or capabilities of thepoor, especially in rural areas whereeffective land use could contribute to

24.3%

1.2%

24.1%

3%0

10

20

30

% of population over 20 who have had noschooling

% of population over 20 who haveaccessed higher education

African White

Figure 2.8: Schooling and access to higher education



ation

58

sustainable livelihoods. In addition,land reform and redistribution has notbeen used as a potential instrument totransform gender relations withinhouseholds by addressing women’s lackof access and control over assets (land)and resources.

Poverty and social securityThe government highlights the fact thatSouth Africa is the only developingcountry in sub-Saharan Africa with anon-contributory social security system,including old age, disability and childsecurity grants. It points to its efforts toincrease the levels of old age anddisability grants and to the introductionof the Child Support Grant, which isintended to support children underseven years of age in poor households.

An analysis of the current socialsecurity system reveals a glaring gap insocial assistance to the poorest andmost vulnerable sectors in South Africa.The system provides only for poorfamilies with children under the age ofseven years and for adults over the age

of sixty (females) and sixty-five years(males). While these forms of assistanceare important targeted contributions topoverty alleviation, they are insufficientand do not, in any case, reach all thoseliving with no income. Furthermore,even if all the intended beneficiarieswere to be reached by the currentsystem, 30 percent of the very poor and40 percent of poor households wouldcontinue to receive no social assistance.

In the context of unemployment andjobless growth, the situation of thesehouseholds is extremely desperate. Inorder to extract themselves from pov-erty, people must receive basic provi-sion to ensure they are able to survive.They must also be in a position to payfor transport to centres where they canapply for assistance. For many of themost vulnerable, there are no house-hold or community resources for this.The need for a basic income or devel-opment grant of last resort to ensurethat households below the minimumliving level are able to survive is ofcritical importance.

Table 2.7: Comparison of HPI estimates with Southern African countriesh

Countries Value(%)

Population who will notsurvive to age 40

(% of total population)1997

Adult illiteracyrate (%)

1997

People without access to Under-weightchildren under

age 5 (%)1990–1998

South Africa 20.2 25.9 15.4 13 " 9

South Africa* 17.46* 9.6* 19.3* 12.5* 37.8b 9c

Swaziland 27.4 20.2 21.7 50 45 10

Namibia 26.6 33.5 19.2 17 " 26

Botswana 28.3 37.1 24.4 10 14 17

Lesotho 23.3 26 17.6 38 20 16

Zimbabwe 30 41 12.8 21 29 15


" 31.7 41.1 32 0 "

Zambia 37.9 46.2 23.7 62 25 24

Angola " 37.7 69 76 42

Malawi 41.9 47.5 41.8 53 20 30

Mozambique 50.7 41.9 57.7 54 70 26

* Estimates based on the 1996 Censush From theHuman Development Report 2000b From theOctober Household Surveyc From Department of Health, South Africa



ation

59

Figure 2.10: Unemployment

Labour absorption rate

52%

42.5%

0

10

20

30

40

50

60

Afric

anm

en

Afric

anw

omen

44%

68%

0

10

20

30

40

50

60

70

80

Afric

anm

enW

hite

men

Afric

anw

omen

Whi

tew

omen

35%

22%

Poverty and human resourcedevelopmentIn order to build people’s capabilitiesto engage in productive endeavour sothat they can compete in a liberalisedmarket economy, a new skills base isrequired. There is an indisputabledearth of appropriate skills and capaci-ties at all levels.

Government argues that it hasprioritised human resource develop-ment. This, it claims, is evidenced byincreased levels of expenditure oneducation and training, skills develop-ment initiatives, fundamental curricu-lum reforms, the initiatives on theNational Qualifications Framework andthe Further Education and TrainingGreen Paper.

Youth training and the retraining ofunemployed people for entrepreneurialactivity have yet to make an impact onlevels of poverty, income earningcapacity and overall improvements inliving standards.

Poverty and job creationGovernment views job creation as themost urgent challenge facing society. Itsees its role as providing an enablingenvironment for the creation of jobs byensuring macro-economic stability toencourage investment. The govern-ment’s community-based Public WorksProgramme aims to provide short-termjob creation and skills training.26

Unemployment is highest amongAfrican women (52%, measured bybroad definition27 ), followed by Africanmen (42.5%). The labour absorptionrate differs widely between populationgroups. In 1997, it ranged between 35percent for African men and 68 percentfor white men and between 22 percentfor African women and 44 percent forwhite women. Urban men were mostlikely to find jobs (40 percent of thoseof working age were formally em-

ployed in 1997), whilenon-urban women had theworst job prospects (only15 percent had jobs in1997).28

Measuring poverty: thehuman poverty indexAccess to basic services andthe meeting of fundamentalhuman needs must beexamined against povertyindicators. According toestimated calculations, R28-billion would be neededmerely to increase theincome of those SouthAfricans living below thepoverty line to R353 permonth. Fully 76 percent ofthis money would have tobe spent in rural areas.

Current definitions ofpoverty include severaldeprivation factors such aslack of access to basic resources andservices. The Human Poverty Index(HPI) is an attempt to capture a broadermeasure of poverty, going beyondmoney or income. Whereas HDI meas-ures progress in a country in general,the HPI is used to measure deprivationsin basic dimensions of human develop-ment and the proportion of the peopleleft out of progress. The HPI was com-puted on the basis of deprivation inlongevity29, deprivation in living stand-ards30 and deprivation in knowledge31.

South Africa’s HPI is estimated at20.232 percent. This indicates that hu-man poverty affects at least 20.2 percentof the population. Moreover, SouthAfrica is lagging in terms of povertyalleviation. In 1998, HPI ranged from3.9 percent in Uruguay to 64.7 percentin Niger. Several countries have an HPIvalue of less than 10 percent33 .



ation

60

Like HDI, HPI varies across prov-inces. Based on the 1996 Census, theWestern Cape has an HPI of 9.68percent; in other words, only 9.68

Table 2.8: Human Development Indices for South Africaand provinces, 1996*

HDI GDI GEM HPI-1

South Africa 0.628 0.625 0.573 17.46

Eastern Cape 0.596 (8) 0.586 (8) 0.618 (5) 23.34 (8)

Free State 0.650 (3) 0.646 (3) 0.567 (7) 15.01 (3)

Gauteng 0.712(1) 0.708 (1) 0.659 (1) 10.45 (2)

KwaZulu-Natal 0.602 (7) 0.596 (7) 0.634 (3) 21.12 (6)

Mpumalanga 0.628 (4) 0.619 (6) 0.549 (9) 21.71 (7)

Northern Cape 0.632 (5) 0.626 (4) 0.614 (6) 17.95 (4)

Northern Province 0.531 (9) 0.525 (9) 0.620 (4) 28.34 (9)

North-West 0.630 (6) 0.622 (5) 0.565 (8) 18.37 (5)

Western Cape 0.702 (2) 0.695 (2) 0.641(2) 9.68 (1)

* The figures in brackets are provincial rankings

Table 2.9: Comparisonof GINI coefficients of

countries at similarlevels of development

Country Ginicoefficient

Poland 0.272

Thailand 0.462

Mexico 0.503

Chile 0.565

South Africa 0.584

Brazil 0.634

Table 2.10: Gini coefficient,1975–1996

1975 1991 1996

African 0.47 0.62 0.66

White 0.36 0.46 0.50

Coloured 0.51 0.52 0.56

Asian 0.45 0.49 0.52

Total 0.68 0.68 0.69

Gau

teng

Wes

tern

Cap

e

Free

Sta

te

Nor

ther

n Ca

pe

Nor

th-W

est

KwaZ

ulu-

Nat

al

East

ern

Cape

Nor

ther

n Pr

ovin

ce

Sout

h Af

rica

9.68

15.01

17.95 18.3721.12

21.7123.34

28.34

17.46

10.45

0

5

10

15

20

25

30

Mpu

mal

anga

Figure 2.11: Human Poverty Index for South Africa and Provinces, 1996

percent of the population in WesternCape are affected by human poverty.Northern Province has an HPI value of28.34 percent, implying that more than28 percent of the population are af-fected by human poverty. Only threeprovinces, Free State, Gauteng andWestern Cape, have HPI values lowerthan the national average. The provin-cial HPI values also show that NorthernProvince, Eastern Cape, Mpumalangaand KwaZulu-Natal have relatively highHPI of more than 20 percent. In theseprovinces, more than 50 percent of thepopulation reside in rural areas. Thissupports the argument that rural peopleare more affected by human povertythan urbanites and that there is moredeprivation in rural areas than in urbanareas.

It must also be noted that a higherHDI ranking does not imply a higherHPI ranking. This is illustrated in Table2.8. For example, Gauteng is rankednumber one in terms of HDI but isranked second behind Western Provincein terms of HPI. Mpumalanga is alsoranked fourth and seventh in terms ofHDI and HPI respectively.

Human Development andInequalityVirtually every social indicator betraysthe extreme inequalities that defineSouth African society. Measured by Ginicoefficient34 , inequality in South Africais among the highest in the world.South Africa is ranked as the third mostunequal society, surpassed only byBrazil and Guatemala. The randomselection of Gini coefficients of coun-tries at similar levels of development inTable 2.9 is instructive.35

Comparisons of inequality betweenraces in South Africa reveal that, meas-ured by the Gini co-efficient, the gapbetween white and African is increas-ing. (See Table 2.10 and Figure 2.12).



ation

61

The final fifteen years of the apart-heid era saw a massive transfer ofwealth from the poor to the rich:between 1975 and 1991, the income ofthe poorest 60 percent of the popula-tion dropped by about 35 percent. By1996, the gulf between rich and poorhad grown even larger. The poorestquintile received 1.5 percent of totalincome, compared to the 65 percentreceived by the richest quintile and the48 percent by the richest 10 percent.Also startling was the extent of poverty:in 1996, the poorest half of householdsearned a mere 11 percent of householdincome.36 Figure 2.13 represents thisgraphically.

Indications are that ‘within race’inequality is beginning to outstrip

‘between’ race inequality. Recent studiesindicate that, at the upper incomelevels, racial boundaries of incomeinequality are falling away.37

Race and income inequalityInequality of income between racegroups is considerable, and accounts for37 percent of total income inequality.Most in the top income quintile arewhites (65% of households) and Indians(45%). Only 17 percent of colouredsand 10 percent of Africans earn incomessufficient to put them into that category.Viewed from the other end of the scale,one finds 23 percent of all Africanhouseholds in the poorest quintile,compared with 11 percent of colouredsand 1 percent of Indians and whites.

Table 2.11: Annual per houshold income of various income classes: 1991 and 1996African White Coloured Asian Total

1991 1996 1991 1996 199 1996 1991 1996 1991 1996

Poorest 50% 3001 2383 35028 29549 8203 8214 18776 17878 4208 3572

41–60% 9519 9120 96444 83506 24392 25967 47155 49569 16956 15624

61–80% 18497 19183 155763 134821 42856 46463 71489 80882 39342 36797

81–90% 33843 37093 228018 207243 70765 77866 104838 125962 83693 78620

Richest 10% 93124 108568 407010 406091 144989 168005 201462 258244 233836 222734

Total 19500 21180 127955 116818 38306 42359 61869 71662 44698 42048

Source: Whiteford and van Seventer, 1999:20

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

Figure 2.12: Gini coefficient: 1975–1996

African White Coloured Asian Total

1975 1991 1996

0.66

0.36

0.460.5 0.51

0.520.56

0.450.49

0.52

0.68 0.68 0.69

0.62

0.47

Source: Whiteford and van Seventer - 1999: p18

Figure 2.13: Growth of per household income, 1991–1996

30%

20%

10%

0%

-10%

-20%

-30%African White Coloured Asian

Poorest 40% 41%–60% 61%–80%

81%–90% Richest 10%

Source: Whiteford and van Seventer - 1999: I



ation

62

40%

20%

60%

0%

80%

African WhiteColouredAsian

1970 1980 1991 1996

Source: Whiteford and van Seventer - 1999

Figure 2.15: Racial shares of income,1970–1996

0

5

10

15

20

25

1%

11%

23%

1%

Whi

te

Indi

an

Colo

ured

Afric

an

0

10

20

30

40

50

60

70 65%

17%

10%

45%

Whi

te

Indi

an

Colo

ured

Afric

an

Top income quintile

Bottom income quintile

Figure 2.14: Top andbottom income quintile, by race

A closer look atmeasures of humandevelopment revealsmore precise contours ofinequality and poverty.The experience of ex-treme poverty is dramati-cally concentrated amongAfricans: 57.2 percent ofAfricans live below thepoverty threshold, com-pared to 2.1 percent ofwhites. The poorest 40percent of citizens re-main overwhelminglyAfrican, female and rural.According to Statistics SA,twice as many female-headed as male-headedhouseholds are in thebottom quintile (26percent compared to 13percent). When race andgender are aggregated,the figure rises to 31percent of African, fe-male-headed householdsin the lowest quintile,compared to 19 percentof African, male-headedhouseholds.38 Overall,the poverty rate amongfemale headed house-holds is 60 percent,compared with 31 per-

cent for male-headed households –underlining the need to prioritise Afri-can women in social welfare, job crea-tion, training and small business devel-opment programmes.

Embedded in such statistics are thedifferent ideological lenses throughwhich inequality can be scanned inSouth Africa. In its official pronounce-ments, the ANC government highlightsthe racial contours of poverty andinequality. Reviewing these indicatorsin June 1998, Mbeki declared:

It helps nobody, expect those who donot want change, to argue that the

difference in income between a seniorblack manager and an unskilled blackworker is as high as the difference inincome between an equivalent seniorwhite manager and an unskilled blackworker and, therefore, that like manycountries, we are now faced with thechallenge of class differentiation ratherthan the racial differentiation that is theheritage of white minority rule.39

The perception of a ballooning blackelite may, indeed, be exaggerated.Between 1995 and 1997, the number ofblack senior managers in the privatesector rose by only 2.3 percent, whilemiddle managers increased by only 1.6

40%

20%

60%

0%

80%

1975 1991 1996

White African Coloured Asian

100%

Source: Whiteford and van Seventer - 1999: ii

Figure 2.16: Racial composition ofrichest 10% of households



ation

63

percent. In thepublic services in1997, whites stillheld 62 percent ofmanagementpositions, althoughthey only com-prised 21 percentof overall staff. Aslightly betterbalance pertainedin senior manage-ment, whereAfricans held 47

percent of posts and whites 43 per-cent.40

Despite this, the ‘deracialisation’ ofinequality is noteworthy. Although stillaccounting for a small share of the richoverall, the proportion of urban Afri-cans in the richest quintile increasedfive-fold between 1990 and 1995 – from2 percent to 10 percent. While overalllevels of inequality are not decreasing,small but significant numbers of Afri-cans are being elevated into the higherranks of income earners. Although thisis not strictly a post-1990 phenomenon,it has accelerated during this period.According to the ILO, inter-racial in-equality constituted 65 percent ofgeneral earnings inequality in 1980; by1993, it had dropped to 42 percent.41

There are several developmentspropelling this process. They includethe ‘deracialisation’ of state institutionsand (although at a slower pace) accessto management positions in the privatesector. Another factor is the improvedemployment and entrepreneurial pros-pects of sections of the previouslysuppressed and excluded middleclasses; while the phenomenon ofblack economic empowerment is,increasingly, being levered to promi-nence with government support.

Black economic empowermentrequirements are now prominent in

government tender, procurement andprivatisation policies. One result is agrowing number of multi-racial businesspartnerships that operate as empower-ment ventures. Despite the setbackssuffered by such ventures since mid-1998, they are expected to snowball asseveral packages of largestate-sponsored contracts and licensesare finalised. These will include infra-structure expansion, construction oroverhaul of private prisons, defencecontracts, new cellular telephone net-work licenses and casino licenses. Theresult could be:

a much more intimate nexus betweenblack-controlled firms and government,analogous to the Apartheid State’slevering of the Afrikaner bourgeoisie. Aculture of patronage is firmly takingroot within the discursive ambit ofblack economic empowerment andMbeki’s ‘African Renaissance’ vision.42

Current statistics are inconclusivebut, in a situation where the poorest 40percent of citizens’ share of income isnot increasing (and is possibly decreas-ing), one must question whether thelimited ‘deracialisation’ of top incomegroups reflects redistribution at theexpense of the poor.

According to an income and spend-ing survey, levels of income disparityamong black households (measured byGini coefficient) rose from 0.35 in 1990

Other

Africans:richest10%

Africans:81-90%

Africans:61-80%

Whites:richest10%

Coloureds:richest 10%

Africans:41-60%

Asians:richest10%

Source: Whiteford and van Seventer - 1999: iii

Figure 2.18: Gainers from redistribution:1991–1996

1.60

%

2.30

%

0%

10%

20%

Seni

orm

anag

ers

Mid

dle

man

ager

s

Figure 2.17:Increase innumbers ofblack seniorand middlemanagers inthe private

sector,1995–1997



ation

64

Africans:richest 10%40%

Africans:81%–90%12%


Whites:richest 10%11%

Coloured:richest 10%6%


Asian:richest 10%4%

Other12%

Source: Whiteford and van Seventer - 1999: pp25

Figure 2.21: Destination of redistributed income

78%

20%

0

20

40

60

80

Eastern Cape Gauteng

Figure 2.19:Percentage of children who live in

poor households

to 0.51 in 1995.43 A 1998report showed evengreater levels of disparity –with a Gini coefficient of0.54, almost as high as thenational figure of 0.58.44

Such indicators maygive rise to concerns that“the national struggle isstopped in its tracks and issatisfied with the co-optionof a small black elite into

the presently forbidden areas of eco-nomic and political power”.45 As thestatistics suggest, if:

left unchecked, the defining trends ofthe transition seem destined to shape arevised division of society, with thecurrent order stabilised around, at best30% of the population. For the rest(overwhelmingly young, female andAfrican) the best hope would be sometrickle-down from a ‘modernised’ and‘normalised’ South Africa.46

Rural/urban inequality is significant,with African and coloured medianincomes in rural areas about half that oftheir counterparts in urban areas.

In the mainly rural Northern Prov-ince, almost two-thirds of residentscook with wood fires, while only 17.8percent have running water in theirhomes and 7.5 percent have tele-phones. More than one-fifth of residents

Source: Whiteford and van Seventer - 1999: pp25

Figure 2.20: Source of income for redistribution

Whites: 41%–60%2.2%

Economic growth91.6%

Whites: 61%–80%3.6%

Whites: poorest 40%2.6%

have no toilet facilities. In the EasternCape, 78 percent of children live inpoor households, compared with 20percent in Gauteng.

Human Development andGenderThere are inequalities in human devel-opment between men and women inmany countries and South Africa is noexception. As discussed above, womenare more likely to be unemployed thanmen, average incomes are lower forwomen, and women are not usuallyrepresented in political, administrativeand managerial positions.

About 21 percent of the femalepopulation of twenty years and olderhave no schooling compared to 17percent of the male population. Theadult literacy rate for women is 79percent compared to 83 percent formen. The combined gross educationenrolment ratio for women is 81 per-cent, which is slightly higher than thatof males (80%). However, the enrolmentratio for women at the tertiary educa-tion level is only 13 percent against 15percent for men47 . It is therefore impor-tant to examine the circumstances thatresult in a higher drop out rate forwomen at tertiary levels.



ation

65

Measuring gender inequalityThe gender-related develop-ment index (GDI) and theGender Empowerment Meas-ure (GEM) are compositemeasures developed tocapture gender inequalities inhuman development. TheGDI is a measure of achieve-ments in basic human devel-opment, adjusted for genderinequality. The GEM meas-ures gender inequality ineconomic and political op-portunities48 .

The Gender DevelopmentIndexThe Gender DevelopmentIndex (GDI) is computed with thesame variables used in computing HDI,adjusted for gender inequalities. The1996 GDI for South Africa is computedas 0.625. This is slightly lower than theHDI value of 0.628, indicating that thehuman development of women islower than that of men. This isunsurprising, considering the fact thatwomen are discriminated against inmany spheres of society.

GDI does not, however, reveal thefull extent of gender imbalances inSouth African society. This is evidentfrom the fact that about 42 percent ofeconomically active women are unem-ployed compared to 27 percent of men.Women also account for 56 percent ofthe unemployed overall. On average,women earn 76 percent of what theirmale counterparts earn. Furthermore,about 35 percent of economically activewomen earn R500 or less per monthcompared to 19 percent of the samecategory of men. African women aremost affected: almost 48 percent earnR500 or less per month49 .

The GDI estimate from StatisticsSouth Africa (0.625), based on the 1996

Table 2.12: Comparisons of GDI estimates with Southern African countries h

GDIvalue

Life expectancy Adult literacy Real GDP percapita (PPP$)

HDI rank Value Female Male Female Male Female Male

South Africa 0.689 56.2 50.3 83.9 85.4 5,205 11,886

South Africa* 0.625* 58.1 51.5 81* 80* 2,436r 4178r

Swaziland 0.646 63 58.4 77.3 79.5 2,267 5,485

Namibia 0.624 50.6 49.5 79.7 81.9 3,513 6,852

Botswana 0.584 47.1 45.1 78.2 72.8 3,747 8,550

Lesotho 0.556 56.4 54.0 92.9 71.0 982 2,291

Zimbabwe 0.551 44.0 43.1 82.9 91.7 1,990 3,359


0.418 52.7 49.6 47.1 71.3 590 1,060

Zambia 0.413 41 39.9 69.1 84.0 540 903

Angola " 48.6 45.4 " " " "

Malawi 0.375 39.8 39.2 44.1 73.2 432 616

Mozambique 0.326 45.0 42.6 27 58.4 647 921

* Estimates based on the 1996 Census.r Based on data obtained from the Reserve Bank of South Africa.h From the Human Development Report 2000.

79%

83%

77

78

79

80

81

82

83

84

Women Men

21%

17%

0

5

10

15

20

25

Women Men

Adult literacy rate

Figure 2.22:Population over 20 withno schooling, by gendercensus, is lower than that

provided by the 2000Human DevelopmentReport. This may be dueto differences in sourcesof information and theyear of estimation. GDIalso varies across prov-inces. Gauteng has thehighest GDI of 0.708 andEastern Cape has thelowest of 0.586. It mustalso be noted that theHDI ranking of provincesdoes not correspond tothe GDI rankings. Forexample, whereasMpumalanga is rankedfourth in terms of HDI, itis ranked sixth in terms ofGDI.

Gender EmpowermentMeasureThe Gender Empowerment Measure(GEM) is a composite indicator ofrepresentation by females in political,administrative, managerial, professional



ation

66

56%44%

42%

27%

05

1015202530354045

Women

Men

Unemployment: total, by gender

Women

Figure 2.23:Economically active population:

% who are unemployed,by gender

and technical positionsand female income share.

In 1996, the proportionof female parliamentarians was 26.75percent50 . This is not high, consideringthat the female share of the populationis 52 percent. It does, however, com-pare well with the rest of the world. Interms of this ratio, South Africa rankedeighth behind countries like Sweden,

Figure 2.24:Administrative/management

positions, by gender

40%

60%

73.85%

0

20

40

60

80

Wom

en in

adm

inis

trativ

e/m

anag

emen

t pos

ition

s

Wom

en a

s %

of

empl

oyed

pop

ulat

ion

Men

in a

dmin

istra

tive/

man

agem

ent p

ositi

ons

Men

as

% o

f em

ploy

edpo

pula

tion

26.15%

Table 2.13: Comparison of GEM estimates withSouthern African countrtiesh

Countries Value Seats inParliament

held bywomen (as% of total)

Femaleadministrators

andmanagers (as

% of total)

Femaleprofessionaland technical

workers(as % of total)

South Africa " 28.4 " "

South Africa* 0.573* 26.8* 26.1* 47.18*

Swaziland 0.381 6.3 24.1 61.2

Namibia " 20.4 " "

Botswana 0.521 17.0 25.7 52.8

Lesotho 10.7 " "

Zimbabwe " 14.0 " "

Congo,DemocraticRepublic of the

" " " "

Zambia " " 10.1

Angola " 15.5 " "

Malawi " 8.3 " "

Mozambique " 30.0 " "

* Estimates based on the 1996 Census.h From the Human Development Report 2000.

Denmark, Norway, Finland, Nether-lands, Germany and New Zealand.More women were elected to Parlia-ment after the June 1999 elections,increasing the proportion of womenparliamentarians to about 30 percent.

Women hold only 26.15 percent ofadministrative and management posi-tions.51 This is minimal in relation tothe fact that 40 percent of the employedare women. This means that womenhave less power in society and lowerincomes than men do. Women holdabout 47.18 percent of professional andtechnical positions52 . This is a signifi-cant shift and closer to the 50 percentshare. This also compares well with therest of the world.

Using the 1996 Census, the GEM isestimated at 0.574. This is slightly lowerthan the 1997 figure as reported in theHuman Development Report 1999. It is,however, higher than the 1995 value.GEM also varies across provinces,ranging from 0.659 for Gauteng to 0.565for North-West.

HIV and the Declining HumanDevelopment IndexThe estimated HDIs for South Africaand the nine provinces for the twoscenarios of ‘no HIV epidemic’ and‘HIV epidemic’, are presented in Ap-pendix 1.

As illustrated in Figure 2.25 the HDIsfor the situation of ‘no HIV’ are increas-ing marginally, whereas those estimates‘with HIV epidemic’ are decreasingsignificantly. Based on certain assump-tions, the HDI for South Africa is ex-pected to increase slightly by 4 percentfrom 0.628 in 1996 to 0.654 in 2010. Onthe other hand, the estimated HDI forthe scenario of ‘HIV epidemic’ shows asignificant decrease from 0.626 in 1996to 0.542 in 2010. This trend implies thatthe HIV epidemic will reverse the gainsmade through other policy initiatives



ation

67

related to basic needs and governance.In human and development terms, thenegative effects of the pandemic willhave long-term consequences for theeconomy, demographic patterns, socialstructure and political stability. Theestimates indicate that HDI will de-crease by 11.4 percent over the nexteleven years.

The effects of HIV on human devel-opment become clearer when onelooks at the ratios between the HDI‘with HIV’ and HDI ‘without HIV’. Table2.14 shows the HDI with HIV andwithout HIV for South Africa for se-lected years. The table also shows theratios between the two estimated indi-ces. This ratio has declined from 0.99 in1996 to 0.84 in 2010.

Appendix 2 illustrates the expectedimpacts of HIV on human developmentin provinces. It shows the ratio ofexpected HDI ‘with HIV’ to that ‘with-out HIV’. This ratio measures theexpected loss of HDI as a result of theHIV epidemic. By 2010, the HDI valuesof almost all provinces will be reducedto below 85 percent of the expectedvalue as a result of HIV.

The estimates also show that the HIVepidemic will affect provinces differ-ently. The Northern province is themost affected by the HIV epidemic andWestern Cape the least affected. TheHDI for the Northern Province and theWestern Cape for the year 2010 will be,respectively, 79 percent and 92 percentof their potential values. Beyond theseindicators, HIV/AIDS has the potential

to wipe out recent gains in humandevelopment. The devastation wroughton the poorest has created more frag-mentation, isolation and a change insocial relations as evidenced by child-headed households and AIDS orphans.

ConclusionKey indicators of human developmentand transformation show that, at anaggregate level, there have been marginalimprovements in conditions for thepoorest. However, the reality, as ex-pressed by the poorest themselves, paintsa very different picture. For many ofthem, poverty has increased, while socialfragmentation and alienation has creatednew tensions and led to new forms ofpathologies – including more violencewithin the household, trade in drugs andchildren and a pervasive sense of thedevaluation of human life. Desperatepoverty, perceived and actual inequalityand a consumer culture that is individual-istic and aimed at instant gratification areeroding the values that ensure socialsolidarity, social cohesion and promotethe links between social, economic,cultural and political development.

This chapter has also highlighted theimportance of comparing conventional

0.8

0.6

0.4

0.2

0

1996 2000 2005 2010Year

HD

I

No HIV

HIV

Figure 2.25:

Human

Development

Indices for South

Africa,

1996–2010

Table 2.14: Human Development Indices for South Africafor selected years1996 2000 2005 2010

HDI with HIV 0.626 0.605 0.565 0.542

HDI without HIV 0.628 0.646 0.650 0.654

Ratio 0.990 0.937 0.869 0.839



ation

68

indicators of development againsthuman development and people’sexperiences. It provides a more accu-rate reflection of the social develop-ment impulses that lead to and rein-force patterns of powerlessness andalienation from mainstream society.Remarkable though South Africa’s roadto transformation has been, all theindicators reveal the need for an accel-eration of the pace of development for

the poorest if the gains achievedthrough political and institutional trans-formation are to transcend the legacy ofapartheid. It is against this backdrop –of the indicators of human develop-ment, of persistent and growing pov-erty, of social inequality as reflected inrace, income and gender imbalancesand the lack of social capacity – thatinstitutional transformation and govern-ance are examined in the next chapter.



ation

69

Notes1 UNDP [1997], 15

2 GDP is often used to rank nations in

relation to one another, particularly for

investment purposes.

3 Manuel [1998a], 4

4 Manuel [1999], 19. As suggested above, the

authenticity of that claim is also controver-

sial.

5 To avoid double counting, they aim to

count only “final product”, excluding

intermediate output. Final product is

defined as goods and services that are

purchased and not resold during the

accounting period.

6 Clarke [1991], 23

7 UNDP [1997]

8 UNDP [1997], 26

9 Eisner [1989]

10 UNDP [1999]

11 UNDP [2000]

12 This assumes a GDP per capita growth rate

of 2 percent per annum.

13 A measurement of the extent of absolute

poverty

14 Whiteford and van Seventer [1999]

15 Poverty and Inequality Report (PIR)

16 Whiteford & van Seventer [1999]

17 Poverty and Inequality Report and Statis-

tics South Africa 2000

18 Bundy [1992], 25

19 Sangoco, CGE & SAHRC [1998], 17

20 Statistics South Africa [1996]

21 Statistics South Africa [1998], The People of

South Africa: Population Census 1996,

Report No. 03-01-11

22 Unsafe water is defined as water drawn

from dams, rivers, streams and spring

23 Tertiary education includes universities

and technikons.

24 UNDP [2000]


26 See further Chapter One.

27 The broad definition includes anyone who

is unemployed and is available to start

work within a week of being polled.

28 Statistics South Africa figures released in

October 1998; see “Detailed picture of

labour losses”, SouthScan Vol 13 No 23, 13

November 1998.

29 This is measured as the percentage of

people not expected to survive at age 40.

30 This is estimated as an average of the

percentage of severely and moderately

underweight children under 5 years,

percentage of people without access to

safe water and percentage of people

without access to health services as a

measure.

31 This is measured as the percentage of

adults who are illiterate.

32 UNDP [2000]

33 UNDP [2000]

34 The Gini coefficient is a number between

0 and 1 which indicates the level of

income inequality within a population. A

value of 0 indicates perfect equality

(everyone has the same income), while a

value of 1 indicates perfect inequality (one

person or household has all the income).

As the Gini coefficient becomes larger and

closer to 1, the extent of inequality

increases.

35 World Bank [1996]

36 ‘South Africa is still suffering inequalities

from racial capitalism’, Parliamentary

Bulletin, 14 April 1998, based on a paper

by Professor Sampie Terreblanche of the

University of Stellenbosch.

37 Whiteford and van Seventer [1999]

38 Statistics South Africa figures, using the

1995 Income and Expenditure Survey and

cited in Mbeki [1998a], 2.

39 Mbeki [1998b], 5.

40 Figures cited by Mbeki [1998b]

41 ILO [1996], 21

42 ‘Ramaphosa’s departure raises key black

empowerment issues’, South Scan Vol 14

No 5, 5 March 1999.

43 Figures cited in ‘Poor still no better off’,

Financial Mail, 19 September 1997.

44 UNDP [1998], 5

45 Slovo [1976], 141

46 Marais [1998], 5

47 Statistics South Africa, 2000

48 UNDP [1999]


50 Information on parliamentary representa-

tion was obtained from the Parliamentary

Liaison Officer.



53 This is the average annual growth rate of

population over the past several 25 years


transforming governance

70 Transforming governance:Institutional change andhuman development

3



71

“Our people, with

their aspirations

and collective determi-

nation, are our most

important resources. In

linking democracy, de-

velopment, human rights

and a people-centred ap-

proach, we are paving the way

for a new democratic order.

The thorough-going democrati-

sation of our society…that

must transform both the state

and civil society, is, therefore,

an active process enabling

everybody to contribute.” 1



72

There have been momentous institu-tional changes in South Africa over

the past six years. Assisted by civilsociety, government has succeeded inoverhauling Parliament and otherinstitutions of governance, entrenchingprinciples of accountability and promot-ing public participation. There has beensignificant progress towards makinginstitutions representative and account-able. If the pattern of the past six yearscontinues, these reforms will continueto take place in line with three carefullybalanced objectives: the maintenance ofstability and order, the promotion of thewell-being of the least advantaged andconformity with a rights-based constitu-tional framework. All three are essentialrequirements for human development.The relationship between democraticgovernance and institutional changethat is responsive to people and humandevelopment is critical.

This chapter assesses institutionaltransformation since 1994 and reviewssome of the main challenges againstgovernment’s objective of promoting apeople-centred society. The first sectioncovers the central institutions of demo-cratic governance, with an emphasis onthe transformation of the nationalParliament. The second section de-scribes and analyses the financing ofgovernmental and institutional transfor-mation. It considers the provincialdelivery of social services, such ashealth, welfare and education, andreviews municipal service provision,focusing on water, electricity and roads.Each of these aspects is critical to thehuman development requirements ofequity and the distribution of basicgoods. There is also an overview of theeffect of donor funding and govern-ment debt on social service delivery.

Institutional Transformation

The official understanding of institutionaltransformationIn an address to the African NationalCongress (ANC), former PresidentNelson Mandela emphasised the need totransform South African government andsociety:

The country we have inherited isessentially structured in a manner [that]denies us the possibility to achieve thegoal of creating a new people-centredsociety. Accordingly, the realisation ofthis objective, from which we will notdepart, requires that we work to trans-form our country, fundamentally.2

The basis for the reform of govern-ment institutions – in both its legislativeand executive branches – is the Recon-struction and Development Programme(RDP). The RDP is explicit about theneed to overhaul and democratise stateinstitutions. As stated in one of its sixprinciples:

The RDP requires fundamental changesin the way that policy is made andprogrammes are implemented. Aboveall, the people affected must participatein decision-making. Democratisationmust begin to transform both the stateand civil society. Democracy is notconfined to periodic elections. It is,rather, an active process enablingeveryone to contribute to reconstructionand development.3

Thus, transformation is defined as anactive process of developing accountabil-ity, openness and public participation ingovernment institutions and activity.Mandela underscored the urgency oftransforming state institutions:

One of the first things that was veryclear to us is that we cannot effectivelyuse our access to political power toeffect a fundamental transformation of

Introduction



73

our society by relying on the oldapartheid state machinery. One of thecentral tasks of the democratic revolu-tion is the abolition of the apartheidstate and its replacement by a demo-cratic state. A complicating factor isthat we must accomplish this task atthe same time as we continue to usethe existing state machinery to imple-ment our programmes.4

That transformation is seen as anongoing process is evident in govern-ment and ANC documents. According tothe Speaker of the National Assembly,Frene Ginwala:

Transformation is not a static thing, nota technical thing that you pull out of atextbook. It is an organisational culture.It is the components, the ways inwhich you function, the objectives youserve, the degree of participation youhave. These are all part of the process.It’s democratising the institution itself.5

These statements clearly anchorgovernment’s vision of transformationwithin a human development perspec-tive. Transformation is expressed as theprocess through which institutions ofthe apartheid government are trans-formed into accessible, open and inclu-sive institutions of a democratic state.

Institutional Transformation atNational LevelCentral to transformation and humandevelopment are the conceptual linksbetween institutional transformation andissues of equity, participation and thedistribution of power and resources.Hence, an examination of the results ofsix years of political democracy requiresa review of the extent of democraticconsolidation by the legislative, execu-tive, independent constitutional bodiesand civil society arms of governance.

In countries where democracy isusually understood as the promotion ofplural political relations, such consoli-dation may appear contradictory. How-ever, in the context of South Africa’sapartheid past, with its divide-and-rule

race-based politics, the task of consoli-dating various interest groups intocoherent political forms and relations isessential. Transformation in South Africamust include the provision of channelsof access, patterns of inclusion, re-sources for action and norms aboutdecision–making that conform to thepromotion of active citizenship6 .

The “People’s Government”:transforming structures, policies, rulesand proceduresAt the national level, the objectives oftransformation have been and continueto be implemented in the legislative andexecutive branches of government. Thetransformation of Parliament is dealtwith in detail below. At the executivelevel, an important instrument was theappointment of a Presidential commis-sion to study the reform of the Presi-dent’s Office and the workings of theCabinet. Some of its recommendationswere considered in the reorganisation ofthe President’s Office after the 1999elections. Even before this, the Presi-dency housed a number of specialinitiatives focusing on poverty, disabil-ity, women and children.7

In this regard, the Constitutionestablished a number of independentinstitutions to support constitutionaldemocracy. These ‘Chapter 9 Institu-tions’8 are designed to protect, promoteand monitor human rights, accountabil-ity and equality within their specificareas of remit. They are the HumanRights Commission9 , the Public Protec-tor10 and the Commission for GenderEquality. In addition, the Office of theAuditor-General audits and reports onthe financial statements and financialmanagement of all national and provin-cial state departments and all munici-palities. Clearly, these bodies have anessential role to play in achievingdemocracy and accountability. Theirmandates explicitly include monitoring,investigating and reporting on govern-



74

ment activity, helping to ensure theopenness and accountability of govern-ment processes and personnel.

Democratic oversight and institutionalpluralism pose important challenges tothe South African government. Theseinclude public expectations about per-formance, the accountability of oversightbodies and the balancing of market-oriented strategies with the interests ofcompeting constituencies.

Parliamentary transformation – a newagenda to consolidate democracyThe Parliament that sat in 1994 oper-ated under guidelines established in the1993 interim constitution. It included aNational Assembly, a Senate and asystem of parliamentary committees,open to the public for the first time.Between May 1994 and May 1996, theNational Assembly and the Senatecombined to form the ConstitutionalAssembly and devoted much of theirenergies to drawing up and finalisingthe Constitution.

Crafting a new constitution accept-able both to all political parties and tothe country as a whole was a majorachievement. It highlighted the calibreof political leadership that came out ofthe democratic movement and thecommitment of the new government topromoting a representative pluraldemocratic state. Passed at the end of1996, the Constitution emphasised theobligation of national and provincialgovernment to consult broadly withcivil society. It also changed the struc-ture of Parliament. In February 1997,

the National Council of Provinces(NCOP) replaced the Senate, with theaim of involving provincial interestsmore effectively at national level.

The two houses of Parliament havedistinct functions. The role of the NationalAssembly is direct representation of thepeople. This is achieved through thenational legislative process and by provid-ing a national forum for raising issues andexercising oversight of the executive. TheNCOP’s role is limited to representingprovincial interests at the national level.This it does by participating in the na-tional legislative process and providing anational forum for public consideration ofissues affecting the provinces.

A critical aspect of the transformationof Parliament has been the promotion ofwomen within its structures. Both theSpeaker and the Deputy Speaker of theNational Assembly are women, as is theChairperson of the NCOP. Just underone-third of committee chairs arewomen. As noted elsewhere, the ANCprescribes that one-third of its MPs mustbe women.

The transformation of the institutionsof Parliament has also resulted in signifi-cant changes in its culture, symbols,customs and orientation. From being theseat of an illegitimate power, Parliamenthas become a vibrant, representativeand people-friendly institution.

The parliamentary committee system –representing multiple publicsAnother significant change was theoverhaul of a committee system thathad, before 1994, simply endorsed theexecutive decisions of the apartheidregime. With the adoption of the finalConstitution in 1997, the expanded roleof committees was clearly articulatedand established, and committees movedfrom the shadow of the executive tobecome what has been described as the‘engine room’ of Parliament.11

Today, committees play a central rolein the promotion of parliamentary

Transformation is defined as an

active process of developing

accountability, openness and

public participation in govern-

ment institutions and activity.



75

democracy, providing a forum fordifferent interests and social forces. Thisis particularly important for SouthAfricans who were formerly denied thepolitical and economic power to makedecisions affecting their lives. It alsocontributes to the effective participationof poor people as a critical element inthe promotion of human development.

The Constitution gives parliamentarycommittees considerable powers. Na-tional Assembly committees may initiateand prepare legislation. They must alsomaintain political oversight of thenational executive. This includes moni-toring the implementation of legislationand ensuring that all executive organsof state are accountable to Parliamentfor their actions. The rules of the Na-tional Assembly provide additionalpowers for their committees. Theseinclude the ability to, “monitor, investi-gate, enquire into, and make recom-mendations relating to any aspect of thelegislative programme, budget, rationali-sation, restructuring, functioning, or-ganisation, structure, personnel, policyformulation or any other matter it mayconsider relevant, [to] governmentdepartment or departments fallingwithin the category of affairs consignedto the committee.” 12

Although NCOP committees mayinitiate or prepare certain types oflegislation affecting the provinces, theNCOP has no oversight function. How-ever, committees of both houses havethe power to summon people to giveevidence or to produce documents.They may ask any person or institutionto report to them on specific mattersand receive petitions, representations orsubmissions from any interested peopleor institutions.

There are forty-four parliamentarycommittees, each with a membership ofbetween fifteen and thirty. Twenty-sixare portfolio (National Assembly) com-mittees, one for each of the twenty-fivegovernment departments, and a com-

mittee on private members’ legislativeproposals. Of the eleven select (NCOP)committees, nine broadly correspond togovernment departments, one dealswith private members’ legislative pro-posals and one with public accounts.There are also joint committees, com-prising members from both houses, adhoc and ‘housekeeping’ committees.Party political representation on thecommittees is proportional to thenumber of seats each party has inParliament.

Changes in the executive, however,may require a review of the existingcommittee system. The executive nolonger operates exclusively within thevarious departmental portfolios; itsdecision-making processes now tend tocut across portfolios. Joint interdepart-mental committees are commonlyestablished to consider policy of com-mon concern, such as the treatment ofjuveniles in custody. Furthermore,under President Thabo Mbeki’s direc-tion, a system of cabinet clusters orcommittees brings ministries togetheraccording to their functional areas, withthe aim of promoting better coordina-tion between sectoral initiatives. If theyare to maintain effective policy coher-ence and oversight of the executive,parliamentary committees will need torespond and adapt to these changes.

The transformed committee systemhas been instrumental in increasing thenational Parliament’s legislative produc-tivity over the past six years. It has alsohelped reinforce the links betweenefficiency and democracy and hassubstantially improved the quality of

Today, committees play a central

role in the promotion of parlia-

mentary democracy, providing a

forum for different interests and

social forces.



76

legislation. Much of the legislationpassed during this period has beentransformative in nature, bringing SouthAfrica’s old system of government intoline with the new constitutional andpolitical order. A significant number ofActs (87 of the 532) passed between1994-1999 dealt with the realisation ofthe social and economic rights con-tained in the Constitution.13 This cre-ates an enabling legislative environ-ment for human development.

There are, however, numerousconstraints to the optimum functioningof committees. Inadequate budgets andstaff limit the ability of many commit-tees to play a sufficiently active role inthe development of legislation. Partydiscipline influences the extent towhich committee members are able tocriticise or revise legislation or policydeveloped by a Minister from the sameparty. Members of Parliament (MPs) areconstrained by the need to balancepolitical oversight of the executive withthe need to understand and take intoaccount the fact that the executive isunder immense pressure from verypowerful vested interests. Indeed, MPsthemselves may experience similarpressures. Despite these limitations,some committees have achieved signifi-cant success in playing the role envi-sioned for them.

Public participation in theparliamentary process: attainingcitizenship and rightsThe importance of public participationis embodied in documents that definethe goals of transformation. The objec-tives of the RDP state: “Democracyrequires that all South Africans haveaccess to power and the right to exer-cise power.” This right goes beyondsimply choosing representatives; itentails the right and ability to exerciseinfluence on all government decisions.By engaging with the government atmultiple levels, the public ensures that

government is accountable, open andtransparent – not only during elections(when citizens typically have the mostdirect input into the character of theirgovernment), but also between them.

Both national and provincial legisla-tures have attempted to establish sys-tems to facilitate public participation, asrequired by the Constitution.14 While thecommittee system provides the primeplatform for public participation, Parlia-ment’s Public Information Departmentseeks to inform, educate and facilitateinteraction between the public, civilsociety organisations, and governmentagencies.15 Yet, despite recognition thatcitizens need to understand their politicaland civil rights and responsibilities, arecent study has highlighted unevennessin how provincial legislatures achievethis.16 If those who have been historicallyexcluded are to claim the benefits ofcitizenship and meet their responsibilities,much more public education and capacitybuilding of the poorest citizens will beneeded. Providing the political space isnot enough. Human development de-pends on the extent to which citizens areable to make use of that space.

Civil society: reclaiming governance forhuman developmentPublic hearings are held on almost allpieces of legislation or policy that affectthe socio-economic status of people.Civil society organisations, in this re-gard, have risen quickly to the challengeof meeting their obligations as activeparticipants in South Africa’s new de-mocracy. Written and oral representa-tions are made to Parliament by a broadrange of interest groups, representingwomen, youth, workers, rural communi-ties and people with disabilities.

As suggested above, however, themost disadvantaged sectors of thepopulation are often unable to partici-pate in the democratic process. Limitedaccess to media, low education levelsand geographic isolation from the



77

centres of government, not to mentionconstraints of time and money, precludemeaningful participation by much ofsociety. However, although those withresources and expertise are often betterable and more likely to participate ingovernment activity, there are a numberof notable examples where civil societyhas successfully impacted on the gov-ernment process in a way that benefitsits most disadvantaged members.

A specific example was the expres-sion of public concern about the intro-duction of a Child Support Grant,introduced to replace the racially dis-criminatory State Maintenance Grant.Following an enquiry, government hadannounced the adoption of a R75 flatrate grant per month for each childyounger than six years of age, targeting30 percent of poor children (threemillion individuals).

Convinced that this was woefullyinadequate, the Congress of SouthAfrican Trade Unions (COSATU), theBlack Sash, the Community Law Centre,the South African Non-GovernmentalOrganisations Coalition, the Commissionfor Gender Equality, the Institute forSocial Development and the Institute forDemocratic Alternatives in South Africa(Idasa) decided to lobby the PortfolioCommittee for a better deal. Throughtheir submissions, they were also ableto show that government figures andcalculations were incorrect because theunderlying assumptions about phasingin the new scheme were wrong.

As a consequence, the PortfolioCommittee chose not to support thegovernment’s policy, but proposed anoption that set the benefit at R135,targeting 80 percent of children be-tween zero–nine years of age. ThePresident’s Office brokered a dealbetween the Ministers of Welfare, Popu-lation and Development and Financeand the grant was increased to R100 –33 percent more than the government’soriginal offer of R75.

This was an important achievementfor civil society and demonstrates thestrong role that public participation canplay in the policy process. Because ofthe strength and persuasiveness of theevidence presented by civil societyorganisations, Parliament was able toovercome the constraints of inadequateresources, lack of experience and lackof expertise. It asserted the powerfuloversight role that is envisioned forparliamentary committees by the Consti-tution and demonstrates both the rela-tionship between democracy and thepromotion of human development andthe impact of institutional transformationin South Africa.

Transformation at ProvincialLevelThe new democratic government hasalso sought to transform provincialstructures of governance. The NCOP,which represents provincial interests atnational level, and the provincial legisla-tures were created to bring governmentcloser to the people. The NCOP is madeup of 10-member delegations from eachof the nine provincial legislatures.

Transformation at the provincial levelis necessarily intertwined with issues ofco-operative governance and intergov-ernmental relations. The basis for inter-governmental relations is established inChapter 3 of the Constitution, entitled“Co-operative Government.” Chapter 3states that government is constituted asnational, provincial and local spheresthat are distinctive, interdependent andinterrelated. Section 41(1) states that thedifferent spheres of government co-operate by “… assisting and supportingone another; informing one another of,and consulting one another on mattersof common interest,” as well as by “co-ordinating their actions and legislationwith one another.”

The decentralisation of power anddecision-making offers greater potential



78

for the representation of women anddiverse interests. This is not, however, anautomatic consequence. Participation inmainstream social, political and economicactivity depends on the types of choicesand access to opportunities that are madeavailable to the poorest people. All thoseinvolved in co-operative governanceshould, therefore, be committed to theeradication of poverty, building thecapacity of poor people and activelypromoting human development. Onlythis will ensure that the transformationagenda does not become subjected toparty political trade-offs.

Intergovernmental relations: policy andlegislative developmentThe drafting of the White Paper on LocalGovernment illustrates the potential ofintergovernmental cooperation. Gener-ally, the development of policy papers isconsidered the prerogative of the execu-tive and they enter the parliamentaryprocess only in their final stages. In thecase of the White Paper on Local Gov-ernment, however, the Portfolio Commit-tee on Constitutional Development tookthe unprecedented step of devising apolicy formulation process that directlyinvolved both the executive and legisla-tive levels of all three spheres of govern-ment (national, provincial and local)throughout the entire process. Thedrafting team consisted of a politicalcommittee, consisting of national parlia-mentarians, a provincial Member of theExecutive Council (MEC) and two localcouncillors, and a technical drafting

committee, consisting of representativesfrom local government, civil societyorganisations, majority party researchersand senior civil servants. A three-phaseprocess (Green Paper, White Paper andBill) was devised, with comment periodsfor each.

Section 76 legislation represents an-other important area for interaction andcollaboration between national andprovincial government. Section 76 of theConstitution describes legislation affectingcompetencies shared by national andprovincial government. In terms of thisprovision, Bills that affect the provincesmust be referred to the provincial legisla-tures (through the NCOP) for their input,and the amendments of the provincesmust be considered. Each ten-personprovincial delegation has one vote, forwhich a mandate is given by the provin-cial legislatures; hence the party thatcontrols the province will almost certainlydetermine the mandate the delegationtakes to the NCOP. The majorities that theANC currently enjoys in seven of the nineprovinces, combined with its strongsecond-place position in the remainingtwo provinces, ensure that the NCOP willvirtually always reflect the ANC’s provin-cial priorities when voting on Section 76Bills.

Through the South African LocalGovernment Association (SALGA), organ-ised local government now also has a rolein the national legislative process. Interms of the Organised Local GovernmentAct, local government structures in eachprovince may nominate six councillors tomake up a pool of fifty-four who partici-pate in the NCOP.17 Although this delega-tion cannot vote, it has an important voicein the legislative process.

Making co-operative governance arealityCo-operative governance provides themeans for different levels of governmentto supervise and monitor one another,providing a valuable tool for the trans-

All those involved in co-operative

governance should be committed

to the eradication of poverty,

building the capacity of poor

people and actively promoting

human development.



79

formation of state institutions. Section100(1) of the Constitution states that,when a province cannot or does notfulfil its obligations in terms of legisla-tion or the Constitution, the nationalexecutive may intervene, taking what-ever steps are appropriate to ensure thefulfilment of that obligation. The na-tional government may also, to theextent necessary, assume responsibilityfor the unfulfilled obligation. It may actto ensure established minimum stand-ards for the rendering of a service, tomaintain national security or to preventthe province from taking unreasonableaction that is prejudicial to the interestsof another province or to the country.One example of this is the assistancegiven by the national government to theFree State Province when it had aserious problem of over-expenditure.

Provincial government is, in turn,required to monitor local governmentperformance. This also involves capacitat-ing municipalities and empoweringthem to fulfil their constitutionalmandate. Formal monitoring takes placethrough the SALGA as well as throughregular MINMEC (Ministers and MEC)forums. At these forums, the nationalMinister responsible for a portfoliomeets with the nine MECs responsiblefor that portfolio at provincial level todiscuss issues of national-to-provincialco-operation within their shared man-date. The rationale for MINMEC forumsis effective service delivery.

Where effective service delivery doesnot take place within a municipality,either provincial or national governmentmay intervene. For example, the EasternCape province took over the operationof the council of Butterworth whenlocal political squabbles brought effec-tive service delivery to a halt. Someinterventions have been the result of afailure by national or provincial govern-ment to capacitate local governmentseffectively. These are known as ‘un-funded mandates’, where functions are

devolved to local authorities without theprovision of the requisite resources forthe discharge of responsibilities. It isobviously essential that the concomitantfunds and the necessary training accom-pany mandates to local government.

It has been argued that most provin-cial governments perform administrativefunctions already delivered either bylocal or national government and thattheir powers need, consequently, to bereviewed. Accusations of corruption andinefficiency have also contributed to thecall to alter the status of the provincesthrough a constitutional amendment. In1999, the Constitutional Review Commit-tee in Parliament focused on the powersof the provinces, with the aim of deter-mining their role in relation to otherspheres of government and providingclarity on issues related to concurrentpowers. Although the outcome of thesediscussions has not yet been released, itis by no means certain that the powersof the provinces will be cut back. In-deed, new legislation is currently beingprepared to clarify and grant borrowingand taxation powers to the provinces,which will enhance their autonomy.

Local GovernmentTransformationIn line with the principles of decentrali-sation and the devolution of statepower, South Africa adopted the princi-ple of local government as a distinctsphere of government. The RDP argued,further, that local development is contin-gent on strong local government.

Local government structures haveundergone extensive reforms over thepast six years. The Local GovernmentTransition Act (LGTA) of 1993 providedthe framework for initial reform. For-merly segregated areas were integratedinto transitional local councils withnominated councillors. Followingcountrywide elections during 1995 and1996, nominated councillors were



80

replaced with elected representatives.The transitional process will be com-pleted later this year (2000), when newcouncillors are elected in terms of thenew legal framework for local govern-ment and the final Constitution.

The functions of local governmentcan be broadly categorised into twoareas: legislative and administrative.Legislative responsibilities includemaking by-laws and interpreting exist-ing local government legislation orordinances. Administrative responsibili-ties include the provision and deliveryof basic services.

The LGTA gives provinces theflexibility to decide on the form of localgovernment structures. Most provinceshave implemented a two-tier system. Atthe primary level are the elected localcouncils, either urban or rural, typicallycalled Transitional Local Councils orTransitional Rural Councils. The sec-ondary level covers larger geographicareas and is referred to in the differentprovinces either as District, Regional orServices Councils. This second tier isconstituted from a number of sources:directly elected councillors,representatives from the first-tier coun-cils and members of several interestgroups – levy payers (farmers), womenand traditional leaders, who are grantedex officio membership.

The Local Government White Paper(LGWP) emphasises a people-centred

approach to local government. This isreflected in the developmental roleprescribed for local government and inits promotion of the participation of thepoorest in development and decision-making structures. Municipalities areurged to “adopt inclusive approaches tofoster community participation, includ-ing strategies aimed at removing obsta-cles to, and actively encouraging, theparticipation of marginalised groups inthe local community.”18 The challengeto government is to ensure participationby those who currently fall outside ofmainstream society and have becomealienated by inefficient or non-existentservice-delivery. As the primarycaregivers in the household, those mostdirectly affected by issues of socialdelivery are women. They should,therefore, be a primary target in policyand planning changes at the local level.

Transforming local government forhuman developmentLocal government faces a massivelegacy of outdated, costly and inefficientmanagerial and organisational systemsthat disadvantage poor people anddiscriminate against women – in prac-tice if not in intention. This implies thatthe present rules-driven culture must bechanged to a culture that is service-driven and developmental.

Politically, local government leadersare often chosen from amongst those whofailed to make it onto national or provin-cial lists and may not, consequently, be intouch with the issues of the poorest. Ofparticular concern in local government islack of recognition of the many ways inwhich patriarchy, custom, religion andother social forces combine to oppressand exploit women. Issues of survival andsafety within households, on the streetsand in workplaces, where women aresubjected to insidious forms of exploita-tion, are not taken into account duringelections or after, even when their votesare being sought.

Local government structures

have undergone extensive re-

forms over the past six years...

The transitional process will be

completed later this year (2000),

when new councillors are elected in terms

of the new legal framework for local govern-

ment and the final Constitution.



81

Another concern is the fact thatalmost 70 percent of the more than 800municipalities are in financial troubleand almost a quarter of them are simplynot viable. This means they have littleor no capacity to address the manyneeds of the citizens they serve, espe-cially the poor. In areas that amalga-mated former homelands, local authori-ties are burdened with large salary billsand have almost no resources to spendon the community. Effectively, this meansthat no new infrastructure investment ispossible in poor areas, despite the dra-matic scale of poverty.

If these factors are not addressed,claims of community participation anddevelopmental local government be-come meaningless. Recognising this,national government is working on anumber of remedies. First, it aims torationalise the number of municipalitiesto reduce the problem of financiallyunviable (without an adequate taxbase) local government. Secondly, itseeks to encourage municipalities toengage in a systematic assessment oftheir core functions, strengths andweaknesses in service delivery and todevelop appropriate and efficient waysof meeting needs. Thirdly, once munici-palities have developed a sound under-standing of the development needs andchallenges, they are expected to formu-late a coherent and holistic strategy toaddress these in the short, medium andlong term within a clear financial plan. Indoing so, they are expected to use a‘partnership approach’. A regulatoryframework for both public-private andcommunity-municipal partnerships iscurrently being finalised.

In order to achieve effective govern-ance at the local level, organisations ofpoor women and people need to bestrengthened through capacity building,resource mobilisation and developmenteducation. Significant infrastructuraldevelopment should be accompaniedby programmes to ensure that women

are able to access work, contracts andthe necessary training. The role ofwomen is central to effective localgovernment. Not only do they under-stand the issues, they continue to be theforce that generates social cohesion andsupports human development against allodds. They should not, however, simplybe used as vehicles for development;they must benefit directly and partici-pate fully in all spheres of life.

Another essential to a people-centredprocess is making the rules for engage-ment and procurement of tenders andother resources simple, accessible andavailable in languages that people canunderstand.

Traditional leadership and governanceThe transformation of local governmentand the ex-officio inclusion of Amakhosi(traditional leaders) in local governmentcouncils have resulted in a degree ofconflict between traditional structures ofpower and the formal structures of localgovernment.

At a fundamental level, systems oftraditional leadership (characterised byinherited rather than elected leadership,deference to authority and emphasis onthe good of the collective over that ofthe individual) seem inherently incon-sistent with the principles of democraticgovernance. However, Amakhosi oftenprovide a voice that represents theinterests of rural and traditional commu-nities that may not be heard throughother means.

Section 211 of the Constitution recog-nises traditional leadership according tocustomary law, subject to the Bill ofRights and other constitutional protec-tions. The Section states that legislationmust provide for the role of traditionalleadership at a local level on mattersaffecting local communities. In addition,legislation may provide for the establish-ment of national and provincial housesof traditional leaders. The White Paperon Local Government identifies the



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responsibilities of Amakhosi. Theseinclude acting as head of the tribalauthority, presiding over customary lawcourts, consulting with the communityregarding their needs, providing thecommunity with information and advis-ing the government on issues of rel-evance through the national and pro-vincial houses of traditional leaders. Inareas of socio-economic development,Amakhosi are expected to make recom-mendations on land allocation and landdisputes, lobby government for devel-opment of their areas and ensurecommunity participation in decisions ondevelopment. Their responsibilities donot, however, include the actual imple-mentation of development projects.

Tensions between local governmentand traditional leadership arise mostoften in areas of overlapping or sharedfunctionality. Surveys and interviewswith members of traditional communi-ties indicate that what is most desired isthe eventual realisation of a co-opera-tive, function-sharing local leadershipstructure, in which Amakhosi and localcouncillors work together to achievedevelopment goals. There is a percep-tion that the two entities have differentand complementary strengths. Localgovernment is seen as the vehiclethrough which the community’s needsare communicated to provincial andnational government, while theAmakhosi are seen as having theknowledge and trust of the communityneeded for the protection of their

interests. It must be noted, however,that, when it comes to the promotion ofgender equality and women’s rights,traditional authorities and custom oper-ate in a profoundly patriarchal system.

As noted above, the Constitutionprovides that legislation “may” be en-acted to establish national and provin-cial houses of traditional leaders toadvise national and provincial govern-ment. Traditional leaders complain thatthis wording allows for the possiblefuture discontinuation of the provincialhouses. Government is also not obligedto take the advice of the houses oftraditional leaders, even on issues thatdirectly affect traditional communities.There have been calls for a more formalrole for the houses of traditional leaderson certain legislative and policy issues.In practice, however, the input of tradi-tional leaders is taken into considerationwhen drafting policy that affects tradi-tional communities. At public hearingson the draft White Paper for Safety andSecurity, held in KwaZulu-Natal in July1998, almost one-third of the presenta-tions were made by traditional leadersor traditional organisations and anumber of the issues raised were incor-porated in the final White Paper.

Institutional Change andTransformation for HumanDevelopment:Recommendations

Enhancing Parliament’s capacity toexercise meaningful oversight over lawand policy makingThe oversight role of Parliament, andspecifically that of the parliamentarycommittees, needs to be clarified andconsiderably strengthened. It is notpresently clear how and when theexecutive can be called to report toParliament, nor what the nature andcontent of that reporting should be.

Of particular concern in local

government is lack of recogni-

tion of the many ways in which

patriarchy, custom, religion and

other social forces combine to oppress

and exploit women.



83

Thus, regulations or even legislation toclarify procedures for parliamentaryoversight are urgently required.

Furthermore, the capacity of parlia-mentary committees needs to be en-hanced so that their members fullyunderstand the links between thedifferent spheres of government, par-ticularly in relation to concurrent andseparate powers. If parliamentarycommittees are to play an enduring rolein the consolidation and enhancementof democracy by promoting humandevelopment in the interests of thepoorest citizens, they must develop anduse their limited resources carefully,nurturing expertise and policy speciali-sation among support staff and withincommittees and improving access tobasic research and technical support.

Creating space for greater involvementin budgetary processesPresently legislatures and civil societyhave very limited opportunity for inputinto the formulation of the nationalbudget. Reasons for this include a lackof parliamentary amendment powers formoney bills, restricted time available forcomment and insufficient supportinginformation. Parliament also has limitedindependent budgetary research capac-ity and the position of government-established monitoring commissions –the so-called Chapter 9 institutions – issomewhat compromised (see below).19

A number of attempts to build thecapacity of legislatures and civil societyare underway. Most derive from outsideof Parliament and consist, on the onehand, of research projects that analysebudgetary trends and the social impactof government spending20 and, on theother, of education and training projectsaimed at improving budget literacy21 .

Parliament needs to be given amend-ment powers in line with internationalbest practice, which suggests, as aminimum, the power to decrease ex-penditure and increase tax.22 In addi-

tion, functional committees should begiven the power to suggest amendmentsto the floor of the house.23 Reschedulingthe release of the draft budget wouldgreatly enhance the capacity of Parlia-ment and civil society to debate andcritique budget recommendations:24 arelease date in December or Januaryshould provide sufficient time for thesegroups to voice their concerns anddevelop informed alternative propos-als.25 The release of the budget shouldbe preceded by the release of theMedium Term Budget Policy Statementin November (as at present), but withmore time allocated to the discussion ofits macroeconomic implications than ispresently allowed. In order to facilitate agreater role for functional committees,more time could be allocated for com-mittee debate relative to that presentlyallocated for general debate on the floorof the house.

The research capacity of Parliamentcould be boosted, firstly, by drawing theFinance and Fiscal Commission (FFC)more closely into the process and,secondly, by collaborating with univer-sity departments. Chapter 9 institutions(such as the Human Rights Commissionand the FFC) play a critical role inproviding independent assessments ofgovernment policy and delivery per-formance.26 Under the present arrange-ments, each of their budgets is locatedwith the department to which they havethe greatest affinity – the very bodiesthey are required to monitor with thegreatest intensity. The obvious conflictsof interest in this arrangement should beeliminated.

Strengthening public participationThe public participation system favoursorganised and well-resourced sectors ofcivil society. “The person we must allhave in mind when we think of publicparticipation is a black African, rural,illiterate woman. We must aspire toreach her,”27 said Frene Ginwala in



84

1995. Three years later, she concededthat this ambition had not beenachieved; thus far, only organisedinterest groups participate. Governmentmust persist in its attempts to find waysto encourage public participation byboth unorganised and organised sectorsof society.

Promoting links between traditional andconstitutional forms of governmentSignificant issues need to be addressedregarding the co-existence of localgovernment structures and traditionalstructures of power. The manner inwhich patriarchy, governance, classinterests and human developmentintersect needs to be understood. Proce-dures, rules and an enabling environmentmust be developed to ensure that thepromotion of equality and the inclusionof the most marginalised sectors ofsociety into decision-making forums arenot compromised.

Public Financing: the Key toInstitutional Change andTransformation

What are the democratic dividends forthe poorest citizens?As noted, institutional change shouldresult in significant, tangible gains forthose who have been excluded frommainstream society. This demands acritical examination of the publicfinancing of the distribution of goodsand services.

The absence of accessible anduniformly detailed information makes itextremely difficult to examine thelinkages between social need, publicpolicy, resource allocations through thefiscus, actual expenditure and socialimpact across all sectors entailed inhuman development. Public institutionsare still emerging from a highly frag-mented past; information management

systems remain biased towards trackinginput data and have yet to be given anoutput and outcome orientation; inputdata is commonly not formatted to allowfor comparison, and analysis acrossspending agencies and actual expendi-ture figures are commonly not available.

Taking these information managementconstraints into account, this sectionfocuses on provincial and local govern-ment – the two spheres most involved inservice delivery – and examines whattheir location within the intergovernmen-tal fiscal system means for delivery.

Intergovernmental fiscal relationsThe Constitution assigns both concur-rent and exclusive powers to all spheresof government. In relation to sharedpowers, the national government isusually responsible for policy formula-tion, while sub-national28 governmentsare responsible for implementation. Thisis the case in all the provincial servicesdiscussed in this section. In the localgovernment sphere, national govern-ment is involved in implementation inthe electricity sector (through the elec-tricity public utility) and the watersector, although largely only in the ruralareas.

According to section 146 of theConstitution, national legislation gener-ally prevails over sub-national legisla-tion. National government is empow-ered to prescribe uniform nationalnorms and standards for delivery, pro-vided the implementing sphere hasadequate resources to meet such stand-ards, raising the question of ‘unfundedmandates’ discussed above. Oversightfunctions between national and sub-national spheres and provincial andlocal spheres are also prescribed.

The most important factor determin-ing the relationship between nationaland provincial government is the vastdiscrepancy between provincial ex-penditure responsibilities and thesources of revenue over which they



85

have power. Provinces generate only 5percent of their revenue needs andreceive the other 95 percent in the formof unconditional and conditional trans-fers from national government. Therelationships between the differentspheres of government are set out inthe Constitution and given financialeffect by the FFC, which determines thefinancial allocations for provinces inaccordance with agreed formulas. Whenmaking provincial allocations for thedelivery of services, the FFC and gov-ernment take into account both demo-graphic factors and the unequal revenuebase of provinces.

Although local government has abroader range of revenue sources at itsdisposal, there is also an unequal distri-bution of wealth between municipali-ties. The erstwhile Department ofConstitutional Development and Provin-cial Affairs29 estimated that local govern-ment could generate over 90 percent ofits revenue,30 a calculation based onbudgeted income and expenditure for1996/97. However, since municipalitiescannot budget for an operating deficit,this estimate must be seriously ques-tioned. The aggregate also hides mas-sive variations in the revenue bases ofmunicipalities. The fact that 151 out of843 municipalities are in deep financialcrisis calls their financial viability intoquestion.31

In order to facilitate a more equitableallocation of resources, all revenuecollected by the national governmentgoes into a common revenue pool fromwhich each sphere has a right to an‘equitable share’. According to theConstitution, the equitable share shouldbe large enough to permit each sphereto perform its functions.

Table 3.1 shows the relative shares ofeach sphere’s allocation of the totalnational revenue pool. The “top slice” isthe amount subtracted from the totalpool before division. By far its largestcomponents are debt and interest

repayments32 . The relative share of eachsphere is declining while the top slice isincreasing. Provinces receive the largestshare of the pool and local governmenta significantly smaller portion. Theshares are based on historical patternsof expenditure. This allocation has beencriticised by the FFC and other group-ings, including the local governmentassociation, SALGA.33

Table 3.2 shows the real per capitatransfers to provinces. The trend in percapita share for all provinces is down-

Table 3.1: Nominal equitable shares for each sphere(conditional grants have been excluded)

R' 000 000 % oftotal

Nominal 1998/9 1999/00 1998/9 1999/00

National Equitable share 81312 80833 37.7% 37.3%

Provincial Equitable share 84069 84202 39.0% 38.8%

Local Govt Equitable share 2316 1673 1.1% 0.8%

"Top slice" 48000 50072 22.3% 23.1%

Total Expenditure 215697 216780 100.0% 100.0%

Source: Dept of Finance Budget Review 1999/2000

Table 3.2: Per capita real provincial conditional and unconditionaltransfers budgeted for 1999 and 2000 and projected for the MTEF

period34

1998 Rands 1998/9 1999/00 2000/1 2001/2

Northern Cape 2520 2486 2510 2516

Eastern Cape 2374 2276 2265 2227

N. Province 2223 2142 2180 2166

Free State 2281 2181 2199 2169

Western Cape 2388 2285 2228 2162

KwaZulu-Natal 2029 1969 2019 2007

North-West 2132 2029 2023 1983

Mpumalanga 1946 1908 1950 1960

Gauteng 1899 1862 1866 1862

Total 2160 2086 2107 2086

Table 3.3: Provincial department budgets(as % of total provincial budget)

1996/97 1997/98 1998/9 1999/00

Health 20.31% 21.59% 23.60% 24.32%

Welfare 17.71% 18.74% 20.12% 19.53%

Education 37.09% 36.48% 40.51% 40.79%

Other 24.88% 23.18% 15.77% 15.36%

Source: Provincial estimates of expenditure (own calculations)



86

ward over the medium term period, withsome of the poorest provinces amongstthe most severely hit (Eastern Cape,Northern Province and the North-Westprovince)35 . The lack of movementtowards equality demonstrated by thistable suggests that there are deficienciesin both the horizontal formula and themanner in which new demographicinformation flowing from the 1996 censusis being phased into the formula.

Three provinces (Eastern Cape,KwaZulu-Natal and the Free State) havebeen ‘bailed out’ by national govern-ment since the discretionary provincialbudgeting and equitable share systemwas introduced in 1997/98. While it iscertain that poor financial managementcontributed to the shortfall, deficitswere confined to particular sectorswhere expenditure did not match thesector specific grants in the horizontalformula. This suggests that the formulaneeds to be revised.

Table 3.3 shows that Health, Welfareand Education (HEW) are by far themost significant expenditure depart-ments at provincial level. Their aggre-gate share has grown dramatically since1996 and currently makes up almost 85percent of provincial budgets. Nationalgovernment expenditure on HEW isrelatively insignificant, except fortertiary education (excluded from thescope of the study).

The imperative is to match nationaltransfers with expenditure obligations ina manner that reflects national govern-ment policy. Although national priorityareas require the co-ordination ofnational government, this should notcompromise the ability of sub-nationalgovernments to respond to regional andlocal needs.

Provincial services: health, welfare andeducationHealth, welfare and education are thethree delivery sectors that criticallyunderpin human development36 . Thissection focuses on the social effect ofpublic delivery on two of the poorestsocial sectors, women and children.

There have been two broad objec-tives in social service delivery in theimmediate post apartheid period: firstly,the redirection of resources to keysocial sectors from sectors previouslyaimed at bolstering apartheid and,secondly, the redistribution of resourceswithin sectors to services geared toserving the poor. There has been somesuccess in addressing the first objective.Fifty-five percent of the national budget(after interest and debt deductions) isspent on social services – a high pro-portion compared to social spending insimilar middle-income developingcountries.37 When compared with thesecountries, however, outcomes are muchweaker, implying that success in respectof the second objective has been lim-ited.

There are substantial inherited in-equalities between and within prov-inces38 , implying that the second objec-tive can also be expressed as the re-dressing of geographic inequalities. Thissection provides some evidence tosuggest that the elimination of inter-provincial inequalities is not complete.Very little information exists regardingintra-provincial inequalities, althoughone example is given below.

The absence of accessible and

uniformly detailed information

makes it extremely difficult to

examine the linkages between

social need, public policy, resource

allocations through the fiscus, actual ex-

penditure and social impact across all

sectors entailed in human development.



87

HealthThe most important policy goal forhealth is to shift resources from tertiaryand secondary health care to primaryhealth care, increasing proportionalexpenditure on primary health careclinics in relation to provincial andacademic hospitals. Primary health careis said to be more effective in achievinghealth outcomes, as it is more efficientand accessible to dispersedpopulations. Provinces have, accord-ingly, been instructed to make this shiftin their budgets. The national impor-tance of tertiary services and their ‘spill-over’ into other provinces has beenaccommodated through a ‘health condi-tional grant’, administered by the na-tional Health Department and ear-marked specifically for academic hospi-tals in four provinces. Recipient prov-inces explicitly budget for these grants.

Table 3.4 shows that, in practice,provinces have spent only marginallylarger proportions of their budgets onprimary health care facilities39 , whilethe proportion allocated to academichospitals has increased proportionatelyfaster. Hence, cuts have occurred insecondary hospital and maintenanceexpenditures rather than in tertiaryservices. This is because provinces donot control the most important costdriver in health expenditure, salaries.For reasons discussed later40 , provincescannot adequately control staff numbersand wage levels. Staff redeploymentwithin this sector is constrained by thenon-substitutability of labour, arisingfrom the specialised nature of healthcare personnel.

Childhood health and nutritionindicators point to the limited impact ofredirection and redistribution to adistrict health system,41 with the indica-tors reflecting the lingering effects ofpast discriminatory social policies. Poorchildren continue to suffer and die fromdiseases such as tuberculosis, measles,typhoid and diarrhoea. Childhood

stunting is a major problem in thepoorer provinces, pointing to severechild health and nutrition problems inthese areas. Although the average infantmortality rate (IMR) for South Africacompares well to that for Latin Americaand East Asia, extreme provincial dis-parities mean that a child born in theWestern Cape has a 37 percent betterchance of survival pastthe age of one year thanits counterpart in theEastern Cape.

Children are particu-larly susceptible to theravages of the HIV/AIDSepidemic. In 1994, 2.3percent of all babies inSouth Africa were HIV-infected and 10.7 percentof all reported AIDScases up to 1994 werechildren. There are alsoincreasing numbers ofAIDS orphans in SouthAfrica. While data on theincidence of HIV/AIDSamong children is not readily available,HIV prevalence data indicate that 16.1percent of all South Africans were HIVinfected in 1997 compared to 14.1percent in 1996 and 10.4 percent in1995.42 This has serious implications forhealth care and financing. Existinglevels of health provision are unablecope with such a rapid increase.

Table 3.4: Provincial Health programmesas percentage of the total health budget

1996/97 1997/98 1998/9 1999/00

Administration 3.76% 3.34% 3.73% 3.37%

District Health Services 37.68% 39.15% 39.13% 38.44%

Provincial Hospital Services 29.64% 27.42% 28.64% 28.60%

Academic Health Services 20.35% 21.38% 21.27% 21.84%

Health Sciences 2.19% 1.82% 2.07% 2.03%

Health Care support services 2.87% 3.01% 1.89% 3.28%

Health Facilities Developmentand Maintenance

4.06% 4.12% 3.54% 2.66%


10.4

16.1

14.1

0

2

4

6

8

10

12

14

16

18

1995 1996 1997

Perc

enta

ge o

f pop

ulat

ion

Figure 3.1: Population infectedwith HIV, 1995–97



88

Table 3.5: Provincial Welfare programmesas percentage of total welfare budget

1996/97 1997/98 1998/99 1999/00

Social security 83.64% 83.17% 85.73% 85.68%

Social Welfare & Socialassistance

8.64% 8.58% 7.05% 7.59%

Other 7.72% 8.24% 8.22% 6.74%


WelfareWelfare policy has two broad policyobjectives: firstly, the extension ofsocial security to all eligible citizensand, secondly, the shift away fromexpensive institution-based models ofcare towards community-based servicesand prevention strategies.

In practice, emphasis has beenplaced on achieving the first objective,with positive impacts in provinceswhere a large number of people werepreviously precluded from receivingrace-based grants (such as the StateMaintenance Grant). With the introduc-tion of the non-racial Child SupportGrant, provinces such as the NorthernProvince and Eastern Cape have had tospend more on social security, whileprovinces like the Western Cape, wherethe opposite is true, have been able tospend less. Social assistance, providedas non-contributory forms of socialsecurity, are means-tested and offer themost direct poverty reduction strategy.They include social old age pensions,disability grants, care dependency andfoster care grants.

In general, provinces have spent alarger proportion of their budgets onsocial security as more people haveentered the system. The result has beena decline in spending on social welfareand social assistance programmes.Policymakers have suggested that theratio of social security to social welfareand social assistance programmesshould be close to 80:20. However, thiscannot be achieved without a substan-tial decrease in social security paymentsor a drastic increase in the resources

available to provincial welfare budgets –both of which seem unlikely. Thisdilemma is heightened by the increaseddemand for social security in the face ofgrowing unemployment and joblessness.

The only available ‘outcome’ indica-tor for the welfare sector is the childpoverty rate, which currently stands at60 percent.43 Again, there are starkprovincial disparities: in the EasternCape, 78 percent of children live in poorhouseholds compared to 35 percent inthe Western Cape. These figures suggestthat more focused targeting is essentialin welfare services if child poverty inSouth Africa is to be reduced.

EducationEducation policy has two broad objec-tives: firstly, the introduction of tenyears free and compulsory education forall children and, secondly, a shift to-wards providing more non-formaleducation services – for example, adulteducation, early childhood developmentand special school education.

The key measure in meeting the firstobjective is the incremental removal ofracial and geographic disparities inservice provision. Although the originalprogramme of redeployment and re-trenchment of teachers floundered, thecurrent programme of intra-provincialequity in learner-educator ratios isnearing completion. Norms and stand-ards that benefit the poor now guide thedistribution of funds for books andstationery and the setting of school fees.The Schools Act (No. 84 of 1996) re-quires that policy on the distribution ofpublic funds to primary and secondaryschools must come on line this year(2000).44

Nevertheless, schools in poor areasremain significantly under-resourcedrelative to schools in wealthy areas. Thisis because attendance patterns based onincome, and to some extent race, haveremained unchanged. Each schoolcontinues to service a single income



89

group and is located in the area wherethat group resides. Rich schools rely onparents and the private sector for themajority of their funds. Thus, although adisproportionate share of public fundsis being channelled to poor schools,there is no clear reduction of inequalitybetween schools in richer and poorerareas.

Table 3.6 shows that, althoughprovinces have allocated progressivelylarger portions of their budgets toprimary and secondary schools, therehas been little systematic shift in ex-penditure to non-formal education.

Given these constraints, there isevery reason to believe that intra-provincial inequalities in provincesformed from the core of old provinces45

(in which there were pockets of high-level service delivery) have still notbeen addressed. This conclusion issupported by the finding of the Me-dium-Term Expenditure FrameworkEducation Sectoral Review Team. While,on average, the Western Cape complieswith suggested norms for the learner-teacher ratio of 35:1, there are rich areaswith ratios as low as 26:1 and poorareas where ratios are as high as 70:1(1998).

The most widely available educationindicator is the matriculation pass rate,which shows a disturbing declinetowards the 50 percent level.46 Provin-cial disparities in matriculation passrates are even more disconcerting.Better resourced provinces – WesternCape, Northern Cape and Gauteng –achieve the highest pass rates whilepass rates in poorer provinces like theNorthern Province and the Eastern Capeconsistently fall below 50 percent.

An assessment of provinces as deliveryinstitutionsBefore 1994, the public administrationwas extremely fragmented, with four-teen different race-based administra-tions. Homelands, although nominally

autonomous, were highly dependent ontransfers from the national government.Provinces were merely administrativeextensions of national government, fromwhich they received all policy instruc-tions and sector-specific funding.

Since 1994, all provinces except theWestern Cape and Gauteng have had todivert considerable resources intomerging and rationalising disparatesystems and administrations into single,coherent administrations. The histori-cally uneven distribution of resourcesduring the apartheid years has, however,resulted in provinces of vastly differenteconomic and demographic profiles.These differences affect the demand forservices, the ability to provide them andthe skills-bases of provinces. Provincesincorporating former homelands haveabove-average population densities andlargely rural populations. These factorsresult in a relatively higher demand forsocial services, a lower ability to payuser charges and higher service provi-sion costs. A further feature of theseprovinces is the lack of basic socialinfrastructure to support government orprivate sector interventions.

At least four of the current provinces(Northern Province, North-West,KwaZulu-Natal, and Eastern Cape) wereeconomically underdeveloped by previ-ous governments47 . The national gov-

Table 3.6: Provincial Education Budget expenditure by programme

1996/97 1997/98 1998/99 1999/00

Administration 5.95% 5.48% 6.22% 4.49%

Public Ordinary SchoolEducation

82.33% 81.58% 82.67% 84.50%

Private Ordinary SchoolEducation

0.76% 0.90% 0.65% 0.61%

Education in SpecialisedSchools

2.74% 2.97% 2.89% 2.94%

Teacher Training 2.40% 2.35% 2.08% 1.97%

Technical School Education 1.96% 2.18% 2.01% 1.98%

Non-formal Education 0.68% 0.95% 0.83% 0.89%

Other 3.18% 3.58% 2.63% 2.62%




90

ernment has introduced measures toaddress these disparities, includinglinking per capita funding of provincesinversely to the wealth of the provinceand initiating and driving ‘spatial devel-opment initiatives’ (SDIs) in thoseprovinces. The outcome of these initia-tives has yet to be assessed.

Factors inhibiting reprioritisation

Staffing rigiditiesProvinces have little control over theirwage bills. This is because wage levelsare set through centralised nationalbargaining and the ‘sunset clauses’agreed to by parties during the pre-1994 negotiation period (to protectpublic sector employees from unilateralretrenchment). The increase in person-nel expenditure has squeezed out bothnewly identified spending priorities andspending on essential consumables,capital and maintenance. It also inhibitsthe retention and acquisition of skillswithin delivery programmes. Skilledpersonnel are often retained on short-term contracts, providing relatively easyopportunities for staff shedding in theface of personnel budgetary pressures.Another human resource rigidity is therelative non-transferability of skills. Thisis due both to the lack of a pool ofspecialised skills required for a numberof services within provinces, as well asthe unwillingness of employees to berelocated and the lack of incentives orsanction to impel them to accept relo-cation.

One of the results of the lack of aretrenchment tool and the non-transfer-ability of skills is the high number ofsupernumerary workers who havespilled over from former administra-tions into new provinces. The esti-mated cost of supernumeraries isbetween R1.5 and R2 billion per year.The Eastern Cape spent R2 billion onsupernumeraries over the four yearsbefore 1998.48

Another factor behind escalatingpersonnel expenditure is the presenceof ‘ghost workers’ – that is, ‘workers’officially on the books of a province,but not providing labour services.Salaries are embezzled in this manner.‘Ghost workers’ are confined to theNorthern Province, the Eastern Capeand KwaZulu-Natal. In 1997, the gov-ernment estimated that there were 47000 ghost workers in the public serviceat an annual cost of approximately R5billion.49 Until this situation is ad-dressed, much needed resources toaddress human development prioritieswill remain limited.

Lack of financial planning and managementcapacityProvinces are unable to cost policiesaccurately. They lack planning skillsand sufficient information on the de-mand for services and the cost of deliv-ery options. The lack of expenditureoutput and outcome data inhibits theirability to monitor the effect of existingpolicy and to steer implementationtowards greater impact.

Intergovernmental relationsOther inhibiting factors originate in thesystem of intergovernmental relations.These relate to the co-ordination offunding transfers with the devolution ofresponsibility and the co-ordination ofpublic sector reform with budgetaryreform.

‘Unfunded mandates’ squeeze outnon-mandated expenditure and con-strain broad reprioritisation acrosssectors. There are only two clear casesin which spending mandates have beenissued to provinces: the levels of socialwelfare transfer entitlements and thesalary scales of public servants. Theupward trends in spending levels onsocial welfare and salaries, taken withthe relative proportional decline in theprovincial equitable share, suggest thatthese spending mandates are ‘unfunded’.



91

The government has embarked on afar-reaching plan to reform budgetprocesses and systems in South Africa.Despite the absence of a budget reformWhite Paper, the broad approach isidentifiable in several budget policydocuments, including the recent PublicFinance Management Act (Act 1 of1999) and the annual Medium TermBudget Policy Statements. These docu-ments, among others, are closely relatedto the public finance reforms adoptedfirst by New Zealand and Australia.50 Asis the case in several countries pursuingbudget reform, the Finance Departmenthas taken a lead in designing andfacilitating the process. These reformsmay promote transparency and civilsociety participation in the budgetprocess.

There is a close relationship betweenbudget reform and civil service reform.Unless reprioritisation of expenditure ismatched with a transformed deliverystructure, South Africa will not be ableto improve the flow of resources to-wards poverty eradication.

Municipal Services: Electricity,Water, Sanitation, Roads andTransportAs with provinces, the Constitutiondefines local government’s exclusiveand shared competencies in relation tothe powers of other spheres. However,the vision for local government con-tained in the White Paper on LocalGovernment appears to be widely usedas a working definition, both internallyand externally. “Local government isresponsible for the services and infra-structure so essential to our people’swell being, and is tasked with ensuringgrowth and development of communi-ties in a manner that embraces commu-nity participation and accountability”.51

It is difficult to assess whether localgovernment is fulfilling its responsibili-

ties because of the large number ofmunicipalities (843) involved, hugedifferences in capacity, the array ofdifferent types of communities theyserve, as well as the ongoing restructur-ing of this sphere of government. Theseproblems are aggravated by a paucity ofinformation, both aggregated anddisaggregated, on municipal objectives,outputs and outcomes. This sectionlooks at four national and municipalpolicy goals (water, electricity, sanita-tion, and roads/transportation) andgauges the extent to which five munici-palities of differing size and capacity areable to budget for and deliver them.52

Each municipality has been labelledaccording to the type of settlement itserves. These are listed below:• Rural municipality (a ‘deep’ rural

area)• Semi-urban municipality (a former-

homeland capital consisting of alargely residential core surroundedby rural areas)

• Medium-sized town municipality• Secondary city municipality• Metropolitan (local) municipality (a

region within a metropolitan area)

Water and sanitationNational guidelines define a basic levelof water service as the provision of aclean, safe water supply of 25 litres percapita per day within 200 metres of eachhousehold, and basic sanitation as theprovision of an on-site service (venti-lated improved pit latrine).

A study conducted in the WesternCape Province highlights key issuesaffecting the provision of basic servicesand equity. It shows that the three ‘mosturban’ municipalities provide water totheir communities at a profit. The metro-politan municipality increased its waterbudget by 300 percent in 1998/99,reflecting the large number of infrastruc-ture projects completed in informalareas in the preceding four years.53 Themedium-sized town cross-subsidises a



92

basic level capital investment for waterfrom within the water service, andshowed similar budgetary growth.54

Through a similar cross-subsidy mecha-nism (supplemented by internationaldonor assistance), an upgrade schemewas extended to 6 351 households inthe secondary city in the period 1994 to1998.55 There are still, however, 20 000houses without metered water andbasic levels of sanitation.

Due to negligible revenue bases, thetwo most rural municipalities in thestudy rely on transfers to fund bothoperating and capital expenditure. Therural municipality budgeted for anamount of R580 000 in 1997/98, withthe aim of increasing water access forapproximately 10 percent of its popula-tion. The required transfers were,however, delayed.56 Water in the semi-urban area is provided by a watercommittee, which oversees a projectfunded and established by the provin-cial Department of Water Affairs.57 Withthe exception of hospitals, clinics andschools, there is no formal sanitationprovision in the rural municipality.58

On the advice of the Department ofWater Affairs, the council budgeted fora Department grant in 1998/99. WaterAffairs has since reduced the grant offerto R600 000.

ElectricityEskom (the electricity generating andtransmission public utility) and theNational Electricity Regulator are cur-rently promoting an ambitious electrifi-cation programme with some success.The aim of the programme was toelectrify 450 000 households a yearfrom 1996 to 1999.59 While municipali-ties have first rights to distribute elec-tricity in their areas, Eskom distributesto areas not covered by municipalities,such as former township and ruralareas.

In the rural municipality, althoughno figures are available, electrification

is extremely low.60 In the semi-urbanarea, the suburban residential part ofthe municipality is electrified and serv-iced directly by Eskom, while the ruralpart of the council is not electrified.Neither the district council (a regionallocal government body composed ofboth urban and rural local councils) northe local councils have budgeted forelectrification. Despite the subsidies atits disposal, Eskom does not appear to beextending electricity into the rural parts ofthese councils, probably because it hasjudged the investment non-viable.

In contrast, the three ‘most urban’councils are able to provide electricityat a profit. In financial terms, electricitydepartments are the largest departmentsin these municipalities. The metropoli-tan municipality generates over 50percent of its total operating budgetfrom electricity, while electricity ac-counts for over 45 percent of the coun-cil’s total operating expenditure.61 Thesecondary city generates 46 percent ofits total revenue from the trading serv-ice.62 It also spent just under R7 millionin 1997/98 on the extension and up-grading of electricity in informal areas,approximately 3 percent of its totalcapital budget.

Roads and transportationBecause of the dispersed nature ofSouth Africa’s settlement system, theprovision of good roads and publictransport is critical to economic andsocial integration and performance.Informal townships and rural areas areespecially inaccessible. Local govern-ment’s responsibilities include theprovision and maintenance of municipalroads (and associated storm waterdrainage), the provision of publictransport and the management andregulation of traffic, including publictransport. Yet, except in some of thelarger urban areas, local governmenthas reduced its provision of publictransport. Municipalities with a revenue



93

base rely on tax revenues and anysurplus on trading services for most oftheir funding of this service, althoughsome subsidies are available fromprovinces for the maintenance of roadsdesignated as provincial.

The policy of the metropolitanmunicipality is to “reconstruct roads,foot-ways and storm-water infrastructurein disadvantaged areas according to aprogramme based on local communityneeds, environmental upliftment andavailable funds”.63 In 1998/99, R87million, or 12 percent, of the metropoli-tan capital budget was spent on extend-ing and upgrading roads.

Most roads in rural areas are gravel,which is more maintenance-intensivethan tar. These roads are frequently notmaintained and are commonly in verypoor condition. Extending road infra-structure is extremely costly in ruralareas. In the semi-urban area, the onlyrecent road investment was in 1997/98,where a capital transfer of R6.3millionwas used to extend a gravel bus routeby three kilometres.64 In the ruralmunicipality, a recent case concerns theallocation of a R8.2 million grantaccessed by the District Council fromthe province across its area of jurisdic-tion.65 The length and condition ofexisting roads and population permunicipal area were used as allocationcriteria. This effectively confined fundingto district roads; local roads connectingvillages to social facilities were not con-sidered for upgrade, although these maybe more beneficial to residents.

Institutional change has resulted insome gains for poor communitiesthrough the extension of basic socialservices. However, if democratic divi-dends are to be experienced by themajority in a more tangible way, betterarticulation between the differentspheres of government is required. Inaddition the governance process mustinclude a clear commitment to develop-ment goals and people.

The Effect of Donor Funding onSocial Service DeliveryThis section examines the contributionmade to government programmes inkey social sectors by official develop-ment assistance (ODA).66 A study on theimpact of ODA in promoting genderequity is used to demonstrate issues ofconcern.67 Despite efforts by the govern-ment to create formal channels fordonor financing and control its flows,very little information on the source,destination and outcome of ODA fundshas been released into the public do-main. Compared with other developingcountries, ODA in South Africa contrib-utes a relatively small portion to thegovernment’s budget (around 2 per-cent).68 Given the budget rigiditiesdescribed above, however, this couldplay a vital role in reprioritising deliveryactivities towards poverty eradication.

ODA takes three basic forms: techni-cal assistance, concessional loans andoutright financial grants. The interna-tional shift away from technical assist-ance has not affected South Africa. Thismay be because of the mix of donors,the need for managerial expertise duringthe transition, the relative availability ofgovernment funds for direct servicedelivery and the availability of contract-ible local expertise.69 Another reason isthe relative ease in providing technicalassistance, given the RDP controls onfinancial transfers to government.Concessional loans amounted to about athird of the total amounts pledged forthe period 1994-9. The government hasgenerally discouraged loans in an effortto avoid the debt trap experienced byother developing countries.

Funds from the European Union(EU), USAID and Japan together accountfor 70 percent of the total.70 South Africareceives a significant share of the piefrom the EU, USAID, the United King-dom, most Scandinavian countries,



94

Australia and New Zealand. For in-stance, the EU’s assistance71 representsits largest programme anywhere in theworld.72 In 1996, South Africa received55 percent of the total of US$500 mil-lion allocated by USAID to nine South-ern African countries.73 Japan andGermany, however, give below averageamounts to South Africa.

After 1994, most donors shifted alarge part of their funding from NGOsto government.74 However, virtually allforeign government agencies (exceptItaly, Cuba and Japan which giveexclusively to government) say theyprovide some assistance to both gov-ernment and NGOs. Although SouthAfrica would not normally qualify foraid because of its level of economicdevelopment, the international commu-nity remains committed to addressingsome of the legacies of apartheid. Mostdonors indicate that they expect theassistance to be renegotiated beyondthe end of the current period.75 Theonly donors who are clear when aidwill stop are Norad (in 2005), Denmark(in 2001) and Switzerland (2004).

With a few exceptions, donor alloca-tions reveal a focus on poverty allevia-tion and are consistent with the govern-ment’s funding patterns. All donorfunds are required to go through aspecial RDP Fund, with oversight by theInternational Development Co-opera-tion Directorate in the Department of

Finance.76 This meansthat most ODA going togovernment should be‘on-budget’. The pictureis, however, obscured bythe fact that significantamounts of ODA-fundedpolicy work and institu-tional transformation ingovernment are carriedout by NGOs. Hence,although the majority ofdonors claim to split theirfunds equally between

government and NGOs, the final destina-tion of these funds is difficult to track.

The use of the RDP Fund as a conduitfor ODA allows government to regulatethe flow of donor aid in accordance withits priorities.77 This, together with SouthAfrica’s lesser dependency on aid, limitsdonors’ influence on policy.78 An exampleof this independence was the introductionof free health care for pregnant womenand children, which ran counter to donorencouragement of user fees generallydiscouraged in other countries.

Most agencies have a stated commit-ment to gender equity and recognise theimportance of gender issues in allocat-ing aid,79 although, when giving exam-ples of gender funding, they oftenmention NGO rather than governmentactivities. Almost all are committed tomainstreaming and integrating genderissues. For several, gender is a ‘cross-cutting’ issue to be considered in allprojects. Yet, examples of fundingspecifically linked to gender or women,reflect assistance to national machinerymore often than programmes or initia-tives within ‘mainline’ programmes. Atpresent, it seems that funders may berelying too heavily on gender machineryto achieve integration. A number ofdonors provide support to the Commis-sion on Gender Equality, Women’sEmpowerment Unit, Office on the Statusof Women and departmental genderunits.80

Donor support for development raisesa number of concerns. Most important isthe issue of measures taken to ensureprogramme stability and sustainability,given the finite life span of funding.

The Effect of Debt on SocialService DeliverySouth Africa’s total loan debt declinedfrom a high 56,2 percent of gross domes-tic product (GDP) in March 1996 to ananticipated 55,6 percent at the end of1998-9 fiscal year.81 Government has

Figure 3.2: Increase indebt-servicing costs

12.5%

22%

0

5

10

15

20

25

% o

f con

solid

ated

spe

ndin

g

1990/1 1999/00



95

achieved stability after steep increases ofthe debt to GDP ratio in the first half ofthe 1990s.82 Most of this debt was accu-mulated at national government level.However, R14.8 billion worth was in-curred by the former homelands andR13.9 billion by the former regionalauthorities and was incorporated intonational government’s debt portfolio in1994.83 Based on the adjusted GDP, theaverage total national government debt asa percentage of GDP in 1998 was 47,3%.84

The overwhelming share of SouthAfrica’s debt is internal.85 As at 31March 1999, domestic debt totalledR347,9 billion and foreign debt amountedto R16 billion (at an exchange rate ofR6,03:US$ 1 prevailing at 29 January1999). Total debt at that time stood atR377,4 billion (due to forward coverlosses of R13,5 billion). Although for-eign debt increased from 2,7 percent ofloan debt at the end of March 1994, itreached a mere 4,4 percent at the end ofMarch 1999.86 This puts South Africa in amore favourable position than a numberof African countries, many of which facesubstantial foreign debts while relying onunstable currencies for repayment.

Consolidated national and provincialexpenditure figures indicate that debt-servicing costs consumed 22 percent ofconsolidated spending in the 1999/2000fiscal year – up from 12.5 percent in1990/91 – making interest payments thesecond largest item of consolidatedgovernment expenditure. By the begin-ning of 2000, government had spentabout as much on debt servicing as itallocates to education, the largest ex-penditure item on the consolidatedbudget over the past years.87

Civil society organisations havecalled for the cancellation of govern-ment debt in order to free up money forsocial and developmental expenditure.88

The Department of Finance has rejectedthis call. It argues that, because govern-ment has borrowed heavily from itsown pension fund, most of this money

is de facto owed to individual SouthAfricans. A task team established at the1998 Job Summit was asked to investi-gate ways to restructure the Govern-ment Employees’ Pension Fund as ameans of freeing up resources.89

The Constitution prescribes that localand provincial governments may raiseloans for capital expenditure and bridg-ing purposes during a fiscal year, to berepaid within twelve months (section230 of Act 108 of 1996). So far, the nineprovincial governments have not en-gaged in formal borrowing and newlegislation to regulate provinces’ bor-rowing powers is currently beingdrafted. Although municipal debtamounted to R16 billion at the end ofthe third quarter of 1998,90 a generalconstraint on local government borrow-ing is the fact that only 150 out of 843municipalities in the country are consid-ered credit-worthy.91 A re-demarcationprocess, currently underway, mayfacilitate better access to the borrowingmarket. Carefully planned andmonitored borrowing by provincial andlocal governments may be one way ofboosting developmental expenditure.

Concluding CommentsSouth Africa’s debt burden has emergedas a substantial constraint in respondingto poverty eradication and other devel-opment priorities. The debt burdenprevents increases in social expenditureon health, welfare and education. Whilethe national government has stabilisedthe debt to GDP ratio, it faces increasingdebt-servicing costs in years to come.Thus, while substantial budget

The government has generally

discouraged loans in an effort to

avoid the debt trap experienced

by other developing countries.



96

reprioritisation has been achieved sinceapartheid ended, mainly at the cost ofshrinking defence expenditure, furthershifts to developmental and socialexpenditure are not possible. Thisforces government to focus on effi-ciency gains within the current broadstructure of spending priorities.

It has been argued that greaterflexibility in macro-economic policy,linking deficit and inflation reduction toa broad band rather than an inflexibletarget, would enable government tofund social development priorities.92

The motivation is that, while theeconomy is operating well undercapacity, it makes sense to allow amodest boost to macro-economicgrowth by increasing governmentexpenditure (allowing an increase inthe deficit) or by reducing interest rates(a relaxation of the Reserve Bank’sinterest rate policy). Both optionswould support faster growth with alimited risk of an increase in inflationor rise in the interest rate applicable togovernment debt.

Improving information systems andreportingThe allocation of resources and theirbenefits to specific target groups needsto be carefully tracked. The PublicFinance Management Act providesguidelines for effective financial report-ing and the information technology

systems for recording and processingoutput and outcome data already existand are in use. The crucial missingelement in the system is the design andimplementation of effective output andoutcome measures.

Promoting policy co-ordination andcoherenceClear guidelines for policy and pro-gramme co-ordination of developmentpriorities by the President’s Office areurgently required.93 A critical arena forpolicy co-ordination is between budget-ary reform and the reform of the publicsector. Simply maximising the resourcesavailable for poverty alleviation will notensure success. The public sector itselfneeds to be orientated towards achiev-ing this end. At present, individualministries drive such activities andinformation is shared through specificCabinet Clusters.

Addressing inter- and intra-provincialinequalitiesNeither inter- nor intra-provincial in-equalities have been fully addressed.While the former may be addressed atthe national level by making adjust-ments in the allocation formula, thelatter lies within the control of prov-inces and is thus more difficult toaddress through national policy. Thenational norms and standards provision,designed to deal with intra-provincialinequalities, has not been implemented.Addressing staffing rigidities couldprovide more opportunities for definingnational norms and standards.

Strengthening intergovernmentalfinancial relationsThe use of the section 100 constitutionalpowers of oversight and supervision bythe national government when allocat-ing ‘bailouts’ to assist provinces withexpenditure shortfalls points to unevenrelationships between national and

The ultimate test as to whether

institutional change is

transformative in content and

outcomes is the extent to which

such change is underpinned by national

budget allocations that reflect redistribu-

tion to the poorest sectors of society.



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provincial governments. Stringentconditions have been attached to these‘bailouts’. Asymmetry is acceptable andmay even be required to build thecapacity of provinces, provided thebounds of intervention are strictlydefined and the mode supportive.

Creating an enabling institutionalenvironment for human developmentThe ultimate test as to whether institu-tional change is transformative incontent and outcomes is the extent towhich such change is underpinned by

national budget allocations that reflectredistribution to the poorest sectors ofsociety. This is also central to howgovernment promotes a human orpeople-centred development approach.The power and influence of politicalrepresentatives can also be measured bythe manner in which they advance thecause of their constituencies throughparliamentary processes. If it is to havemeaning for the excluded, institutionaltransformation should be based both onthe redirection of resources and on theredistribution of power to ensure equity.

Notes1 The Reconstruction and Development

Programme, 19942 Mandela [1997]3 RDP [1994], Section 1.34 Mandela [1997]5 Parliamentary Whip, 14 March 1997, 36 Schmitter [1998]7 Calland R [1999a], 158 Named after the chapter in the Constitu-

tion in which they are established.9 that must promote respect for and monitor

the observance of human rights.10 has the power to investigate any conduct

in state affairs or public administrationsuspected to be improper.

11 Calland [1999b], 3112 Rule 52(1), Standing Rules of the National

Assembly.13 Calland [1999], 1414 Sections 57, 59 and 118.15 Parliament [1996]16 IDASA [1999b]17 Only ten of these councillors can partici-

pate in the Council’s business at any onemoment and the chief executive officer ofSALGA decides who attends to the busi-ness of the Council.

18 Ministry for Provincial Affairs and Constitu-tional Development [1998], Section B 1.3

19 IDASA [1998]20 For example, the Women’s Budget Initia-

tive, a joint project of the ParliamentaryCommittee on the Quality of Life andStatus of Women, the Community Agencyof Social Enquiry, IDASA, examines theimpact of fiscal policy on women. IDASAalso runs a Children’s Budget Project.

21 For example, SADEP (UCT) and Fair Shareproject on promoting budgetary literacy ofcommunity organisations.

22 Krafchik & Wehner [1998]

23 Krafchik & Wehner [1998]24 Krafchik & Wehner [1998]25 IDASA [1998]26 IDASA [1998]27 The Speaker of the National Assembly,

Frene Ginwala, described the originalobjectives of public participation whenlaunching the National Public EducationDepartment in 1995.

28 This term is used to denote provincial andlocal government collectively, followingconventional use. The hierarchical connota-tions of this term are not reflected in theSouth African Constitution, which explicitlyavoids such terminology in favour of termsconnoting horizontal equity.

29 Following the 1999 election, the constitu-tional development function has beenincorporated under Justice and the Depart-ment renamed the Department of ProvincialAffairs and Local Government.

30 Department of Constitutional Development[1998]

31 Business Day, 19 July 199932 The effect of debt and interest repayment

on social delivery is discussed in thesection entitled “The effect of debt onsocial service delivery”.

33 Finance and Fiscal Commission [1998a]34 These figures are taken from p.107 of the

1999 Budget Review. Local governmentconditional grants for 1998/9 and 1999/00were excluded since they were phased outover this period. The figures were thenadjusted for inflation based on figures fromp.56 of the Budget Review. Populationfigures were projected from Census 96 withpopulation growth rates from the Demo-graphic Information Bureau.

35 The social-economic characteristics anddelivery needs of each province areprofiled in Appendix One.



98

36 The housing sector is also critical to humandevelopment; this report, however, focuseson the social services in which the highestpublic expenditure occurs. South Africaspends approximately 2 to 3 percent of thenational budget (after debt servicing andredemption) on housing, 2 or 3 percentbelow what other middle income develop-ing countries spend, suggesting thatgovernment could give more attention tothis sector. Housing, together with jobcreation, crime fighting and education, is atop public priority for government action.See IDASA [1998]

37 Robinson & Sadan [1999]38 The sources and patterns of inter- and

intra-provincial inequalities are discussed in‘An assessment of provinces as deliveryinstitutions’.

39 District Health Services40 Refer to “Factors inhibiting reprioritisation”.41 Robinson & Sadan [1999]42 United Nations Development Programme

[1998]43 Robinson & Sadan [1999]44 A study conducted in 1996 by the FFC

revealed that the share of the educationbudget spent on the poor and ‘ultra-poor’is much lower than their share of thepopulation. See Finance and Fiscal Com-mission [1998b]. While the poor comprise53 percent of the population, they receiveonly 40 percent of the education budget.The ‘ultra-poor’ form around 29 percent ofthe population, but receive merely 20percent of the education budget. Theseindicators may have shifted to some degreesince provinces began to introduce thenew schools funding policy informally.

45 The compositional relationship betweenpost 1994 provinces and the old provincesand administrative entities is shown inAppendix Two.

46 Robinson & Sadan [1999]47 Refer to Appendix One.48 Msimango [1998]49 Business Day 3 July 199750 Compos & Pradhan [1996]51 Department of Constitutional Development

[1998]52 Budlender [1999]53 Hewu [1999]

54 Perreira [1999]55 Moodliar [1999]56 Coopoo [1999]57 Holcomb [1999]58 Coopoo [1999]59 National Electricity Regulator [1997]60 Coopoo [1999]61 Hewu [1999]62 Moodliar [1999]63 Hewu [1999]64 Holcomb [1999]65 Coopoo [1999]66 This excludes assistance provided by

international and local trust funds, founda-tions, private sector initiatives, as well aschurch, labour and other groupings. It alsoexcludes counter-trade deals.

67 Budlender Dube [1999]68 Budlender & Dube [1999]69 Schneider & Gilson [1997], 4370 Bratton & Landsberg [1998]71 officially termed the European Programme

for Reconstruction and Development(EPRD)

72 Delegation of the European Commission[1997], 10

73 Schneider & Gilson [1997], 2074 Bratton & Landsberg [1998]75 Budlender & Dube [1999]76 Budlender & Dube [1999]77 Bratton & Landsberg [1998]78 Schneider & Gilson [1997]79 Budlender & Dube [1999]80 Budlender & Dube [1999]81 Department of Finance [1999], 7982 Annett [1996]83 Department of Finance [1999], 7884 Own calculations based on data from South

African Reserve Bank, Quarterly Bulletin,December 1999: S/59 and S/106

85 Department of Finance [1999], Table 3.1786 Department of Finance [1999], 8087 Department of Finance [1998], Table 3.11

and Department of Finance [1999], Table5.8

88 Business Day, 18 December 1998.89 Department of Finance [1999], 8790 Department of Finance [1999], 10991 Business Day, 14 September 199892 IDASA [1998]93 IDASA [1998]

transforming the public sector

99


Transforming the publicsector: People first forhuman development

4



100

“Loskop has water,

but not for us. It is

only 10 km away, but

the water passes us. It

goes to Groblersdal and

Marble Hall. They are 85

km away, but we have no

access. The problems are

caused by the lack of water. It

is made for whites only. We

want access to it. For irriga-

tion. To look after our children

through water. We do not want

the water taken out of Loskop.”Julia Kotelo

Poverty HearingsMpumalanga

“We find that many ladies

have lost their limbs because

of crocodiles while they are

trying to fend for their

children…When trying to fetch

water, you have to put a string

on the bucket and throw it

there to avoid an attack from

the crocodile.”Jabu Ntuli

Self-Employed Women’s UnionPoverty Hearings

KwaZulu-Natal


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Introduction

Beyond responding to global pres-sures for change, the South African

government had pressing internalreasons for embarking on a radical andcomprehensive process of administra-tive transformation and reform. Democ-ratisation, nation-building and recon-struction and development depend ona fundamental restructuring of the post-apartheid bureaucracy. The key chal-lenge, therefore, is to change the publicsector from an instrument of discrimi-nation, control and domination to anenabling service-oriented sector thatempowers all the people in an account-able and transparent way.

South Africa has been able to drawon lessons of international best practicein the public sector to advance itsreform process.

The government’s White Paper onthe Transformation of the Public Serv-ice (WPTPS)2 provided the broadpolicy framework for reform. This wasgiven added substance and momentumby many policy documents and legisla-tive interventions. There have beensome notable successes, particularly inthe integration and unification of thepublic service, the devolution of powerand decentralisation of managerialresponsibility, and the increased repre-sentation of black people (Africans,coloureds and Indians) and womenwithin senior management echelons.Some remaining concerns include thetask of enhancing the efficiency andeffectiveness of public sector perform-ance, upgrading the quality of servicedelivery and achieving a professionaland corruption-free service.

This chapter provides an overviewof the main achievements of and chal-lenges for public sector transformation

in South Africa. The South Africanpublic sector consists of three distinctbut related elements: a public servicethat currently employs approximately1.1 million people, local governmentthat employs 230 000 and a parastatalsector that employs close to 200,000.Although all three sectors will be cov-ered in this chapter, the main emphasiswill be on the public service.

Box 1“International best practice inPublic Sector Reform.” Theseinclude:

• moving towards the state asfacilitator rather than controller;

• trimming state expenditure and the size of the publicservice;

• contracting out services to the private sector and non-governmental agencies;

• increasing emphasis on quality, performance, efficiencyand cost-effectiveness;

• devolving and decentralising managerial responsibilityand accountability, together with the introduction ofperformance-related contracts for senior managers;

• introducing new and more participative organisationalstructures;

• developing new and less rule-bound organisationalcultures;

• developing more effective and computerised managementinformation systems;

• introducing more flexible staffing and recruitment prac-tices;

• introducing improved and output-related budgeting andfinancial planning systems, and

• increasing emphasis on performance management andhuman resources development.1



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Transforming Policies

The vision for public sectortransformationThe Government began its transforma-tion of the public sector with a radicaloverhaul of the policy framework. Thepublic service inherited by the govern-ment in 1994 was designed to promoteand defend the social and economicsystem of apartheid and geared toserving the material needs and interestsof the white minority. Structured alongmechanical, closed models of publicand development administration, theprinciple features of the apartheidbureaucracy included rigid racial andethnic segregation, a serious lack ofrepresentivity, fragmentation and dupli-cation, corruption and mismanagementof resources. Other features were poorand outdated management practices, arigid regulatory bureaucratic culture,lack of accountability and transparency,poorly paid and demotivated staff andconflictual labour relations.

After 1994, there was broad agree-ment on the need for a much moreefficient, effective and equitable publicservice, capable of improving thequantity and quality of service provi-sion and redressing the imbalances ofthe past. The Public Service Act of 1994created the basis for integrating thefragmented system of state administra-tions inherited from the apartheid erainto a unified public service that wouldoperate at both national and provinciallevels. At the same time, the WhitePaper on Reconstruction and Develop-ment identified institutional transforma-tion and reform as one of the mainprogrammes to drive the implementa-tion of the Reconstruction and Develop-ment Programme (RDP).

The most comprehensive interven-tion, however, was the November 1995White Paper on the Transformation of

the Public Service (WPTPS), whichestablished a national policy frameworkfor the introduction and implementationof new policies and legislation aimed attransforming the South African publicservice in line with the following vision:

The Government of National Unity is

committed to continually improving the

lives of the people of South Africa by a

transformed public service that is

representative, coherent, transparent,

efficient, effective, accountable and

responsive to the needs of all.

The White Paper identified eightpriority areas for public service transfor-mation. These were:1. rationalisation and restructuring to

ensure a unified, integrated andleaner public service;

2. institution building and managementreforms to promote greater account-ability and organisational and mana-gerial effectiveness;

3. increased representivity throughaffirmative action;

4. improved service delivery to meetbasic needs and redress past imbal-ances;

5. the promotion of internal democracyand external accountability;

6. human resource development andcapacity building;

7. improved employment conditionsand labour relations; and

8. the promotion of a professionalservice ethos.Progress in relation to each of these

eight priority areas is examined insubsequent sections of this chapter.

Human development and public sectortransformationThe vision, mission and goals of theWhite Paper on the Transformation ofthe Public Service (WPTPS) were prem-ised on a fundamental redefinition ofthe role of the state and its relationshipwith civil society – emphasising


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partnerships rather than the antagonis-tic relations of the past. They reflecteda major shift from a mechanical modelof public administration towards amore strategic, decentralised, develop-mental and adaptive model of govern-ance, broadly in line with ‘internationalbest practice’.

Significantly, while ‘internationalbest practice’ has frequently empha-sised cost-cutting, commercialisationand privatisation to maximise theefficiency of service delivery, theWPTPS cautioned against the uncriticaladoption of such an approach.3 Itrecognised the adverse effects of cost-cutting and privatisation in a number ofdeveloping countries: declining servicestandards, worsening conditions ofemployment, rising unemployment andthe increasing marginalisation of disad-vantaged groups, particularly womenand children. Thus, while acknowledg-ing the need for cost-effectiveness andfiscal restraint, the WPTPS was firmlylocated within the broad developmentaland people-driven paradigm estab-lished by the RDP.

The office of the Minister for PublicService and Administration was given aleading role in directing and shapingthe transformation process. The powersand responsibilities of the national andprovincial public service commissionsestablished by the 1993 interim consti-tution were reviewed and clarified,with a view to removing much of thebureaucratic red tape associated withtheir work. Many of their executivepersonnel functions were transferred tothe Ministry and individual line depart-ments. In December 1995, a fully-fledged Department for Public Serviceand Administration (DPSA) was estab-lished. It has expanded rapidly and hastaken over most of the policy andregulatory functions previously exer-cised by the national and provincialcommissions.

Independent monitoring of the publicserviceThe South African Constitution did awaywith the Provincial Commissions en-tirely and limited the role of a restruc-tured national Public Service Commis-sion (PSC) to that of an independentmonitoring body responsible for thepromotion and maintenance of severalkey values and principles of publicadministration. These values and princi-ples include the maintenance of a highstandard of professional ethics, theprovision of services on an impartial,fair, equitable and bias-free basis andthe efficient and effective utilisation ofresources. Other important principlesand values include the need for respon-siveness to peoples’ needs, the encour-agement of public participation inpolicy-making and the provision ofpublic services in accountable, transpar-ent and development-oriented ways. Inaddition, the Public Service Commissionmay, on request or of its own accord,conduct investigations into personnelpractices and adherence to applicableprocedures. The emphasis is on serviceto people rather than regulation andcontrol.

The WPTPS applies specifically tothose parts of the South African publicsector, both national and provincial, thatare regulated by the Public Service Actof 1994 (as subsequently amended).Government has also directed that thebroad principles contained in theWPTPS should inform the processes oftransformation in other parts of thepublic sector. These include local gov-ernment, parastatals, the South AfricanNational Defence Force and the Intelli-gence Services, which are carrying outtheir own restructuring.

Translating policy into implementationIndividual departments and provincialadministrations must develop specificimplementation strategies. In doing so,they may draw on a variety of policy



104

and legislative interventions designed togive the transformation process addi-tional momentum. A substantial body ofnew policy and legislation has beendeveloped since the promulgation ofthe WPTPS, including inter alia:• An increasing number of DPSA

public service policy documents,designed to give effect to many ofthe proposals contained in theWPTPS. These include the WhitePaper on Transforming ServiceDelivery, the White Paper on HumanResources Management in the PublicService, the White Paper on Affirma-tive Action in the Public Service andthe White Paper on Public ServiceTraining and Education.

• The introduction in 1997 of a newCode of Conduct for the publicservice, prepared by the PSC.

• The promulgation of a number ofamendments to the Public ServiceAct (1997, 1998, 1999) and theintroduction of new Public ServiceRegulations (1999), which have cutthrough much of the red-tape andlaid the foundations for a moreflexible and decentralised system ofpublic administration.

• The Ministry for Provincial Affairsand Constitutional Development’sWhite Paper on Local Governmentand associated legislation, whichestablishes the basis for a newintegrated and developmental localgovernment system, committed toworking with citizens, groups andcommunities in order more effec-tively to meet their social, economicand material needs.

• The 1996 National FrameworkAgreement between government andorganised labour to guide the re-structuring of state assets and theparastatal sector.

• The introduction by the Departmentof Labour of a programme of legisla-tion on industrial relations, condi-

tions of employment, and skillsdevelopment.4

• The introduction from the 1998/99financial year onwards of the Me-dium Term Expenditure Framework(MTEF). This replaces the previoussystem of annual budgeting with itsrolling three-year budget cycle and isdesigned to enable departments andprovinces to prioritise and plan theirservice delivery programmes moreeffectively.

• The publication of a variety of trans-formation documents by the varioussectoral departments at both thenational and provincial levels.

The Presidential Review CommissionAnother important influence in shapingthe ongoing process of administrativetransformation was the 1998 report ofthe Presidential Review Commission(PRC). Following the WPTPS, formerPresident Mandela established the PRCin March 1996. In February 1998, itsubmitted its eight-volume report to thePresident.

Whilst acknowledging the magnitudeof the task faced by the new govern-ment in transforming the public service,as well as some of its real achieve-ments, the PRC report reached thefollowing conclusion:

the machinery of government is inmany ways not working as effectivelyas it could and should, even within theconstraints now obtaining ... Too littleprogress has been made in remedyingthe inequalities and inefficiencies of thepast. The delivery of public services,their costs and quality, leave much tobe desired.5

The report provides a long list ofrecommendations. These include,amongst others, strengthening co-ordination and strategic direction at theapex of government (the offices of thePresident and Deputy President) and amore vigorous effort to ‘right size’ thepublic service.


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The Human DevelopmentImperatives for Public SectorTransformationAlthough classified as a middle-incomecountry, the inequalities of apartheidhave resulted in levels of poverty,unemployment and general socialdeprivation more characteristic oflower-income countries. High levels ofpoverty amongst the black majorityhave led to a lack of resources at thehousehold level, seriously limitingaccess to adequate education, healthcare, nutrition, shelter and other basicneeds. Poverty has placed great stresson families in general, and women,children and young people in particu-lar. Together with landlessness, rapidpopulation growth and urbanisation,poverty and inequality underpin arange of other serious social problems,from gangsterism and crime to highlevels of domestic violence and theincreasing spread of HIV/AIDS. Thesehuman development imperatives consti-tute a major challenge in the transfor-mation of the public service.

High levels of poverty are reinforcedby equally unacceptable levels ofunemployment, attributable in the mainto falling rates of growth in GDP andgross domestic fixed investment in the1990s and the declining significance oftraditionally labour-intensive industriessuch as mining, construction and agri-culture.

Despite serious domestic, social andeconomic problems, the South Africaneconomy has a number of underlyingstrengths that have enabled it to copewith adverse international pressuresmore successfully than many otheremerging markets. According to theGovernment’s 1998 Medium TermBudget Policy Statement6 , thesestrengths include lower debt obligationsrelative to GDP than most developingcountries, a relatively well-developed

and well-regulated banking and finan-cial services system, and financingrequirements on the balance of pay-ments that are currently less than 2percent of GDP.

The debates and controversies sur-rounding the RDP and GEAR revolvearound the issue of balancing domesticsocial justice with international competi-tiveness and macroeconomic stability.Many observers argue that GEAR repre-sents a discernible shift in emphasis awayfrom the developmental paradigm of theRDP and the White Paper on the Transfor-mation of the Public Service towards amuch more budget-driven approach,placing a number of serious limitations oninstitutional reform and consolidation.7

Public Service Transformation:the Building Blocks for HumanDevelopment

Creating a unified and integrated publicserviceThe apartheid state established elevendistinct systems of government andadministration: four provincial adminis-trations within the former Republic ofSouth Africa and eleven former ‘inde-pendent states’ and ‘self-governingterritories’. After 1994, these systemswere rationalised into a single publicservice operating at national and provin-cial levels. The Public Service Act (1994)created twenty-seven national depart-ments and nine provincial administra-tions. Rationalisation, justifiably de-scribed as “a metamorphosis of epicproportions”8 , had to take place withminimal disruption to the delivery ofservices. Again, the need to break withthe past had to be balanced with thecontradictory imperative of ensuringcontinuity for existing civil servants.

Organisational rationalisation com-menced with the proclamation of thePublic Service Act on 3 June 1994 and



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was completed in slightly less than twoyears. Staffing the rationalised poststook slightly longer, but was largelycompleted by early 1997. Given thetechnical complexity and sheer enor-mity of the task, the rationalisationprocess was, for the most part, handledefficiently. However, the integration ofstructures and personnel in some prov-inces proved cumbersome, particularlywhere it involved the integration of stafffrom the former ‘homelands’. Infra-structural backlogs added to the difficul-ties of provinces such as the EasternCape, KwaZulu-Natal and the NorthernProvince, causing them to lag in theimplementation of subsequent manage-ment reforms and national policy. Asshown in Chapters Two and Three ofthis Report, the difficulties in effectingpublic sector reform in these provincescontinue to have serious implicationsfor human development.

‘Rightsizing’In 1994, more than 1.2 million officialswere employed by the public service.According to the PSC, this was “agreater number ...than were realisticallyrequired to ensure effective administra-tion under the new dispensation”9 . Boththe RDP White Paper and the WhitePaper on the Transformation of thePublic Service (WPTPS) emphasised theneed to reduce consumption expendi-ture as a proportion of total governmentspending. A central concern was thereduction of the wage bill as a propor-tion of consumption expenditure – fromits relatively high level of 60 percent toa figure more in line with countries at asimilar stage of development.

WPTPS strategies for creating aleaner service over time included‘rightsizing’, efficiency savings andincreased productivity; adjustments toremuneration structures; effective poli-cies on retrenchment; early retirementand attrition, and redeployment andretraining. The WPTPS envisaged a

continuous review of programmesaimed at realigning personnel require-ments more closely towards the deliveryof services. This, it was envisaged,would result in ‘downsizing’ in somedepartments or sections and ‘upsizing’in others, within the parameters of agradual reduction in the overall size ofthe service.

In his budget speech to Parliament inMarch 1996, the Minister of Financeannounced a reduction target of 100,000employees a year for three years. Fol-lowing negotiations with the unions,however, government froze employer-initiated retrenchments. Considering theexisting retrenchment package tooexpensive, government introduced amore affordable voluntary severancepackage (VSP) as part of a three-yearimprovement package in pay and condi-tions. The VSP was intended to facilitatethe abolition of funded posts. Althoughthe award of a VSP was made subject tostringent conditions, many departmentsand provinces chose to ignore theguidelines. One result has been theserious loss of skilled and experiencedpersonnel in a number of key areassuch as education, health, finance andpersonnel. A prohibition on the re-appointment of voluntarily retiredofficials was often sidestepped by‘backdoor’ re-hiring of consultants andadvisers, often on lucrative contracts.

The VSP did not generate departureson the scale projected by Finance, as itappealed primarily to a relatively smallnumber of public servants with longservice and skills exportable to theprivate sector. Lower level workers hadvery little to gain from taking the pack-age, especially in areas where employ-ment opportunities were scarce. Themost recent figures indicate that justunder 50,000 public servants and 15,000educators have taken the package.Government came under fire for permit-ting a ‘brain drain’ of the most skilledand experienced professionals in the


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public service and eventually admittedthat the VSP had been a failure.10 ,11

Government’s early experiments in‘rightsizing’ also had a number ofunintended and undesired effects. Theyimpacted on staff morale, motivationand productivity (by fostering anxietyand uncertainty); on service delivery(through the loss of skilled personneland the inability to redeploy staff toareas of greatest need); on affirmativeaction and representivity (by placingceilings on the recruitment of newstaff), and on public service transforma-tion more generally (by providing anexcuse for conservative forces withinthe service to delay or obstruct thechange process).

In 1997, a task team, with supportfrom an ILO expert, was established todevelop a new and improved‘rightsizing’ policy and redundancyframework. The expert’s report made anumber of recommendations, includingthe identification and removal of ‘ghost’workers12 , a product of the numerousand incompatible systems inherited bythe new government. It also recom-mended the identification, redeploy-ment or voluntary/forced redundancyof the many supernumeraries still onthe payroll and surplus to currentrequirements (largely because of theintegration of the former ‘homeland’and Republic of South Africa civilservices). Of the 40 000 ‘ghost’ workersidentified, many were located in theNorthern Province and Eastern Cape.Most have now been removed from thePERSAL system. This, together withnatural attrition and the freeze on newappointments, has resulted in a gradualreduction in public service employmentfrom 1.27 million in September 1995 to1.1 million in December 1998.13

Although the ‘rightsizing’ task teamsubmitted its report on schedule in1998, government has still not pro-duced a coherent policy on ‘rightsizing’.It has, however, taken a fresh ap-

proach, placing greater emphasis onservice delivery needs. The unionsagreed to the introduction of skills,service delivery and personnel audits,and pilot audits began in the NorthernProvince and the Eastern Cape in March1998. Audits across all provinces werecompleted in early 2000 and are in-tended to assist in decision-making onservice delivery needs, retraining andredeployment of personnel and‘rightsizing’.

Co-operative governmentAs indicated in Chapter Three, theConstitution designates national, provin-cial and local government as separateand autonomous ‘spheres’ of govern-ment, rather than tiers or levels in ahierarchical system. All spheres of govern-ment are required to respect each others’powers and functions and work in closeco-operation with each other. Schedules 4and 5 of the Constitution specify thoseareas in which the three spheres haveexclusive competency and those wherethey share concurrent powers.

Despite the recognition of distinctivespheres of government, national govern-ment has a duty of ‘supervision’ oroversight over the other spheres. Super-vision entails the power to intervene,issue directives and even to take overresponsibility under certain circum-stances. The power of supervision iscounterbalanced by a correspondingduty to assist in building the capacity ofthe provincial and local spheres ofgovernment. The National Council ofProvinces (NCOP) has an important roleto play in considering and approvingnational interventions into the provincialsphere and provincial interventions intothe local government sphere.

Provincial governments have also, onseveral occasions, intervened in theaffairs of municipal councils – mostoften in cases where mismanagementand overspending have resulted inenormous debts.



108

Given the problems facing localgovernment, including non-payment forservices, mismanagement and corrup-tion, it is likely that interventions willcontinue to take place to activate serv-ice delivery and improve administrativecapacity in this sphere.

Co-ordination and intergovernmentalrelationsCo-ordination at national level is theresponsibility of Cabinet – through acabinet secretariat and a number ofcabinet committees or clusters. Intergov-ernmental relations are managedthrough the Intergovernmental Forum(IGF) and the Ministerial Forums(MINMECs). The IGF was established toprovide an opportunity for consultationand joint decision-making betweenministers and provincial premiers on allmatters of mutual interest and to discussmulti-sectoral policy issues and finance,fiscal and constitutional matters.MINMECs comprise a national ministerand the corresponding MECs from eachof the provinces. They focus on theharmonisation of legislation and pro-grammes within the sector, consultationson national norms and standards andthe assignment of roles and responsibili-ties between the spheres of government.The work of the IGF and the MINMECsis supported by an array of technicalcommittees.

In its detailed survey of intergovern-mental relations (IGR), the 1998 Presi-dential Review Commission (PRC) reportconcluded that poor co-ordinationwithin and between different depart-ments and spheres of government hadresulted in an incapacity to implementnational programmes and a consequentfailure to deliver basic services.17 Deci-sions taken at the highest political levelwere not always effectively communi-cated to departments. The PRC arguedthat “a culture of IGR, based on techni-cal capacity, has still to evolve,” andadvocated a closer working relationshipbetween the IGF and the MINMECs.18

The PRC also highlighted a lack ofco-ordination at the centre of govern-ment and suggested a “radical reap-praisal of the functions, structures,personnel and management of theOffice of the President”.19 Its recommen-

Box 3Interventions in municipalaffairsOne of the first of these interven-tions was in Butterworth in theEastern Cape, in response toallegations of corruption and misman-agement. Councillors responded byinstituting a court action to demand their reinstatement andan out-of-court settlement was reached with the participationof the NCOP and the South African Local Government Asso-ciation (SALGA).15

More recently, a complete collapse of services in Ogies,Mpumalanga, which owes R30 million to electricity andwater suppliers and the Receiver of Revenue, led to NCOPintervention.

The North- West province is said to be contemplatingtaking over the Stilfontein municipality, which has a debt ofR7 million.16

Box 2National government inter-venes in the Eastern CapeIn December 1997, the EasternCape Provincial Government failedto pay out social security grantsdue to a lack of funds in the provin-cial Department of Welfare and thePremier requested the Minister for Public Service and Admin-istration to investigate. The task team sent to the provincereported that the shortfall should have been foreseen andrecommended that disciplinary steps be taken against severalsenior officials. It also recommended that a comprehensiveassistance programme be developed for the Department ofWelfare. Shortly after the conclusion of the investigation,Premier Stofile fired the province’s MEC for Welfare.14 Inter-vention in this instance helped alleviate the suffering of themost vulnerable in the province.


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dations led to the establishment of aCo-ordination and Implementation Unit(CIU), the Offices on the Status ofWomen and People with Disabilitiesand a new co-ordinating agency forGovernment Communication Informa-tion Management, Systems and Tech-nology. The PRC argued that the loca-tion of these agencies in a new Officeof the President would give them thenecessary authority and influence toachieve more effective co-ordinationand greater compliance with nationalpolicies, norms and standards. A sepa-rate ministry of local government wasalso recommended, to play a proactiverole in the effective integration of localauthorities (as a distinct sphere) intothe broader system of government.20

During the 1999 pre- and postelection period, the Offices of thePresident and Deputy President weresubstantially restructured and merged toform the Presidency, in line with therecommendations of the PRC. A CabinetSecretariat was established, with apolicy co-ordination branch whose roleit is to scrutinise ministerial proposalsagainst the backdrop of policy.21 TheCIU became the Co-ordination andAdvisory Services Unit and five cabinet‘clusters’ were created to bring togetherministries with overlapping functions.The new Cabinet – appointed on 17June 1999 – included a reconstitutedportfolio for Justice and ConstitutionalDevelopment, a separate portfolio forProvincial and Local GovernmentAffairs and a full ministerial portfolio inthe Office of the President.

Centralised co-ordination by govern-ment is demonstrated by a number ofinitiatives. The National Crime Preven-tion Strategy, for example, is an inter-departmental task team, established byCabinet in 1996 to co-ordinate theefforts of departments involved in theadministration of the criminal justicesystem (Justice, Welfare, Correctional

Services, Defence, Safety and Securityand Intelligence). Outcomes of thestrategy are a lifting of a moratorium onappointments to the police service andfast-tracking the establishment of amulti-disciplinary special investigationunit. The latter unit, dubbed the ‘Scorpi-ons’, consists of officials from justice,the police and the intelligence servicesand was launched in August 1999.

Transforming Service Deliveryfor Human DevelopmentThe White Paper on the Transformationof the Public Service (WPTPS) stressedthe urgent need to redress past imbal-ances in service provision and recom-mended that service delivery prioritiesbe based on principles of affirmative orcorrective action. It required departmentsto identify a mission statement for servicedelivery and standards, targets and per-formance indicators; to redirect humanand other resources from administrativetasks to service provision, and to developpartnerships with the private sector,NGOs and community organisations.

The 1997 White Paper on Transform-ing Public Service Delivery (subtitled‘Batho Pele’, the Sesotho expression for‘People First’) provided a more detailedpolicy framework and a practical imple-mentation strategy for service deliveryimprovement. Batho Pele gives effect tothe human development perspective inthe public sector, focusing on howservice delivery should be improvedrather than what services should bedelivered. The White Paper identifies

Co-ordination at national level

is the responsibility of Cabinet –

through a cabinet secretariat

and a number of cabinet com-

mittees or clusters.



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aimed at supporting and enhancingservice delivery.

Alternative forms of service delivery:partnerships for developmentThe development of alternative forms ofservice delivery – through outsourcing orthe establishment of public-private orpublic-community partnerships – is one ofgovernment’s key transformation prioritiesfor 1999-2004.

Despite the fact that no clear orcoherent policy has been developed toguide departments and provinces in thisregard, a number of ad hoc, but fairlyinnovative, initiatives are beginning toemerge. One such example is theBoipatong-Bophalong integrated pilotproject, a public-community partnershipinitiated by the Department of PublicWorks.

A number of local councils haveoutsourced their refuse-collection serv-ices to the private sector, and theBenoni Town Council has contractedout its fire and emergency servicesoperation to a private company.

Across South Africa as a whole,business partnerships between munici-palities and private concerns for thefinancing, operation and managementof infrastructure attracted R1 billion inprivate sector investment during 1997.

An important objective of alternativeservice delivery strategies is to promotecommunity empowerment in general,and the development of black-ownedsmall, medium and micro enterprises(SMMEs) in particular.

The procurement reforms introducedby the Department of Public Works in1997 were intended to support this objec-tive, tilting the balance in favour ofemerging contractors and SMMEs.

However, national and provincialgovernments need to provide SMMEswith much more advice and capacitybuilding to enable them to tender moresuccessfully for government contracts.26

Box 4Piloting service deliveryimprovementsIn 1997, the national departments ofHome Affairs and Health and fivedepartments of the North-WestProvince were selected for pilotprojects in respect of service deliveryimprovement programmes. In May 1998, the DPSA reportedthat, whilst the Batho Pele policy had been well received bypoliticians and top management, the pilot departments hadachieved only varying degrees of success and difficultieswere being experienced in communicating the Batho Peleprinciples effectively throughout the service. The Departmentof Home Affairs was the first to announce its new servicestandards in June 1998; since then, seven out of the nineprovinces have publicly launched their service standards.

A detailed study of service delivery in the Northern Cape23

demonstrated some progress in relation to the Batho Peleprinciples, particularly in respect of improved consultationthrough the establishment of community and local develop-ment forums. Another encouraging sign was the setting up of‘one-stop’ service centres in Kimberley’s Black townships.However, many of the community members interviewedclaimed they were far from satisfied with the accessibility ofservices, courtesy, information, transparency and redress24

The 1998 Presidential Review Commission report similarlyhighlighted a number of important constraints (structural,financial, process, and human resources) impeding theeffective realisation of the Batho Pele principles.25

and elaborates eight principles of serv-ice delivery: consultation, service stand-ards, access, courtesy, information,openness and transparency, redress andvalue for money. These principles arealso intended to inform service deliveryin other parts of the public sector,particularly in local government.

The successful implementation of theBatho Pele policy in the national, pro-vincial and local spheres is central tothe transformation of service deliveryand government. Policies on humanresources management, developmentand affirmative action and revampedlegislative, regulatory and managementframeworks are all designed to bringabout a “management revolution”22 ,


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Representivity and GenderEquality

Representivity and affirmative actionBefore 1994, the public service wasseriously unrepresentative of the popula-tion, especially at managerial levels. Thenew government believes that, if it is toimprove the quality and equity of servicedelivery, the public service must draw onthe skills and talents of all South Africans.A framework for the development ofclear affirmative action strategies bydepartments and provinces was accord-ingly drawn up, with broad targets forthe advancement of black people (50percent of the management echelon,director level and above, by 1999),women (30 percent of new recruits to themanagement echelon between 1995 and1999) and people with disabilities (2percent of public servants by 2005).

The 1998 White Paper on AffirmativeAction in the Public Service (WPAAPS)and the Employment Equity Act (1998)further promote the objectives of trans-forming the Public Service. The Em-ployment Equity Act (1999) outlawsunfair discrimination in the workplaceand requires employers (private andpublic) to prepare and implementemployment equity plans and to reportregularly to the Government on theirprogress.

Legislative interventions to promoteaffirmative action in the public serviceinclude the amendment of section 11 ofthe Public Service Act, which deals withappointments and the filling of posts inthe public service. The amendmentremoves a long-standing bias in favourof officials with formal qualificationsand seniority, directing instead thatevaluation be based on “training, skills,competence, knowledge and the needto redress the imbalances of the past” 27

Table 4.1 provides details on thenature of changes regardingrepresentivity within the management

echelon of the public service by raceand gender. A more detailed breakdownby provinces and selected national depart-ments is provided in Table 4.2.

The figures in Tables 4.1 and 4.2indicate that overall progress has beenmade in terms of race, with the propor-tion of black managers increasing from5 percent in 1994 to 41.5 percent in1998. However, less progress has beenmade in respect of gender, especiallyover the past two years. The rate ofprogress has also varied considerablybetween different departments andprovinces. Some (particularly HomeAffairs and the provinces of KwaZulu-Natal and the Northern Province) have

Box 5Boipatong-Bophalong –partnership with the communityIn Boipatong-Bophalong, physicalassets – such as schools, clinicsand roads – are created andmaintained through the directinvolvement and participation of thecommunity. This R15 million project isadministered by community project committees. Activecommunity participation has ensured that the communityactually receives the services it identifies and really needs.

Box 6Outsourcing in Benoni: workerparticipationThe Benoni Council has put variousmechanisms in place to ensureeffective monitoring of service provi-sion. These include worker participationperformance standards, financial penaltieswhere standards are not met and the presence of two citycouncillors on the company’s board. The company took overall 178 people employed by the council to carry out theservice, with no loss of benefits. The company’s staff hassince risen to 200, with staff owning 20 percent of the compa-ny’s shares. This partnership arrangement has saved theCouncil R16 million over the first contract period of five years.



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performed below average in terms ofgender; others (particularly Housing,Justice, Safety and Security, the South

African Revenue Services and the FreeState province) have performed wellbelow average in terms of both raceand gender. These departments andprovinces have proffered a number ofreasons to explain their slow rate ofprogress. These include the lack ofappropriately skilled and qualified blackand female applicants for posts, finan-cial constraints (in terms of establishingnew positions) and fears about “lower-ing standards”. These constraints donot, however, justify the disturbinglyslow rates of progress towardsrepresentivity in a number of depart-

Table 4.2: Profile of management echelon in the public service by population group, 31.10.97 (selected Departments andall provinces) – in percentages

African Coloured Asian White Race Gender

Department/Province M F M F M F M F B W M F

Department

Education 28.0 8.0 8.0 4.0 8.0 4.0 36.0 4.0 60.0 40.0 80.0 20.0

Foreign Affairs 21.3 6.6 1.6 0.0 6.6 1.6 57.4 4.9 37.7 62.3 86.9 13.1

Health 23.1 23.1 0.0 7.7 0.0 0.0 38.5 7.7 53.8 46.2 61.5 38.5

Home Affairs 46.7 0.0 0.0 0.0 0.0 0.0 53.3 0.0 46.7 53.3 100 0.0

Housing 21.4 0.0 0.0 0.0 0.0 0.0 78.6 0.0 21.4 78.6 100 0.0

Justice 19.6 1.5 0.8 0.0 1.2 1.9 71.5 3.5 25.0 75.0 93.1 6.9

Labour 17.4 0.0 4.3 0.0 4.3 4.3 56.5 13.0 30.5 69.5 82.7 17.3

DPSA 38.5 15.4 0.0 0.0 0.0 7.7 15.4 23.1 61.5 38.5 61.5 38.5

Public Works 16.7 25.0 8.3 0.0 8.3 0.0 41.7 0.0 58.3 41.7 75.0 25.0

Safety and Security 16.4 0.0 2.5 0.3 2.3 0.3 75.6 2.8 21.2 78.8 96.6 3.4

Revenue Services 1.4 0.0 1.4 0.0 1.4 0.0 88.9 6.9 4.2 95.8 93.1 6.9

Welfare 11.2 22.2 0.0 22.2 0.0 0.0 22.2 22.2 55.6 44.4 33.4 66.6

Provinces

Eastern Cape 74.1 12.1 0.0 0.0 0.0 0.0 12.1 1.7 86.2 13.8 86.2 13.8

Free State 18.0 4.0 0.0 0.0 0.0 0.0 76.0 2.0 22.0 78.0 94.0 6.0

Gauteng 17.4 5.8 2.2 1.4 3.6 1.4 63.0 5.1 31.9 68.1 86.3 13.7

KwaZulu-Natal 37.3 1.3 1.3 0.0 4.0 1.3 52.0 2.7 45.3 54.7 94.7 5.3

Mpumalanga 58.6 20.7 6.9 0.0 6.9 0.0 6.9 0.0 93.1 6.9 79.3 20.7

Northern Cape 20.0 10.0 25.0 0.0 5.0 0.0 40.0 0.0 60.0 40.0 90.0 10.0

Northern Province 84.9 7.5 0.0 0.0 1.9 0.0 5.7 0.0 94.3 5.7 92.5 7.5

North West 53.3 16.7 0.0 0.0 1.9 0.0 26.7 0.0 73.3 26.7 83.3 16.7

Western Cape 0.0 0.0 23.4 2.1 8.5 0.0 57.4 8.5 34.1 65.8 89.4 10.6

All Departments and Provinces 23.4 3.8 2.8 0.7 2.8 0.7 61.8 4.0 34.2 65.8 90.8 9.2

M = Male F = Female B = Black W = White Source: PRC, 1998:126.

Source: PRC, 1998:126

Table 4.1: Changing profile of management echelon in the publicservice by population group and gender, March 1994 to December

1998, in percentagesAfricans Coloureds Asians Whites Males Females

31/03/94 2.0 1.0 3.0 94.0 95.0 5.0

31/01/96 30.0 3.0 4.0 63.0 90.0 10.0

30/11/96 33.0 3.0 3.0 61.0 90.0 10.0

31/12/97 33.2 3.8 4.5 58.5 87.0 13.0

31/12/98 34.9 4.3 5.2 55.6 85.8 14.2

Sources: PSC, 1995; PSC, 1996; DPSA 1997b; DPSA, 1998


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ments. Nor do they justify non-compli-ance with affirmative action guidelineslaid down in the WPTPS.28

Government’s 1996 IntegratedNational Disability Strategy estimatesthat approximately 5 percent of SouthAfricans have a disability. Yet, accord-ing to the White Paper on AffirmativeAction in the Public Service (WPAAPS),people with disabilities constitute onlyabout 0.02 percent of public servants.As no statistics on disability are avail-able from government informationsources beyond this estimated baselinefigure, it is difficult to gauge whetherthere has been any progress in thisrespect over the past few years. Therecommendations contained in Chapter6 of the Disability Strategy outline thenecessary steps – including norms andstandards – government must take topromote greater representivity andbarrier-free access for people withdisabilities. They need to be imple-mented urgently.

Affirmative action strategies shouldnot become a hiring policy or numbersgame. Rather they should form part ofa holistic approach aimed at empower-ing hitherto marginalised people andenabling them to participate in allspheres of life. Such strategies shouldbe based not only on the eradication ofracism, sexism and other forms ofdiscrimination, but on the developmentof a uniquely South African corporateculture, aimed at entrenching a broaderculture of inclusivity.

The 1997 White Paper on HumanResources Management in the PublicService (WPHRM) devotes a chapter tothe management of diversity and thepromotion of representivity as a meansto achieving democratic legitimacy forthe public service. The WPHRM re-quires public service departments toconduct a “diversity audit” to addressrace, gender, disability and also factorssuch as age.

Managing diversity is more than justa paper exercise. It needs to be ab-sorbed into the management styles ofpublic service managers and supervi-sors. Representivity and organisationaldiversity are constitutional obligations.Integration in terms of race, gender anddisability in the Public Service will alsocontribute to integration in society atlarge.

Women’s empowerment and genderequalityWomen in South Africa, especially blackwomen, have historically been subordi-nated, marginalised and disadvantagedthrough a triple form of oppressionbased on race, class and gender. Since1994, government and civil societyorganisations, especially women’sgroups, have demonstrated an increas-ing commitment to redressing thissituation. This is illustrated in a varietyof ways, including:• the equality clause in the 1996 Con-

stitution which specifically protectswomen’s rights;

• government’s adoption in 1995 of theBeijing Platform of Action;

• government’s ratification in January1996 of the international Conventionon the Elimination of All Forms ofDiscrimination against Women(CEDAW);

• government’s signing in September1997 of the SADC declaration com-mitting the governments and coun-tries of southern Africa to the promo-tion of women’s empowerment andgender equality;

• the establishment of the Commissionfor Gender Equality (CGE) as anindependent constitutional body;

• the establishment of the Office onthe Status of Women (OSW) in theOffice of the President, with a man-date to promote and safeguard therights of all women;

• the establishment of provincialOSWs;



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• the establishment of Gender Desks(or Gender Focal Points) in nationaland provincial line departments;

• the introduction of measures andtargets to increase the representivityof women in the public service,especially at senior managementlevels;

• the promulgation of legislation thatpromotes the rights of women andprohibits unfair discrimination (includ-ing the 1998 Employment Equity Actand the 1997 Termination of Preg-nancy Act29 ).Despite these developments,

progress in translating policy commit-ments into effective plans and pro-grammes for implementation has beenslow, particularly in respect of servicedelivery. One of the main reasons forthis has been government’s inability tomainstream gender issues in the policiesand plans of line departments at na-tional, provincial and local levels.

In the Northern Cape, many of thewomen interviewed (including the headof the provincial OSW) expressedconcern about, amongst other things,the lack of official service provision orsupport in respect of domestic violenceand rape, teenage pregnancies, wom-en’s health issues, poverty alleviation,land tenure and housing30 . Attentionwas drawn to the lack of effectiveopportunities for women’s economicempowerment and the high levels ofunemployment, poverty and deprivationin female-headed households (25 per-cent of all households in the NorthernCape)31 . Concern was also expressedabout the continuing contradictionsbetween customary law and practiceand women’s rights.

In those departments that have set upGender Desks or Focal Points in line withnational policy, responsibility is usuallyassigned to relatively junior officialswhose views are rarely considered at thestrategic management level. There is alsolittle or no awareness raising or training

on gender issues taking place in govern-ment departments.32

Democratising the State

Democratising the workplaceIn order to promote greater internaldemocracy, the White Paper on theTransformation of the Public Service(WPTPS) advocated the establishment oftransformation units (TUs) in nationaland provincial departments. TUs pro-vide a forum for employee participationin the development of programmes toimplement transformation policies. TheWPTPS further recommended thatTransformation Co-ordinating Commit-tees be established at both national andprovincial levels to help co-ordinate thework of TUs and facilitate the sharing ofbest practices.

A review of twenty-seven out ofthirty departments at national levelfound that twenty had set up TUs33 , butthat their success in democratising theworkplace has varied significantly. Insome departments, there was lack ofsupport from political heads and topmanagement, who regard transformationas an ‘add-on’ rather than integral toother management practices and proc-esses. Hence, the establishment of TUswithin departments is not a guarantee ofa more democratic and participativeapproach to management.

Promoting external involvement andaccountabilityThe government is committed to trans-forming the state into an enablingagency that will serve and empower allthe people of the country in an account-able way.34 The aim of the Public SectorTransformation Forum (PSTF) is toinvolve civil society in the transforma-tion process. Made up of representativesfrom civil society organisations, thePSTF is envisaged as playing a pivotalconsultative and advisory role, specifi-


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cally in the formulation, implementa-tion and monitoring of public policy.Yet, despite the importance attached tothe promotion of people-centred gov-ernance in both the RDP and theWPTPS, progress towards the setting upof the PSTF has been slow.

The WPTPS and the Constitutionemphasise the importance of promot-ing public accountability and transpar-ency in the national and provinciallegislatures35 and in the various inde-pendent statutory bodies (notably thePublic Protector, the Auditor-Generaland the Public Service Commission)accountable to the National Assembly.

The Public ProtectorIn terms of the Public Protector Act of1994, the role of the Public Protector isto investigate and report on “anyconduct in state affairs, or in the publicadministration in any sphere of govern-ment, that is alleged or suspected to beimproper or to result in any impropri-ety or prejudice” and to take remedialaction where appropriate. Although ithas acted in a number of high profilecases involving senior governmentofficials, the bulk of the Public Protec-tor’s work has involved interventions ingovernment departments on behalf ofcitizens.

In its first nine months, the Office ofthe Public Protector dealt with over 500such cases and, according to its half-yearly reports to Parliament, hasachieved a high success rate in thisrespect. Shortage of funds and staff has,however, resulted in quite a seriousbacklog, which the recent doubling ofthe office’s budget (from R7,4 million in1998 to R15,4 million in 1999) shouldhelp reduce. There is no doubt that thework of the Public Protector representsan important advance in the promotionof the ordinary person’s access togovernment and ability to obtain re-dress. The enactment of the OpenDemocracy Act and Administrative

Justice Act broadens access to theseimportant rights.

The Auditor-GeneralThe Auditor-General’s reports to Parlia-ment have often highlighted financialmismanagement. These reports providethe basis for Parliament, and the PublicAccounts Committee in particular, tosummon and call to account the relevantheads of department and to recommendcorrective action. On a number of occa-sions, the Committee has refused tocondone unauthorised expenditurereported by the Auditor-General’s office.In addition to auditing and reporting onfinancial matters, the Auditor-General’soffice has conducted a number of per-formance audits, such as one relating toabsence due to illness in the public sector.

The Public Service CommissionThe Public Service Commission (PSC) isanother important check againstmaladministration. The reconstitutedPSC was formally established in July1999, having been in transition since1996. Under its new mandate, it pro-vides a monitoring, advisory and stand-ards-setting service in line with similarinstitutions in other countries (a roleformally endorsed in the Constitution).Despite the uncertainty created bychanges in functions and personnel, thePSC has been able to draw up a newCode of Conduct for the public service.It has also investigated and reported ona number of issues, including ethics,service delivery, human resource prac-tices and appeals and grievances.36

The government is committed to

transforming the state into an

enabling agency that will serve

and empower all the people of

the country in an accountable way



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Building OrganisationalCapacity for DemocraticGovernanceMeasures have been introduced topromote institution building and moreeffective management in the publicservice. Some of these relate particularlyto human resources development,workplace democracy and the manage-ment of diversity. This section concen-trates on two important issues raised inChapter 9 of the White Paper on theTransformation of the Public Service(WPTPS). The first concerns the decen-tralisation of managerial responsibilityand accountability; the second, theintroduction of more effective systems ofinformation management and technology.

DecentralisationThe WPTPS observes that the powers ofpublic service managers to lead anddirect change in a creative and visionaryway are constrained by the rule-boundand procedure-laden culture inheritedfrom the past. The method selected toovercome this is to devolve and decen-tralise managerial responsibility andincrease accountability for performanceagainst specified objectives. To this end,the public service regulatory frameworkwas scrutinised, incrementally dismantledin its entirety and replaced with a legisla-tive and regulatory framework designedto enable rather than hinder change.

A 1997 amendment to the PublicService Act transferred the executive

powers allocated to the Public ServiceCommission (PSC) to “executing au-thorities” (the President, Deputy Presi-dent, Ministers, Premiers and MECs) andgave regulatory and policy-makingpowers to the Minister for Public Serviceand Administration. “Executive powers”(with reference to executing authorities)means autonomy over personnel andorganisational matters within theirdepartments. The legislation also requiresthat all heads of department employedafter the commencement of the Act beappointed on five-year (renewable)contracts and provides for performanceagreements between executing authoritiesand their heads of department.

A 1998 amendment to the Act dealtwith the anomaly at provincial level.Although each province consists ofseveral departments, the 1994 PublicService Act treated the province as awhole as a ‘department’, with a provin-cial Director-General as its head andDeputy Directors-General headingindividual departments. This meant thatthe powers of individual MECs werediminished by the Director-General’scontrol over administrative and financialmatters. The amendment rectified thesituation by including provincial heads ofdepartment in the new definition of ‘headof department’. The 1999 Public FinanceManagement Act also required that everyhead of department be the accountingofficer in his or her department.

A new set of regulations, consistentwith the Constitution and the aboveamendments to the Public Service Act,came into effect on 1 July 1999. Theregulations lay down broad nationalnorms and standards in respect of issuessuch as: delegations, authorisations andresponsibilities; planning, work organi-sation and reporting; job evaluation;performance management and develop-ment; training and education, andlabour relations.

Rewriting the rulebook has been anessential element of the transformation

The powers of public service

managers to lead and direct

change in a creative and vi-

sionary way are constrained by

the rule-bound and procedure-laden

culture inherited from the past.


117


process, but there are some inherentrisks in the move towards decentralisa-tion and deregulation. There is a possi-bility that conservative forces in someprovinces may use their delegatedpowers to block rather than acceleratethe transformation process. Of equalconcern is the possibility that somenational and provincial departmentsmay not have the capacity to respondappropriately to the greater flexibilityprovided in the new legislative andregulatory frameworks. Successfulimplementation of the new regulatoryframeworks consequently requiresparticularly careful monitoring.

Information management, systems andtechnologyAdministrative transformation dependson accurate and accessible information.Existing information (particularly com-puterised) systems must be redesignedand upgraded to increase the accessi-bility and accuracy of information andto improve communication betweenand within departments and betweendifferent agencies and levels of govern-ment. The effective distribution of infor-mation and knowledge is essential tohuman development, contributing to thedispersal of power to people at all levels.

In response to concerns expressedby Parliament’s Public Accounts Com-mittee and the Portfolio Committee onPublic Service and Administration aboutthe lack of an effective overarchingframework for information manage-ment, systems and technology (IMST),the Ministry for Public Service andAdministration established a StateInformation Technology Agency (SITA).SITA combines existing state IT re-sources in a state-owned company witha view to the more effective manage-ment of IT issues.

The 1998 SITA Act provided for themerging of three existing IT resourceswithin the public sector. These are

Infoplan (a division of the armamentsparastatal Denel), Central ComputerServices (a component within the Depart-ment of State Expenditure) and the SouthAfrican Police Services IT division. SITAprovides IT services to national andprovincial departments on request, al-though Cabinet has the power to makethe service compulsory. In its new trans-formation priorities issued on 7 July 1999,the Ministry for Public Service and Admin-istration emphasised its commitment toimproving the quality of information usedin planning and decision-making.

Building Human ResourcesCapacity for DemocraticGovernanceThe urgent need to develop SouthAfrica’s human resources in general,and those of the public service inparticular, has been stressed in a varietyof policy documents. These include theRDP White Paper (1994), the WPTPS(1995) and the Department of Labour’sGreen Paper on a Skills DevelopmentStrategy for Economic and EmploymentGrowth in South Africa (1997). Under-pinning this urgency is the fact that, in1996, South Africa ranked last out of 46countries (at a similar stage of develop-ment) in terms of its human resourcesdevelopment performance,37 a factattributable to the legacy of apartheid.

The effective mobilisation, develop-ment and utilisation of human resourcesare important transformation goals intheir own right (in building individualand institutional capacity for democraticgovernance). They are also critical tothe success of the transformation proc-ess more generally. Accordingly, acoherent and holistic strategy for humanresources management and develop-ment needs to be developed at bothnational and provincial levels. A frame-work for this is sketched out in the



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White Paper on the Transformation ofthe Public Service (WPTPS) and is devel-oped in much greater detail in a numberof subsequent policy documents, espe-cially the White Papers on Human Re-sources Management in the Public Service(WPHRM 1997) and Public Service Train-ing and Education (WPPSTE, 1998).

Collectively, these documents form thebasis for human resources managementand development towards building thecapacity and career development oppor-tunities of all public servants, particularlythose from previously disadvantagedgroups. Such a system needs to be effec-tively and strategically planned,prioritised, resourced and monitored inline with the individual needs of staff andthe service delivery needs of individualdepartments. Moreover, the policy docu-ments pay special attention to the devel-opment of flexible working patterns, acareer public service with increasedcompetition and lateral entry and theintroduction of effective performancemanagement and appraisal systems.Other aspects include the use of incen-tives to promote individual and teamperformance and recruitment, and pro-motion and career advancement based onperformance and competence.

While some progress has been madeby a number of national and provincialdepartments, overall progress has beengenerally slow, variable and limited.38

Problems include a fragmented anduncoordinated approach to humanresources management (HRM) andhuman resources development (HRD)across the public service, the lack ofeffective systems for strategic planningand budgeting of HRM/HRD and theinability to link HR plans to service. Thelack of effective systems for performancemanagement and appraisal, slow progressin multi-skilling, delays and blockages inthe systems of recruitment and selectionand persistent discrimination in therecruitment, promotion, staff develop-

ment and training process are criticalfactors that limit transformation.

A framework for a new and improvedtraining system was set out in the 1998White Paper on Public Service Trainingand Education (WPPSTE). The aim is toreplace the ad hoc, over-centralised,supply-driven and poorly resourcedsystem of public service training with anew system. The new system will bedecentralised and flexible, strategicallyplanned, well co-ordinated and effectivelyresourced, demand-led and competency-and outcomes-based. It will be linked tothe Department of Labour’s new nationalskills development strategy and theDepartment of Education’s nationalqualifications framework.

The 1998 Report of the ParliamentaryPortfolio Committee on Public Serviceand Administration shows where thereis progress and where there is not. Itacknowledges progress made in devel-oping a consultative implementationprogramme for the WPPSTE and, inparticular, the establishment of a PublicService Education and Training Authority(in line with the proposals in the nationalSkills Development Act). It also notessignificant progress towards the develop-ment of the Capacity Development Stand-ard (CDS).

The Report also expressed someconcerns. One of these relates to the lackof a strategic, needs-based and outcomes-based approach to training and educationin a number of national and provincialdepartments. Another concerns the qualityand relevance of several of the trainingprogrammes provided by in-service andexternal providers. It also noted slowprogress by the DPSA in producing theplanned strategic guidelines for trainingand education and the fact that nationaldepartments spend less than the mini-mum 1 percent of payroll on trainingrecommended in the Skills DevelopmentAct. A particular concern related to therole of the South African Management


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and Development Institute (SAMDI): forexample, 67 out of 102 of SAMDI’s pre-planned courses for the first half of 1998were withdrawn or cancelled.

The DPSA’s Provincial Review Reportin 1997 revealed that some provinces hadskills shortages of crisis proportions. Thishas created a greater sense of urgency inrespect of training and capacity building.The decisive restructuring of SAMDI in1998 and 1999 is expected to pay divi-dends in the near future. However,SAMDI and the EU-funded Public ServiceManagement Development Programmeare, for the most part, designed to meetthe training needs of middle and seniormanagers. Below that level, departmentsare expected to take responsibility fortheir own training needs. There is, there-fore, no direct pressure on departmentsto deliver in terms of the training needsof their workforces.

Employment Policies andIndustrial RelationsThe Labour Relations Act (LRA) of 1995established a new bargaining council forthe public service – the Public ServiceCo-ordinating Bargaining Council(PSCBC) – together with sectoral councils(education, safety and security, generaladministration and health and welfare)and provincial and departmental bar-gaining councils. Up until then, thepublic service was regulated by its ownlabour relations legislation.

The 1996 three-year service agree-ment package included a new salarygrading system with six broad bandsand sixteen salary ranges. It raised theminimum wage to R17,000 per annumfrom R10,800 in 1994 and reduced theemployer contribution to the pensionfund from 18 percent to 17 percent ofsalary39 . It imposed a freeze on em-ployer-initiated retrenchments andintroduced the voluntary severancepackage scheme.

Annual salary increases for the threefinancial years were to be funded bybudgeted amounts, supplemented in thesecond and third years by savings from‘rightsizing’.40 In 1998, differentiatedincreases from 10,5 percent at thelowest levels to 0 percent at the highestwere agreed upon and increments of 5percent for senior management (direc-tors and chief directors) were madeconditional on the signing of a perform-ance agreement. One result of thesemeasures has been a reduction in thewage gap (between the highest andlowest paid employees) from 25:1 in1994 to 16:1 in 1999. This does not,however, meet the 12:1 target for 1999set in the White Paper on the Transfor-mation of the Public Service (WPTPS).

Three main issues emerged from the1999 negotiations. First, the COSATU-aligned unions pointed out that, al-though they support government’sefforts to transform the public service,they regard remuneration as a separateissue. Second, they called for pre-budgetnegotiations on improvements in condi-tions of service, so that agreementsreached can be effectively reflected inthe budget. Third, they threatenedrolling mass action (with obvious impli-cations for the disruption of services) ifgovernment failed to meet their de-mands for a 10 percent pay increase.

Despite union resistance, the govern-ment has resolved to review personnelcosts. This entails a review of currentbenefits and allowances relative towages and an investigation of payprogression to replace the current rank

The DPSA’s Provincial Review

Report in 1997 revealed that

some provinces had skills short-

ages of crisis proportions.



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and leg promotions. Other aspects to bereviewed include the restructuring ofthe pension fund (to permit greatermobility), current bargaining processes(to ensure the increased utilisation of asectoral approach) and the narrowing ofthe wage gap. At the same time, strate-gies to retain professionals and seniorstaff are being developed.

Developing a ProfessionalService Ethos: Serving PeopleThe introduction of improved pay andconditions, effective career paths for allpublic servants, greater opportunitiesfor staff development and training andmore participatory forms of manage-ment are designed to promote a moreprofessional ethos amongst staff at alllevels. The goal is the achievement ofgreater honesty, integrity and efficiencyin the public service as a whole. How-ever, for human development to begiven impetus, a number of additionalmeasures are necessary. These includethe introduction of a code of conductfor public servants and measures toeliminate corruption.

Codes of conduct and disciplineThe Constitution gives the Public Serv-ice Commission a major responsibilityto promote and maintain a professionalservice ethos in the public sector. In1997, the Commission developed a newCode of Conduct. The Code is framedin positive terms and conveys the spiritin which employees should performtheir duties and conduct relationshipswith the legislature and the executive,the public and their colleagues. There isalso a section on personal conduct andprivate interests.

Many public service managers sawthe disciplinary procedures in placebefore July 1999 as an obstacle to themaintenance of effective conduct anddiscipline. There was, furthermore, a

shortage of qualified staff in depart-ments and provinces to prosecute andadjudicate disciplinary inquiries. Follow-ing an investigation41 , the DPSA re-pealed these outdated procedures anddrafted a new disciplinary code andprocedures in line with the LabourRelations Act. These were made aResolution of the Public Service Co-ordinating Bargaining Council in January1999. The new streamlined code pro-vides for progressive discipline andcorrective action, a significant improve-ment since the perceived need for aformal inquiry in every case had ofteninhibited managers from exercisingproper discipline under the old system.

Combating corruptionThe introduction of a Code of Conductand a Disciplinary Code has laid a solidfoundation for a professional serviceethos in the public sector. Their success-ful implementation, in conjunction withperformance management systems,should play a positive role in combatingthe current high levels of corruption inthe service. Corruption seriously jeop-ardises the capacity of the public serviceto deliver improved services and under-mines public credibility and trust ininstitutions entrusted with delivery.Transparency International ranked SouthAfrica 23rd out of 54 countries in termsof corruption in 1996, and 33rd out of 52countries surveyed in 1997 – an indica-tion either that the problem is gettingworse or that corruption is receivinggreater exposure. President ThaboMbeki has, on several occasions, com-mitted government to fighting andpreventing corruption as part of abroader South African national integritystrategy and has been the driving forcebehind key initiatives.

A positive step by government in thefight against corruption was the estab-lishment of the Special Investigating


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Unit and Tribunal42 to investigateserious malpractice andmaladministration. The Special Tribunaladjudicates on matters referred to it bythe Unit (led by Judge Willem Heath)and uses civil proceedings to recoverstate assets and public money andprevent further misappropriation. ByNovember 1998, according to its unau-dited accounts, the Special InvestigatingUnit had recovered, saved or preventedthe loss of state assets worth R848million and an estimated R46 million incash. Other anti-corruption units in-clude the Investigating Directorate:Serious Economic Offences (IDSEO)43 ,a component of the Office of the Na-tional Director of Public Prosecutions,which concentrates on the prosecutionof ‘white collar’ criminals, and theIndependent Complaints Directorate,which investigates allegations madeagainst the police.

The work of such agencies will befacilitated by the Public Finance Man-agement Act of 1999, which regulatesfinancial management for all publicsector institutions. This should ensurethat more effective systems and controlsare put in place to prevent and detectcorruption.

Effective Resourcing for GoodGovernance and HumanDevelopmentSound financial planning, managementand budgeting is crucial to all societies,because it is concerned with the alloca-tion of scarce public resources towardsthe realisation of human developmentpriorities. In South Africa, this isespecially so. The major challenge is tobalance the need for a major invest-ment in social reconstruction, redistri-bution and poverty alleviation againstthe pressures of globalisation and the

associated requirements of macro-economic stability and fiscal austerity.

Since 1994, a number of strides havebeen made in this regard. From 1997/845 , provincial allocations received fromcentral government have been largelyunconsolidated, giving provinces discre-tion over the way in which their alloca-tions are prioritised and divided betweenthe different sectors. The provincialbudgets for 1997/98 were also the first tobe allocated under the formula devisedand recommended by the Financial andFiscal Commission to redress previousprovincial imbalances and to ensure amore equitable provincial distribution ofgovernment revenue in the future.

Another important aspect of budget-ary reform has been the introduction,from the 1998/99 financial year, of themedium term expenditure framework(MTEF). This rolling three-year budgetcycle replaces the previous system ofannual incremental budgeting, with itsattendant problems of rollovers and endof financial year spending sprees. TheMTEF at least potentially provides aframework for the more effectiveprioritisation and planning of projectsand programmes.

These measures have led to anumber of positive achievements,particularly in reprioritising budgets inline with national developmental goals.Although the total national budget hasfallen, in real terms, by R8.3 billionsince 1995/96, spending on key areas

Corruption seriously jeopardises

the capacity of the public service

to deliver improved services and

undermines public credibility and

trust in institutions entrusted with

delivery.



122

such as education, health, housing andwater has increased. At the same time,tighter financial discipline has overcomeserious problems associated with pro-vincial over-spending during the 1997/98 financial year. Yet, despite theseachievements, there are still a numberof major financial problems and manydepartments and provinces complainthat financial constraints are seriouslyimpeding their efforts to improve serv-ice delivery and achieve the govern-ment’s transformation goals.

The lack of effective financial plan-ning and prioritisation is a continuingproblem. Most provinces do notprioritise their budgets in accordancewith their policy objectives, nor do theylink them sufficiently with their activi-ties. Hence, when cuts are made, theyare often carried out in an arbitrarymanner without real consideration forthe effects on service delivery.46

Parastatals: The PrivateProvision of Public ServicesIn July 1995, the Minister for PublicEnterprises released the DiscussionDocument on the Consultative andImplementation Framework for theRestructuring of State Assets. The mainobjectives of restructuring are:• to facilitate economic growth;• to fund the Reconstruction and

Development Programme;• to create wider ownership in the

South African economy;• to mobilise private sector capital;• to reduce state debt;• to enhance the competitiveness of

state enterprises;• to promote fair competition, and• to finance growth and the require-

ments for competitiveness.The Discussion Document divided

parastatals into three categories, inrelation to the broad transformationalgoals and thrust of the RDP. The first

Box 7The National Anti-CorruptionSummit: steps towardspublic service integrity

As part of its ongoing efforts toaddress the problem of corruption,the government convened a NationalAnti-Corruption Summit in April 1999.

The Summit was preceded by conferences at thesectoral level. These included the Public Sector Anti-Corruption Conference, held in Parliament in November1998 and attended by Ministers, Premiers, MECs,senior government officials, chief executives ofparastatals, trade unions and a wide range of institu-tions engaged in anti-corruption initiatives. Conferenceresolutions were submitted to Cabinet and forwarded tothe National Summit.44

Delegates to the National Summit included repre-sentatives from business, organised labour, religiousbodies, NGOs and community-based organisations(CBOs), financial institutions, academic, professionaland sports bodies, the media, organised labour and thepublic sector.

The Summit resolved, amongst other things, thaturgent action should be taken to:

• review and revise current anti-corruption legislation;• develop and implement ‘whistle-blowing’ mecha-

nisms;• support the speedy enactment of the Open Democ-

racy Bill;• establish special courts to prosecute corruption;• establish sectoral co-ordinating structures and a

national co-ordinating structure to lead, co-ordinate,monitor and manage the anti-corruption campaign;

• publicise and promote the blacklisting of busi-nesses, organisations and individuals proved to beinvolved in corruption and unethical conduct;

• establish national and sectoral anti-corruptionhotlines, and

• develop, support and enforce codes of goodconduct and disciplinary codes in the public andprivate spheres.

The resolutions of the Summit were discussed at the 9th

International Anti-Corruption Conference, hosted bySouth Africa in Durban in October 1999.


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category consists of state-owned enter-prises (SOEs) whose explicit role it is toprovide basic services. The documentargued that a change in the controllingownership of these SOEs from publicto private without effective regulatoryprotection could emasculate the abilityof the state to realise RDP targets. SOEsin this category included Transnet,Telkom and Eskom. The second cat-egory consists of SOEs that have apublic policy or public interest dimen-sion but are more strategic, such asDenel, Armscor, Mossgas and Petronet.The third are SOEs with no publicpolicy role in meeting basic needs.These enterprises were divided intoprofitable and unprofitable.47

The National Framework Agreement(NFA) on the restructuring of stateassets was concluded between theunions and government on 25 January1996. The NFA proposes a number ofrestructuring options. These include:outright disinvestment of unprofitablestate-owned companies or parastatalsthrough private sales to the public;strategic equity partnerships (SEPs);outsourcing services to reduce expendi-ture and enhance efficiency; theredeployment of state assets for growthand development, and granting conces-sions to the private sector. The govern-ment subsequently established theNational Empowerment Fund (NEF) toencourage wider ownership of theSouth African economy, boost theSMME sector and facilitate genuineblack economic empowerment. Mod-elled on Malaysia’s successful, ethni-cally exclusive Bumiputra national unittrust scheme, up to 10 percent of eachparastatal is sold into the NEF, offeringhistorically disadvantaged communitiesthe opportunity to buy units in thefund at considerable discounts.

The NFA sets out the objectives ofthe restructuring programme andguidelines for its implementation. It

also creates substructures to take theprocess forward, including a ‘six-a-side’forum (government and labour) for themediation of conflicts and sectoralforums. The NFA’s approach is thatpublic enterprises have a key role toplay in transformation and develop-ment, particularly in extending serviceprovision to the previously disadvan-taged.

The political imperatives of transfor-mation and service delivery call for a“measured approach” towards restruc-turing, reaffirmed by President Mbeki inhis speech at the opening of Parliamenton 25 June 1999. The restructuringprogramme has been slowed down by anumber of factors. These include thesubstantial debts accumulated by anumber of parastatals as governmentsubsidies have declined; the transportparastatal, Transnet, for example, has adebt of R22 billion48 . Such debts mustoften be renegotiated before restructur-ing can take place. Another factor hasbeen strong union resistance to theretrenchments (and consequent joblosses) frequently required to streamlinestate companies in ways that makethem more profitable and attractive toprivate interests. The recent governmentback down on the proposed retrench-ments in Spoornet, the rail arm ofTransnet, is a case in point.

Transnational interests in publicprovisionDespite these obstacles, a number ofassets have been sold to strategic equitypartners during the past six years. Theseinclude the sale of a 30 percent stake inTelkom (for R5.6 billion) to the US-based SBC International and TelekomMalaysia in 1997 and the recent awardof a 20 percent stake in South AfricanAirways to Swissair at a price of R1,4billion. The Minister of Water Affairsand Forestry announced in March 1999



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that Safcol, the forestry parastatal withassets of R1-1,5 billion, would be priva-tised. Seventy-five percent has beenoffered to the private sector, 10 percentallocated to the National EconomicEmpowerment Fund and the remaining15 percent will be divided betweengovernment and employee share own-ership schemes.49

In his speech at the 1999 opening ofParliament, President Mbeki50 promisedfurther developments in the telecommu-nications sector and liquid fuels andpetro-chemical industry, including thefinalisation of negotiations with Mozam-bique for the construction of a gaspipeline. Jeff Radebe, the new Ministerfor Public Enterprises, also promised toaccelerate the restructuring of stateassets. New Zealand Post Internationaland the UK’s Royal Mail have beenappointed as the state’s preferredbidder for the Post Office’s strategicmanagement partnership, while BritishAerospace is said to be finalising theacquisition of a 20 percent stake inDenel, the armaments parastatal.

The first six years of restructuringhave clearly provided a learning curvefor government. Although the pace ofrestructuring and privatisation seemslikely to increase in the next eighteenmonths, the fundamental position of theNFA remains unchanged. Governmentstresses that it will continue to assess allrestructuring and privatisation proposalsagainst the promotion of development,the provision of basic services to previ-ously disadvantaged communities andthe impact on unemployment in thecountry.

Conclusions: ReclaimingGovernment for HumanDevelopment

Achievements and successes in publicsector transformationAt the policy level, government’s com-mitment to institutional transformationhas been demonstrated through a set ofwide-ranging policy documents (Greenand White Papers) and legislative inter-ventions. These are designed to trans-form the public sector into an agencythat is coherent, transparent, representa-tive and capable of achieving the crucialgoals set for it by the people and gov-ernment of South Africa. Many of thesepolicy initiatives have been in line with,and have sometimes exceeded, interna-tional best practice. They have alsobeen guided by the requirements of the1996 Constitution (including the Bill ofRights), widely acclaimed as one of themost liberal and progressive examplesof its kind. New labour legislationconforms to ILO standards.

The promotion of women’s empow-erment and gender equality havepushed South Africa from 141st to 7th inthe world in terms of the representationof female MPs. This is a significantmilestone.

The government’s commitment totransparent and accountablegovernment has been demonstrated byits willingness to submit itself to scru-tiny – through a free press, criticalinvestigations and the enactment of theOpen Democracy and AdministrativeJustice Acts.

Translating the new policy frame-work into effective forms of implemen-tation has led to significant achieve-ments. These include the integration ofthe previously fragmented public serv-ice into an integrated whole, the in-creasing representation of black people

A number of assets have been

sold to strategic equity partners

during the past six years.


125


at the senior management levels andthe reprioritisation of national budgetpriorities.

In respect of service delivery, therehas been considerable progress in theareas of education and health and inthe provision of subsidised housingand basic services such as water andelectricity.

Weaknesses and limitationsImpressive though some of theseachievements have been, the surface ofthe many socio-economic problemsand imbalances bequeathed by apart-heid has barely been scratched. Seriousproblems of unemployment, povertyand inequality continue to exist and, asthe government itself has acknowl-edged, much more needs to be done toaddress them.

Some of the constraints faced by thenew democratic regime in tackling theapartheid legacy include satisfyingpopular expectations raised by thetransition to democratic rule; mediatingthe wide range of competing political,social and economic pressures thatcontinue to be advanced by differentsocial forces in the country; reconcilingthe almost universal tension betweenthe internal needs of bureaucracy andthe needs of citizens; negotiating thedifficult path between political democ-ratisation and economic liberalisation,and confronting the many challengesposed by the increasing globalisation ofthe economy.

These constraints, together with thepolitical compromises built into the1994 democratic settlement (includingthe ‘sunset clauses’ in the interimconstitution designed to protect thebeneficiaries of the old order) haveclearly limited the government’s abilityto execute its ambitious programme ofsocio-economic reform as effectively asit would have liked. Another limitingfactor has been the disappointing

record to date in fully transforming thepublic sector into the efficient andeffective instrument for policy imple-mentation envisaged in the White Paperon Public Service Transformation(WPTPS). Progress has been particularlyslow in relation to ‘rightsizing’ (ratherthan ‘downsizing’); the representation ofwomen and people with disabilities;public involvement and participation;the development of a professionalservice ethos, and the effective imple-mentation of the Batho Pele principlesfor improving service delivery.

A number of problems underpin therelatively slow progress in public sectortransformation, many of which havebeen discussed above. They includelack of vision and strategic direction,ineffective strategic planning andprioritisation (with too much time beingdevoted to fire-fighting and crisis man-agement) and a lack of alignmentbetween strategic planning and thebudgetary process (with many depart-ments and provinces failing to prioritisetheir budgets in accordance with theirpolicy objectives, with the result thatreprioritisation has often resulted insevere cutbacks to health, welfare andeducation sector spending). The persist-ent culture is still rule-bound and awide range of procedural bottleneckscontinues to hamper prompt and effi-cient levels of service delivery. Furtherproblems include a relatively low levelof skills and capacity, poor staff moraleand continuing corruption and misman-agement in a number of national de-partments, provinces and local authori-ties.

Towards a government for humandevelopmentThe persistence of these problems andconstraints highlights the need for amore determined approach towardstransformation and human develop-ment. Evidence of such an approach



126

was demonstrated by President ThaboMbeki in his address at the opening ofthe new Parliament on 25 June 199951 ,when he pledged the new governmentto accelerating the process of servicedelivery.

Shortly afterwards, on 7 July 1999,the new Minister for Public Service andAdministration, Geraldine Fraser-Moleketi,announced a number of new initiativesfor accelerating the process of publicsector transformation. These include: (i)comprehensive review of the currentconditions of service in the public serviceand the development of a new wagepolicy; (ii) improvements in the quality ofinformation used in planning and deci-sion-making; (iii) accelerating the imple-mentation of the new public servicemanagement framework, the skills auditand the Batho Pele programme; (iv) thedevelopment of strategies for managingpersonnel costs and containing personnelexpenditure; (v) the development ofpolicy and guidelines for alternativeservice delivery mechanisms; (vi) fast-tracking capacity building programmesfor all public servants; (vii) the improve-ment of information technology andinformation management systems, and(viii) the development of the DPSA’scapacity to investigate and advise on theefficiency of the public service in theshort and medium term.

In speeding up the process of transfor-mation, the new government will be ableto draw on the wide-ranging recommen-

dations contained in the report of thePresidential Review Commission, anumber of which have been referred to inearlier sections of this report. Greaterpolitical will and decisiveness is necessaryto implement the goals of the WPTPSmore effectively. If it is to resolve thedisjuncture between policy objectives andoutcomes, government will need todistinguish between ineffective implemen-tation (resulting rather from a lack ofcapacity, particularly funds, than fromlack of commitment to the implementa-tion of government policy) and non-implementation (resulting from a lack ofcompliance with policy). Appropriate anddifferentiated strategies must be devisedto address these two issues. While moreeffective forms of support for departmen-tal, provincial and local governmentcapacity building will help address theissue of ineffective implementation, it isalso necessary to introduce a more rigor-ous system to tackle the issue of non-compliance.

The kinds of structural reforms recom-mended in the Presidential Review Com-mission report will need to beaccompanied by a more thorough-goingcultural reorientation of the underlyingvalues, attitudes and behaviour that have,in many cases, frustrated the process oftransformation. Strategies will be requiredto address the tendency to privilege theconsolidation of bureaucratic power andprestige over comprehensive reform (notonly amongst the ‘old guard’, but alsoamongst some new incumbents). Theeffective implementation of several newconduct and performance-related meas-ures (the Code of Conduct, the Discipli-nary Code and Procedures and depart-mental performance management sys-tems) will be crucial in bringing about thisreorientation.

Greater energy needs to be devoted toforging the kinds of creative partnershipsbetween the state and civil society envis-aged in the RDP and the WPTPS. Since

Strategies will be required to

address the tendency to privi-

lege the consolidation of bu-

reaucratic power and prestige

over comprehensive reform (not

only amongst the ‘old guard’, but also

amongst some new incumbents).


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1994, there has been discernible move-ment from the inclusive civil societyforums that characterised the early phasesof the transition towards a more socialcorporatist approach (particularly throughthe NEDLAC framework) that has privi-leged business and labour over other civilsociety organisations. The WPTPS recom-mendation of a transformation forum,through which civil society organisationsmay participate in public sector transfor-mation, has yet to be realised.

The need for more effective forms ofpartnership between the state and civilsociety has been bolstered by recentresearch52 , which has demonstrated that

the increased capacity of the state ispositively, rather than inversely, correlatedwith the increased vitality of civil society.As civil society grows more robust, thecapacity of the state to govern is in-creased. This research challenges thehitherto dominant neo-liberal policyprescription that democratic governancedepends on the ‘insulation’ of the statefrom society. In his opening address inParliament, President Mbeki committedthe government to working in closepartnership with the people, “to ensurethat we draw on the energy and genius ofthe nation to give birth to something thatwill surely be new, good and beautiful”.53

Notes1 Kaul [1995]2 References on all policy documents

referred to are listed at the end of thechapter.

3 Evans [1996], 6; Rodrik [1996]4 These include the Labour Relations Act

(1995), the Conditions of Employment Act(1997), the Employment Equity Act (1998)and the National Skills Development Act(1998).

5 Presidential Review Commission [1998], 176 Ministry of Finance [1998]7 NIEP [1996]; Marais [1997]8 Public Service Commission [1996b], 9.9 Public Service Commission [1996b], 7-8.10 Business Day, 18 February 1999; Depart-

ment for Public Service and Administra-tion [1997b]

11 Presidential Review Commission [1998]12 Listed on the PERSAL salary system and

receiving a pay cheque but either non-existent or receiving a salary elsewhereon the system.

13 Public Service Commission [1995]; Depart-ment for Public Service and Administra-tion [1998]

14 Sunday Times, 1 February 1998.15 Siyaya, Autumn 1999:916 Business Day, 14 July 199917 Presidential Review Commission [1998], 3518 Presidential Review Commission [1998],

37-819 Presidential Review Commission [1998], 2920 Presidential Review Commission [1998], 4121 Business Day, 15 July 199922 Department for Public Service and

Administration [1997c]

23 School of Government [1998]24 School of Government [1998]25 Presidential Review Commission [1998],

109-11026 School of Government [1998], 10327 Public Service Laws Amendment Act, 1997.28 Presidential Review Commission [1998],

125-12729 which has transformed women’s reproduc-

tive rights by providing women withchoice of termination over pregnancy.

30 Women face particular difficulties inrelation to tenure, a precondition for thehousing subsidy.

31 School of Government [1998]32 School of Government [1998], 133-13533 Department for Public Service and Admin-

istration [1998]34 Ministry for Public Service and Administra-

tion [1995], 1535 See Chapter 2 of this Report.36 See, for example, Pubic Service Commis-

sion [1998]37 World Competitiveness Yearbook, 199638 Department for Public Service and Admin-

istration [1997b]; Presidential ReviewCommission [1998]

39 Subsequently, employers’ contribution tothe pension fund was further reduced from17 percent to 15 percent of salary.

40 Disputes arose during the second year(savings did match the projections) and inthe third year (government budgeted onlytwo-thirds of the amount previouslyagreed upon). Consequently, increases thatshould have been implemented from 1July in both 1997 and 1998 were onlyapproved much later in those years.



128

41 by the Portfolio Committee on PublicService and Administration in 1998

42 In terms of the Special Investigating Unitsand Special Tribunals Act, 1996.

43 formerly known as the Office for SeriousEconomic Offences

44 Sangweni & Balia [1999]45 This innovation was the result of the 1996

Constitution.46 Department for Public Service and Admin-

istration [1997a], 4247 Department of Public Enterprises [1995]48 Transnet (which controls South African

Airways, Spoornet, Metrorail, Portnet,Petronet, Autonet and Fast Forward)

declared a loss of R426 million for 1998/1999 after making a R278 million profit in1997/1998. It subsequently announced thatcompanies making a loss, such as Autonetand Fast Forward, would be privatised(Sunday Times, 18 July 1999)

49 Business Day, 5 March 1999.50 In his speech at the opening of Parliament

on June 199951 In his inaugural address at the opening of

the new Parliament on 25 June 1999.52 Rodrik[1996]; Evans [1996]; World Bank

[1997]53 Mbeki [1999], 3

transforming processes for hum

an development

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Transforming processes forhuman development:Some sites, instruments &modes of empowerment

5



an development

130

“Deepening democ-

racy in our society

is not only about vari-

ous governmental and

non-governmental insti-

tutions. Effective democ-

racy implies and requires

empowered citizens. Formal

rights must be given real sub-

stance. All of the social and

economic issues (like job crea-

tion, housing, and education)

addressed in ... the RDP are

directly related to empowering

our people as citizens.” “1


an development

131


Introduction

In an era of globalisation, the subjec-tion of humanity to narrow market-driven considerations constitutes one

of the biggest threats to the realisationof full human potential. Measurementof progress is now being subjected toeconomic categories and descriptionsthat are devoid of human and socialcontent and considerations. Economicsis spoken about as if it is comprisedonly of ‘things’ – such as fundamentals,factors of production, resources, ratesand investment – rather than of people.In the light of this growing globaldiscourse that threatens to underminewhole countries and regionsof the world, it has becomemore important than ever tofocus on human developmentand people’s participation inchanging their own condi-tions. It is against this contextthat transforming processesfor human developmentbecome critical. Such proc-esses are integral to somesites and instruments ofdevelopment and transforma-tion, such as education, theeconomy, the householdsphere and new modes ofengagement.

Considering the short timeframe since the 1994 elec-tions, great strides have beenmade in transforming SouthAfrican society, especiallypolitical society. These are, asshown in the precedingchapters, formal governinginstitutions, state structuresand ‘action spaces’ betweenthe state and civil society.Less transformation hasoccurred at the householdlevel (manifested in pro-

foundly unequal gender relations andgender-based violence) and in theprivate sector sphere (the market).

The challenge is to sustain the mo-mentum in political society and toextend it to the household sphere andmarket sector. This will, in many ways,prove the most difficult aspect of thetransformation process. What are thepossibilities and ways of doing this?How can processes of development inthese spheres become transformative?Figure 5.1 highlights the significance ofthe relationship between human devel-opment, economic growth, the

Figure 5.1: From human development to growth – and back

HumanDevelopment

Socialreproduction

CapabilitiesWorkers and farmersEntrepreneursManagers

Employment

Production, R&Dand technology

Composition ofoutputs and exports

Socialpriorityspending

Householdexpenditureon basic needs

Governmentpolicy andexpenditure

Household activitiesand expenditures

Employment

Economicgrowth

Foreignsavings

Domesticsavings

Physicalcapital

Social capital, NGOs and community organisations

Distribution of private and public resources

Institutions and governance

Source: UNDP, Human

Development Report, 1996: 68.



an development

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household sphere and government/civilsociety interventions in this regard.Critical to this relationship are theprocesses involved in moving fromhuman development to growth andback; and the types of interventionsrequired to modify relations within thehousehold and market spheres sincethese are mutually reinforcing.

The links between economic growthand human development are not auto-matic, as is evident from South Africa’sapartheid past. What policy interven-tions, therefore, are needed to ensuresuch linkages? That human develop-ment requires investments in education,welfare, health and basic infrastructureis unarguable. While countries differ inhow they translate growth in incomeinto human development (humandevelopment efficiency) or humandevelopment into economic develop-ment, evidence2 indicates that theabsence of the one undermines theother.

As discussed in earlier chapters,other elements that are critical to humandevelopment and economic growthinclude political freedom within theframework of plural democracy andhuman rights, environmentalsustainability and institutional change toensure citizen participation. To usedemocratised governing institutions forthe broader purpose of social transfor-mation requires a critical understandingof the processes that shape these insti-tutions. It is in this context that an

examination of participation opportuni-ties that privilege organised civil societysectors also acquires importance.

A central concern is how to ensurethat the very processes, sites and modesof engagement are transformed as partof the structural changes underway. Akey site and instrument for democratisa-tion, both in terms of process andoutcome, is education. As a criticalelement in human development, educa-tion is important in addressing povertyin terms of improving capabilities andexpanding access to opportunities aswell as achieving economic outcomes.In the South African context, educationalso forms the basis for reversing theentrenched culture of apartheid and itssocial engineering. This chapter, there-fore, also provides an overview ofeducation for democratisation, empow-erment and transformation.

Key among the challenges facingSouth Africa is the need to build itsyoung democracy, while simultaneouslytransforming the economy away from itsapartheid legacy. Recent estimates showthat over 45 percent of the populationlive in poverty. Yet the country is notpoor. A large part of the problem is theextent of inequality, placing SouthAfrica amongst the most unequal coun-tries in the world3 . Indeed, it is increas-ingly recognised by all constituenciesthat a sustainable political democracy inSouth Africa depends on reducing thehigh levels of inequality and poverty4 .

The structure of the economy can-not, however, be transformed by currentdecisions alone. For example, whilenew labour-intensive investments canhelp shift the economy away from itshistorical capital-intensive bias, thismust be seen as a gradual, long-termprocess. This chapter also provides anoverview of some key elements, sitesand processes that shape economicempowerment, democratisation andderacialisation.

To use democratised governing

institutions for the broader

purpose of social transforma-

tion requires a critical under-

standing of the processes that shape

these institutions.


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Transforming South Africa’s socialand economic relations also requiresforms of institutional engagement,instruments and processes that candeliver over the long-term. To furtherthis goal, the Reconstruction and Devel-opment Programme (RDP) called for afundamental change to the way inwhich policies are made and imple-mented. New modes of institutionalengagement are designed to ensure thatall people are involved in decision-making, and not only during periodicelections5 . As a result, recent years haveseen the rise of a host of extra-parliamen-tary institutions established to promotecitizens’ involvement. These include thenational policy-body, the National Eco-nomic Development and Labour Council(NEDLAC)6 , and regional, sectoral andworkplace forums in labour law.

Extra-parliamentary institutions areexpected to work alongside the newparliamentary democracy. A wider anddeeper democratisation may beachieved by decentralising power tocivil society. Such a process could meetthe more stringent definitions of de-mocracy such as “enhancing the capac-ity of people to take control of theirlife’s conditions.”7 For some, however,the achievement of parliamentarydemocracy is seen as sufficient. In thisview, democracy means only politicalcompetition between different politicalparties. Indeed, such observers see theinvolvement of extra-parliamentarystructures in policy-making as “undemo-cratic”. After all, they ask, is it not the jobof an elected Parliament to make laws?8

There are other challenges to therole of extra-parliamentary institutions.Is it feasible to determine macroeco-nomic policy through consensus? Arethe main constituencies actually com-mitted to such extra-parliamentaryprocesses? Do such processes offerlonger-term gains or are they delayingimplementation of change? To betterunderstand these issues, NEDLAC is

examined as a particular mode of en-gagement in the process of both democ-ratising and deracialising the economy.

One of the key dilemmas in anyproject of societal transformation asmassive as the transition from apartheidto democracy is the relationship be-tween change and transformation. Anysociety can undergo significant changes.However, these may not necessarily leadto any substantive reshaping of powerrelations. Changes in government andpolicies may not necessarily lead toequality, democracy and the eradicationof the apartheid legacy. In order tobring about transformation, the outcomeof those changes must be the creation ofan equal society. Therefore, the house-hold sphere of activity and its contribu-tion to human development is analysedas a key site for transformation.

In the section that follows, educationis reviewed as an essential process ofimproving human capabilities and ofproviding opportunities to push, simul-taneously, the concept of human devel-opment efficiency and that of attainingredress. Educational input has thegreatest potential to promote humandevelopment and economic growth9 .

Education as a Site andInstrument of Transformationand Human DevelopmentTranscending the legacy of apartheid inSouth Africa means increasing the rangeof human capabilities available to thepoorest people. This means movingaway from education viewed narrowlyas a means for the development of

A wider and deeper democrati-

sation may be achieved by

decentralising power to civil

society.



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resources – as though people aremerely resources for economies toharness and use. Education should beviewed as a human and social processto be promoted for human develop-ment. Access to education, therefore, isan important means towards humandevelopment, rather than simply a toolto produce human resources for thelabour market.

In the South African context – withits huge legacy of inequalities – educa-tion becomes even more fundamental inthe realisation of a non-racial, non-sexist and equitable society. In a coun-try where denying access to educationand literacy was one of the principalmeans for reproducing apartheid, fullaccess to quality education is a criticalcomponent in transforming the apart-heid society to a full democracy. Thestructural changes that have taken placein education are thus located within theframework of the broader politicalimperatives and struggles shaping SouthAfrica’s transition to democracy.

Apartheid was essentially a particular– and vicious – form of racial oppres-sion and discrimination. Its principalfeature was the national oppression ofblack people, particularly Africans, in allspheres of life. The economic founda-tions of apartheid rested on the exploi-tation of the African majority throughthe creation of a cheap labour system.Within this context, apartheid wascharacterised by acute gender inequali-ties, which were reproduced on theterrain of racial and class oppression.Apartheid effectively harnessed, repro-duced and extended the gender in-equalities already embedded throughoutall levels of South African society.

Thus it is clear that apartheid com-bined racial, gender and class oppres-sion and exploitation. Ultimately, apart-heid could not function or reproduceitself without the intricate and inter-dependent relationship between thesethree social contradictions. The transfor-

mation of South African society, there-fore, requires that the race, class andgender contradictions be tackled simul-taneously and not sequentially, despitethe fact that the racial contradiction wasalways the dominant one. Focusingprincipally on one aspect – no matterwhat progress can be made – is likely tolead to the exacerbation of the others,thereby undermining the entire transfor-mation effort. The education systemprovides one of the most strategicpoints of intervention for addressingthese contradictions at a systemic level.

Black people, Africans in particular,were denied the opportunity of educa-tion; where they received it, it was of apoor quality with severe limitations forprogression even within that system.This was the racial character of apart-heid education. Black people were, byand large, given only the education theyrequired to provide unskilled, and atbest semi-skilled, labour in theeconomy, limiting for the majority theopportunities for upward advancementbeyond certain forms of manual labour.This was the class character of apartheideducation. Within this system, women,particularly African women, had theleast access to education and the leastopportunity to advance within thesystem.

Education in South Africa has alwaysbeen part of intense struggles forchange. While these contestations werefought on a terrain with its ownspecificities, they also reflected thebroader struggles between the demo-cratic forces and the apartheid order.Taylor draws attention to the signifi-cance of the education struggles in thebroader anti-apartheid struggle:

Education has always been a site ofstruggle during the different phases ofmass mobilisation. In the 1970s massresistance against the education systemwas an outcome of both the economicand political crises that resulted from


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continued repression and which led tomass student resistance in 1976. In the1980s, under the broad umbrella of theUDF and the student movement, theschools once again became a site ofresistance… In retrospect, while theeducation campaigns of the 1950s and1980s did not result in significantchanges to the education system, theydid create a platform from whicheducation needs could be addressed.10

Education has thus become both asite and an instrument for transforma-tion. It is a site in that educationaltransformation must be measuredagainst the goals of the RDP. That is,the extent to which education is trans-formed reflects the extent to which thetransformation of South African societyis progressing. Education is an instru-ment for transformation and implemen-tation of the RDP in that educationaltransformation will enable realisation ofthe RDP.

However, the struggles for thetransformation of education also reflectbroader tensions and dilemmas in thetransformation of society as a whole.The key challenge facing South Africa’semerging democracy is how to useexisting and inherited state structureswhile simultaneously seeking to trans-form them. Thus, government has hadto manage the turbulence of changewhile at the same time maintaining theexisting education system. This isclearly evident in the schooling, highereducation and adult basic educationand training spheres of the system. Aconsiderable portion of the govern-ment’s budget is spent on education.11

As such, it is necessary to review thevarious levels of education and themanner in which resource allocationsare related to issues of redress andtransformation of the system as awhole.

SchoolingThe state of schooling represents thecentral challenge of educational trans-

formation. Without significant structuraltransformation of schooling, there canbe no transformation of education inSouth Africa and limited change atsocietal level. Based on what is perhapsthe most comprehensive survey everundertaken on South African schooling,the School Register of Needs Survey, afuller picture of the state of schooling inSouth Africa emerges.12 This is reflectedin the box on the following page, whichhighlights just some features of theschooling system. A central featurecaptured by the statistics is that the mostdisadvantaged provinces are those thathad to incorporate the formerBantustans, where population concen-trations were high. For instance, 70percent of all African children areschooled in the former Bantustans andrural areas. In addition, 24 percent ofAfrican schooling takes place in under-resourced farm schools.15

Literacy and an integrated system ofeducation and trainingSouth Africa has one of the highest ratesof illiteracy in the world. The 29 percentof the adult population that isfunctionally illiterate consists of about7,5 million adults.16 In some provinces,nearly half of the adult population isilliterate. Further, 53 percent of thepopulation living on less than R350 permonth receives only 40 percent of themoney allocated to education. Women,particularly those in rural areas, areaffected more than males – 20 percentof African women older than twentyyears have no formal schooling. Ofsignificance also is the fact that 27,000learners with disabilities are outside theformal school system.17 A prerequisitefor an informed and active citizenry is aliterate population. The ability to accessinformation and communicate appropri-ately is key to economic and socialempowerment in all spheres of society.

Illiteracy remains one of the mostdisempowering factors faced by a large



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Apartheid backlogs in schoolingNo water is available in 24 percentof the schools in the country, andless than half of schools (43%)have an electrical power supply.The lack of power supply is mostprominent in the Northern Province(79%), the Eastern Cape (77%) andKwaZulu-Natal (61%).

A maximum of 37 percent of schools have telephones,except in the Northern Cape (77%), Western Cape (88%)and Gauteng (85%). Most striking from this survey is theidentification of toilet facilities as one of the most neglectedareas of provision. Provinces with the most severe shortageof toilets were KwaZulu-Natal (a shortage of 66,921 toilets),Northern Province (a shortage of 51,324 toilets) and theEastern Cape (a shortage of 46,785 toilets). Where toiletswere provided, 47 percent were pit latrines and 34 percenthad flush systems. At 13 percent of schools, no toilets of anykind were provided for learners.

The provision of media equipment, media collections,learning equipment and materials was almost non-existent:82 percent of schools had no media equipment at all. Thereis also an extremely poor provision of media centres (includ-ing libraries) in most of the schools. For instance, only 2percent of primary schools in the Northern Province, FreeState and Eastern Cape had media centres. In addition,between 44 percent and 47 percent of schools in KwaZulu-Natal, Free State, Eastern Cape, Northern Province andWestern Cape were without sports facilities

With regard to classroom shortages, based on a learner-classroom ratio of 40:1, it was estimated that in 1996,57,499 classrooms were needed nationally. Classroomshortages are extremely high in the Eastern Cape (15,538),KwaZulu-Natal (14,534) and the Northern Province(13,670).

The gender inequalities within the education sector arestriking and reflect the inequalities in the wider South Africansociety. While 64 percent of all teachers are women, maleteachers hold 58 percent of principal posts, 69 percent ofdeputy principal posts and 50 percent of heads of departmentposts. Until very recently, women teachers did not qualify forthe government’s ‘home owner’ scheme, and gender-baseddifferentiation in salaries was only eliminated in 1992.13

Only 33 percent of women/girls participate in school sportsas opposed to 77 percent of men/boys.14

Girls are also susceptible to other pressures and realities.For instance, South Africa has a teenage pregnancy rate of 33percent, affecting the education of girls quite severely. Girlsare usually expelled as a result, but boys who impregnategirls are allowed to continue with their education.

majority of the people of the country. Itaffects democratic participation, andconsequently hinders human develop-ment. The most positive developmentin this regard is the importance thenew Minister of Education, KaderAsmal, places on this particular issue.18

Indeed, key priorities in Tirisano19

(Ministry of Education’s Ten Point Plan)will help to guide resources to wherethey are most needed.

For Adult Basic Education andTraining (ABET) to have meaningfulresults, it needs to be part of an inte-grated implementation plan for allspheres of activity, especially theworkplace and household. The diffi-culty is that two separate governmentdepartments, education and labour,have historically performed these twofunctions independently of each other.Despite efforts at co-ordination, theirjoint efforts have proved far fromadequate. The challenge, therefore, isthe extent to which the private sectorcan be mobilised to be truly part of theeducation and training effort. This willrequire strong state leadership. TheSkills Development Act (1998) is afurther major step towards enhancingtraining and skills development, par-ticularly given the fact that South Africaspends far less on training than coun-tries at similar levels of development.20

Higher educationEducational institutions and policymakers in South Africa need to recog-nise the significant relationship betweenresearch and development and technol-ogy for industrial production andcommunication. Because of the linkbetween human development andtechnological advances, education andresearch that is geared to a globalisingeconomy must begin to focus on themanner in which trade patterns change.These are the linkages that providecountries with an alternative form ofcomparative advantage.


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People’s education is education for the‘people’… people who aspire to non-racialism and democracy, and who arepredominantly black and working class.Accordingly, this education is non-racial and democratic, and primarilyinformed by the aspirations of thenationally oppressed blacks and theexploited working class.25

Transformation of education policy as aninstrument for human developmentBetween April 1994 and June 1999, thebiggest shift in education policy in thehistory of South Africa took place. Thesechanges were based on the educationclause in the Constitution as reflected inthe box on the following page.

The White Paper on Education andTraining succinctly captured the valuesand principles that underlie the neweducation policy. It re-affirms the Con-stitution by stating that education andtraining are basic human rights. There-fore the state “has an obligation toprotect and advance these rights, so thatall citizens irrespective of race, class,gender, creed, or age have the opportu-nity to develop their capacities andpotential, and make their full contribu-tion to the society”.27

Education as a democratic processThe White Paper also firmly entrenchedthe right of parents or guardians to beconsulted by the state with respect tothe form of education best suited totheir children. It stated that theoverarching goal of policy must be toenable all individuals to have access toand succeed in lifelong education andtraining of good quality. Underpinningthis new policy was an acknowledge-ment of the responsibility of the state toensure redress of past inequalities.

Education for empowermentThe new educational policy frameworkalso located educational transformationfirmly within an economic developmentprogramme in which human resource

In addition, the extent to which allSouth Africans are a part of the educa-tional process is the extent to which thiscomparative advantage will be meaning-ful. The participation of African studentsin higher education more than doubledbetween 1986 and 1992, but still repre-sented only one-sixth of that of whites.While in 1993, women’s enrolment atuniversity was 49 percent; in thetechnikon sector it was only 30 percent.However, this apparent equity at univer-sities masks the fact that only 21 percentof registered women students were in thenatural science programmes.21

Academic staff and senior manage-ment in institutions of higher educationalso remain predominantly white andmale. For instance, studies showed that87 per cent of staff at universities andtechnikons was white and 68 percent ofall staff at these institutions was male.22

Another critical problem facing highereducation is the amount of student andinstitutional debt carried over from theapartheid years, but which in manyinstitutions has continued to grow after1994. By mid-February 1999, studentdebt stood at R500 million. This isagainst a background of fallingenrolments, particularly in crisis-riddenhistorically-black institutions.23

Transforming Education forHuman DevelopmentTransforming education for humandevelopment involves five centralobjectives and principles – non-racial-ism, non-sexism, a unified system,democracy and redress.24 In the contextof the anti-apartheid struggles, theseprinciples are a response to the particu-lar race, class and gender features ofSouth Africa’s education system andtheir interrelated articulation. Therelationship between education andbroader transformation is capturedunder the rubric of ‘people’s educationfor people’s power’, as expressed byMashamba:



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development features prominently.Particularly important is the fact that theWhite Paper combines, both conceptu-ally and programmatically, humanresource development and the develop-ment of multi-skilled citizens able toparticipate in the processes of democ-racy.

The main theme of the RDP’s humanresource development programme isthe empowerment of people, througheducation and training, includingspecific forms of capacity-buildingwithin organisations and communities,to participate effectively in all theprocesses of democratic society, eco-nomic activity, cultural expression andcommunity life.28

In line with the RDP, education is notseen simply as educating for economicneeds and the labour market, but alsoin terms of human, social, intellectualand cultural development. However,translating this into practical reality,within the context of global pressureson South Africa as a developing coun-try, poses some serious dilemmas andtensions.

Implementing EducationalProcesses for HumanDevelopmentSignificant as they are, policy frame-works do not automatically translateinto structural changes in the system.Instead, their implementation becomesan intense site of struggle. Structuraltransformation also needs to be as-sessed to determine the extent to whichpolicy shifts have been translated intoopportunities for the majority. In addi-tion, the implementation process mustfocus on the extent to which educa-tional changes in South Africa havedealt with the race, class and gendercontradictions – not in isolation but inrelationship to each other. In otherwords, one needs to examine the extentto which government has intervened inthe cycle of causality of poverty andinequality to improve the supply anddemand for human capital and to buildsocial cohesion.

Finance and redress as key processesThrough its RDP Presidential LeadProjects, government set aside anamount of R1,2 bn to build classroomsin 1994. By the end of the term of thefirst democratic government, almost10,000 classrooms had either been builtor repaired and more than 80 percent ofthe allocated money spent.29 Thisamounts to classroom space for about350,000 students, taking an average 1:35classroom size. Most, if not all, of theseclassrooms have been built in blackschools, particularly in the rural areas.This accounts for about one-fifth ofestimated classroom shortages in 1997.Despite these achievements, it shouldbe noted that school enrolment in-creased by 1,5 million between 1994and 1999.30 This is a significant devel-opment, but puts further strain on thesystem.

Education as a Basic HumanRightEveryone has the right –a. to a basic education, including

adult basic education; andb. to further education, which the

state, through reasonable meas-ures, must make progressively available and accessible

Everyone has the right to receive education in the officiallanguage or languages of their choice in public educationalinstitutions where that education is reasonably practicable. Inorder to ensure the effective access to, and implementationof, this right, the state must consider all reasonable educa-tional alternatives, including single-medium institutions,taking into account –a. equityb. practicability; andc. the need to redress the results of past racially discrimina-

tory laws and practices.26


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At the same time, redeployment andanticipated retrenchments have led to adrop in enrolments in teacher educa-tion colleges and faculties of educationat universities. If demand should againrise, this could pose a serious threat toteacher education in the future. Thereis a danger of severely running downthe capacity of many higher educationinstitutions to provide teacher training.Effective training of adequate numbersof teachers to respond to the growthand transformation of the educationsystem is critical to the change andmanagement of South Africa’s educa-tion system.

An even bigger (political) dilemmais that, as the better-off communitiesare required to pay more to fund theschooling of their children, the middleclass – both black and white – maybegin leaving the public school systemin large numbers. The more difficultiesgovernment experiences in fundingpublic education, the more the middleclasses may consider taking their chil-dren to prestigious private schools withsmaller classes and good facilities, withnegative effects on the quality of edu-cation and governance expertise re-quired in the schools they leave. Al-ready the tendency is for the blackmiddle class to send their children tobetter-off public schools, leaving ruraland township schools further impover-ished of both money and parentalexpertise.31 In this situation, it becomesessential for government to considerthe conscious use of social priorityratios in allocating funds.

In higher education, funds havebeen allocated to cover physical back-logs in historically black institutions.Between 1994 and 1999, about R1,2 bnwas spent to support poor but aca-demically deserving students with loansand bursaries in higher education.32

This accounts for about 80,000 blackstudents who would not otherwise

have been able to study in highereducation institutions. Significantly, alllegislative, policy and implementationmeasures have incorporated either aredress fund or redress mechanisms.This ensures that the issue of redressacquires a specific focus and is notmerely subsumed in educational spend-ing.

Using social allocation ratios33 andsocial priority ratios34

The issue of redress runs the risk ofbeing ghettoised and not integrated intothe very transformation of educationitself. For instance, the question ofredress in many institutions is treated assomething set aside to assist blackstudents, while the balance of the fundsis used to continue with ‘normal’ educa-tional activities and is not used toreprioritise educational needs. Forexample, while the government’s Na-tional Student Financial Aid Schemesupports thousands of black studentseach year, there has been little curricu-lum transformation in institutions ofhigher education to cater for changingsocial and political realities in thecountry. This means that funds used foracademic activities are still largelyreinforcing the old curricula and waysof teaching. This tendency can bereversed through the use of socialpriority ratios. Such ratios can provide

Between 1994 and 1999,

about R1,2 bn was spent to

support poor but academically

deserving students with loans

and bursaries in higher education...

about 80,000 black students would not

otherwise have been able to study in higher

education institutions.



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clear links between government’spolitical priorities (such as curriculumtransformation) and the need for socialallocations that simultaneously respondto issues of redress and other problems.

The higher education sector is alsocrippled by the amount of student andinstitutional debt inherited from apart-heid. Without a national strategy andmechanisms to deal with this debt, thevery transformation of higher educationwill be undermined. One of the nega-tive effects of this debt, particularlystudent debt, is that an increasingnumber of black students is beingexcluded from institutions of highereducation.

Additional funds are needed totackle the enormous backlogs in educa-tion, so as to lay a firmer basis forprovision of quality education to thepoor. This might well mean a revisionof government’s own budget deficittargets or the reprioritising of thebudget to release more funds for educa-tion. The release of earmarked fundingto target backlogs in specified key areasof provision might well be the onlypath to creating better educationalopportunities for the majority of thepeople of the country.

The process of redistribution andprofessional development of teachersRedistribution and the professionaldevelopment of teachers are closelyrelated to the redistribution of fundingas personnel costs consume a nationalaverage of about 91 percent of SouthAfrica’s schools budget.35

A large percentage of South Africanteachers are under-qualified or poorlytrained.36 In order to turn around theeducation system and implement newcurricula, teacher development is ofstrategic importance. Recognising this,the current government has placed newemphasis on this question.37

The process of centralisation anddecentralisation of education asinstruments of transformationOne of the key structural issues in theSouth African education sector is that ofthe relationship between the centralisa-tion and decentralisation of education.There is general consensus that both areneeded to ensure the transformation andsmooth running of the education sys-tem. At the centre of the disputesaround this question is the extent towhich each should occur, and in whichspheres of control and administration.

Civil Society, Government andthe Business Sector – TirisanoCommunities, the private sector and thelabour movement need to play a leadingrole in literacy provision and skillstraining. Such mobilisation can becomean important lever to access the finan-cial and human resources needed toensure educational transformation forhuman development.

Democratic participation in thetransformation of educationNot only was the role of democraticmass organisations important in thedefeat of apartheid, but the very trans-formation of education in the currentperiod is premised on strong massparticipation, as captured in the RDP’snotion of people-centred and people-driven change. Mass organisations aremore than just players in the struggle forstate power; they are about changingclass and power relations in the spheresin which they operate, one of which iseducation. Indeed, the capacity of thestate to transform education is depend-ent on the strength of mass participa-tion. It is for this reason that the role ofmass organisation in mobilising commu-nities for educational change is a criticaldimension in the structural transforma-tion of education.


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The weaknesses in mass organisa-tions in the education sphere arise fromthe strategic dilemmas facing theseorganisations in the new period. Onthe one hand, they must decide how tosupport and be an active part of gov-ernment without sacrificing their au-tonomy or compromising the interestsof their constituencies. Conversely, howdo they advance the interests of theirconstituencies – which are still largelypoor and disadvantaged – without atthe same time undermining govern-ment and the emerging democraticorder?

While transformation of the educa-tion system is essential to addressdeprivation in human capabilities, itspotential is limited if it does not lead toopportunities for economic empower-ment and democraticisation.

Economic EmpowermentProcesses for HumanDevelopmentThis section examines the relationshipbetween government policies intendedto empower people economically andhuman development. The term ‘em-powerment’ is used to denote people’sdemands to be recognised, consultedand valued. In a narrow sense, it isused to describe a wide range of effortsto enhance the power of individuals,groups and organisations in society. InSouth Africa, where the term is used ina specific context, it is often seen as away of promoting the role of unions inindustry, the participation of emerginginvestors in capital markets and therole of disadvantaged communities inthe economy. Fundamentally, it is theprocess of changing the balance ofpower in favour of those who werekept out of the mainstream of eco-nomic and social activity as a result ofapartheid.

In organisation and management,empowerment has an external andinternal dimension. The external dimen-sion refers to the involvement of clientsand customers in the decision-making ofthe organisation.38 In internal manage-ment processes, therefore, the term‘empowerment’ may be used to refer tothe delegation of power in order tocreate an enabling environment. In thissense, ‘empowerment’ is “a process ofenhancing feelings of self-efficacyamong organisational members throughthe identification of conditions thatfoster powerlessness and through theirremoval by both formal organisationalpractices and informal techniques ofproviding efficacy information”.39

Government policies intended toempower are aimed at improving theparticipation of citizens, especially thepreviously disadvantaged, in govern-ment and business. In this sense, de-mocratisation and empowerment areclosely related in that empowermentaims to broaden participation whiledemocratisation aims to follow inclusiveplural processes. In economic empower-ment, job creation and negotiatingeffective links between economicgrowth and human development arecritical. Other important related aspectsinclude participation in the economythrough Employee Share OwnershipProgrammes (ESOPs), and the develop-ment of Small, Medium and MicroEnterprises (SMMEs) discussed in Chap-ter One.

As outlined earlier, efforts to build aconsensual basis for post-apartheid ruleand transformation endeavours werecentral to both the ‘negotiations’ periodand the ANC government’s first term inoffice. Institutionally, these attemptswere most marked in the realm oflabour relations and economic policy,with various mediation and arbitrationstructures and NEDLAC – discussed laterin this chapter – constituting the flag-ships of these endeavours.



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Government interventions for economicempowermentThe objective of government, as re-flected in previous chapters, is to pro-vide a better life for all in South Africa.The Constitution provides the frame-work for the development of strategiesthat are inclusive, participatory, trans-parent and accountable in order toensure value in all delivery initiatives,especially in the area of basic needs.Based on this, a core “economic bill ofrights” has been developed to promoteeconomic empowerment (see box).

This Bill of Rights must be seen inthe context of the strong correlationbetween unemployment and poverty. Itis estimated41 that the unemploymentrate among the 20 percent pooresthouseholds is 53 percent, compared to4 percent in the 20 percent richesthouseholds.42 According to 1997 statis-tics, African workers earned 63 percent

less than white earners. The unemploy-ment rate in South Africa is extremelyhigh compared to that of other mediumincome countries. Wage disparities arealso high by international standards.This reflects the apartheid legacy ofwhite workers who are relatively bettereducated compared to black workers.

These inequalities mean that Africansare disadvantaged in terms of incomegenerating resources. They are notsufficiently well trained to commanddecent wages; they do not own enter-prises from which they could generateprofits; they do not own land fromwhich they can collect rent or farm; nordo they have investments from which toearn interest and dividends. It follows,therefore, that transforming economicprocesses for human developmentrequires specific policy and programmeinterventions to reverse these racistpatterns and chain of causality frommarginalisation to social integration.

Government initiatives to promoteeconomic empowermentThe government has put in place infra-structural and special employmentprogrammes intended to enable jobcreation, particularly for the people atthe lowest end of the labour market. Aspart of the Job Summit outcomes (dis-cussed in Chapter One), governmentwill consolidate current job creationprogrammes through improved coordi-nation, paying greater attention to thefinancing of these programmes, capacitybuilding through training and financialcontributions to the development oflocal economic activity. ApproximatelyR5 billion has been allocated to jobcreation, particularly for use in labourintensive projects. These projects in-clude those in Working for Water, theLand Care Campaign, rural water sup-ply, community-based public worksprogrammes, the Consolidated Munici-pal Infrastructure Programme and hous-ing and select welfare programmes.43

An Economic Bill of Rights toPromote Economic Growthand Human Development

• a right to a basic income andaccess to a minimal level ofeconomic resources

• a right to participate in the produc-tive and reproductive work of society

• a right to non-discrimination – on the basis of gender,race, sex, pregnancy, marital status, ethnic or socialorigin, colour, sexual orientation, age, disability, religion,conscience, belief, culture, language and birth – in thedistribution of income, productive output, and economicresources

• a right to non-exploitation in all work – in the labourmarket, in the household, and in the informal economy

• a right to a just share of the production of the economy

• a right to an equitable distribution of the powers andprivileges associated with the ownership of productiveassets40


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Worker participation or co-optionEmpowerment programmes constitutegovernment’s main pillars to changestock ownership plans, expand oppor-tunities for broader South Africanparticipation and ensure that SMMEshave equitable opportunities. In addi-tion to participation in union-drivenempowerment projects, another type ofeconomic opportunity being exploredare the Employee Share OwnershipProgrammes (ESOPs). ESOPs are not anew concept and other countries havetried them with varying degrees ofsuccess. These include Sweden, theUnited States of America, the UnitedKingdom and Japan. ESOPs allow forindividual share ownership rather thanownership by groups, such as unionsand other consortia. Unions do notfavour ESOPs because they are seen asa means of co-opting workers.44 Gov-ernment has also, at times, sent am-biguous messages regarding ESOPs; forinstance it has not given ESOPs recog-nition in the fishing industry, where it ispractised.45

There have been political motivesassociated with all ESOPs plans inSouth Africa. When the Ford motorcompany divested in 1987, it donated24 percent (R100 million) equity to aworkers’ trust fund, including R2 mil-lion to a community trust. However, thedeal was seen as self-serving. Oneresearcher commented thus:

It is hoped by giving black workers astake in the free enterprise system,however small, their ideologicalallegiance will shift towards support forthe system. Ford saw its step as intro-ducing an “economic citizenship” forworkers, but that certainly did not meetthe demands for “political citizenship”for workers. The company also hopedby donating shares to workers it couldmaintain a profitable relationship withSA in the future.46

Evidence47 indicates that suchschemes usually become policy at atime when industry is going through

changes or restructuring. ESOPs areseen as an alternative way of payingworkers, as an attempt to discourageworkers from demanding higher wages.Further, workers participating in suchschemes pose no threat to ownership asthe number of shares issued dependsentirely on the business concerned.Another criticism of ESOPs is that suchschemes normally favour those who arealready better of in terms of wages,salaries and fringe benefits. This can bedivisive. There is little or no generalevidence that ESOPs or similar schemesenhance economic performance, exceptwhere accompanied by genuine partici-pation of workers in management anddecision-making, a factor that can beintroduced independently of ESOPs48 . InSweden, where a genuine attempt wasmade to increase workers’ control, thescheme failed due to opposition frombusiness.

Further, ESOPs are seen by theirdetractors as an attempt to underminethe unions. This suspicion is clearlyevident in South Africa. ESOPs pose avery serious problem for the unions.First, they are government policy andremain in operation until changes areapproved. Secondly, unions will becomepart of the restructuring taking place inindustry. Thirdly, as a form of wagesoffered by employers to employees,ESOPs are divisive in that they offerdifferential benefits to the workersdepending on their status in the com-pany. ESOPs are also seen as diversion-ary, drawing unions away from fightingfor wages and conditions of work tomore general issues of the economy.

In this regard, several issues arise.First, as the government privatises, shareissues may increasingly be made avail-able to workers. Secondly, unions musttake into account the fact that they haveshare issues in the form of pensionfunds. Thirdly, big corporations areunbundling and more opportunities mayarise for worker participation. Fourthly,



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Current views on empowermentEquity ownership was made available tosome groups of blacks and, in this way,large deals have been completed,involving both listed and unlistedcompanies. For its part, governmentdetermined that these deals should bebroad-based and set criteria to makesure this happened, particularly in thearea of procurement. The criteria at-tracted a larger number of participantsto the tender process, especially forgovernment business. It required thatentities tendering for government busi-ness demonstrate that they are broadlyrepresentative and inclusive. Most of thetendering took place in the IT andtelecommunication industries, wheregovernment is a big spender. Print,publishing and broadcasting were alsoareas for economic participation.49

Unions were successful in theirtenders for business because theybrought in added value as black-ownedconsortiums and represent people from

previously disadvantaged areas. Conse-quently, companies in which unionshave invested through empowermenthave made deals of over R1.1bn.50

These deals have been criticised onvarious grounds, predominantly ongrounds of conflict of interest. Criticshave questioned whether the unions arenot ‘in bed’ with the capitalists and haveasked whether, as investors, they will beable to represent the interests of theworkers. Will they be able to advocateempowerment and affirmative actionfrom inside corporate structures? Or willthey pursue profits at the expense ofbroader issues of worker rights? It is stilltoo early to assess this. COSATU-alignedtrade unions such as the National Unionof Mine Workers (NUM) and the SouthAfrican Clothing and Textile WorkersUnion (SACTWU) were amongst the firstto participate in empowerment pro-grammes.

The viability of these deals is alsobeing questioned because of the man-ner in which they were introduced.Most black empowerment deals weresaid to be risk-free, enabling thesecompanies to exercise less discretionregarding the investments they weremaking. The deals were made throughthe special purpose vehicle (SPV) fund-ing mechanism. Financiers are nowtaking a second look at this type offunding strategy and only a few dealswill pass the new conditions to beimplemented. Already, some empower-ment groups are failing to completedeals due to stricter requirements. Forexample, Kopano ke Matla recentlyfailed to raise cash to purchase a 100percent stake (R93 million) in Aventura,and NuIntegrated Communicationscould not raise 40 percent (or R8 mil-lion) to purchase equity in Saatchi andSaatchi. Business Map notes that anaverage of six empowerment deals permonth were completed in 1999 against a1998 average of twelve for the sameperiod.

Economic empowerment must

lead to sustainable livelihoods

and access to income earning

opportunities.


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Economic empowerment deals raisecertain tensions and contradictions fororganised labour’s involvement in themarket. However, such tensions mustbe resolved if the economy is to bederacialised and democratised to pro-mote economic growth and humandevelopment. Fine51 makes the follow-ing suggestions:

• Black empowerment should beclearly understood at the plant,enterprise, sector or economy levelas, first and foremost, the negotiationthrough centralised bargaining, for asbroad a section of the workforce aspossible, of secure employment, withdecent wages and conditions.

• ESOPs as the profit-share schemeintroduced into the gold miningindustry in 1993 has the effect ofcreating wage disparities and effec-tively undermines centralisedcollective bargaining for commonwages and conditions. Whereschemes such as ESOPs are negoti-ated, they should be pegged as far aspossible to as broad a collectiveparticipation in the bonuses shared.

• More generally, priority in economicpolicy must be directed towards themeeting of basic needs. Much moreimportant than the weight of sharesowned by the workers in the form ofpensions is the economic and finan-cial system in which they are owned.

Public-private partnershipsThe privatisation of state assets isgenerating intense debate in SouthAfrica. The debates centre on whetherthere is a need to privatise or restruc-ture state assets; whether restructuringwill lead to job losses; and the extent towhich key utilities will become inacces-sible to poorer sections of the commu-nity because of increases in user fees.In a generic sense, most countriesprivatise because they argue that publicenterprises suffer from poor investmentdecisions, inappropriate pricing poli-cies, overstaffing and political interfer-ence. Other reasons might includeexcessive centralisation, lack of capital,

elaborate procedures and unclear objec-tives.

Privatisation is seen as part of abroader strategy of structural reform andis expected to provide opportunities foreconomic empowerment. Governmentargues that privatisation is necessary inorder to leverage more capital, infusenew technology and develop newmarkets. The dilemma that privatisationpresents for government is that it inevi-tably results in employment reduction. Itis for this reason that privatisation dealsare negotiated with labour, usually onthe basis of a Social Pact. As a result,government has opted for partnershipsrather than outright privatisation.

Public-private partnerships takedifferent forms. Among the most stand-ard are service contracts, managementcontracts, lease contracts and conces-sions and what are normally referred toas ‘acronymic’ partnership forms. 52

Building Own Operate (BOO), BuildOperate Transfer (BOT) and RehabilitateOperate Transfer (ROT) are all modifiedforms of concession contracts. 53 Thegovernment will explore the practicalityof these models as it implements theprivatisation programme. A clear indica-tion of government’s approach to pub-lic-private partnerships and their poten-tial for economic empowerment iscontained in the statement below.

the principal question SA faces today isnot whether but how to introducegreater private … participation inmeeting the demand for infrastructureservices. In answering this question weare not guided by an ideologicalfixation on one or other … approach.We must search for the best service forlocal residents, and the maximum boostto jobs, and working conditions.54

The Municipal Investment Infrastruc-ture Framework, as a case in point,estimates that redressing infrastructurebacklogs would require at least R170bnover ten years and that governmentwould be able to contribute R60bn over



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the same period. The statement goesfurther:

Many local governments have begun toexplore alternative means of deliveringservices. More and more … have cometo realize that they can and should,work in partnership with the privatesector with a view to getting privateinvestment and delivery of a service.Perhaps even in the management of aservice utility that the public sectorowns, private financing of publicinfrastructure investment, or … othercombinations.55

The public-private partnership ap-proach could be seen as one govern-ment strategy to democratise theeconomy. The strategy is designed toensure that the role of governmentremains one of policy making, systemsdevelopment, monitoring and evalua-tion while the private sector is expectedto focus on delivery. This type of rolefor government is strongly contested,particularly in the context of massiveinequalities and the economic logicwithin which the private sector oper-ates. The rise in service charges and theinability of low and unwaged workersto pay for basic services has a negativeimpact on human development.

Government is, therefore, faced withthe challenge of having to democratisea highly centralised and monopolisedparastatal sector. The centralised natureof this sector is said to make it behavein a manner that is typical to monopo-lies – that is supplying to a limitedmarket at high prices. While govern-ment’s objectives in wanting to privatise

the parastatal sector are to broadencoverage, most potential investors areless interested in broadening servicecoverage than they are in buying intoparastatals in order to remain in lucra-tive markets and realise high profits.Labour argues that the state ought not tostand back and reduce its involvementin favour of the private sector. Ratherthere should be strategic nationalisationof some industries and the introductionof strong regulatory bodies togetherwith the development of creative formsof worker and community control andownership.56

The small and medium business sectorThe Department of Trade and Industryis responsible for promoting smallbusiness in the country. The Departmenthas established a policy framework, theWhite Paper on a National Strategy forthe Development and Promotion ofSmall Business in South Africa. The keyobjectives of the national small businessstrategy are to:• Create an enabling environment for

small enterprises;• Facilitate greater equalisation of

income, wealth and earning opportu-nities;

• Address the legacy of apartheid-based disempowerment of blackbusiness;

• Support the advancement of womenin all business sectors;

• Create long-term jobs;• Stimulate sector-focused economic

growth;• Strengthen cohesion between small

enterprises;• Level the playing fields between

bigger and small business as well asbetween rural and urban business;and

• Prepare small business to complywith the challenges of an internation-ally competitive economy.Two agencies have been established

to provide financial and expert support

Most potential investors are

less interested in broadening

service coverage than they are

in buying into parastatals in

order to remain in lucrative markets

and realise high profits.


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to SMMEs: Khula and Ntsika. It isestimated that there are more than800,000 small, medium and microenterprises in South Africa that providejobs for approximately 3,5 millionpeople57 . Building the capabilities andassets of this sector is therefore criticalto the process of deracialising anddemocratising the economy. Such anapproach must be based on a twinstrategy of moving from human devel-opment to growth and back as repre-sented in figure 5.1. In addition strate-gic government intervention in both theeconomic and social sphere will haveto ensure that policy choices relate toincome measures, capability measuresand asset development.

New Modes of EngagementEmpowerment processes within theeconomy and the household are centralto the twin strategy of economicgrowth through human development.However, to be effective, such a strat-egy must be mediated within demo-cratic spaces and through legitimate,credible formations representing la-bour, government, business and com-munity interests. Building social capitalthrough the involvement of NGOs,community organisations and householdsin order to mobilise resources for effec-tive engagement in the political economyrequires appropriate institutions andprocesses. The establishment of NEDLACand its role demonstrates the issues andchallenges of using democratic space totransform modes of engagement withinthe state and the business sector.

In the latter years of the apartheidstate, the government was neither ablenor allowed to govern on its own; norwere progressive forces able to do so.Out of this political stalemate devel-oped a negotiated process,58 bringingtogether different political forces tocreate a political democracy. A similartransformation was needed in the

economy, which had stagnated due tothe accumulated weight of apartheideconomics – exhibited mainly in declin-ing net investment, high interest rates,skill shortages and a general loss ofbusiness confidence.

In short, South Africa was, and stillremains, in the midst of a ‘doubletransition’ – a simultaneous movementtowards political democracy and eco-nomic restructuring. Under conditionsof economic globalisation, however,capital has a stronger exit option andthus stronger bargaining power. Thiscould be interpreted as meaning thatgrowth for the new political democracydepends on adopting policies that willattract investment. Indeed it is oftenargued that South Africa’s politicaldemocracy came at the price of accept-ing neo-liberal policies.

How can society manage such a‘double’, and potentially contradictory,transition? Should democracy be aban-doned in favour of implementing un-popular economic restructuring? Or isthere a path more advantageous to bothdemocracy and economic growth? It isin this context that extra-parliamentaryinstitutions such as NEDLAC are impor-tant.

Some59 see this transition as a ten-sion between the dual imperatives ofcompetitive forces and social cohesion.The competitive imperative is central tomarket-driven economies but is rein-forced by globalisation, trade liberalisa-tion and privatisation. Social cohesion isneeded, in this view, to ensure that the‘management of change’ is ‘legitimised’.According to Douwes-Dekker,60 thesetensions between competitive and socialimperatives can be “resolved” throughthe social ‘pacting’ occurring at NEDLACand other forms of engagement.61

A second view is that such efforts toresolve tensions are “lofty and naïve”.62

It is argued that there are moves to steertripartite structures away from formativepolicy-making and towards the imple-



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mentation of policies decided elsewherein the system. The central dilemma forCOSATU, then, is whether the “labourmovement is willing to become anactive party to a neo-liberal economicstrategy in exchange for concessions fora section of the working class?” And, ifthe answer is ‘yes’, will this entail anabdication of the labour movement’srole in breaking the insider/outsiderdivide in society?63

Webster and Adler, however, statethat: “Claims about the inevitability of aconservative pact exaggerate the powerof globalisation, by presenting it as anomnipotent force depriving states ofmanoeuvring room in the choice ofdevelopment policy”.64 They argue thatsuch positions ignore the power ofmovements and institutions to influencethe strategic direction of policy andchange the rules of the game to ensurefavourable outcomes for the excluded.

Institutionalising participation anddecision-makingNEDLAC is indeed a site of class strug-gle and a potential instrument fortransformation. It is a forum throughwhich the representatives of the mostpowerful employer and worker organi-sations and the democratic governmentinteract to seek agreement on importantpolicies. Although progressive forcesenter such terrain with considerableuncertainty, institutionalised participa-tion in decision-making does increasethe influence of the working class.65

Nor can engagement through suchinstitutions be equated with becomingan active party to neo-liberalism. Rather,“the struggle to make democracy work,and to extend it, is linked to our idea ofsocialism”66 . As such, institutionalengagement has the potential to openup spaces for further advances bydifferent constituencies. It is, therefore,a site through which constituencies willgain according to their respective com-mitment, strategy and bargaining power.

The establishment of NEDLACNEDLAC arose as a result of workerstruggles driven by the major progres-sive union federations such as COSATUand the National Council of TradeUnions (NACTU) in the late 1980s.These worker struggles were the resultof the 1988 attempt by the Nationalistgovernment, with the support of em-ployers, to amend the Labour RelationsAct (LRA) in order to curb union power.In 1990, after two years of intensestruggle, an agreement was reachedbetween unions, employers and govern-ment. Known as the ‘Laboria Minute’, theagreement accepted that all future labourlaw would be considered by employerbodies and the major union federationsbefore being sent to Parliament.

As part of the agreement, unionswould participate in the National Man-power Commission (NMC), a body setup years before but boycotted as a‘toothless’ advisory structure. Under thenew agreement, the NMC would bereconstructed to have more power, acondition for union participation.

The second impetus was the apart-heid government’s attempt, in late 1991,to impose Value-Added Taxation (VAT).Unions resisted this, both because VATwas regarded as a regressive taxationhurting the poor, and because it couldalso become a way to prevent theapartheid regime from unilaterallyrestructuring the economy on the eve ofa new democratic order. Labour de-manded a role in the formulation ofmacroeconomic policy, a demand thatgave rise to the establishment of theNational Economic Forum (NEF) in1992. There were, however, tensionsaround the role of the forum. Labourwanted a negotiating body; businesswanted an advisory body, but some-thing that could make the South Africaneconomy ‘governable’.

These were the events and processesthat led to NEDLAC’s creation by an Act


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of Parliament in September 1994 (Act35 of 1994) and its launch on 18 Febru-ary 1995. NEDLAC’s new statutorystatus made it more powerful andstable than the NEF and NMC, whoseroles it incorporated.67

Democratisation must reach beyondthe narrow governmental domain. TheNational Economic, Development andLabour Council is a key step along theway. It represents the broadening anddeepening of our democracy, bydirectly engaging sectors of society informulating policies and in managinginstitutions governing their lives.68

Much of the current debate aroundthe role of NEDLAC is a continuation ofthis tension. That NEDLAC was grantedreal negotiating power was due to thestrength and political importance givento unions by the new government. Thisbalance of forces, which underpinnedNEDLAC’s creation, still remains crucialto its future.

Transforming the process ofengagement: expectations of NEDLAC

Labour’s expectation of NEDLACThe late 1980s was a watershed periodfor unions in South Africa, with the fallof Eastern European communismimpacting on their political perspec-tives. As old style socialism lost esteem,unions began to search more openlyfor fresh approaches, and to shifttowards a socialism that was “demo-cratic, pluralist and participatory”.69

COSATU was urged to look at“strategic unionism”, towards develop-ing a more corporatist approach.70 Aspart of this trend, COSATU developedthe Reconstruction Accord in 1992, laterto inform and become the basis of theRDP. This Accord was criticised bysome in the unions for being “reform-ist”.71 , but among unions it was seen asa necessary step that had to be taken toreposition worker, business and gov-

ernment from “resistance to reconstruc-tion”.72

The formation of NEDLAC gavelabour an avenue to influence economicdecision-making at a crucial time inSouth Africa’s history. However, laboursought to influence policy both throughNEDLAC and the Tripartite Alliance73 –a pattern it consistently maintained.74

Thus, while the labour movement hasbeen NEDLAC’s strongest support base,its support for NEDLAC is part of amulti-pronged approach to engagement.

Business’ expectation of NEDLACBusiness was supportive of the estab-lishment of NEDLAC as a way to “getinside the system”75 . Business wished toincrease its influence on policy and sawNEDLAC as providing an opportunity todo so. There was concern that labour,in alliance with the new government,would weaken business’ relationshipwith and position in relation to the newgovernment.

A number of initiatives affecting theeconomy were open to influence. First,the Department of Labour’s five-yearplan (transforming labour markets) hadbeen announced and was tabled atNEDLAC. Second, there was an expecta-tion in 1995 that government’s eco-nomic policy might go throughNEDLAC. Third, there were many inbusiness with thoughts of an Accordbeing reached in the coming years,essentially negotiated throughNEDLAC.76

NEDLAC is a forum through

which the representatives of the

most powerful employer and

worker organisations and the

democratic government interact to

seek agreement on important policies.



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There were other reasons for busi-ness’ support of NEDLAC. Some seniorbusiness leaders77 were committed tothe principle of social dialogue andwere influential in getting business to‘buy-into’ NEDLAC. Importantly, therewere indications that government wasgoing to resist lobbying,78 particularlyin respect of trade and industrial policy.South African industrial ‘policy’ hadevolved historically through govern-ment being lobbied by business inter-ests, a practice that left the country witha rather incoherent and ultimately non-optimal industrial structure.79

Based on these expectations, therewas a strong motivation for business toback NEDLAC. This did not mean,however, that all senior business lead-ers were in favour of it.

Government’s expectation of NEDLACThe ANC government, on the eve ofdemocratic elections and governance,was initially ambivalent about NEDLAC,particularly with regard to the extent towhich both labour and business couldconstrain government’s ability to trans-form the economy. In particular, it wasfelt that trade unions might focus onnarrow, membership interests andwould be unable to develop the widersocietal interests necessary for macro-economic policy formulation. However,labour, through COSATU leaders whobecame ANC parliamentarians, gainedpolitical support for NEDLAC and extra-parliamentary institutions in general andthere was final agreement that NEDLACcould serve to accommodate labour

concerns and make the economy moregovernable.80 In the final result, regard-less of some ambivalence aboutNEDLAC, the institution was grantedsignificant powers (see box).

NEDLAC processes – linking economicand social objectivesNEDLAC is a representative body whereparties seek agreement primarilythrough negotiation and discussionbased on mandates. NEDLAC modelledits approach on international experiencein tripartite decision-making, as well ason the experience of its predecessors,the NEF and NMC. However, it also has“unique features aimed at meeting theparticular needs of the South Africansituation”: it goes beyond traditionalpartners – government, business andlabour – and includes organisations thatrepresent broader community interests inthe country.81

Using democratic space fortransformationWhile NEDLAC has the power to considerand agree on policies before they go toParliament, Parliament is still sovereignand must accept any NEDLAC agreementbefore it becomes law. Parliament is thusable to change any agreement reached atNEDLAC although, having being reachedbetween key constituencies, such anagreement would carry considerableweight.

Besides reaching agreements, NEDLAChas a role in building a culture of demo-cratic participation and social dialogue insociety.82 This includes informationsharing, research, workshops and semi-nars and dispute resolution.83

NEDLAC was structured to addressissues clustered into four ‘Chambers’:labour market, public finance andmonetary policy, trade and industry anddevelopment. These Chambers feedtheir agreements to the managementcommittee, which in turn reports to the

That NEDLAC was granted

real negotiating power was

due to the strength and politi-

cal importance given to un-

ions by the new government.


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Executive Council (the highest decision-making structure). At an annual Summit,there is feedback and input on progressmade by NEDLAC.

Each constituency decides on itsown representatives and how they areallocated to the Chambers and otherNEDLAC structures. In the labourconstituency, the six labour seats ineach of the Chambers have been di-vided as follows: four to COSATU, oneto FEDUSA and one to NACTU. This ismore or less in line with their relativemembership numbers. In the businessconstituency, seats are divided betweenBusiness South Africa and the NationalFederation of Chambers of Commerce(mainly black business) on a four-to-two split. The community constituency(represented in the DevelopmentChamber), however, presented a chal-lenge: who represents the ‘community’?The formula adopted was for severallarge organised groups (women, disa-bled, rural, youth and civics) to playthat role. Government is represented inthe NEDLAC structures according to thenature of the Chamber, so that theDepartment of Labour is most central inthe Labour Market Chamber, the De-partment of Finance in the PublicFinance Chamber and so on.

According to the NEDLAC Secretariatreport, the institution “made an impacton the transformation of the labourmarket, trade and industry policies,development policies and the buildingof important new institutions in soci-ety.” More specifically, NEDLAC wasconsidered to have been very influen-tial regarding labour market policiesand, to a lesser extent, in trade andindustry matters. Influence on eco-nomic policy has lagged, however.84

NEDLAC’s impact is also felt in otherways, such as through improvingtransparency of decision-making andlimiting the scope for self-servinglobbying by narrow interests. Further,

NEDLAC powers, purpose andstructureThe NEDLAC Act requires NEDLACto:

• Strive to promote the goals ofeconomic growth, participation ineconomic decision-making, andsocial equity;

• Seek to reach consensus and conclude agreementspertaining to social and economic policy;

• Consider all proposed labour legislation relating to labourmarket policy before it is introduced in Parliament;

• Consider all significant changes to social and economicpolicy before they are implemented or introduced inParliament; and

• Encourage and promote the formulation of coordinatedpolicy on social and economic matters.

co-operative governance means thatnew policies and changes are consid-ered, carefully balanced and moredurable in the longer-term.85 One exam-ple of this is the recent Competition Bill.The secretariat coordinator of the Tradeand Industry chamber remarked that,“The insights and information providedby labour and business filled the gaps inthe government plan, making the finallegislation more appropriate and relevant.It is a clear example of where NEDLAChas added value to government policy.”86

Impact on strategic visionCreating a common vision for action hasbeen a challenge. This has been gener-ally acknowledged by all constituencies,and explicitly mentioned as a weakpoint at the 1998 Annual Summit.87

A discussion document, Discussionon framework for social partnership andagreement-making in NEDLAC, wasdeveloped by the NEDLAC secretariat. Itraised the need for a strategic frame-work and argued that there needed tobe “an explicit recognition by the con-



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stituencies of the need to work towardsa longer-term vision, and consider theneed, where necessary for shorter-termtrade-offs to achieve this vision”. Thisframework must “assist in identifyingspecific issues for negotiating in thechambers” and provide “commonassumptions and a common terminol-ogy”.88 Further, the document raised anumber of possible areas for such aframework: wages and incomes; invest-ment and jobs; reprioritising govern-ment expenditure, and trade and indus-trial development.

This initiative did not get far, how-ever. A central reason was the lack ofcommon ground between business andlabour on the objectives of such astrategic vision. In 1996, for example,an important block within organisedbusiness – the South Africa Foundation,which represented the largest compa-nies – introduced its own vision docu-ment called Growth for All. The docu-ment took a hard line, calling for theintroduction of a ‘two-tier’ labourmarket, essentially proposing lowwages and lower minimum standards tocreate jobs.89

Labour developed its own economicalternative in early 1996. This docu-ment, Job Creation and Social Equity,was endorsed by all three labour fed-erations at NEDLAC and attacked all ofthe business document’s underpinnings.

In mid-1996 government, underpressure from a sudden downturn infinancial markets, announced the ‘non-negotiable’ Growth, Employment andRedistribution strategy (GEAR) dis-cussed in preceding chapters. Thisstrategy, designed, some argue, toplacate financial markets, had many ofthe ingredients of a standard structuraladjustment programme.90

The community constituency attackedBusiness South Africa’s Growth for Allframework and government’s GEARstrategy, which it said did not “fall in linewith the RDP” and was a reason for

limited success against poverty. Its presen-tation to the subsequent NEDLAC Summitcalled for a “return to the RDP”.91

Such strong, opposing perspectivesand approaches of its constituencies area major obstacle to the facilitation of acommon vision at NEDLAC. Indeed, itsinitial attempt to do so may have beengreatly over-optimistic.

Impact on detailsIt is worthwhile to examine two proc-esses in order to assess the opportuni-ties and constraints NEDLAC has facedin reaching agreements. The first is theprocess of seeking agreement on theBasic Conditions of Employment Act(BCEA). This process, arguably, had thegreatest negative impact on NEDLAC asan institution promoting transformationprocesses.

Constraints regarding capacity,legitimacy and credibility in transformingprocesses in NEDLACSeven constraints are discussed below.The first three are general constituency/maturity matters; the last four deal withmatters of principle and relationships.

Constituency/maturity constraints1. Flexibility, unpredictability and the role of

personalities

NEDLAC – and social dialogue – is stillin its infancy in South Africa. As such,one can expect that the system willchange and adjust itself over time, thebetter to meet the needs of managingSouth Africa’s transition. However, the‘newness’ of NEDLAC brings with itseveral weaknesses. First, processes arerelatively flexible as rules and protocolsare still evolving. The extent to whichdifferent constituencies abide by theseprotocols may also differ from constitu-ency to constituency and from time totime. A negative aspect of this flexibilityis the unpredictability that may result.


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Another weakness is that flexibilitymay result in a vacuum in which therole of strong personalities is enhanced.This may be exacerbated by weak-nesses in constituency capacity andloose mandating procedures. Thisapplies equally to all constituenciesrepresented at NEDLAC.

2. Capacity of constituencies

All NEDLAC constituencies lack capac-ity, including the technical capacity todevelop, analyse or respond to propos-als. A study of the labour constituencyrevealed that, despite efforts to developresearch and training facilities, theimpact of the rapid loss of experiencedsenior leaders to government hasresulted in extensive loss of capacity atNEDLAC. Capacity constraints alsoinclude the inability of senior negotia-tors to devote more time to NEDLACactivities, with some already spendingabout 40 percent of their time atNEDLAC.105

NEDLAC is focusing on buildingcapacity106 and now has a capacitybuilding fund for constituencies. De-spite these efforts, the problems remainconsiderable. In part, this reflects thefact that resources alone may not bethe problem. In the case of the labourcapacity building fund, the majority ofthe funds remains unused, indicatingthat the constituency has been unableto manage available resources effec-tively. Second, constituencies tend touse “tight leadership” styles107 that mayundermine the process of building newleadership.

3. Loose mandating and grassroots linkages

Agreements have often been driven bya small group of leadership from con-stituencies.108 Information on agree-ments or progress achieved does notreach the membership as widely as itshould. Confirming this, a NALEDIsurvey found that the majority of organ-ised workers did not know aboutNEDLAC or had not attended a report-

back meeting.109 This, however, revealsmore about the weaknesses in internaldemocracy and the communicationsystem within the labour constituencythan about NEDLAC itself. Similar weak-nesses probably exist in all constituen-cies, including between Ministers andbureaucrats and between businessrepresentatives and employers.

Weaknesses in mandating and com-munication clearly impact on thestrength of a bargaining position, butalso on the extent to which negotiatorscan be held accountable for their ac-tions. The ability of a constituencynegotiator, then, to put forward a posi-tion contradicting earlier agreements orthe broader interests of his or herconstituency is increased. This weak-ness also enhances the importance ofpersonalities in negotiations.

Principle/relationship issues4. Distance from economic policy formulation

As seen earlier, there are those whohave always felt that economic policyshould not be discussed within theforum. They hold the view thatglobalisation requires rapid and un-popular decisions and that such proc-esses cannot take place within NEDLAC.They argue, further, that ‘credible’economic policy requires certainty andcannot, therefore, be opened up tochange. As a result, NEDLAC’s impacton macroeconomic policy has trailed itsimpact on labour market and trade andindustry issues.110

This technocratic view of economicpolicy-making holds that “experts,shielded from political pressures, aremost capable of formulating effectivepolicy. They reject the claim that tech-nocratic processes are undemocratic bynoting that the government is ultimatelyaccountable to the public throughelectoral competition”.111

Such a technocratic approach toeconomic policy formulation, whileclearly expedient, is flawed. In reality,



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Case study (1): Negotiations on the Basic Conditions of Employment Act

been asked to vote on the issue. Further, bypassingNEDLAC appeared to undermine the credibility of theinstitution. After all, some would ask, if it cannot reach anagreement, “what do we have NEDLAC for?” The con-servative media immediately claimed that “COSATU’swithdrawal” from NEDLAC may “signal the end ofNEDLAC”, as the institution appeared unable to deliver“satisfactory outcomes”.95

Under strong pressure to avoid a vote in Parliament,the Minister of Labour threatened to withdraw the draft Billand implement an interim piece of legislation that wouldsimply cover all workers under the old Act. Further,Cabinet announced that a Presidential Job Summitwould be held in October 1997. The timing of thisannouncement (based on a June 1996 proposal of theLabour Market Commission) was tactical. It created anopening for employers to ask that the deadlocked BCEAnegotiations continue after the Job Summit, when abetter understanding of job creation could be achieved.96

Rather than “give in to face-to-face confrontation withbusiness and government”, COSATU prepared to take thematter to a vote in Parliament and, if the democraticParliament voted against them, to “lose with dignity”.97

By now, all serious hope of continuing negotiations wasdead, with COSATU describing the dispute as an “ideo-logical war”.98

The task then became one of finding a suitablecompromise to ensure that a NEDLAC agreement, andnot a Parliamentary vote, was arrived at. To this end,government agreed to some concessions for labour,99

while refusing many of labour’s core demands.In reviewing the process, the Minister of Labour

stated that, “we assumed that there was increasedmaturity among NEDLAC social partners after the LRAnegotiations. Therefore we felt that the Basic Conditionsof Employment could also find agreement. But insteadwe found deadlocks all over the place.” The Minister alsosaid that, “government is determined not to repeat thisexperiment until the relationship between the threepartners has matured sufficiently.”100

If NEDLAC was so thoroughly undermined, though,where could the Presidential Job Summit be held? Theanswer, ironically, was NEDLAC. This apparent about-face may reflect the view that conflict over policies wouldhave taken place anyway and that, without NEDLAC, theywould have been harder to resolve. It also reflects thatthe BCEA problems may have had more to do with thecomplexities of the issues than with the maturity ofNEDLAC constituencies.

The introduction of a new BCEA was central to the five-year plan of the Department of Labour. The BCEAprocess was preceded by the LRA negotiations. In thatprocess, also negotiated through NEDLAC, constituen-cies reached agreement on the Act ‘line by line’ andcompleted their task within ten weeks. Thus, govern-ment was relatively optimistic about getting anagreement on the BCEA.92

By mid-1997, after a year and eleven tripartitemeetings, the negotiations on the BCEA had reached adeadlock. At issue was labour’s demand for lowerhours of work and paid maternity leave, together withunhappiness that the new Act was trying to underminestandards, especially regarding the clauses dealingwith ‘variation’ of minimum standards.

Labour threatened a national strike to break thedeadlock. In the past – as during the 1995 LRAnegotiations – such a strategy did not prevent eventualagreement. But the new LRA required that, beforeembarking on ‘socio-economic protests’, unions hadto follow a clear process through NEDLAC – notifyingNEDLAC93 and requiring that it attempt to resolve thedispute before protest went ahead. Labour’s oversightof the new requirement allowed organised business toseek a Supreme Court interdict, successfully stoppingthe labour protest on the grounds that it had notcomplied with the new LRA.

The negotiations turned from difficult to poisonous.Labour ‘postponed’ its protest action and followed theNEDLAC S77 process. The impact of the nowprocedurally-correct work stoppage was uneventhough considerable; between 25 percent – 70percent of the workforce across the country responded.This use of mass action by the trade unions was laterto become a subject of debate: after all, does going tothe streets to protest not undermine the integrity of thenegotiating forum?

Both sides now engaged in hard-line positionsand there was little movement. COSATU claimed that,“business have no desire to see a new Statute” and“that no amount of discussion in this body [NEDLAC]would reach an agreement”. It threatened to break offnegotiations, taking the matter straight to Parlia-ment,94 believing that Parliament, with an ANCmajority (many of whom were former COSATUleaders) would vote in its favour.

The implications of this approach were far-reaching. This was the first time that NEDLAC hadfailed to reach agreement and that Parliament had


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the desire to create a more equal society. Even ifgovernment and business preferred such anapproach, it would face fierce resistance fromunions, as it would undermine the conditions ofthe already working poor.

Third, if asset ownership is redistributed (asindicated in the ESOPs), a broad segment ofsociety can derive the benefits of redistribution fromremuneration towards profit share, which wouldhave a lesser impact on inequalities. Therefore,asset redistribution should become a core elementof a strategy to create jobs.

Fourth, there may be possibilities to develop ajob creation strategy through small, medium andmicro-enterprises (SMMEs). In the event that SMMEsare proved to be net job creators101 , this route maybe vital. Major problems of SMMEs include access tocheap credit and skills. However, in policy debate,labour regulations are also raised as a problem.102

Other aspects include linking SMMEs to an assetdistributive strategy, including land.103

Finally, research104 indicated that labourshedding trends in large South African firms seemto be a reaction to the need to become competitivein the international marketplace. There is, therefore,a need to tackle the terms under which South Africaenters the global economy. Addressing such abroad challenge is one of the potential strengths ofa NEDLAC structure. This remains an area of greatpotential, and, in view of massive job losses, anurgent one.

Case Study (2): Job creation for human development

Table 5.1 demonstrates that companies saw the mostimportant variables influencing investment behaviourand consequently job creation as interest rates,economic growth and the overall stability of theeconomy. Average wage levels and maintaining goodlabour relations were seen as the least important ofthe variables.

It is unlikely that the large corporations, undercurrent economic conditions, will substantiallyincrease employment in the short to medium term. Infact, further job losses in these large firms canprobably be expected in the next several years.Further, restrictive economic policies (including highinterest rates) undermine economic growth and jobcreation.

There were several broad options facing theNEDLAC constituencies.

First, if the private sector is unlikely to create jobs,jobs can be created within the public sector andthrough fiscal policies. Such an approach could use acombination of different policies, including publicworks programmes (which could also be linked toinfrastructure delivery); maintaining a sustainablelevel of employment within the public service, andpursuing redistributive fiscal policies to produce anddeliver public goods and services. The critical elementof such an approach would be to link such pro-grammes to an overall goal of economic growth andhuman development.

Second, if private firms are to create more jobs,the profit share is important. But this may contradict

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156this “non-negotiable” macroeconomicstrategy is an “illusion of central deter-mination”.112 Macroeconomic strategiessuch as GEAR only “influence” wages,investment and prices; they do not“determine” them. Therefore “even thebest laid plans of our macroeconomicmanagers can be sand-bagged byrecalcitrant public sector workers orangry welfare recipients. So macroeco-nomic policy will enter the publicarena. And holding the line will dependnot only on determination, but onpopular support.”113

5. No strategic vision for common action

NEDLAC, despite its efforts, has notsucceeded in developing a strategicvision for common action. This isexplained by the very divergent classperspectives of the different constituen-cies and partly, perhaps, by the relativenewness of the process of social dia-logue at national tripartite level.

Clearly, the goal of achieving acommon vision does not appear possi-ble because of differences in perspec-tive. However, a goal of developing acommon strategy, or perhaps even onlya common policy agenda, may be morerealistic and realisable.

6. New modes and former alliances

The Tripartite Alliance, if it works well,can play an important transformationalrole. As a structure comprising thecentral progressive forces, it can de-velop strategy and influence importantinterventions. With this in mind, Alli-ance partners have used this structureto bypass the ‘old guard’ (essentiallywhite business and opposition parties)

on matters pertaining to the apartheidlegacy.

However, several problems arisefrom labour and government’s use ofthe Alliance.

First, “the Alliance is generally notworking”.114 Central among manyproblems is the fact that broad agree-ments reached at Alliance level need tobe implemented by government bureau-crats and can be interpreted in manyways, often in ways that some alliancepartners do not support.

Second, the use of the Alliance doesnot stop at ‘apartheid legacy’ issues. TheAlliance is used to intervene and makedeals on matters on the NEDLACagenda, resulting in dual processes.

The Alliance must, therefore, becarefully used. If it undermines NEDLACand the Alliance agreements fail to ‘holdwater’, NEDLAC may well lose its poweras a site and instrument for transforma-tion. The result could be a reversal of theprocess of democratising and transform-ing key aspects of South African society.

7. Relationship between Parliament and NEDLAC

There has been criticism from some thatNEDLAC undermines the sovereignty ofParliament. However, the existence ofNEDLAC does not mean that Parliamentis unable to act; simply that extra-parliamentary processes serve to decen-tralise decision-making to civil society,thereby deepening democracy. It is stillthe duty of government to govern,accepting or rejecting any recommenda-tion from NEDLAC. Attacks on the princi-ple of extra-parliamentary democracy,therefore, reflect a resistance to thedecentralisation of power to constituen-cies such as labour and the community.Further, NEDLAC and Parliament couldmutually reinforce each other.115

Representation of community interestsThe participation of the communityconstituency is a sign that NEDLAC goes

NEDLAC’s new processes are

relatively flexible as rules and

protocols are still evolving.


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beyond any form of ‘elite pacting’.However, this constituency participatesonly in the Development Chamber, oneof the least effective chambers. Centralto the problems of this Chamber is thedifficult question of the composition ofthe ‘community’. The constituency isalso embroiled in an internal disputeover its composition, especially inregard to whether civics should beallocated a greater share.116

Another problem appears to be thefact that the Chamber is an omnibus.With many different government de-partments involved in ‘development’, itis difficult to find one to become thechampion of the Chamber, taking up itsissues at the NEDLAC ManagementCommittee level. Problems in thisChamber are, therefore, ignored, andenergies are focused on chamberswhere Management Committee mem-bers have more direct interests.117 Bettercoordination could be effected throughone government department (or per-haps the Deputy-President’s Office)which could act as the governmentanchor.

Recent discussions have also raisedthe need for community representativesto be part of all four of NEDLAC’schambers. As yet, other constituencieshave not agreed to this. Business hasalready raised an objection, possiblydue to the fact that the communityconstituency will join labour, therebyexploiting the myth of a ‘labour aristoc-racy’. Other constituencies, equally,may want the current internal disputeswithin the community constituency tobe resolved before their extendedparticipation can be considered. How-ever, if South Africa is to move “fromhuman development to growth – andback” as a strategy, then the role of thecommunity sector, particularly where itrepresents the perspectives of womenand civic movements, could becomevital.

The Space for and Limits toEngagement: the InformalSector as a Site for HouseholdSurvivalThe informal sector in South Africa islargely made up of survivalist initiativesbut can include micro-enterprises.118 It hasemerged out of growing unemploymentand the inability of the economy togenerate more jobs, lack of access toassets such as land and credit and otherfactors impacting negatively on house-holds. Poorer provinces, such as theEastern Cape and the Northern Cape,have a larger percentage of the informalsector. It is estimated that, countrywide,70 per cent of those in the informal sectorare women, who operate mainly withinthe survivalist sphere (refer to Table 5.2).

“Even the best laid plans of our

macroeconomic managers can

be sand-bagged by recalcitrant

public sector workers or angry

welfare recipients.”

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The imperatives that drive women’sinvolvement in the informal sector arisefrom the issues they have to deal with inthe household sphere and their continuedmarginalisation from mainstream activity.

Household119 sphere as a site andinstrument for transformationAlthough household activities contributeto human development, they are unpaidand are still invisible in national ac-counts. It is in these activities thatwomen contribute the most in terms oftheir labour, time and resources. Thissphere of activity is also alluded to asthe social reproduction sphere andincludes managing households, raisingchildren, caring for the sick and elderlyand contributing to social capital forma-tion on which economic productionprocesses depend. In more direct ways,women’s labour and contribution,especially through voluntary communityorganisations in the poorest rural com-munities in South Africa, contributes tohealth, educare, and nutrition of chil-dren and the elderly. Globally, the valueof this work has been estimated in 1996at $11 trillion, and is a large part of thenon-monetised global output fromunpaid work.120

Another important aspect in thechain of causality between householdactivity, economic growth and humandevelopment are the spending or con-sumption patterns attributed especiallyto women. Increasing women’s earningcapacity and capabilities has a moredirect impact on increasing expenditureon food, medicine, school books andother essentials related to the care ofhuman beings. While women’s develop-ment is essential to their ability toexperience the benefits of full socialcitizenship, studies have shown thatexpanding their opportunities andchoices leads to gains for othermembers of households and the com-munity at large.

A critical question in South Africa ishow to ensure that those householdswithout any source of income fromwaged work or forms of state socialassistance are able to survive. There isno doubt that South Africa is sitting on atime bomb of poverty and inequality.While survival strategies in poor com-munities depend on state nutrition andschool feeding schemes, these do notcreate opportunities for long-term,sustainable development.

In certain countries (Brazil), a 10percent increase in income is associatedwith 5-8 percent improvement in educa-tional attainment. Increasing householdincomes (as shown in Brazil, Chile, Côted’Ivoire and Nicaragua) are also associ-ated with improvements in health indi-cators (height-for-age ratios, survivalrates and life expectancy at birth, re-duced illness among children). Powerrelations in the household and women’saccess to control over income play asignificant role in human development.Studies reveal that, where women earna higher share of income, there is agreater consumption of calories andprotein since they use their income forbasic needs.121 A strategic policy optionfor South Africa in responding to theneeds of the poorest households could beto extend the State Social AssistanceCoverage to include a Basic Income Grantas reflected in the box on the previouspage.

Land reform and redistribution totransform women’s position withinhouseholdsThe critical issue for economic andsocial empowerment of informal sectorworkers is the participation of women,together with the type of governmentstrategies required to promote theirdevelopment within the household andin the economy as a whole. Using landreform, restitution and redistribution asa key asset and intervention to build the


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economic and social capacity of house-holds headed by particularly black, ruralwomen, government can intervene totransform the process of women’s eco-nomic and social marginalisation.

The October Household Surveyestimated that there were about 3,6million black rural households and thatthis figure might increase to 4,2 millionby 2006. The land reform researchprogramme found that 67,7 percent ofrural households need access to farm-land123 in order to survive and maintainadequate levels of development.

Access to and control over landmeans much more than just the abilityof women to meet their basic needsand secure their physical survival fromone day to the next. Land as an assetcan define women’s power (and place)within the social, political, and economicstructures in which they live out theirdaily lives.124 This argument is borne outby the history of racialised land owner-ship and control in South Africa and theparticular ways in which such ownershipconcentrated social, economic andpolitical power in white South Africans.

By the same logic, lack of access toand control over land by women limitstheir economic and social power vis-à-vis men, undermining their position inrelation to male partners, husbands,traditional authorities and the like. Italso underpins (rural) women’s de-pendence on and subordination to maleauthority. The failure of the SouthAfrican land reform policy to facilitatewomen’s independent access to land,and to structure women’s eligibility inrelation to that of a male partner/husband and/or dependent(s), deepensmale power and authority over womenand advances patriarchal power. It alsoretards human development within thehousehold.

Advancing women’s independentrights to and meaningful control overland is an essential intervention in theprocess of transforming unequal power

relations. However, it “means admittingnew contenders for a share in a scarceand highly valuable resource whichdetermines economic well being andshapes power relations in the country-side; and it means extending the conflictover land that has existed largely be-tween men, to men and women, thusbringing it into the family’s inner court-yard.”125 Drawing the relationship be-tween land and social, economic andpolitical power in this way foregroundsthe political nature of land reform andthe different spheres on which landreform will impact – the household, thelocal community and nationally. It alsosheds light on what/who might consti-tute the potential sources of resistanceto land reform, and thus opens the wayfor more strategic thinking on how toadvance women’s independent rights toland.126

Investigations into how rural house-holds and communities ensure theirsurvival show that women in rural areasvalue land as a resource in gender-specific ways.127 Studies highlight anumber of different ways through whichwomen sustain themselves – includingagriculture (for consumption mostly),wage labour, small and micro enter-prises and claiming (for example, socialpensions) from the state, as well asclaiming migrant remittances from otherfamily members.128 For most ruralwomen, waged labour markets arerelatively closed and difficult to breakinto. Land assumes greater value, there-fore, as a social rather than economicresource: A study of Cornfields inKwaZulu-Natal129 found that womenwere more interested than men inmaintaining an agricultural subsistencebase and valued land because it alsoprovides access to resources like woodand water, amongst other things. Forthem, land for agricultural productionformed part of a “package of strategies”by which to ensure survival for them-selves and their children.



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African women have long outnum-bered men in rural South Africa, mainlyas a consequence of labour migration,by men, to the cities. In recent years,more men have moved back to ruralareas as retrenchments in the cities, andparticularly on the mines, have reducedemployment opportunities. The struggleover land between men and women isthus bound to have intensified. In thiscontext, arguments about African ‘tradi-tion’ and ‘custom’ have been trotted outwith greater regularity to justify men’s(particularly husbands’ and chiefs’)stranglehold over land. The shortage ofland in relation to demand has, there-

fore, increased most rural women’sinsecurity.

Women’s economic empowermentThe redistributive thrust of land reformis intended to turn around the longhistory of racialised land ownership,with the majority of disadvantaged ruralhouseholds either having no access toproductive land or subject to insecuretenure arrangements. The main policymechanism offered by government is anallocation of R16,000 to help ruralhouseholds to acquire land as part of aLand Acquisition/Settlement Grantscheme. Some of the communities that

Gearing social security to address structuralpovertyThe provision of cash benefits to South Africa’s elderlypopulation has been internationally acclaimed as asuccess story in alleviating poverty. Despite theirrelatively low level, state old age pensions havetangible developmental impacts on people’s lives.Having a reliable source of regular income providesessential security, especially in poor rural households.It is widely acknowledged that, while the needs of poorpeople differ, by far the majority budget carefully andspend their money for the good and development ofthe whole family.

However, over 13 million people in South Africaliving below the poverty line have no access to socialassistance and are left in harsh poverty with littlemeans of escape. Even if one assumes that allintended beneficiaries of the current social securitysystem are reached, 30 percent of the ‘ultra-poor’ and40 percent of the ‘poor’ live in households wherenobody receives any social assistance. Economicgrowth on its own will take decades to alleviate thisstructural poverty. South Africa’s already highlyunequal society cannot afford to leave behind wellover 50 percent of its people for decades until eco-nomic growth addresses this structural problemeffectively.

Research by COSATU identified this glaring gapand initiated a lively debate by suggesting a BasicIncome Grant. Building on the experience of a broadly-based cash transfer system, all South Africans would

receive a low-level BasicIncome Grant per personper month. The sugges-tion envisages a processof claiming back themoney from higherincome groups throughtax, or alternatively using asimple means test to excludethe wealthy. Final estimated costs amount to about 1.5-3 percent of gross domestic product (GDP), dependingon the level of benefit and the system decided upon. Thetotal amount spent could be fixed as a percentage ofGDP, which would ensure that the grants grow with theeconomy, but not faster than the economy can afford.

This suggestion has found support across the boardas it channels money directly to the poor but avoids‘poverty traps’ – often inherent in other social securityschemes – as well as expensive structures, which onlyindirectly benefit the poor. The Basic Income Grantcould, therefore, prove an integral part of South Africa’sdevelopmental strategy, giving resources and therebychoices to the people. While it is clear that a BasicIncome Grant will not solve the massive povertyproblem overnight, it could provide a net for destitutepeople and a trigger for self-employment.

The system would, furthermore, link cash to everyperson, favouring extended household structures andthereby encouraging social cohesion. With increasingpressure on households – due to HIV/AIDS-relatedchanges in family structures – this could be a strategicpolicy option.122


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have so far benefited from land distri-bution feel that the acquisition of landhas unlocked their development poten-tial and will create a climate conduciveto their socio-economic upliftment.130

But for many, the acquisition of landhas also become a poverty trap, withcommunities and households unable totap the full potential of the land due tothe lack of services and infrastructureto support agricultural development.

One of the principles that inform theland reform programme is povertyreduction. Land reform cannot stopwith the transfer of land to previouslydisadvantaged communities, but mustinclude strategies that facilitate ruralhouseholds’ ability to participate fullyin the rural economy. To this end, theDepartment of Land Affairs launched aland reform credit facility to supportnew farmers and land reform partici-pants beyond the point of land acquisi-tion. The Land Bank, in turn, runs itsown initiatives to facilitate access toproductive credit.

The extent to which women havebeen able to benefit from land redistri-bution has been constrained by lack ofcapacity within the Department of LandAffairs, by powerful traditional struc-tures and the lack of a powerful lobbycampaigning for women’s rights inland. The lack of capacity within theDepartment is exemplified by its inabil-ity to spend the money allocated foracquisitions of land. Furthermore,bureaucrats are unable to questionunequal social relations within commu-nities involved in the land reformprocess, mainly because of the passingnature of their relationship and thelimits within which they operate.

Similar conclusions were reachedfollowing a study on share equityschemes in which farm workers in theWestern Cape participated. The studysought to understand whether theseschemes met the expectations of farmworkers, and to assess whether the

objectives of the land reform pro-gramme, especially gender equity andredistribution, were being achieved. Itfound that many of these schemespractised a narrow interpretation of theobjective to promote and protect wom-en’s interests – regarding it as simply aquestion of women’s representation inthe legal sphere and neglecting oppor-tunities for women’s economic empow-erment. Shares were frequently regis-tered in the husband’s name with thewoman as “co-applicant.” Departmentof Land Affairs planners confirm andreinforce these gender stereotypes byfailing to check discrimination in thebusiness plans of share equity schemes,especially where they fail to meet, forexample, the equity objectives set out inthe Employment Equity Act. 131

Notwithstanding possible hostilitiesto government intervention in social(and specifically, gender) relations, aswell as serious tensions between gov-ernment’s commitment to gender equal-ity and hostility from traditional powerstructures, there are no detailed guide-lines on how land reform officials canensure that women are not marginalisedin the land reform processes. Addition-ally, because most rural women seeland as a social resource (to guaranteesecurity rather than an income), astrong lobby for rural women’s right toaccess and control land is also lacking.The extent to which black rural womenwill benefit from land reform is furtherconstrained by their lack of informationon the formal structures and opportuni-ties that have been established. For allthese reasons, gender equality in landreform may remain stronger at the levelof principle than practice.132

ConclusionsThe picture that emerges from theanalysis in this chapter is that significantstrides have been made in educationaltransformation in South Africa, though



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this has largely been in the area ofdeveloping new non-racial, non-sexistand equitable policy frameworks. Themajor challenge in the next period is theimplementation of these policies in amanner that improves access to qualityeducation and skills for the majority ofthe population. South Africa’stransformation is threatened and bur-dened by the very things it seeks toresolve – poverty, disease, underdevelop-ment and racial and gender inequalities inthe economic and household spheres.

Government needs to act decisivelyto reverse aspects in the educationsystem that substitute class distinctionsfor racial privilege. Though the systemis still very far from achieving racialequality, black working-class familiesand communities have far fewer oppor-tunities in the education system. This isbecoming more accentuated as furtheropportunities open up for middle-classblacks.

New policy frameworks have openedup spaces for new modes of engage-ment and have led to transformation ofprocesses for human development.Whereas transformation in the first fiveyears of post-apartheid South Africa hasbeen dominated – indeed, defined – bygovernment-initiated and -managed

changes, there are strong signs that thenext few years will be shaped moredecisively by struggles mounted fromwithin civil society. In a very real sense,this marks the normalisation of theSouth African transition to democracy.

Centre-stage already are the domi-nant forces in civil society: the organisa-tions of capital and labour. The powerof the former can scarcely be exagger-ated – all the more so when bolsteredby the punitive capacities of financialand other markets. Meanwhile, civilsociety and labour remain the mostvibrant components of ‘the popularsector’: community- and mass-basedorganisations (along with the serviceorganisations supporting them). Theybroadly share the desire to transformsocial relations and material conditionsin line with the rights-based ideals ofdistributing resources, opportunities andpower more equitably in society.

The struggles waged by these variousforces are, at the very least, refractedthrough the state which helps create theconditions that trigger those struggles,the terms on which they are fought andeven their outcomes. The plethora ofnegotiating fora set up during the early1990s theoretically provided the institu-tional basis for these engagements.Practically no policy area was excludedfrom contestation, debate and consen-sus-reaching outcomes. South Africa’schallenge in the Twenty-First Century isto sustain such broad participation innew spaces and in ways that will lead toa people-driven process of humandevelopment. Galvanising such anoutlook must be a process that marshalsthe intellectual and organisational vi-brancy of popular forces into designingthe architecture of a post-apartheidtransformation project.

For many, the acquisition of

land has also become a poverty

trap, with communities and

households unable to tap the

full potential of the land due to the

lack of services and infrastructure to support

agricultural development.


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Notes1 ANC [1994], 1212 UNDP [1996]3 Heintz and Jardine [1998], 5-64 Minister of Finance [1998]5 ANC [1994], 1.3.76 NEDLAC includes government, business,

labour and the community sector as keyconstituents in the policy negotiating body.

7 Sitas & Jarvis [1998], 38 Douglas [1997]9 UNDP [1996]10 Taylor [1997], 177-17811 In the 1995/96 budget, R31,089 billion

went to education, of which 86,4 percentwent to provinces, largely for schooling:Vally [1998]. In the 1997/8 budget, 82percent of provincial education budgetswent to public schools: Edusource [1998]

12 Department of Education [1997] Unlessotherwise indicated, all the data on school-ing in this section is taken from this survey.

13 Gender Equity Task Team [1997]14 Gender Equity Task Team [1997]15 Hofmeyr & Buckland [1997]16 South African Communication Service

[1997]17 National Speak Out on Poverty [1998]18 The Star, 27 July 199919 Tirisano means ‘working together’.20 Department of Labour/International Labour

Organisation [1999]21 National Commission on Higher Education

[1996]22 National Commission on Higher Education

[1996]23 It was estimated, for instance, that

enrolments at the University of Fort Haredropped from 5 000 to 2 000; University ofthe North from 9 000 to 2 000; North Westfrom 11 203 to 6 011. Wits EducationalPolicy Unit [1999]

24 These principles are best captured andarticulated in the report of the NationalEducation Co-ordinating Committee [1992]

25 Mashamba [1992], 3926 Government of South Africa [1996]27 Department of Education [1995], 2128 Department of Education [1995], 2529 Minister of Education [1999]30 Minister of Education [1999]31 For example, from the beginning of 1991,

the National Party government began toallow African, Indian and colouredlearners to attend white and other raciallycategorised schools. By 1993, there were60,000 black learners at white schools andabout 40,000 African learners at Indianschools. By the end of 1995, this figurehad risen to about 200,000. Naidoo [1996]

32 Minister of Education [1999]33 Social allocation ratio means ‘earmarking’

funds for social sectors such as education,health and welfare.

34 Social priority ratio is a way of ensuringthat an equitable percentage of socialexpenditure is devoted to basic education,health, nutrition, housing etc according togovernment’s political objectives.

35 Centre for Education Policy Development[1997]

36 In May 1998, there were 443, 000 teachersin South Africa, 28 percent of whom wereunder-qualified. In the North-West provincea whopping 53 percent of teachers wereunder-qualified, followed by KwaZulu-Natalwith 34 percent and Eastern Cape and theFree State at 31 percent. Edusource [1998]

37 The Star, 29 July 199938 Conger & Kanungu [1988], 11439 Conger & Kanungu [1998], 11440 Heintz & Jardine [1998], 641 Klasen & Woolard [1998]42 Klasen & Woolard [1998], 7, Stander, Sender

& Weeks [1996]43 Department of Labour [1998], 844 ‘Esops look interesting again’, Business Map

113/BEE/AB/98, June 3, 1998, 145 ‘Esops look interesting again’, Business

Map, 113/BEE/AB/98, June 3 199846 Fine [1997], 547 Fine [1997], 1548 Fine [1997], 1549 Africa Update [1999], 150 ‘Union Investment Activities’ Business Map

77/BEE/AB/98, July 8 1997, 151 Fine [1997], 1752 Stacy [1996], 1253 Stacy [1996], 3854 Quoted in Solomon [1997], 1555 Ministry of the Office of the President &

Department of Housing [1995], 218 in Stacy[1996], 16

56 Business Map 89/DF/DS/AB/9757 Department of Trade and Industry [1996]

and Statistics South Africa [1999]58 The first institutional engagement in this

process was through the Convention for aDemocratic South Africa (CODESA).

59 Douwes-Dekker [1998], 560 Douwes-Dekker [1998], 1061 The resolution in this sense is given to mean

“promoting effectiveness in allocation ofresources to achieve a degree of stability andensure legitimacy of outcomes that are lessthan expected but an improvement on whatwas before.” Douwes-Dekker [1998], 10

62 Marais [1998], 22963 Marais [1998], 23264 “Claims about the inevitability of a con-

servative pact exaggerate the power ofglobalisation, by presenting it as anomnipotent force depriving states ofmanoeuvring room in the choice ofdevelopment policy. Above all, thesepositions ignore the power of movementsand organisations, the importance ofinstitutions, the strategic choices thatcollective actors can make. Movements



an development

164

resisting economic liberalisation may beable to create new institutions throughwhich they can process their demands. Inturn these institutions may be able tocreate new rules of the game…in whichprominent groups renegotiate the terms onwhich a country engages with the globaleconomy.” Webster and Adler [1999], 1

65 COSATU [1997], 2666 COSATU [1997], 3567 Webster & Gostner [1997], 368 Mandela [1995]69 Sitas & Jarvis [1998], 570 Sitas & Jarvis [1998], 571 Sitas & Jarvis [1998], 572 Von Holdt [1991]73 Tripartite alliance in this context includes

government, COSATU and the SouthAfrican Communist Party.

74 Personal interview with Jayendra Naidoo(former Director of NEDLAC), Johannes-burg, 1999.

75 Personal interview with Jayendra Naidoo(former Director of NEDLAC), Johannes-burg, 1999.

76 Personal interview with Wendy Dobson,Johannesburg, 1999.

77 such as Bobby Godsell78 Personal interview with Wendy Dobson,

Johannesburg, 1999.79 NEDLAC [1996]80 Personal interview with Jayendra Naidoo

(former Director of NEDLAC), Johannes-burg 1999

81 NEDLAC [1998a]82 NEDLAC [1998a], 383 NEDLAC [1998a], 284 Alence [1997]85 NEDLAC [1996]86 Personal interview conducted with Shan

Ramburuth, Johannesburg, 1999.87 NEDLAC [1998b]88 NEDLAC [1995], 189 Standing [1996], 48790 Some of these include a lower deficit to

GDP ratio, privatisation of state assets anda move towards increased labour marketflexibility.

91 Community constituency presentations atthe NEDLAC Summit [1997], 5

92 Manga [1997]93 Section 77 (1)94 The Citizen, 199795 Business Report, 2 October 199796 Business Day, 19 June 199797 Sunday Times, 199798 Cape Times, 199799 This was mainly a time schedule for

reviewing the progress on reductions inworking hours.

100 Manga [1997]101 There is considerable doubt among

researchers as to whether SMMEs arecreating jobs, or are growing as a result of

displaced employment and retrenchmentby larger firms.

102 Ntsika [1998]103 COSATU [1997], 84104 NALEDI105 Gostner & Joffe [1997], 12106 NEDLAC [1998b]107 Gostner & Joffe [1997], 14108 Gostner & Joffe [1997], 14109 A long lag time between agreements

reached and membership awareness issomewhat expected, however. Knowledgeof any new programme or institution takestime to work its way through a constitu-ency. For example, union membershipknowledge about the RDP increased from24 percent in 1994 to 80 percent in 1998.Satgar & Jardine [1999]

110 Alence [1997]111 Alence [1997], 2112 Lewis [1997]113 Lewis [1997]114 COSATU [1997], 30115 COSATU [1997]116 Personal interview conducted with Wendy

Dobson, Johannesburg, 1999.117 Personal interview conducted with Wendy

Dobson, Johannesburg, 1999.118 The definition of survivalist micro, small

and medium enterprises can be found inDepartment of Trade and Industry [1995].

119 Statistics South Africa [1999], xvii. House-hold is defined as a dwelling, consisting ofa single person or group of people wholive together for at least four nights a week,eat together and share resources.

120 UNDP [1996], 68121 UNDP [1996]122 Haarman & Haarman [1999]123 Department of Land Affairs [1998], 14-15124 Sunde [1996]125 Agarwal [1996], 3126 Meer [1999], 76127 Walker concluded in her study of Cornfields

in KwaZulu-Natal that: “Land represents anopportunity for women to meet a variety ofneeds, including those which are sociallydefined as primarily their responsibility, suchas running the household and childcare.What emerges … is that Cornfields womenwere straddling different economic optionsand working with a package of strategies forthe survival of themselves and their children.Land for agricultural purposes was oneelement of this package. It was not, how-ever, one which women regarded as themost rewarding in terms of income genera-tion, nor did farming define their interest inland.” Walker [1997], 71

128 Carter & May [1997], 8129 See Walker [1998]130 Department of Land Affairs [1999a], 24-25131 Department of Land Affairs [1999b], 26132 Walker [1997]

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appendices

204

Appendices

Chapter 2

Appendix 1

Estimates of HDI with and without HIV for South Africa and the Nine ProvincesSouth Africa Eastern

CapeFree State Gauteng Kwazulu-

NatalMpumalanga Northern

CapeNorthernProvince

NorthWest

WesternCape

NoHIV

HIV NoHIV

HIV NoHIV

HIV NoHIV

HIV NoHIV

HIV NoHIV

HIV NoHIV

HIV NoHIV

HIV NoHIV

HIV NoHIV

HIV

1996 0.628 0.626 0.596 0.585 0.65 0.631 0.712 0.691 0.602 0.571 0.628 0.612 0.632 0.629 0.531 0.522 0.63 0.619 0.702 0.702

1997 0.628 0.624 0.597 0.582 0.651 0.629 0.713 0.692 0.603 0.571 0.629 0.607 0.634 0.629 0.532 0.52 0.631 0.614 0.703 0.702

1998 0.644 0.619 0.597 0.577 0.652 0.627 0.714 0.693 0.603 0.57 0.629 0.603 0.634 0.628 0.533 0.518 0.631 0.611 0.703 0.702

1999 0.645 0.612 0.598 0.571 0.653 0.62 0.714 0.687 0.604 0.562 0.63 0.595 0.635 0.626 0.534 0.513 0.632 0.605 0.704 0.702

2000 0.646 0.605 0.599 0.563 0.654 0.612 0.715 0.681 0.605 0.554 0.631 0.587 0.636 0.623 0.535 0.506 0.633 0.598 0.705 0.701

2001 0.647 0.597 0.6 0.555 0.655 0.604 0.716 0.674 0.606 0.546 0.632 0.579 0.637 0.619 0.536 0.499 0.634 0.589 0.706 0.699

2002 0.648 0.589 0.601 0.547 0.656 0.595 0.717 0.666 0.607 0.537 0.633 0.57 0.638 0.614 0.537 0.49 0.635 0.581 0.707 0.697

2003 0.648 0.58 0.602 0.538 0.657 0.587 0.718 0.658 0.608 0.529 0.634 0.561 0.639 0.609 0.538 0.482 0.636 0.572 0.708 0.694

2004 0.649 0.572 0.603 0.529 0.658 0.579 0.718 0.651 0.609 0.522 0.635 0.553 0.64 0.603 0.539 0.472 0.637 0.563 0.709 0.691

2005 0.65 0.565 0.603 0.521 0.658 0.571 0.719 0.644 0.609 0.516 0.635 0.545 0.64 0.597 0.54 0.463 0.638 0.555 0.71 0.686

2006 0.651 0.559 0.604 0.513 0.659 0.565 0.72 0.638 0.61 0.511 0.636 0.539 0.641 0.591 0.541 0.455 0.638 0.547 0.711 0.681

2007 0.651 0.554 0.605 0.507 0.66 0.559 0.72 0.632 0.611 0.506 0.637 0.534 0.642 0.584 0.542 0.447 0.639 0.541 0.712 0.676

2008 0.652 0.549 0.606 0.501 0.661 0.555 0.721 0.628 0.612 0.503 0.638 0.529 0.643 0.578 0.542 0.441 0.64 0.535 0.713 0.67

2009 0.653 0.545 0.607 0.497 0.662 0.551 0.722 0.624 0.613 0.5 0.639 0.526 0.644 0.573 0.543 0.435 0.641 0.531 0.713 0.664

2010 0.654 0.542 0.608 0.493 0.662 0.548 0.722 0.621 0.614 0.498 0.64 0.522 0.644 0.567 0.544 0.431 0.642 0.527 0.714 0.659

1996

2000

2005

2010

00.2

0.4

0.6

0.8

1

1.2

Ratio

Province

SA EC FS GP KZN MP NC NP NW WC

Ratio of HDI with HIV to HDI without HIV

Appendix 2


appendices

205

Chapter 3

Appendix 1

Appendix 2

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daolatipacreP

emocnievitaleR

forebmunelpoeproopecnivorpni

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epaCnretsaE hgiH hgiH laruR hgihylevitaleR woL hgiH woL

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lataNuluZawK hgiH hgiH laruR hgihylevitaleR woL etaredoM woL

agnalamupM woL hgiH laruR etaredoM etaredoM etaredoM

epaCnrehtroN woL woL nabrU etaredoM hgiH etaredoM

ecnivorPnrehtroN hgiH hgiH laruR hgihylevitaleR woLyreV hgiH woL

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epaCnretseW epaC


technical notes

206

The Concept of Human DevelopmentThe first Human Development Report(HDR), published by the United NationsDevelopment Programme (UNDP) in1990, defined Human Development(HD) as: “a process of enlarging peo-ple’s choices”. Enlarging people’schoices implies empowering them toachieve their potential to lead fuller andmore productive lives. The report statedthat, “at all levels of development, thethree essential ones [choices] are forpeople to lead a long and healthy life,to acquire knowledge, and to haveaccess to resources needed for a decentstandard of living. If these essentialchoices are not available, many otheropportunities remain inaccessible”.

Starting from this definition, thechallenge of development becomes oneof creating a healthy and educatedsociety in which people participatefreely in social, political and economicdecision-making. No longer are incomeand economic growth the sole meas-ures of human welfare.

HD recognises: “that there is noautomatic link between income, growthand human progress. As the 1992 HDRsums up: “The objective of devel-opment is that people can enjoy long,healthy and productive lives - a simpletruth but one often forgotten in the rushto accumulate more possessions andgreater wealth”.

This paradigm shift in the develop-ment dialogue has several majorimplications. First and foremost, it

suggests that governments, donororganisations and development institu-tions which adopt and embrace theconcept must re-think their objectives,strategies and priorities for develop-ment. At the national level, governmentbudgets must be reoriented away fromwasteful expenditures such as militaryspending, towards more productiveallocations to the health and educationsectors; while the private sector must beunleashed to provide employmentopportunities and generate income. Atthe international level, the donor com-munity should support those nationsand governments that focus on humandevelopment. Leaders and elites whoregularly divert national resources tofurther their own private interests pre-vent the majority from participating inthe decision-making process of humandevelopment and should experience theunequivocal condemnation of theinternational community.

The human development paradigmalso implies that using per capita in-come as a measure of human develop-ment is inadequate and prone to givemisleading results. Therefore, UNDPcreated a new composite Human Devel-opment Index (HDI) for the measure-ment of development, incorporatingproxy indicators for health, educationand income. Health and educationindicators are taken as proxy variablesfor a long and knowledgeable life, whileincome is seen as a means to achieveother goals and not as an end in itself.

Technical notes

Technical note 1

The concept and measurement of human development

technical notes

207


There is a new understanding that thewell-being of society depends not onthe level of income but on the uses towhich it is put. The experience ofseveral countries shows that a high levelof human development can be attainedat relatively low levels of per capitaincome by means of well structuredsocial expenditure, as in the case ofBotswana, Costa Rica, Malaysia, SriLanka and South Korea. At the otherend of the spectrum, countries such asBrazil, Nigeria, Saudi Arabia and Na-mibia demonstrate that, even with ahigh level of per capita income or arapidly growing economy, the discrep-ancy between economic and socialperformance can be vast.

Alternative Development Concepts andTheoriesAlthough the concept of human devel-opment as defined above may seem selfexplanatory today, this was not alwaysthe case. Originally, economists inter-ested in development saw the problempurely in terms of increasing the in-comes of people in developing coun-tries. Countries were ranked accordingto how rich they were. It was assumedthat all that was needed to improvehuman welfare was a rise in grossdomestic product (GDP) per capita. Ittook almost half a century for develop-ment theory to move gradually awayfrom this view towards a more compre-hensive view of human development.The following section briefly reviewsthe major themes that have character-ised the development debate over thepast fifty years. The section is notintended to be a comprehensive ac-count of the evolution of developmenttheory over the past five decades andmany important contributions are thusomitted; rather, it is intended to providethe reader with a broad overview of theevolution of the development debate.

Economic GrowthEarly development economists focusedon economic growth as the main deter-minant and defining characteristic of

development. During the 1950s, devel-opment economics was concerned withtransforming traditional subsistenceeconomies into modern industrialeconomies. A key determinant of thegrowth rate, within this paradigm, is theinvestment rate, which is in turn gov-erned by national savings. Therefore,economic growth required saving andinvestment which, in turn, required theemergence of a capitalist class, concen-trating as large a share of the nationalincome as possible. The idea was thatrich people would save more than poorpeople and that they would provide theengine of growth, the benefits of whichwould then trickle down to eliminate oralleviate human deprivation. This para-digm had widespread influence duringthe 1950s and 1960s. In fact, the under-lying economic growth model, based onaccumulated savings and investmentrates as the key determinants of eco-nomic growth, continues to be used tothis day by institutions such as theWorld Bank. This approach, especiallythe focus on the entrepreneurial classand trickle-down economics, returned tofashion in the 1980s and formed thebasis of domestic policies for much ofthe industrial world during that decade.

Redistribution with GrowthIn the late 1960s and 1970s, the realisa-tion that the fruits of development hadbeen unevenly distributed led to thewidespread appeal of neo-Marxistanalyses of development. The firststatistical signs were emerging that therich, far from saving a higher proportionof their income, may in fact have beganto question the trade-off betweengrowth and equity. Some argued thatdevelopment should be reinterpreted totake account of trends not only ineconomic growth but also in respect ofpoverty, income inequality and employ-ment. Redistribution and growth becamethe leading paradigm. However, mosttheorists confined themselves to study-ing which types of redistribution wouldhave the least effect on thegrowth-equity trade-off which they


technical notes

208

regarded as inevitable. Focusing ondistribution rather than production, theysaw human beings as the beneficiariesof an external process of developmentrather than as the main participants inand initiators of the process.

Basic NeedsIn the late 1970s and early 1980s, thereemerged a growing concern that thepolicies of redistribution with growthmight not be sufficient to guarantee anincrease in welfare for the poorest indeveloping countries. The idea ofpoverty alleviation began to receiveincreasing attention. In 1976, the WorldEmployment Conference endorsed aproposal by the International LabourOrganisation (ILO) that all countriesshould give priority to meeting thebasic needs of all members of theirpopulations by the year 2000. Suchbasic human needs include minimumnutritional requirements, clothing,shelter, health care, education, trans-port, communication, employmentopportunities and participation in thedecisions that were likely to affect theirlivelihoods.

In addition to a wider concern forpoverty elimination and raising theincomes of the poor, evidence thatthere was no clear trade-off betweengrowth and equity was increasing. Infact, proponents of this paradigmclaimed that a basic needs strategycould lay a far more effective founda-tion for sustained economic growth.Spreading the wealth would ensuregreater purchasing power among themajority of the population and promotethe growth of a larger domestic market,which would in turn encourage thelocal production of intermediate goods.Directing greater resources towards themost disadvantaged would ensure ahealthier, better educated work forcewhich was therefore productive. Thisview of development emphasisedpeople as consumers, but it focused onthe provision of goods and servicesrather than the issue of human choices.

Human DevelopmentThe human development paradigm thatdeveloped at the beginning of the 1990shas evolved from these earlier ap-proaches, while building on them inseveral ways. Human developmentemphasises poverty alleviation and itscontinued centrality to the developmentdialogue. The challenge of developmentat the most fundamental level willalways revolve around the alleviation ofhuman misery caused by desperatepoverty and lack of the most basichuman necessities. However, HD isbroader than this, being concerned notonly with basic needs. It thereforeapplies both to developing and devel-oped countries. In high income coun-tries, indicators of shortfalls in humandevelopment should be looked for inhomelessness, drug addiction, crime,unemployment, urban squalor environ-mental degradation, personal insecurityand social disintegration.

Since its inception and popularisationthrough the medium of the UNDPHuman Development Report 1990, HDhas moved to the centre of the globaldevelopment debate. Each year, thehuman development paradigm has beenrevisited and redefined, with new sug-gestions for improving the concept andits measurement. HD does not focussolely on the distribution of wealth andservices such as education and healthcare. Such interventions are seen asinvestment in ‘human capital’ ratherthan as the consumption of scarceresources: they emphasise that theultimate source of wealth of any countryis its people. Investing in people plays acrucial, catalytic role in the growth ofthe economy. Without such investment,there would be limited economicgrowth and, more importantly, nohuman development.

Investing in people is vital, but it isonly one part of the picture. Humandevelopment is not limited to the socialsectors nor to the economic sphere. HDstresses the need to develop humancapabilities and empower people to usethose capabilities in order to participate

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in the development process. Humandevelopment covers all human needs -from production processes, to politicalfreedoms, to methods of government.Therefore, human development isconcerned with the creation and distri-bution of wealth, with allsocio-economic sectors, with politicallife, with basic needs and non-basicneeds and with human choices indeveloping as well as developed coun-tries. “Human development as a con-cept is broad and comprehensive. But itis guided by a simple idea – peoplealways come first”.

Sustainable Human DevelopmentThe evolution of the Human Develop-ment Report paradigm came at a timewhen global environment concernswere also experiencing a revival. As theCold War came to a sudden end, andthe former Soviet Union unravelled, anew atmosphere of trust andco-operation emerged that would allowworld leaders to focus on questions ofcommon concern. Foremost on thedevelopment agenda was environmentalprotection, the need for which con-fronts both developing and developedcountries. It was clear that, whateverthe earth’s carrying capacity, we were,and still are, severely underminingsustainable development, utilisingnon-renewable resources at an increas-ing rate and failing to develop renew-able resources effectively. It was alsoclear that environmental problems didnot respect international boundaries.Potentially serious problems such asdamage to the ozone layer, the green-house effect, acid rain and global defor-estation would affect all the peoples ofthe world, regardless of gender, race ornationality. Furthermore, such problemscould not be solved by an individualcountry, no matter how powerful. Theworld had entered a new era ofinterdependency.

In 1992, a UN Conference on Envi-ronment and Development, commonlyknown as the Rio Earth Summit, tookup the challenge as did the United

Nations HDR 1992 and the World Bank.Together they defined the problems andsuggested solutions that would lead tosustainable human development (SHD).The HDR 1992 has the following to sayabout sustainable development andeconomic growth, “...sustainable devel-opment implies a new concept of eco-nomic growth - one that provides fair-ness and opportunity for all the world’speople, not just the privileged few,without further destroying the world’sfinite natural resources and withoutcompromising the world’s carryingcapacity”. Now, along with healthier,well-educated citizens participating in adecentralised government, came newminimum requirements for SHD whichincluded the elimination of poverty, areduction in the population growth rate,and an improved understanding of thediversity of ecosystems and the environ-mental impact of development activities.SHD puts the human developmentparadigm within the context of our finiteenvironment and ensures futuresustainability of the ecosystem.

Measurement of Human Development

The Human Development IndexHaving adopted such a broad conceptof development, the problem that arisesis how to measure what might at firstappear an indeterminate notion. It isclear that a precise measurement of HDis impossible. Common sense dictatesthat it is not possible to capture such abroad, and in some senses subjective,concept within a single digit - intowhich an enormous number of indica-tors could be chosen for incorporation.Then comes the question of the respec-tive weights to be attached to eachindicator. Some factors that are centralto HD are not easily quantifiable, forexample, access to the decision-makingprocess or freedom of the press. InNamibia’s case, it is precisely in the areaof human freedom that so muchprogress has been made since inde-pendence. Major achievements, such asthe abolition of apartheid, introduction


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of universal suffrage and freedom ofspeech and association, are not re-flected in the HDI, although they repre-sent tremendous advances in humandevelopment.

Within this context, however, theproponents of the human developmentparadigm further postulate that thereare some relevant quantifiable factorsthat would permit an approximateindex by which HD can be measured.The essential elements of HD are three:longevity (health), knowledge (educa-tion) and acceptable living standards(income). These indicators allow theconstruction of a human developmentindex which permits inter-countrycomparisons. Clearly, we are restrictedto using those proxy indicators forthese key elements which are freelyavailable in all UN member states.

The 1990 HDR proposed that forlongevity, life expectancy at birthwould be the appropriate indicator. Along life is not only intrinsically valu-able but also serves as a rough indica-tor for other relevant elements in theHID approach, such as good health andadequate nutrition. As for education, itwas decided to use national literacyrates as proxy for all associated edu-cational values such as access andequality of education. This was laterimproved by the addition of educa-tional attainment (see below)

The final key component of HD isan acceptable standard of living. This isperhaps the most difficult to quantify.The simplest measure of per capitaincome is readily available, but its useis made problematic by access tonon-monetary resources and the pres-ence of non-tradable goods and thoseworking outside the formal economy,as well as distortions arising fromexchange rates, tariffs and taxes. In anattempt to correct some of these distor-tions, per capita income is adjusted toaccount for the cost of living in eachcountry. Finally, HDR 1990 suggestedthat the income indicator should reflectthe diminishing marginal value ofincome. By this, the report suggested

that the more money a person has, theless benefit he/she would receive froman additional dollar. In other words, asingle dollar is worth more to a pauperthan to a millionaire. In order to reflectthis, any income above the averageincome level (already adjusted for thecost of living) is discounted. It shouldbe noted, however, that in spite of theseadjustments to per capita income, beinga national aggregate, this statisticalmeasure will remain inaccurate as anindicator of human welfare in countrieswhere the income distribution is ex-tremely skewed, as is the case in SouthAfrica.

Refinement of the HD1At a later stage, the original index wasimproved by the addition of mean yearsof schooling to reflect knowledge moreaccurately. This was changed again inthe 1995 HDR to a combined primary,secondary and tertiary enrolment ratioas well as highest educational attain-ment, rather than literacy rates, thusreducing the data required. For eachfactor, a scale of the highest and lowestlevels of development is constructedand each country’s level of developmentin relation to the scale is measured. Forinstance, the highest and lowest levelsof life expectancy are set at 85 yearsand 25 years respectively, giving adifference of 60 years between themaximum and minimum levels. If lifeexpectancy at birth in a country is 65years, then on average, citizens areexceeding the minimum value (25 years)by 40 years - i.e. two-thirds of themaximum 60 years - and therefore thelife expectancy index for that countrywould be 0.667. The HDI gives a rela-tive indication of human developmentrather than an absolute value. Each year,as countries progress/regress in eachrespective field, the distance travelled toreach the best value (i.e. the richestcountries or the most well educatedpopulation) will also change. Therefore,the HDI cannot be successfully used totrack human development over a long

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time period, unless static goals aredefined for such an exercise.

The UN received several suggestionsto include broader indicators that cov-ered other aspects of progress such asculture or human freedom. It wasdecided that, although these were

important aspects of development, theyshould be measured independently ofthe original HDI rather than trying toask too much of one index. UNDP is,however, committed to the systematicimprovement of the concept and itsmeasurement.


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Technical note 2

Estimation of the South African Human Development Index

The technical notes are based on the new methodologies as presented in theHuman Development Report 1999.

1. Human Development Index (HDI)Human Development Index (HDI) was calculated as an average of four indices:

Life Expectancy Index (LEI)Adult Literacy Index (ALI)Combined Gross Enrolment Index (CGEI)Adjusted real GDP per capita (PPP$) Index

A: Life Expectancy Index (LEI)Life expectancy index was calculated using life expectancy at birth and the mini-mum and maximum values set. It was calculated according to the formula byUNDP technical notes:

Life Expectancy Index (LEI) = (Life Expectancy at Birth-minimum value)/(Maxi-mum value - minimum value)

The maximum and minimum values are 85 years and 25 years respectively.

B: Adult Literacy Index (ALI)This was calculated using adult literacy rate and the minimum and maximumvalues specified with the following formula

Adult Literacy Index (ALI) = (Adult literacy Rate - minimum value) / (maximumvalue - minimum value)Where the maximum value is 100 and the minimum value is 0

We cannot obtain information from the 1996 Census that will help to estimate adultliteracy, so we have used the 1995 October household information where adultliteracy is defined as the number of people of 15 years and over who can read andwrite.

C: Combined Gross Enrolment Index (CGEI)This was calculated from enrolment ratios for primary, secondary and tertiaryeducation.

Enrolment ratios were obtained by dividing the number of people enrolled ineach education category by the number of people within the required age group.The required age group for primary education is 6-12 years, for secondary, 13-17years and for tertiary, 18-22 years.

For example, enrolment ratio for primary school was obtained by dividing thenumber of pupils in primary school by the population of children in the age cat-egory of 6-12.

Combined Gross Enrolment Ratio was calculated as a weighted-average of theenrolment ratio of primary, secondary and tertiary education. Weights of 7/17, 5/17

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and 5/17 were attached to primary, secondary, and tertiary enrolments respectively.In this case the numerator of the weight represents the number of years for theeducational category and the denominator represents the total number of yearsfrom primary to tertiary. Information on enrolment was obtained from the 1996Census

Combined Gross enrolment index is calculated as follows:

Combined Gross Enrolment Index (CGEI) = (Combined Gross Enrolment ratio -Minimum value)/ (maximum value - minimum value)Where the maximum value is 100 and the minimum value is 0

D: Adjusted Real GDP per capita (PPP$) Index (APPPI)This was calculated by using the following UNDP formula:0

Adjusted GDP per Capita Index (APPPI) = [Log(Real GDP per Capita) - Log(Minimum value)] / [(Log (maximum value)-(minimum value)]

Where:minimum value is $100 and maximum value is $40,000.Real GDP = GDP in 1995 pricesReal GDP per Capita = Real GDP/PopulationGDP = Gross Domestic Product

Human Development Index (HDI)This was calculated as an average of Life Expectancy Index, Educational AttainmentIndex and Adjusted real GDP per capita Index.

HDI = (LEI+EAI+APPP)/3

Where:

Educational attainment index (EAI) = [(2*ALI)+CGEI]/3

2. The Gender- Related Development IndexIn calculating this index we used the same variables as discussed above for wom-en’s share.

A: Equality Distributed Life Expectancy Index (EDLEI)In computing the gender-related life expectancy index, we used different maxi-mums and minimums for male and female as specified in the UNDP report.

The maximum and minimum values for women are 87.5 and 27.5 respectivelyand those for men are 82.5 and 22.5 respectively.

Using the UNDP formula, the equally distributed life expectancy index is calcu-lated as follows:

Equality Distributed Life Expectancy Index (EDLEI) =1/[(Female Populationshare/female life expectancy index) + (Male population share/male life expect-ancy index)]

B. Equally Distributed Educational Attainment Index (EDEAI)This is computed using the UNDP formula:

Equally Distributed Life Expectancy Index (EDEAI) = 1/[(female populationshare/female educational attainment index) + (male population share/maleeducational attainment index)]


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C: Equally Distributed Income Index (EDII)This was calculated as follows:

Equally Distributed Income Index =1 [(Female population share/adjusted incomefor women) + (male population share/adjusted income for males)]

Where:

Adjusted Income for Women = [Log (GDP per capita for women) - Log

(minimum GDP per capita)]/[Log (GDP per capita maximum) - Log(GDP per capita minimum)

Adjusted Income for men = [Log (GDP per capita for men) - Log (mini-mum GDP per capita )]/[Log (GDP per capita maximum) - Log (GDPper capita minimum)

GDP per capita for women = female share of the wage bill* Total GDP/Number of females

GDP per capita for men = [Total GDP - (female share of the wage bill*Total GDP)]/Number of men

Female share of the wage bill = [(Rf* Ef)/{(Rƒ*Ef)+ Em}]

Where:

Rf = Ratio of female income to male income

Ef = Female share of the economically active population

Em = Male share of the economically active population

3. Gender Empowerment MeasureThis involved three indices;

Index of parliamentary representation by females

Index of administrative and managerial positions by females

Index of professional and technical positions by females

Index of male and female incomes

A: Index of Parliamentary Representation by females (IPR)This was calculated as follows:

Index of Parliamentary Representation by Females (IPR) = [Sf/Pf) + (Sm/Pm)¯ π/50

Where:

Sf = Female share of population

Sm = Male share of population

Pf = Percentage share of parliamentary representation by females

Pm = Percentage share of parliamentary representation by males

B: Index of administrative and managerial positions (IAMP)Index of Administrative and managerial positions (IAMP) = [(Sf /Af) + (Sm /Am)]¯π/50

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Where:

Af = Females’ percentage share of administrative and managerialpositions

Am = Males’ percentage share of administrative and managerial posi-tions

C: Index of Professional and Technical Positions (IPTP)Index of Professional and Technical Positions (IPTP) = [Sf / Tf) + (Sm / Tm)] ¯ π/50

Where:

Tf = Females’ percentage share of professional and technical positions

Tm = Males’ percentage share of professional and technical positions

D: Combined Index for administrative and managerial, and professional and technical positions (CIAPP)This was calculated as the average of B and C above.

CIAPP = (IPTP + IAMP)/2

E: Equally Distributed Income Index (EDII)This was calculated the same way as 2C above

Gender Empowerment Measure (GEM)

The Gender Empowerment Measure (GEM) was computed as follows

GEM = (IFMI + CIAPP + IPR)/3

4. Human Poverty Index (HPI-I)This was computed with the following variables;

Percentage of people not expected to survive at age 40 (PNS)

Percentage of adults who are illiterate (PAI)

Percentage of people without access to safe water (PSW)

Percentage of people without access to health services (PHS)

Percentage of severely and moderately underweight children under 5 years(PUC)

Percentage of people not expected to survived at age 40:

This is a calculated ratio of the number of people 0-10 years old in 1956 to thenumber of people 40-50 years old in 1996. The number of people not expectedto survive at age 40 has been estimated by subtracting the number of people 0-4years old in 1956 from the number of people 40-44 years old in 1996. Thenumber of people 40-44 years old has been obtained from the 1996 Census. Thenumber of people 0-4 years old in 1956 has been estimated using a compoundgrowth rate of 2.4%.1

PSW, PHS and PUC were averaged to obtain one variable, LS representing livingstandards

LS = (PSW + PHS + PUC)/3

Human Poverty Index (HPI-I) = [(PNS≥ + PAI≥ + LS≥)/3]π/≥


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Sources of Information1. Life expectancy at birth for South Africa and the 9 provinces and by gender

were obtained from the Department of Health, Pretoria.

2. Information on educational levels of the population was obtained from Cen-sus in Brief, Report No.1:03-01-11 (1996), published by Statistics SA for SouthAfrica and the 9 provinces and by gender.

3. Enrolment figures were obtained from Information Systems Directorate, De-partment of Education, Pretoria (Contact: Christo Lombard @ 012-312-5242).These included gender and provincial breakdowns. Tertiary enrolment wasnot, however, broken down into provinces but by tertiary institutions. Onallocating enrolment of tertiary education to provinces, we have allocatednumbers on the basis of the proportion of provincial population to totalpopulation of that age category.

4. GDP information was obtained from the Quarterly Bulletin of the SouthAfrican Reserve Bank.

5. Population information was obtained from Census in Brief, Report No.1:03-01-11 (1996), published by Statistics SA for South Africa and the 9 provinces andby gender. Projections were made for the 1997 and 1998 population figuresusing a compound growth rate of 2.4%.

6. Information on the economically active population was obtained from Censusin Brief, Report No.1:03-01-11 (1996), published by Statistics SA for SouthAfrica and the 9 provinces and by gender.

7. Information on administrative, managerial and professional and technicalpositions by gender was obtained from Statistics South Africa, Census in brief.

8. Information on parliamentary representation was obtained from the Parlia-mentary Liaison Officer in Cape Town.

9. Information on people with access to tap water was obtained from Census inBrief, Report No.1:03-01-11 (1996), published by Statistics SA for South Africaand the 9 provinces.

10. Information on people with access to health care was obtained from theOctober Household Surveys.

11. Information on underweight children under 5 was obtained from Departmentof Health.

ReferencesBundy, C [1992] ‘Development and Inequality in Historical Perspective’ in R. Schrire (Ed)

Wealth or Poverty? Critical Choices for South Africa, Oxford University PressClarke, John [1991] Democratising Development: the Role of Voluntary Organisations.

Kumarian Press, West Hartford, ConnecticutILO [1996] Restructuring the Labour Market: The South African Challenge, ILO Country

Review, GenevaManuel, TA [1998a] Address to the Société Générale Frankel Pollack 21st Annual Invest-

ment Conference (24 February), JohannesburgManuel, TA [1999] Budget Speech (17 February), Cape TownMarais, H [1998] South Africa Limits to Change, UCT Press, Cape Town & Zed Books,

London

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Mbeki, T [1998a] Statement of Deputy President Thabo Mbeki on Reconciliation at the NationalCouncil of Provinces, 10 November, Cape Town: 2

Mbeki, T [1998b] Statement of the Deputy President on the Occasion of the Debate on theBudget Vote of the Office of the Deputy President, 3 June, Cape Town : 5

SANGOCO [1998] The People’s Voices: National Speak Out on Poverty Hearings - March toJune 1998, Johannesburg

Slovo, J [1976] ‘South Africa - No Middle Road’ in B. Davidson, J.Slovo. & A Wilkinson(eds), Southern Africa: The New Politics of Revolution, Penguin

Statistics South Africa [1996] http://www.statssa.gov.za/stats_in_brief_2000/housing.htmStatistics South Africa [1997] Rural SurveyStatistics South Africa [1998] The People of South Africa: Population Census 1996, Report

No. 03-01-11Statistics South Africa [1999] The People of South Africa: Population Census1996, Report No.

03-01-11UNDP [1997] Human Development Report 1997, Oxford University Press, OxfordUNDP [1998] Poverty and Inequality in South Africa, UNDP, PretoriaUNDP [1999] Human Development Report 1999 Oxford University Press, OxfordUNDP [2000] Human Development Report 2000 Oxford University Press, OxfordWhiteford, Andrew & van Seventer, Dirk Ernst [1999] Winners and Losers, South Africa’s

Changing Income Distribution, WEFA, Southern Africa, Pretoria, South AfricaWorld Bank [1996] World Development Report 1996, Washington

Notes1 This is the average annual growth rate of population over the past several 25 years


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Acronyms

ABET Adult Basic Education andTraining

ANC African National CongressATICS AIDS Training and

Information CentresBCEA Basic Conditions of

Employment ActBLA Black Local AuthorityBOO Building Own OperateBOT Build Operate TransferBWI Bretton Woods InstitutionsCDS Capacity Development

StandardCEDAW Convention on the

Elimination of All Forms ofDiscrimination againstWomen

CGE Commission for GenderEquality

CIU Coordination andImplementation Unit

COB Community-basedorganisation

COSATU Congress of South AfricanTrade Unions

DCD Department ofConstitutional Developmentand Provincial Affairs

DPSA Department of PublicService and Administration

EPRD European Programme forReconstruction andDevelopment

ESOP Employee share ownershipscheme

EU European UnionFEDUSA Federation of Unions of

South AfricaFFC Finance and Fiscal

CommissionGDI Gender Development Index

GDP Gross Domestic ProductGEAR Growth Employment and

ReconstructionGEM Gender Empowerment

MeasureGNP Gross national productHDI Human Development IndexHEW Health, Welfare and

EducationHPI Human Poverty IndexHRD Human resources

developmentHRM Human resources

managementIBA Independent Broadcasting

Authority (now ICASA)ICASA Independent

Communications Authorityof South Africa

IDASA Institute for DemocraticAlternatives in South Africa

IDSEO Investigating Directorate:Serious Economic Offences

IFP Inkatha Freedom PartyIGF Intergovernmental ForumILO International Labour

OrganisationIMF International Monetary FundIMR Infant mortality rateIMST Information Management,

Systems and TechnologyIT Information technologyLGTA Local Government

Transition ActLGWP Local Government White

PaperLRA Labour Relations ActMAI Multilateral Agreement on

InvestmentMEC Member of the Executive

Council (provincial ‘minister’in charge of a portfolio)


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219

MERG Macro-Economic ResearchGroup

MINMEC Ministers and MEC’smeetings

MP Member of ParliamentMTEF Medium term expenditure

frameworkNACOSA National Aids Co-ordinating

Committee of South AfricaNACTU National Council of Trade

UnionsNALEDI National Labour and

Economic DevelopmentInstitute

NCOP National Council ofProvinces

NDA National DevelopmentAgency

NEDLAC National EconomicDevelopment and LabourCouncil

NEF National Economic ForumNEF National Empowerment

FundNFA National Framework

AgreementNGO Non-governmental

organisationNHDR National Human

Development ReportNLC National Land CommitteeNMC National Manpower

CommissionNP National PartyNUM National Union of Mine

WorkersOAU Organisation of African

UnityODA Official development

assistanceOSEO Office for Serious Economic

Offences (now IDSEO)OSW Office on the Status of

WomenPRC Presidential Review

CommissionPSC Public Service CommissionPSCBC Public Service Co-ordinating

Bargaining CouncilPSTF Public Sector

Transformation Forum

RDP Reconstruction andDevelopment Programme

ROT Rehabilitate OperateTransfer

SABC South African BroadcastingCorporation

SACP South African CommunistParty

SACTWU South African Clothing andTextile Workers Union

SADC South African DevelopmentCommunity

SAF South Africa FoundationSALDRU South African Labour and

Development Research UnitSALGA South African Local

Government AssociationSAMDI South African Management

and Development InstituteSANCO South African National Civic

OrganisationSDI Spatial Development

InitiativeSEP Strategic equity partnershipSHD Sustainable human

developmentSITA State Information

Technology AgencySLL Supplemental Living LevelSMG State Maintenance GrantSMME Small, medium and micro

enterprisesSOE State-owned enterpriseSPV Special purpose vehicleSTD Sexually transmitted diseasesTU Transformation unitUDF United Democratic FrontVAT Value-Added TaxationVSP Voluntary severance packageWPAAPS White Paper on Affirmative

Action in the Public ServiceWPHRM White Paper on Human

Resources Management inthe Public Service

WPPSTE White Paper on PublicService Training andEducation

WPTPS White Paper on theTransformation of the PublicService


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Glossary of key terms

AIDSAcquired Immune Deficiency Syndromeis a physiological or medical conditionwhereby the body’s immune system isweakened by a deadly virus (HIV) tothe extent that it is no longer able todefend itself against attacks by ordinary(and other) ailments. There is no curefor it and, once it is full-blown, maylead to death.

Batho Pele (South Sotho)People first.

BlackWhile the categorisation along raciallines is not preferred because of thelinks to apartheid, in this report blackusually refers to all people of colourand is sometimes used to refer topeople who are of African origin.

Commission on Gender EqualityThe Commission was constituted interms of chapter 9 of the South AfricanConstitution to deal with the veryprofound instances or cases of genderinequality.

Employment Equity Bill (now an Act)A statute in South Africa that has el-evated principles of affirmative actionto a law. It is one of the most progres-sive laws passed to address the racialinequalities in employment bedevillingthe South African society.

Equitable developmentThis refers to a strategy of developmentthat is based on principles of equity.This kind of approach accepts that thepoorer areas should be allocated moreresources. Calls for more investment inthe rural areas are based on the needfor equitable development.

Gender empowerment measureThe gender empowerment measureindicates whether women are able toparticipate actively in economic andpolitical life. It focuses on participation,measuring gender equality in key areasof economic and political participationand decision-making. It thus differsfrom the GDI, an indicator of genderinequality, in basic capabilities.

Gender-related development indexThe gender-related development indexmeasures achievements in the samedimensions and variables as the HDIdoes, but takes account of inequality inachievement between women and men.The greater the gender disparity in basichuman development, the lower a coun-try’s GDI compared with its HDI. TheGDI is simply the HDI discounted, oradjusted downwards, for gender equal-ity.

Gini coefficientA Gini coefficient involves a convenientshort-hand way of indicating the relativedegree of income inequality, based onthe Lorenz curve. It can vary from thevalue of zero, indicative of absoluteequality in income distribution, to thevalue of one, indicative of absoluteinequality. It is essentially a ratio. (Asindicated in Central Statistics – Earningand spending in South Africa Selectedfindings of the 1995 income and ex-penditure survey, 1997 – CSS Pretoria.)

HIVHuman immuno-deficiency virus is thevirus that attacks the immune system,leading to the development of AIDS,which may cause death through arelated disease such as tuberculosis.

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HIV/AIDS and migrationThe migrant labour system in SouthAfrica led to oscillatory (frequent move-ment to and from an area) migration.Adult men migrated to urban areas andwere prohibited by law from living withtheir families in the flats or compounds,leading to a ‘culture’ of urban and ruralwives and prostitution. This has beenregarded as a major factor in the spreadof HIV/AIDS and other sexually trans-mitted diseases in South Africa.

HIV/AIDS impactThe social, economic, political andother consequences arising from thespread of the virus. One of the salientfeatures of this is the impact the diseasewill have on the national economy inSouth Africa. Among the economicconsequences of the spread of thedisease are the following factors: a sickand depleted workforce; increasedhealth care delivery costs as a result oflarge numbers of AIDS patients, andexpensive child care services to takecare of large numbers of orphans.HIV/AIDS infections, distribution of

national surveys (e.g: by the CSS onwomen attending antenatal clinics)demonstrate a gradient of HIV infectionacross the country: from high levels inthe North Eastern Provinces, to lowerlevels in the south-western parts of thecountry. The trend seems to followpatterns of areas predominantly inhab-ited by poor communities. While theHIV/AIDS epidemic is more advancedin some provinces such asMpumalanga, Gauteng and KwaZulu-Natal, it is well established and growingin intensity in all provinces, and therate of infections does not seem to beabating.

HouseholdA household refers to a unit of peopleliving, working and sharing resources ina sustained manner and especially livingwithin a designated geographic boundary(for example, a nuclear family of hus-band, wife and children living together inan urban slum or shack).

Human DevelopmentThe process of widening people’schoices and the levels of well-beingthey achieve are at the core of thenotion of human development. Suchchoices are neither finite nor static. But,regardless of the level of development,the three essential choices for peopleare to lead a long and healthy life, toacquire knowledge and to have accessto the resources needed for a decentstandard of living. Human developmentdoes not end there, however. Otherchoices, highly valued by many people,range from political, economic andsocial freedom to opportunities forbeing creative and productive andenjoying self-respect and guaranteedhuman rights. Income clearly is onlyone option that people would like tohave, though an important one. But it isnot the sum total of their lives. Incomeis a means to human development.

Human Development Index (HDI)The human development index meas-ures the average achievements in acountry in three basic dimensions ofhuman development-longevity, knowl-edge and a decent standard of living. Acomposite index, the HDI thus containsthree variables: life expectancy, educa-tional attainment (adult literacy andcombined primary, secondary andtertiary enrolment) and real GDP percapita (in PPP$).

Human Poverty IndexThe human poverty index measuresdeprivation in basic human develop-ment in the same dimensions as theHDI. The variables used are the per-centage of people expected to diebefore age 40, the percentage of adultswho are illiterate, and overall economicprovisioning in terms of the percentageof people without access to healthservices and safe water and the percent-age of underweight children under five.

Human rightsThis generally refers to those rights thathave been recognised as basic andinherent in a human being, such as the

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right to dignity. Human rights havebeen accepted universally by theUnited Nations and form an importantpart of the constitutions of most states.

Masakhane (Zulu)Let us build together.

PovertyPoverty refers to the denial of choicesand opportunities for a tolerable life,and often encompasses a lack of basicsfor survival - such as food, clothing,shelter, medical care, education andemployment. The emphasis in recentreports has been more on humanpoverty than on income poverty. Thelatter refers to deprivations in certainessential aspects of human life and ismulti-dimensional. The former ismainly a single-factor determinant.

Poverty, absolute and relativeAbsolute poverty refers to some abso-lute standards of minimum require-ment, while relative poverty refers tofalling behind most others in the com-munity. With respect to income, aperson is absolutely poor if her incomeis less than the defined income povertyline (the absolute poverty datum linewhen last calculated varied betweenR950 to R1200 per month for a house-hold of six); while she is relatively poorif she belongs to a bottom incomegroup (such as the poorest 10%).

Poverty, depth ofThe depth of poverty can be measuredas the average distance below thepoverty line, expressed as a proportionof that line. This average is formedover the entire population, poor andnon-poor. Because this measure – alsocalled the poverty gap – shows theaverage distance of the poor from thepoverty line, it is able to capture aworsening of their conditions.

Poverty HearingsPoverty Hearings were conducted bythe South African National Non-Governmental Organisation with theHuman Rights Commission and theCommission on Gender Equality

throughout South Africa from March toJune 1998 to gain a picture of thepoverty situation from the point of viewof poor people themselves. The hear-ings were organised in a way thatallowed people living in poverty theopportunity to speak about their cir-cumstances and make direct input intothe policy making process.

Poverty, incidence ofThe incidence of poverty, expressed asa headcount ratio, is simply an estimateof the percentage of people below thepoverty line. It does not indicate any-thing about the depth or severity ofpoverty and thus does not capture anyworsening of the conditions of thosealready in poverty.

Poverty, National Poverty LineThe national poverty line generally indi-cates a lack of economic resources tomeet basic minimum food needs. The lineis often used to delineate a level beyondwhich minimum conditions for a tolerablehuman life cannot be maintained.

A poverty line set at $1 (1985 PPP$)a day per person is used by the WorldBank for international comparison. Thispoverty line is based on consumption. Apoverty line of $2(PPP$) a day is sug-gested for Latin America and the Carib-bean. For Eastern Europe and the CIScountries, a poverty line of $4 (1990PPP$) has been used. For comparisonamong industrial countries, a povertyline corresponding to the US povertyline of $14.40 (1985 PPP$) a day perperson has been used.

Developing countries that have setnational poverty lines have generallyused the food poverty method. Theselines indicate the insufficiency of eco-nomic resources to meet basic minimumneeds in foods.

There are three approaches to meas-uring food poverty.

• Cost-of-basic-needs method. Thisapproach sets the poverty line at thecost of a basic diet for the mean age,gender and activity groups, plus afew essential non-food items; a

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survey then establishes theproportion of people living in house-holds with consumption (or some-times income) below this line. Thebasic diet may consist of the staplefoods needed to meet basic nutri-tional requirements, the typical adultdiet in the lowest consumptionquintile or the investigator’s notion ofa minimal but decent diet. The choiceof both the food and the non-foodcomponents included is necessarilyarbitrary.

• Food energy method. This methodfocuses on the consumption expendi-ture at which a person’s typical foodenergy intake is just sufficient to meeta predetermined food energy require-ment. Dietary energy intake, as thedependent variable, is regressedagainst household consumption peradult equivalent. The poverty line isthen set at the level of total consump-tion per person at which the statisticalexpectation of dietary energy intakeexactly meets average dietary energyrequirements. The problem with thismethod is the caviar caveat: groupsthat choose a costly bundle of foodsare rewarded with a higher povertyline than that for more frugal eaters.

All three approaches are sensitive to theprice level used to determine the costof the bundle. And all three concentratemainly on calories or dietary energy,because protein deficiency due toinadequate economic resources isperceived to be rare in most societies.In industrial countries, too, nationalpoverty lines are used to measurerelative poverty. The European Com-mission has suggested a poverty line forthese countries of half the medianadjusted disposable personal income.

Poverty-related diseaseAn illness associated with or directlylinked to a lack of basic needs such asfood, shelter, housing, etc. Commonpoverty-related illnesses include TB,cholera and scabies.

Poverty, severity ofThe severity of poverty can be meas-ured as a weighted average of thesquared distance below the povertyline, expressed as a proportion of thatline. The weights are given by eachindividual gap. Again, the average isformed over the entire population.Since the weights increase with poverty,this measure is sensitive to inequalityamong the poor.

Poverty, transient and chronicTransient poverty refers to short-term,temporary or seasonal poverty, andchronic poverty to long-term or struc-tural poverty.

Poverty, Ultra-povertyUltra-poverty is said to occur when ahousehold cannot meet 80% of theFAO-WHO minimum calorie require-ments, even when using 80% of itsincome to buy food.

Rural communitiesRefers to non-urbanised, peri-urbanareas. These are often poor places inwhich the lifestyle of the communitydepends mainly on agriculture andlivestock farming. Poverty and unem-ployment levels are often very high insuch places, and infrastructure develop-ment and services provision poor.

Social cohesionThe extent to which a group of peopleshare certain fundamental valuesaround which they mobilise each otherand strengthen the group.

Tirisano (Tswana)Working together.

WhiteRefers generally to people of Europeandescent or origin and excludes peopleof Indian descent or mixed race, classi-fied as Coloured.

YouthThe term normally refers to peopleaged between 15-35, but the limitconstantly changes.

glossary