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Copyright © 2022 Inclusive Society Institute PO Box 12609 Mill Street Cape Town, 8000 South Africa 235-515 NPO All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without the permission in writing from the Inclusive Society Institute D I S C L A I M E R Views expressed in this report do not necessarily represent the views of the Inclusive Society Institute or those of their respective Board or Council members. JULY 2022 An analysis of local economic development with local government: A case study of the City of Ekurhuleni by Nondumiso Alice Sithole Msc. Public Policy & Management, LLB, Property & Investment Practice Law (Postgraduate Cert.), Legislative Drafting Abstract This article examines the role of Local Economic Development (LED) in the context of the local government or municipalities in South Africa, with the City of Ekurhuleni as its case study. It explores various policies and methods that can be implemented as possible positive interventions to redress high unemployment and challenges associated with creating thriving and sustainable township economies, both formal and informal, which will be instrumental in reducing unemployment and poverty amongst local communities. The objective of the paper is to examine what ought to constitute LED at the grassroots level of South Africa’s economy and, more specifically, where local township developments are concerned. The research design used a qualitative approach wherein data were collected by means of a review of the City of Ekurhuleni’s public documents and reports, scholarly articles, and newspaper articles focusing on the topic. The findings point to the fact that municipalities in general need to make a concerted effort in providing a conducive and favourable environment for informal traders, and the informal sector at large, in order for this sector to establish and create sustainable businesses. It is only then that the informal sector could make an advanced impact in terms of LED, by contributing positively towards the growth of local economies. Introduction Local Economic Development (LED) is a grassroots-based approach to economic development. It encourages people, or stakeholders, in a local context, usually the local government sphere, to work together to achieve sustainable economic growth and development, which has positive economic benefits such as improved quality of life for all residents. Local government has a range of roles and responsibilities in relation to social and economic development. It promises to be more suitable and relevant to implementing policies associated with the general concept of local economic development (Cooperative Governance and Traditional Affairs, n.d.), as local government has an important role to play in creating a favourable environment for local businesses’ development and success. At the heart of a successful LED policy and strategy is a partnership between the business sector, community interests, and municipal government (Sebareng, 2016: 4–5). Some municipalities have established LED forums, which can include NPOs and NGOs alongside organised businesses. The objectives of these forums, amongst others, include encouraging private investment in the local jurisdictions; creating and retaining jobs for the local communities; expanding the tax base and contributing towards increasing the general level of economic well-being of local communities. In sum, the goal of these forums revolves around enhancing economic growth, the creation of employment and, ultimately, improving the quality of life for local inhabitants (Sebareng, 2016: 4–5). Often, LED tends to embrace a pro-poor policy orientation. It is also associated with situations where municipalities work with local community structures to create environmental awareness and maintain clean and hygienic public spaces. A case in point, consider recent LED initiatives focusing on informal economic business, where informal employment was created through recycling and retail activities carried out in open spaces and on street pavements (Garane, 2021). The Constitution of the Republic of South Africa (1996) recognises and endorses the importance of local government as a crucial instrument to pursue economic development. Section 152 and Section 153 (a) state that "a municipality must structure and manage its administration, and budgeting and planning processes to give priority to the basic needs of the community, and to promote the social and economic development of the community”. Here, the Constitution defines the municipality’s scope, mandate, and function to carry out obligations associated with LED. Beyond the Constitution, LED is justified by a vast legislative and policy framework empowering local governments to pursue the goal of economic development. For example, the White Paper on Local Government (1998: 23–36) further corroborates the government’s duties of advancing LED as enshrined in the Constitution. The Municipal Systems Act of 2000 provides core principles, mechanisms, and processes that are essential to “enable municipalities to work progressively towards the social and economic upliftment of their local communities” (Act 2003: 3). To pursue LED, municipalities are legally required to have Integrated Development Plans (IDPs). For instance, the Spatial Planning and Land Use Management Act 16 of 2013 (SPLUMA) has the primary aim of providing all spheres of government with a framework relating to the establishment of policies and systems for planning and land use management. All municipalities must approve and adopt a single land use management scheme, from 1 July 2015, with the purpose of promoting economic growth, social inclusion, efficient land development, and minimal impact on public health, the environment, and natural resources (Dykes Van Heerden Group of Companies, 2020). The Business Act 71 of 1991 is another important legislation that promotes LED. The primary objective of this legislation is to empower municipalities with the mandate or right to allow and/or restrict areas where trading is permissible. Secondly, the Business Act provides for various categories of businesses to be compelled to have a trading permit or a business license before they can operate legally (Garane, 2021). There are other policies, frameworks, bylaws, and guidelines aimed at aiding and transforming economic development at local government level. The most recent development in terms of proposed legislation is the newly drafted Gauteng Economic Bill, which aims to structurally transform the Gauteng economy, to bring the historically disadvantaged majority into productive mainstream activities as owners, wealth creators, and asset builders (Siwela, 2020). The Bill also seeks to revitalise and streamline the township economy and move towards new ways of authentic empowerment for township and black-owned businesses. The Bill aims to make certain activities easier for township entrepreneurs and enterprises by making it more affordable and easier to establish, register, and operate businesses. The Bill intends to loosen red tape, remove bottlenecks, and improve the ease of doing business for township enterprises (Siwela, 2020). The mammoth task to promote LED and provide basic services as required by the Constitution has not only put local governments under severe pressure, but also under scrutiny by the communities that they are meant to serve. The purpose of this paper is to examine the role that local governments have played thus far in planning and promoting LED in a broad sense, looking at the position of some metropolitan municipalities in South Africa. For the sake of focus, the paper will limit itself to the case study of what has been done in the City of Ekurhuleni to address socio-economic challenges faced by its local communities. In terms of research methodology, this paper takes a qualitative approach. Specifically, it is desktop and literature-based where it explores the concept of local economic development. It also considers the mandate of local governments and the challenges that have influenced effective and successful LED planning and implementation in the City of Ekurhuleni. The third section focuses on how local government feeds into the informal and formal sectors of local communities practically speaking, taking into consideration the achievements or non-achievements of the City of Ekurhuleni. The final section considers possible solutions that may be adopted and/or utilised to reinforce and reinvent ways in which Ekurhuleni and municipalities in general are to provide effective support where LED is concerned, looking at the introduction of the New Gauteng Township Economic Bill, etc. Background The apartheid government centrally organised and managed all the resources; it was responsible for the entire economy, planning and execution. The result was that local municipalities did not have a role to play in matters of extreme importance, or rather, matters that pertained to economic development planning. If they played a role, it was a very small and insignificant one. There was clear neglect of the majority of the areas where most of the population lived (SALGA, 2010: 3). After 1994, however, there was a major shift. National government placed an emphasis on grassroots initiatives and the participation of local communities. This meant that local government had to assume a wider range of responsibilities and was assigned with core developmental functions, namely, “to (a) structure and manage its administration and budgeting and planning processes in order to give priority to the basic needs of the community, and to promote the social and economic development of the community; and (b) participate in national and provincial development programmes”. After the December 2000 local government elections, every piece of land within South Africa fell under a particular jurisdiction of a municipality. Thereafter, concepts as well as strategies had to be developed in respect of the context of this new position, which was more inclusive and supportive of local economic development (SALGA, 2010: 4). For an organisation or institution to achieve its objectives with respect to a particular mandate or core function and intended outcomes, it is fundamental to understand and define what must be achieved from the onset. The Organisation for Economic Co-operation and Development defines the purpose of LED as follows: LED is to build the municipality of a defined area to improve its economic future and the quality of life for inhabitants. Local development makes an important contribution to national economic performance and has become more critical with increased global competition, population mobility, technological advances, and consequential spatial differences and imbalances. Effective local development can reduce disparities between poor and rich places, add to the stock of locally generated jobs and firms, increase overall private sector investment, improve the information flows with investors and developers, and increase the coherence and confidence with which local economic strategy is pursued. This can also give rise to better diagnostic assessment of local economic assets and distinctive advantages, and lead to more robust strategy assessment (Organisation for Economic Co-operation and Development, n.d.). Similarly, the commonwealth local government forum defines LED as a central part of developmental local government. It is a process that brings together different partners in the local area to work together to harness resources for sustainable economic growth. Local economic development is increasingly being seen as a key function of local government and a means of ensuring that local and regional authorities can address the priority needs of local citizens in a sustainable way. There is no single model for LED – approaches reflect local needs and circumstances (Commonwealth Local Government Forum, 2021). LED is a process by which public, business, and non-governmental sector partners collaborate to create better conditions for economic growth and employment generation (Murphy, 2006: 1). There is no universal agreement on the concept of LED. Hence, the concept is open to a variety or even competing interpretations, including both pro-poor and pro-development economic development approaches. Amongst some municipalities, there is still confusion about the LED department’s role, and LED is to a certain extent not considered a high priority (South African Cities Network, 2019: 8). There is, however, a common element of what LED purports to accomplish and that is to economically develop the communities that they are directly governing or in close proximity to. The aim of LED is to enhance and create a conducive environment to drive local initiatives and promote welfare and business development within the community (Garane, 2021). LED must deal with the formal and informal economy on a parallel basis and must ensure support from the formal sector for the informal sector (Frank, 2021). It is now a well-established principle that all municipalities are required to draft an annual and five-year Integrated Development Plan, with the main purpose of planning and implementing the policies and programmes of an LED strategy. Municipalities’ economic development plans are captured through IDPs, with the key mandate being, in general, the promotion of LED, community empowerment, and redistribution through the provision of policymaking and direction. Municipalities are required to develop and ensure the enforcement of bylaws. They also need to develop processes to regulate land in a manner that aims to minimise costs of conducting business, while also optimising the inclusion of local communities (SALGA, 2010: 5–6). Municipalities have an overarching role in respect of LED; they must develop and provide an enabling environment for residents and businesses to have access and prosper through LED plans and must adopt a balanced approach to “pro-poor” and “pro-growth” (Meyer, 2014: 624–634). The standard view is that at the core of LED is the idea that growth and development require an effective local government that will administer policies, programmes, and projects (SALGA, 2010: 5–6). For successful LED, local governments should strive to cultivate an environment where they do not only roll out projects to communities or informal traders in townships but also ensure that there are continuous monitoring and evaluation mechanisms in place that will offer support in various forms. The support can be mentorship or partnerships with firmly established private institutions, where local governments facilitate ongoing contact of business owners in the informal sector. Municipalities are to be the main initiators and/or activators of economic development programmes through public spending, regulatory powers, and (in the case of larger municipalities) their promotion of industrial, small business development, social enterprises, and cooperatives (SALGA, 2010: 4). The role of a regulator has become extremely important with the establishment of increased private enterprises in respect of economic development. This is an imperative function for LED, and local municipalities are the most appropriate for this role (Mashamaite, 2018: 122). Ekurhuleni Metropolitan Municipality Synopsis Ekurhuleni Metropolitan Municipality is one of the largest metropolitans in the Gauteng province and one of eight metropolitan municipalities in South Africa. It is also one of the most densely populated regions in Gauteng, having a population of over 3, 3 million, with a youthful skills base. The municipality’s vision for its future rests on the implementation of its bold vision for social and economic transformation. Ekurhuleni’s economy makes up 21% of the total economic output of the Gauteng province, equalling 7,7% of the national production (Ekurhuleni Metropolitan Municipality, 2019). It accounts for a quarter of the province’s economy and is said to contribute to over a third of the national Gross Domestic Product (GDP), through its production of goods and commodities. The municipality has a structural advantage over other local authorities in the province in that many of the production plants are located in Ekurhuleni. Manufacturing in the municipality accounts for just below 20% of Gauteng’s GDP and 28% of the total production. Due to its large concentration of industry in relation to figures nationally, and even in Africa, the municipality is often referred to as “Africa’s Workshop” (Ekurhuleni Metropolitan Municipality, 2005). Ekurhuleni is also known to be the country’s manufacturing hub due to its location. It was historically a mining region but is now largely known for its accessibility to critical centres in the province. It has developed an impressive transport network of roads, airports, railways, and telecommunications, putting the municipality at the forefront of transportation in the country (Mabogoane, 2016: 5). The OR Tambo International Airport, which is a vital asset, positions the municipality as an international aviation node. Furthermore, the local municipality has sophisticated logistics and distribution infrastructure within its jurisdiction (Ekurhuleni Metropolitan Municipality, 2019). The municipality’s planners developed a core strategic concept, the Ekurhuleni Aerotropolis – a part of the broader National Strategic Infrastructure Plan (NSIP) – that was meant to be at the heart of a broader programme of urban revitalisation (Ekurhuleni Metropolitan Municipality, 2019). The aerotropolis master plan was approved in November 2017 and a surge of investments and job creation were projected and expected by the municipality as a result of this development strategy. From the above, one can infer that due to its diverse and extensive economy, its local inhabitants and the municipality should be thriving much more, economically, as compared to its counterparts within the Gauteng province. But this paper shows that the levels of poverty-stricken communities and the unemployment rate in Ekurhuleni have instead progressed to extremely high levels. In addition, Ekurhuleni has become an area where there is a low education rate, which has led to a skills shortage (Motsapi, 2022). The IDP of the municipality demonstrates that the unemployment rate in Ekurhuleni increased from 2009; it stood at 26.6% in 2006, but by 2015 it had risen to 29.7%, pointing to the fact that the lack of vigorous LED continued to be a key factor. The unemployment in Ekurhuleni has consistently been higher than the provincial and national figures (Ekurhuleni Metropolitan Municipality, 2018: 12). Identified / Current Challenges within the Ekurhuleni Metropolitan Municipality There are a variety of factors that contribute to the challenges and complexities that slow down the municipality’s economic development. Firstly, it does not have a primary or core distinguishable identity, for example, Johannesburg is known as the “City or Place of Gold”. From the outset, Ekurhuleni’s institutional arrangement and its encompassing areas were never planned as a single functioning unit. Instead, it was formed as nine separate and independent local authorities with different needs, resulting in a municipality that is spatially fragmented (Ekurhuleni Metropolitan Municipality, 2005: 5-6). One can refer to this “identity” as a unique, inherited collection of assets, history, traits, and culture that distinguishes it internally and externally, and has the potential to unite people and a place (Clark, 2020). Some metropolitan councils developed their identities around a core area, or “drawcard”. For example, Cape Town, which is known for its central business district (CBD) area and is thus a top national and global destination; and Johannesburg, which is known as the “Municipality of Gold” and is the hub of economic activity. Secondly, the apartheid settlement patterns persist, where the residential areas are situated on the periphery of the urban areas (Mabogoane, 2016: 9-10), often far away from job opportunities and social amenities. The last decade has seen widespread expansion of informal settlements, especially within the mining belts of the municipality near the CBDs and older industrial areas (Ekurhuleni Metropolitan Municipality, 2005: 8-9). It has been suggested that linked to the core of LED is the notion of nodes and corridors within developed areas. The rationale behind this approach, is that the nodes and corridors are strategically linked to the identification of areas for development that were used during the apartheid era to spatially separate communities. For example, for an effective public transport system, gaps were created between communities as a result of buffer zones to separate race groups (Ekurhuleni Metropolitan Municipality, 2005, p. 14). Therefore, it is recommended that efforts aimed at optimally developing areas such as Leeuwpoort and Ramaphosa informal settlement should be strengthened. The influx of immigrants into the above informal settlements and continued migration of people in search of employment, demonstrates the fact that rural-to-urban migration is an ongoing activity. This migration remains a key challenge that is exacerbated by underlying historical pre-1994 spatial settlement arrangements. The increase in informal settlements has led to increased informal trading, much of which remains unregulated (Metroplan Town and Regional Planners, 2012, p. 7). The probability of the population trading in illegal or counterfeit goods in these areas increasing due to migrants’ need for survival is high and, therefore, it is something that will remain an ongoing challenge. Recent Statistics South Africa research found that 216 companies (mostly SMMEs) across various sectors were liquidated in March 2021, compared to 178 in February 2021 – an increase of 21%. Liquidations at this rate and the trading in counterfeit goods exacerbate South Africa’s unemployment, which by the broadest definition is approximately 40% (Pozniak, 2021). The rapid growth of the city’s forced urbanisation has the potential implication of over-population, which directly affects the city’s ability to plan, budget, and deliver services to its citizens. Moreover, the competition for over-stretched resources could have unpalatable social and economic implications for citizens, its institutions, and its ability to respond timeously and adequately. Township Economy South Africa is facing serious social and economic challenges. The country has a spatial plan that is not properly integrated to logistically connect the rural, township, and city areas efficiently. This fragmented spatial ‘ordering’ poses a serious challenge to economic development, with one of the upshots being the negative impact it has on the informal settlements. The City of Ekurhuleni’s informal sector or labour markets – such as the car washes, shisa-nyamas, salon stalls, etc. – do not have adequate support for their survival, let alone to thrive as sustainable businesses contributing to economic growth. A key challenge, it seems, for the City of Ekurhuleni has been to uplift small informal businesses in townships and to register them as formal private businesses (Ekurhuleni, 2020, p. 25). There are serious material and economic inequalities within the municipality, including the disparity in investment between the informal business sectors in the townships versus the businesses in the formal sector, or mainstream businesses. Another point of concern is that most of the nine towns within the jurisdiction of the city are to some extent characterised by urban decay and deterioration of the physical environment (Ekurhuleni Metropolitan Municipality, 2005: 8). Moreover, the disturbing phenomenon of buildings in the inner town or cities being “hijacked” and operated by criminal characters is a grievous obstacle to attracting investors. Ekurhuleni loses millions in revenue as a ramification of illegal occupation and misuse of municipal infrastructure by consumers who do not pay for services. The municipality does not have a critical tool, a bylaw, in place to deal with issues pertaining to hijacked or deteriorated properties within its inner cities, rendering it incapable of addressing issues arising from the urban decay and other challenges emanating from these problems. The responses by the municipality in dealing decisively with the enforcement of some of its bylaws have failed, especially in the eviction of illegal occupants, who do not pay rates and taxes, adding more pressure to an already burdened system of revenue collection (Motsapi, 2022). Furthermore, other relevant legislation that would provide processes to manage imperatives identified have thus far proven ineffective. The flagship projects identified in the IDPs as urban regeneration – the Germiston Urban Renewal Programme and urban renewal in Kempton Park (South African Cities Network, 2014: 36) – need to be vigorously implemented. Revitalisation of Manufacturing The manufacturing sector in Ekurhuleni remains one of the largest in the province, accounting for 21,5% of the gross value addition, and 27.9% of the overall gross value addition in Gauteng, in 2017. The manufacturing rate currently sits at 20,5% (Ekurhuleni, 2020: 21). The industry has been hard hit by the consequences of Covid-19, as reported in GDP reports stating that the sector suffered a 74,9% financial downturn. This sector-wide drop includes iron, steel, non-ferrous metal products, metal products, and machinery – it has all contributed to a total of 11% to the overall 51% decline. As the central location in respect of the production of metal products, machinery and plastics, accounting for around one-third of total South African output in these sectors, the municipality’s economy suffers when these sectors perform poorly (Roberts, 2011: 2). The city has a mammoth task to revitalise the industry and ensure that they are proactive in taking the lead to restore the manufacturing sector, particularly where matters of compliance by firms is concerned. The city should not be slow to engage big industrial players, to obtain an understanding of how they have been able to survive or navigate the pandemic. Such interaction would assist the city to best ascertain how to assist them, thus ensuring their continued existence in the LED region and securing of jobs (Motsapi, 2022). Another key element in Ekurhuleni is agriculture, which only contributed 0.4% to the GDP of the municipality. It is the sector that contributes the least to the economy of the municipality, bringing in a meagre R1.22 billion or 0.42% of the total GDP. That said, the sector experienced growth between 2008 and 2018, with the highest growth recorded in 2017 and an average growth rate of 13.4% (Ekurhuleni, 2020: 23). The city was able to identify land that could be used for agricultural purposes through its “rapid land release programme”. Historically, it has been women who have relied heavily on the agricultural sector for the alleviation of poverty not only in their homes, but also in their direct communities. In Africa, women in rural areas constitute most of the agricultural labour force in small-scale subsistence farming, and globally, make up 43% of the agricultural labour force (Food and Agriculture Organization of the United Nations, 2022). It is an undervalued sector that ought to be used to re-evaluate women's role and any other individuals that demonstrate commitment to and potential for being economically active as entrepreneurs or small-scale farmers, which might have the consequence of reducing poverty. The city, like other municipalities, is lagging in strategically repositioning agriculture as a sector that can provide viable economic and growth opportunities rather than merely being a subsistence sector. There has been steady progress in respect to the municipality making land available for farming purposes – 11 farms were handed over to successful bidders in August 2021. The municipality urged upcoming farmers to pair themselves with experienced farmers (Matsimela, 2021). Ongoing monitoring and evaluation mechanisms of the programmes and projects rolled out by the municipality lack visibility. Its economic development department needs to continuously conduct skills audits to verify whether they have the requisite human capital with the relevant expertise. It is also essential to consistently update the database with external stakeholders that the municipality can partner with. Legislation that is meant to regulate the informal sector or informal trading more often does not actually assist them. It is more onerous on informal traders from a compliance perspective and, therefore, makes it more challenging for them to get consent for use and other crucial permissions such as permits to operate their businesses. One major reason being that various red tape serves as a bottleneck rather than regulating or easing the integration of the informal (ergo, township) economy into the mainstream economy. Furthermore, the Constitution enjoins the municipality as one of the levels of government that must facilitate LED, whereas the legislative authority in terms of decision-making pertaining to issues of importance relating to LED, lies in the hands of the provincial and national government. As an example, the National Disaster Regulations provide for the suspension of issuing of permits, whilst municipalities are required by law to regulate the granting and/or declining of permits (Motsapi, 2022). The above is an inhibiting factor for most municipalities. Consequently, municipalities have to explore the option of powers being assigned to them by a higher structure of government for key areas when, in fact, the enforcement, regulation, and implementation ought to primarily be entrusted to local levels of government. Proposed Interventions by the Gauteng Township Economic Bill There is significant spatial inequality in the spread of economic opportunities in the suburban areas versus township areas in South Africa, and in the ability of townships to contribute to growth, being located far from urban towns’ economic hubs. The newly drafted Gauteng Township Economic Development Bill (the Bill) is aimed at redrafting how townships are regulated and governed to transform them into zones of widespread job-creating commercial activity. The Bill will set up procurement rules and programmatic support that will allow government and its main contractors to buy from large groups of township-based firms. The province further proposes the establishment of a Small and Medium-Sized Enterprises (SME) Fund to provide wholesale, blended finance to intermediaries that can de-risk lending to township-based firms, including community banks (Constitution Hill Blog, 2021). One is not certain, though, whether this is a response to key challenge(s) with the current procurement processes in place, particularly the 30% regime for small emerging companies to partner with established businesses. A key observation is that the manner or structure of the procurement legislation in place serves to enrich individuals more often, instead of the actual creation of more employment for the needy (Motsapi, 2022). Ekurhuleni has for the past couple of years encountered its own challenges in enforcing and effectively implementing SPLUMA along with its own land-use schemes and other bylaws aimed at dealing with economic matters. The municipality is still attempting to create an environment wherein it will be conducive to and hassle-free for the ease of conducting or operating businesses (Motsapi, 2022). Therefore, any additional prescriptive production of legislation – in the form of the Bill and the proposed legislation – will in effect over-burden the municipality. The Bill must ensure that clauses contained therein are not in conflict with other regulating tools that are aligned to the existing framework and legislation, otherwise the result may lead to inefficiencies. Ekurhuleni, like other municipalities, drafts its own IDP and allocates funding according to its current challenging landscape. The Bill makes proposals that will potentially impact on the already highly fragmented geography. This poses a huge problem for an infrastructure policy framework and may cause further challenges. It is difficult to foresee how it will aid in the development of the municipality’s economy. Therefore, it seems that Ekurhuleni, like other municipalities, still needs to get the basics right in terms of the smooth operation of current systems and processes in place with respect to land use development, and other ancillary issues related to economic development, before it can think of implementing new laws. It is up to municipalities to work diligently, continuously, and consistently at capacitating its officials, who must always be made aware of the legal frameworks regarding the transfer of any land belonging to the government. They must be trained on the varying policy initiatives for the disposal of state-owned land, which may ensure that processes in respect of land are seamless and negotiations around the releasing of available land, easy (South African Cities Network, 2014, pp. 6-7). A key challenge in relying on land as a resource to tackle LED, is the profusion of un-rehabilitated land, specifically in areas where a lot of mining has taken place (Motsapi, 2022). The municipality must, then, know how the land within their jurisdiction is managed – proper records of audits of usable land and that which is not usable must be kept updated. Its property-related departments should work synergistically in identifying various land parcels and continuously reporting on issues around land to the provincial and national governments. The National LED Framework 2018-2028 sets out an expanded vision that identifies, with high levels of certainty, what needs to be done in order to progress towards a more successful form of LED. This is underpinned by the necessity to advance and deepen the country’s understanding of LED, its function in national, regional development and growth in South Africa (Cogta, 2011). The framework is anchored on six core policy pillars that are supposed to influence the design, development, and implementation of LED and what it hopes to achieve: (1) building diverse and innovation-driven local economies; (2) developing inclusive economies; (3) developing learning and skilful economies; (4) enterprise development and support; (5) economic governance and infrastructure; and (6) strengthening local systems of innovation (Cogta, 2011). Ekurhuleni still has a lot of work to do for it to elevate the status of its township economy to that of its mainstream business characterised by robustness and efficiency in their operations. The duty of the municipality to develop thriving local economies and further position them for specifically designed and packaged government interventions, is not being fulfilled at the desired pace. However, the provincial government has at least developed the Gauteng Township Bill, with a view to accelerating these kinds of interventions and bringing about the required change. The municipality’s promotion of regional LED has been slow when it comes to the revitalisation of industrial parks, which are central economic nodes. Covid-19 made it even more challenging to measure any growth in this sector. Municipalities have a clear responsibility in terms of the Constitution to carry out their mandated functions in a manner that promotes local economic and social development. Most municipalities regard the critical element of LED to be an economic one, specifically the optimum utilisation of local resources to achieve reasonable and sustainable growth objectives (SALGA, 2010). Scholars, such as Bartik (2003) and Trah (2004) propose the following fundamental approaches to LED strategy design: conventional or traditional approaches that assert that the key to prosperity is attracting investment (primarily manufacturing), through allowances such as tax breaks, cheap land, and even direct financial rewards, in return for locating in an area. The output of this for municipalities ought to be the creation of jobs through investments; the increase of urban efficiency by local authorities being able to increase urban productivity, through lowering the cost of living and doing business in the locality. The municipality must, to a reasonable and sustainable degree, be willing to cut taxes and service charges to allow businesses to grow. It should privatise some non-core services, if and where possible. Efforts must be made to ensure equitable distribution of human resource development, which has positive consequences in terms of attracting and use of investment. Municipalities must provide and give support to the establishment of local training bodies and require that firms provide a minimum amount of training to their employees; community-based approaches that emphasise the importance of working directly with low-income communities and their organisations; and, lastly, entrepreneurial-competitive approaches that emphasise the importance of local comparative advantages and small businesses in job creation. Local authorities must play a pivotal role in identifying growth sectors and in supporting businesses through research, consultancy, premises, technical infrastructure, and even loans or grants (Waldt, 2020: 5). Situational Analysis The World Bank defines LED as “the process by which public, business and non-governmental sector partner’s work collectively to create better conditions for economic growth and employment generation”. There are, however, several criteria or principles for measuring economic development, although none provides a satisfactory and universally acceptable index. There is no single approach to LED; each locality must develop an approach that is best suited to its local context. The National Framework for Local Economic Development in South Africa 2006-2011 identifies the following as key principles underlying LED: it must create and prioritise job creation and poverty alleviation within their local communities; may target previously disadvantaged people, marginalised communities and geographical regions, black economic empowerment enterprises, and SMMEs to allow them to participate fully in the economic life of the country; must use local resources and skills and maximise opportunities for development; must improve quality of life by promoting local ownership, community involvement, local leadership, and joint decision-making; must involve local, national, and international partnerships between communities, businesses and government to solve problems, create joint business ventures, and build local areas. Bartik (2002: 6) proposes that the type of evaluation of LED policies most needed is estimates of the impact of the policies on desirable local economic outcomes, or “outcome impact” evaluation. Programmes that provide a service or financial assistance to enterprises may be evaluated using the control and treatment group type of experiment. The analysis can be accompanied by surveys and focus groups to determine whether the organisation achieved its objectives or not. The surveys can be used to determine the effects of the programme on business decision-making for the organisation, or rather, in this case, the municipality (Studies in Poverty and Inequality Alleviation, 2013). A more commonly used criteria of economic development are increase in national income, per capita real income, comparative concept, standard of living, and economic welfare of the community. Ekurhuleni is still a major economic and social role-player in South Africa by means of its strong industrial characteristics and contribution to the national economy, and the size and extent of its population. The municipality contributed 19.67% to the Gauteng GDP of R1.7 trillion in 2018 and is projected to grow at an average annual rate of 1.75% from 2018 to 2023. Gauteng and South Africa are projected to grow at 1.72% and 1.60% respectively (City of Ekurhuleni, 2021-2022: 26-27). The above demonstrates that the municipality is still a main contributor nationally. Research conducted by it revealed that the average annual household income within the municipality is R29 400, which is about the same in Gauteng, and South Africa (City of Ekurhuleni, 2021-2022: 25). However, there are still critical areas where the municipality is lagging behind in improving the lives of its population. For example, the exceedingly high unemployment rate, which stands at 30.1% – 1% higher than the provincial and national levels (City of Ekurhuleni, 2021-2022: 46). In summary, there is a substantial percentage of the population that are still living in informal dwellings, 18.7%, which is higher than the figure for Gauteng (City of Ekurhuleni, 2021-2022: 24). Clearly, the municipality still has a great deal of work to do towards achieving its local economic objectives. Recommendations Firstly, it is necessary as a basis for the city to conduct a desktop re-evaluation of all its current policies, legislation, programmes, projects, all relevant operational systems, and initiatives pertaining to economic development. The results of the SWOT analysis – a strategic planning and management technique used to help a person or organisation identify strengths, weaknesses, opportunities, and threats related to business competition or project planning – will identify the areas that need intervention and perhaps even what those interventions must be. Secondly, the historical context of Ekurhuleni means that its institutions at the metro level are weak. The bringing together of nine different towns, which were largely rivals, meant that the common institutions had to be built in order to bring uniformity (Roberts, 2011: 16). These central institutions are not well defined and operational in the city. The leadership at the helm of the city should strive to advocate a change in the mind-set of officials, who should by now have completely moved away from the mind-set of the previous dismantled municipalities (Frank, 2021). With the marketing of a single city, and the employment of staff who are not from the previous municipalities, there is now a need for the city’s departments to work in a coordinated manner to achieve the objective of LED. A clear network of institutions is imperative for the city to be able to realise the collective benefits of the different towns or regions. The effect should be the sharing of crucial skills, technical know-how, thereby assisting with developing resources that are urgently needing to be upgraded. The “network of institutions” – the internal networks of the city and public-private partnerships with the various groups of enterprises – can be motivated through incentive measures and skills development for employees who are tasked with implementing the government policies and rolling out effective service delivery. According to Roberts (2011: 2), the balance of power must come through building or rebuilding more coherent bodies representing interests of downstream manufacturing, small to medium enterprises, empowerment, and equity objectives. The city should also invest in facilitating the fostering of these connections, as the governance of these inter-firm relationships is vital to the development of local industries. In addition, the city must attempt to meet private companies halfway by putting in place incentives such as “payment holidays” from rates/taxes, to attract new investors and keep investors developing within its borders (Motsapi, 2022). Thirdly, the Economic Development Department must have a functional division that is able to formulate, implement, and monitor policies seeking to revitalise, create, and manage an informal economy, actively targeting poverty alleviation and wealth creation. Individuals must have a fair opportunity to transition from the informal economy to the formal economy, and local government is ideally placed to facilitate this process (Frank, 2021). This division must, along with other departments, also dedicate time to the issue of rebuilding decaying or hijacked building infrastructure, with the intended outcome of attracting investors. The city could identify properties to purchase and turn into low-cost housing or even rental stock. In addition, the identification of land parcels, through land audits, to be utilised for various purposes including agricultural development, is also vital (Frank, 2021). The city should consider the establishment of a committee or task team mandated with property-related issues as well as enforcement of its bylaws with regards to building contraventions. A collaborative approach should be adopted, where the landlords or owners are made part of the task teams or committees, as they are essential in the reclaiming of hijacked and decaying buildings. With regards leasing land to emerging farmers to invest, promote, and regenerate the agricultural economy, the municipality needs to develop appropriate measures to support stable capabilities, tutoring, collective learning, and upskilling. The city should foster a proactive leadership role in facilitating the fast-tracking of land use applications and the granting of consent for informal traders that conduct businesses in the townships. There should be consistent training and development of individuals at the frontline of assisting the public with information regarding applying with council to open businesses, whether informally or formally. A key priority should be holding information workshops with the public to educate them in general with regards to applications and processes (Frank, 2021). The municipality also needs to use the legislative tools available – such as Chapter 7 of the Constitution, SPLUMA, and the Regulations of the Preferential Procurement Policy Framework Act (PPPFA) – to include the informal economy in the formal economy. The regulations of the PPPFA obligate the municipality to provide for subcontracting of at least 30% of a tender, which value exceeds R30 million. This regulation has created a superstructure for targeting the informal economy, but, as yet there is no policy developed by the municipality to implement these regulations effectively (Behari, 2021). Furthermore, the supply chain policy ought to be reviewed to make it applicable, and inclusive of the informal sector. Pending the finalisation and/or adoption of the Gauteng Township Economic Bill, the municipality should revise its town planning scheme, and implementation of SPLUMA should also make provision for the development of the informal economy. Currently, there is a tendency to deal with many informal businesses as contraventions of the town planning scheme. Where appropriate, land use in terms of consent must be considered. The city should propose to provincial and national government that it should be assigned with competent powers in terms of the Constitution in areas where it is required to regulate by law, as it is municipalities who in fact govern their communities at grassroots level. Therefore, municipalities, in certain key areas, should have the same powers as other levels of government, lest the lack of powers hinder service delivery in urgent situations. In areas where municipalities have proper infrastructure and can supply electricity, they should be given those rights. SALGA is currently seeking that municipalities be granted exclusive rights by the courts to distribute electricity within their boundaries to bolster revenue collection. Conclusion According to studies, the size of Ekurhuleni’s economy and its location within South Africa’s economic heartland of Gauteng does not appear to have translated into strong local economic development. The literature review suggests that robust economic development policies have an essential role to play in the planning and provision of sustainable support for building technical abilities, capacity in terms of appropriate skills, resources, and infrastructure. We also noted the importance of a coordinated approach that is responsive to evolving global technology and adapts industrial and agricultural policies as well as skills development frameworks, to ensure both the formal and informal economies realise the benefits. The formal sector is an easier category to “manage”. A large part of the budget and effort is devoted to the formal sector, as this is one of the primary bases for raising rates and sales of utilities. Whereas there is a tendency to either neglect or minimise the importance of the informal sector. One of the legacies of apartheid is the lack of economic development in previously designated black townships and rural areas. Poverty is a significant driver of the informal economy. Not all informal settlements are poor, but most of the inhabitants are indeed indigents and require social safety nets. It is thus crucial that some sort of formalisation of some of the habitable settlements becomes a key priority. It is imperative that the municipality’s Human Settlement Department is consistent and tightens up efforts in its process to identify settlements that can be upgraded or, alternatively, transitioned for the land to be bought and/or expropriated. (Motsapi, 2022). The objective of any human being to earn a living is not primarily to make a profit, but to provide shelter and feed a family. Left neglected and unregulated, the informal economy has the potential to become a source of nuisance and lawlessness. Most often the reaction from the municipality is to seek legal recourse and shut down informal businesses. This practice is contrary to the provisions of the Constitution. The local economic problem is at times further exacerbated when documented or undocumented foreigners set up informal businesses in townships and exploit the market or economy, adding to the imbalanced competition within the informal sector. Left unattended, the informal economy could become unmanageable and may not contribute effectively to addressing the crisis of poverty for thousands. References Act, M. S. 2000. Regulations on appointment and conditions of employment. In Municipal Systems Act. s.l.: s.n. Anon. 1995. Front Matter. 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[Online] Available at: https://www.timeslive.co.za/news/south-africa/2020-10-14-gauteng-municipalities-have-a-20-vacancy-rate-among-senior-managers/ [accessed: 4 June 2021]. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - This report has been published by the Inclusive Society Institute The Inclusive Society Institute (ISI) is an autonomous and independent institution that functions independently from any other entity. It is founded for the purpose of supporting and further deepening multi-party democracy. The ISI’s work is motivated by its desire to achieve non-racialism, non-sexism, social justice and cohesion, economic development and equality in South Africa, through a value system that embodies the social and national democratic principles associated with a developmental state. It recognises that a well-functioning democracy requires well-functioning political formations that are suitably equipped and capacitated. It further acknowledges that South Africa is inextricably linked to the ever transforming and interdependent global world, which necessitates international and multilateral cooperation. As such, the ISI also seeks to achieve its ideals at a global level through cooperation with like-minded parties and organs of civil society who share its basic values. In South Africa, ISI’s ideological positioning is aligned with that of the current ruling party and others in broader society with similar ideals. Email: info@inclusivesociety.org.za Phone: +27 (0) 21 201 1589 Web: www.inclusivesociety.org.za

Copyright © 2022 Inclusive Society Institute PO Box 12609 Mill Street Cape Town, 8000 South Africa 235-515 NPO All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without the permission in writing from the Inclusive Society Institute D I S C L A I M E R Views expressed in this report do not necessarily represent the views of the Inclusive Society Institute or its Board or Council members. Author: Inclusive Society Institute Research Team SEPTEMBER 2022 Content Overview Background President Ramaphosa sets the scene at the NPC Macro-situation for consideration The global environment Domestic landscape National Policy Conference deliberations Organisational renewal Political party modernisation and reform Electoral Reform State/local government Economic Transformation Universal Basic Income Grant (BIG) Social Transformation Peace and stability Fight against corruption and State capture Conclusion Projections of where South Africa is currently situated ISI views: The way forward Appendix Snapshot of academics’/analysts’/journalists’ Comments Prof Richard Calland (Public Law, UCT)(2022) Duma Gqubule (economist)(2022) Rebecca Davis (journalist, Daily Maverick)(2022) Prof Susan Booysen (political scientist, author and analyst)(2022) Anton Harber (2022) References Cover page photograph source: https://mg.co.za/opinion/2022-07-28-anc-policy-conference-the-iceberg-moment-is-upon-us/ Overview Background The 6th National Policy Conference (NPC) took place from 29-31 July 2022 at NASREC, Johannesburg, in the year that has been declared by the ANC as ‘The Year of Unity and Renewal to Defend and Advance South Africa’s Democratic Gains’. The NPC was truncated from five to three days, with one of the reasons for this being a lack of resources. The Conference is held in compliance with the ANC Constitution, which states that “the NEC may convene a Policy Conference, as a recommendation-making body on any matter of policy, whenever it deems it necessary, but the NEC shall convene a National Policy Conference at least six months before the National Conference to review policies of the ANC and to recommend any new or to amend any present policy for consideration by the National Conference”. The ANC Constitution provides that the Policy Conference should be preceded by the National General Council (NGC). This would have taken place in 2020 but was cancelled due to the Covid-19 pandemic. President Ramaphosa, in his opening address, said that the NPC “in many ways is a defining moment for the ANC and for our country”. President Ramaphosa also stated that the delegates “carry the responsibility to shape policy proposals that will deepen the renewal of our movement and hasten the transformation of our society”. Many liken this moment to the “consultative conferences” of Mogorogoro (1969) and Kabwe (1985) when the ANC faced deep crises in its ranks. There were calls to hybridise the NGC and NPC, where an “organisational review” would be presented. This would allow a review of the performance of the NEC and officials, including that of the President. It has been suggested that political motives prompted these calls for a hybrid conference. Historically, the 2005 NGC is legendary for the revolt against then ANC President Mbeki and the recall of Jacob Zuma after his dismissal as deputy president of the country. In December 2007, the Jacob Zuma slate triumphed against the Thabo Mbeki slate by a 60-40% margin. On the eve of the NPC, the National Working Committee (NWC) turned down the request for hybridisation. Some delegates tried to re-raise these issues at the NPC but could not muster sufficient support. President Ramaphosa sets the scene at the NPC In his opening address, President Ramaphosa set the tone for the NPC, when he said that “our deliberations over the next few days, the resolutions we will adopt at our 55th National Conference, and the actions that we then take, will determine the fate of our movement and indeed the direction of our country. This Policy Conference should be seen as a festival of ideas, where the ANC lives up to its role as the leader of society by developing policies that relate to the lived experience of our people where they live to shape the trajectory of our country. We have exhibited discipline in our discussions and our exchanges at branch, regional and provincial level in preparation for this conference. This should underpin our approach to discussions and exchanges at this conference. Many in the media expect this to be a conference where we will fight amongst ourselves and differ widely on a variety of matters of politics and ideology. We will demonstrate, in accordance with ANC tradition, that where we might have different views and approaches on various matters, we are always able to build consensus and emerge with coherent policy positions.” The President, in his political overview, noted that the ANC was at its weakest ever. He also outlined the myriad of challenges the ANC faces and that need to be addressed in order for our society to flourish. Macro-situation for consideration South Africa has been afflicted by poor economic growth since the 2008 Global Financial Crisis. This has not improved the country’s socio-economic conditions, which are characterised by anaemic economic growth, unacceptably high levels of unemployment, poverty and inequality, corruption and malfeasance, gender violence, rising insecurity, and low trust and social cohesion in society. Policy proposals need to address these challenges and unlock cooperation amongst social partners to improve matters. The question needing to be answered is: How is it that South Africa, which has one of the highest spending budgets for education and health, suffers from such poor outcomes in those areas? Our social safety framework is globally lauded as one of the most comprehensive in the world. However, our development must be shifted so that it can become more inclusive and sustainable. The global environment If we thought 2020 was a momentous year, with the outbreak of the novel Covid-19 virus, 2022 appears to be equally so. The global public health crisis triggered by the pandemic quickly turned into the largest global economic crisis in more than a century, resulting in major setbacks to growth, increased poverty rates, and widened inequality. The economic slowdown – equivalent to a mini-recession – induced by Covid-19, is now coupled with the rise in inflation, increases in energy, food, fertiliser, etc. There has been a tightening of interest rates to counter rising inflation, deeply impacting real incomes and consumer spending. Particularly, there is concern about rising food prices, given its disproportionate impact on the poor. The world faces a volatile situation, unprecedented in recent history. In May, England’s Central Bank Governor, Andrew Bailey, warned that the catastrophic food prices could have a disastrous impact on the world’s poor for a long time. He went on to say that “this is the biggest test of the monetary policy framework in 25 years. There is no question about that” (Elliot, 2022a). Also in May, the United Nations (UN) Secretary General, António Guterres, cautioned that a potential global food crisis could last years if it goes unchecked, as the World Bank announced an additional $12 billion in funding to mitigate its “devastating effects”. Guterres said shortages of grain and fertiliser caused by the Russia-Ukraine war, warming temperatures, and pandemic-driven supply problems threaten to “tip tens of millions of people over the edge into food insecurity”, as financial markets saw share prices fall heavily again on fears of inflation and a worldwide recession (Guterres, 2002). Speaking at a UN meeting in New York on global food security, Guterres said that what could follow is “malnutrition, mass hunger and famine, in a crisis that could last for years”, as he and others urged Russia to release Ukrainian grain exports. He said he was in “intense contact” with Russia and other countries to try to find a solution. Guterres further stated that “the complex security, economic and financial implications require goodwill on all sides for a package deal to be reached”. Together, Russia and Ukraine produce 30% of the world’s wheat. Before the invasion in February, Ukraine was seen as the world’s breadbasket, exporting 4.5m tonnes of agricultural produce per month through its ports – 12% of the planet’s wheat, 15% of its corn, and half of its sunflower oil. Prices have skyrocketed. The UN’s food and agricultural price index reached an all-time high of almost 160 points in March before falling 1.2 or 0.8% in April. In the words of UNSG Guterres: “Let’s be clear: there is no effective solution to the food crisis without reintegrating Ukraine’s food production”. World Food Programme Head David Beasley said at the summit: “The world is on fire. We have solutions. We need to act, and we need to act now” (Farrer, 2022). Countries such as Egypt and Tunisia rely heavily on exports of Ukraine’s wheat and cooking oil. Sri Lankans have suffered months of severe shortages of food, fuel, and medicine – as well as long power cuts – after the country burnt through foreign currency reserves needed to pay for vital imports. This led to mass protests and the forced resignation of Prime Minister Mahinda Rajapaksa and the Cabinet. Subsequently, then-President Gotabaya Rajapaksa was forced to resign and was replaced by former six-time Prime Minister, Ranil Wickremesinghe (with one seat in Parliament). There have been warnings that this could create a domino effect globally, and protests in many other countries, particularly around high food and energy prices (Elliot, 2022b). Prof Carmen Reinhart, Chief Economist of the World Bank, says in the 2022 World Development Report, “It’s time to prioritise early, tailored action to support a healthy financial system that can provide the credit growth needed to fuel recovery. If we don’t, it is the most vulnerable that would be hit hardest” (World Bank, 2022). The outbreak of hostilities between Ukraine and Russia has made the world more crisis-prone and unpredictable. The most recent sabre-rattling in the Taiwan Straits around Speaker of the US House of Representatives, Nancy Pelosi’s visit, has accelerated tensions between the USA and China. This event is as momentous as the dissolution of the Eastern Block, which signified the end of the Cold War. This ushered in the era of globalisation and ostensible good growth prospects for the globe. A new Cold War appears in the offing and will reshape the global political and economic environment for the foreseeable future. In the intervening period, the world has witnessed events that have altered global affairs drastically, from the dissolution of the USSR, the rise of globalisation – predicated on an international liberal world order – to the outbreak of the Covid-19 virus and various wars over the years. The much-trumpeted globalisation process has been weakened by the effects of increased levels of inequality, the rise of nationalism/illiberalism, the hollowing out of democracy, trade conflicts, climate change induced disasters, the coronavirus pandemic, and now, the Russia-Ukraine conflict. The world has also witnessed the rise of Asia in general – and China in particular. With its large, populous countries, Asia has seen the centre of gravity of economic activity shifting from West to East, thereby challenging the US-EU global dominance. Its economic development is regarded as unprecedented and hundreds of millions of Chinese have been lifted out of poverty in record time. The “pivot to the East” of the USA was in the main to prevent the rise of a rival to its pre-dominant global super-power position. This has been the stated position of the US, from the 1990s onwards, with the release of its revised 1992 national security paradigm. The world has also witnessed the waning in influence of multilateral institutions like the World Trade Organisation (WTO). The United Nations has been dysfunctional in resolving global flashpoints as events showed in Libya, Yemen, and now, the Russia-Ukraine conflict. This dysfunctionality of the UN has resulted in a move away from multilateralism towards unilateralism and a focus on regional blocs, which has led to further polarisation globally. It is the view of the Inclusive Society Institute (ISI) that this strengthens the need for UN reform, inclusive of its Charter and especially the security council mechanism. All the multilateral bodies do not reflect the world as of 2022, but still, by and large, the post-WWII geo-political balance of power. This needs to change sooner rather than later, and not merely incrementally. On the BRICS front, its character has changed since its inception. The BRICs concept was coined in November 2021 by then-Chief Economist of Goldman Sachs, Jim O’Neill. It was premised on the idea that the “world would be shaped over the coming decades not by Europe and America, but by growth in Asia and the emergent markets” (Tooze, 2021). The intention behind BRICS was to open up policy space for governments, especially in the developing world, to pursue more independent paths to sustainable economic development. However, the reactions to the initial four BRICS members varied: “There was delight in Russia, bafflement in China, cynicism in Brazil and indifference in India” (Tett, 2010). The economic progress of BRICS has been impressive; between 2000 and 2011, they more than doubled their share of the global economy from 8% to 19%. Several countries – including Turkey, Egypt, Saudi Arabia, Iran, and Argentina – are engaged in the BRICS membership process. And overtures have been made to Indonesia, UAE, Nigeria, Senegal, Thailand, and Kazakhstan to attend development meetings. It should be borne in mind that BRICS brought “together a mix of democratic and authoritarian regimes, with very different societal structures, resource bases, developmental trajectories, and historical traditions” (Narlikar, 2020). The addition of more countries, most not known for their democratic credentials, might exacerbate these divisions. Already, the Covid-19 pandemic has illuminated the fault lines in BRICS and ongoing global realignments. In conclusion, we agree with Prof Jim O’Neill’s (2021) view that “what the world really needs is what we called for back in 2001: genuinely representative global (economic) governance”. This raises the question of what South Africa’s position will be on these vexing issues. Africa has witnessed increasing instability and conflict over the last period. It also needs to simultaneously diversify its economies, lessen its dependence on commodities that are prone to cyclical movements, and re-industrialise. These developments play out against the backdrop of a weakened AU and coup d’états in 2021, mainly in West Africa, ongoing tensions in Libya, Chad, CAR, the DRC Sudan and Ethiopia, rooted principally in a challenge to manage diversity. The Sahel region, Nigeria, Somalia, and Mozambique experienced conflicts flowing from jihadist’s actions. These are worrying trends that require urgent attention and resolution. Africa does not appear to feature on the global agenda of formations like the G7, etc. We should guard against Africa becoming the playground of superpowers again, as was the case during the Cold War; this time more as a scramble for resources and spheres of influence by the “great powers”. Africa should resist being pulled into one, exclusive sphere of influence. The continent should focus on trade and investment opportunities that foster its sustainable development. The new frontier of extractive industries will be for raw materials for renewable energy, of which Africa has in abundance. As Europe accelerates its renewable energy, weaning itself off Russian gas and oil, the appetite for raw materials will explode. Africa should engage the West and the East on its terms and what is in its interests, what the Inclusive Society Institute refers to as “triangular engagement”. With reference to the NPC’s International Relations paper; the paper is long, but short on specifics and the strategic position of South Africa vis-à-vis the continent and the globe. The following paragraph is illustrative of this non-specificity. “Our commitment to the African Union (AU) Agenda 2063 as an expression of the aspirations of Africans, is central to the view that the silencing of guns on the continent is as much a security matter as it is a governance and development imperative. In this context, the full operationalisation of the AfCFTA; the further strengthening of NEPAD and the operationalisation of the tripartite free trade area between SADC, COMESA and EAC remain of great importance.” Domestic landscape The situation at home has been equally challenging following the onset of Covid-19 in 2020. The ANC’s electoral fortunes have been on a downward trajectory over the last few elections, with the exception of the 2017 national election. The ANC also suffers from a significant trust deficit amongst the populace. The poor turnout at the pre-NPC gala dinner was illustrative of how the ANC’s standing has decreased. This is in addition to the financial crisis that the party suffers presently. During the 2019 provincial elections, the ANC declined by 10%, depreciating its majority to a precarious 54.21% of the vote. In the 2021 local government elections, the ANC’s support declined to 47.21%. If this trajectory continues, the ANC could slip below 50% in the 2024 general election, necessitating a coalition arrangement. The ANC is also at risk in Gauteng, KwaZulu-Natal, Free State, Northern Cape, and Nort West. It is already in opposition in the Gauteng metros, even though it garnered the highest percentage. Most opposition parties appear determined to unite against the ANC and keep it out of power; this trend is likely to remain. The latest Ipsos poll (published in August 2022) confirms the decline. Whilst the ISI’s interpretation of the poll does not share the view that the ANC support could decline to as low as 42%, nor that it can be removed from government, it does suggest that it is currently hovering around the 50% mark. In a medium voter turnout scenario, the ISI is of the opinion that the ANC would garner between 48-50% of the national vote should an election be held now. Therefore, given that ANC support is hovering at around the 50% mark, they would most probably be able to form a government on their own. But if not, there are several potential coalition partners, with similar policy orientations, that could push them over the 50% mark that is required to form a government. In the Institute’s view, no opposition party will be able to form a coalition government without the inclusion or support of the EFF, whose support is currently in the region of 12-13%. Therefore, any coalition government that is formed to oust the ANC will likely suffer from policy incoherence. This will result in governance instability and/or unpredictability. Tshwane, Johannesburg, and Nelson Mandela are all undergoing permutations of these failures. Although unlikely, should such a coalition be formed, similar failures are sure to be repeated at the national level (and provincial level, where applicable). Accordingly, the ISI does not see an election that offers two coherent policy options. There appears to be a choice between, on the one hand, unpredictability and instability, and on the other, continuity and predictability. Both, it could be argued in the current environment, have downsides. South Africa is far from where it needs to be. So, should the ANC wish to retain its lead position, it is incumbent on them to prove their commitment to real renewal and sensible growth-centred policies. This commitment to build the necessary trust capable of convincing the electorate that it will not be business as usual, or the lack thereof, will become evident during the ANC National Conference scheduled for later this year. Despite significant progress over the years, the ANC is faced with a number of critical challenges, which have led to the erosion of electoral support and confidence in the ANC as a leader of society. The policy documents note some the following factors: Low economic growth and a parlous fiscal situation Unacceptably high levels of inequality, unemployment, and poverty Widespread corruption, malfeasance, and underperformance A lack of planning, coordination, implementation, and accountability for the work in government and the achievement of policy goals Poor political will and leadership, and failure to implement the ANC’s policies and programmes Failure to respect the values of the organization; serving the community and addressing their concerns is subordinated to factional interests Violent protests and assassinations fueled by rival factions, some of which are institutionalised Lack of accountability, accessibility, and transparency by ANC deployees, including poor communication with communities, lack of transparency, weak or ineffective ward committees Declining service delivery and poor municipal financial management Declining support for the ANC in elections across all spheres of government July 2021 unrest and looting, mainly in KZN and Gauteng. National Policy Conference deliberations Discussions at the Policy Conference were based on discussion papers contained in the Special Edition Umrabulo, published in May 2022, and three discussion papers on State Capture and Corruption, Migration, and Gender and Women’s Emancipation (Vol II). The last revision of Through the Eye of the Needle, published in the Special Edition Umrabulo for the proposed 2020 NGC, was circulated on 30 July 2022 at the Conference. Presentations were made on the following four overarching topics to assist discussions in the commissions: Strategy and Tactics, and Balance of Forces; Organisational Renewal; State Capture and Combatting Corruption; Gender Equity and the Emancipation of Women. These are regarded as transversal issues and the first two as scene setting. They were discussed simultaneously in all eight commissions and encapsulated in one report back. The other eight papers were discussed separately on the day in each of the eight commissions, with a separate report back: Commission 1: Peace and Stability Commission 2: Social Transformation Commission 3: Education, Health Science and Tech Commission 4: Culture and Heritage Commission 5: International Relations Commission 6: Legislature and Governance Commission 7: Communications and Battle of Ideas Commission 8: Economic Transformation What follows is a critique of a number of these papers. Organisational renewal Organisational renewal of the ANC is pivotal for its future and the country’s. The 54th ANC National Conference in 2017 resolved that: “Organisational renewal therefore is an absolute and urgent priority, and we may go as far as to say, to the survival of our great movement.” Moving from being a liberation movement to “moving into the seats of power” of government has attracted all kinds of careerists, many of whom are there for their own selfish interests and are ANC in name only, if that. Being in government has brought many negative elements, ranging from gatekeeping; influence of money politics in elections; swelling of ranks by careerists and opportunists; putting the interests of individuals ahead of the organisation and society; growing levels of malfeasance and corruption; poor service delivery; a distant, out of touch, inward-looking ANC unable to be effective agents of change and connect with communities; decreasing levels of trust and credibility in the ANC. This has resulted in the ANC losing support, most deeply illustrated in the recent November 2021 local government elections, where ANC support dropped below 50% in a number of metros. This is a huge warning signal for the coming 2024 national elections. At the NPC, the ANC vowed that the behaviour of members and leadership would be ethical and that unsavoury elements would be removed from its ranks. It further committed to the renewal, re-engineering, and revitalisation of the ANC, so it can remain true to its principles and objectives. Stricter requirements for the membership application have been suggested, which could see members reapplying and vetted before joining the party. The latest Ipsos poll (August 2022), previously alluded to, confirmed a further decline in support for the ANC. Respondents articulated being despondent about the state of affairs, largely driven by the increasing “cost of living”, occasioned by high prices. That said, Ipsos Director Mari Harris notes that the ANC’s downward spiral is not any other party’s gain. This suggests that new [coalition] councils have not made a difference. Harris said that she would be surprised if the ANC gets more than 50% in the 2024 national election. She remarked that the party achieved 47% of the vote in the local government elections and appears to have subsequently further lost support. “The slide is going in the wrong direction,” she said (Haffajee, 2022). In 2021, the ANC introduced the “step-aside clause” (SAC) and continues to strengthen these measures. The SAC was the most observed issue by journalists and analysts as a bellwether of the ANC’s commitment to renewal and change. It was further viewed by many as a personal test of the President’s standing in the party. It was also seen as a proxy battle for divergent views/groupings in the ANC. In the end, there was overwhelming support for the SAC by the delegates, with minority dissension. One of the main critiques from these ranks is that the policy is not being consistently and fairly applied; that some are selectively targeted in the ANC. Another critique of the SAC is that those implicated can wait for years, in a sort of no man's land – neither guilty nor exonerated – before they are tried and convicted or acquitted in a court of law. An example is that of Danny Msiza and Florence Radzilani (the VBS issue) in Limpopo, who have still not been charged more than three years after the initial allegations. This points to weaknesses in the justice system. President Ramaphosa, in his closing address, stated that they are cognisant of this criticism and will address it. Political party modernisation and reform It is recognised that the modernisation of the ANC is necessary, but that it will not be easy to accomplish. The ANC describes itself as a “liberation movement” with the aim to achieve the liberation of South Africa from it previously undemocratic, unjust, and unequal history. It has continued to couch itself as a “broad church” catering for many different ideological and class positions, underpinned by variegated ideas on its raison d’être, ethos, and philosophical outlook. At election time, all potential voters are targeted, not sections of the population, irrespective of the result. However, since 1994, the party now exists in a constitutional democracy. And despite some of the negative pre-1994 societal features stubbornly prevailing today, the question has been posed: Why is the ANC so reluctant to make the transition to a modern, flexible, more streamlined political party? After all, its character displays all the elements of hierarchy, participation, and consensual decision-making. Given the travails that the party is experiencing, it is inevitable that the ANC will have to adapt and transform into a more modern version of its traditional form; this will be an inescapable process, despite ongoing resistance and reluctance. Electoral Reform On 11 June 2020, the Constitutional Court declared that the Electoral Act 73 of 1998 is unconstitutional to the extent that it states that adult citizens may be elected to the National Assembly and Provincial Legislatures only through their membership of political parties. Parliament was given 24 months from the order to remedy the defect giving rise to the unconstitutionality. To date, the defect has not been remedied and 2024 is not far away with regard to election preparation. It is recognised that there is not enough time to bring in the directly elected element for the 2024 national and provincial elections, as there would still need to be constituency delimitation, inclusive of consultation, etc. It is therefore acknowledged that the 2024 poll will have to be conducted according to the existing system, with the proviso that changes will occur for the 2029 election. The debate in Parliament on this matter has shown that the majority party intends to adopt a “minimalist” position with reference to changes to the Act. The Inclusive Society Institute has a research paper out on remedial proposals and has been engaging role-players in civil society, Parliament, the Ministry of Home Affairs, amongst others. Moving forward, some of the proposals mooted in the 2003 Slabbert Electoral Reform Task Team with reference to a mixed system, will be beneficial for this electoral reform aspect. It is our view that the following two views should be heeded with reference to the envisaged electoral changes: “changing electoral systems is dauntingly complex” (Butler, 2022) and “long-term decisions should not be made under such time pressure” (Grootes, 2022). Therefore, given the current realities, the ISI supports a two-step approach. The first being the proposed minimalist approach, aimed at simply accommodating the Constitutional Court judgement requiring that the Electoral Act be amended to allow for independent candidates to contest national and provincial elections. This should be in place for the 2024 general election but should also expire at the time of the 2029 general election. The second step should be more comprehensive electoral reform in time for the 2029 general election, which should allow for a form of constituency-based elections. The ISI has proposed a Multi-Member Constituency model. State/local government The ANC has achieved substantial improvement in state transformation since 1994, with the establishment of strong democratic electoral systems, regular elections, and the ongoing transformation of the state into a people-centred organ. However, state capacity and delivery leave a lot to be desired, particularly at local level. Local government structures are dysfunctional – many towns have potholes, leaking taps (many towns losing up to half of their water this way), piles of rubbish on streets, weak lighting, to name a few. In fact, in his opening address, the President noted that in June 2017, eight municipalities were under administration. By June 2021, 23 municipalities were under administration, and by February 2022, this number had further increased to 33 municipalities. The finance ministry foresees that even more municipalities will require intervention. The President noted that many of these challenges arise from poor management of the political-administrative interface, weak oversight, poor accountability, and inadequate consequence management systems. There is also a shortage of skilled leadership and management, and widespread fraud and corruption. The NPC stated that a national framework on the professionalisation of the public sector will be finalised soon. This framework proposes a stronger emphasis on merit-based recruitment and appointments. Some good news is that significant progress has been made in achieving the country’s developmental goals. The Millennium Development Goal (MDG) targeted to “halve, by 2015, the proportion of the population without sustainable access to basic services”, an accomplishment that South Africa managed to attain by 2011, four years ahead of the global target (United Nations, 2015). A disquieting development, however, is that the ANC has fallen behind on the SDG scorecard. The Afrobarometer Sustainable Development Goal (SDG) scorecard in September 2021 showed that there has been regression in certain policy areas. It shows that South Africa has made progress on climate action, but lost ground on poverty, hunger, and perceived corruption in institutions. These citizen assessments can be compared to official UN tracking indicators. The Afrobarometer SDG Scorecard, which provides citizens’ assessments of South Africa’s progress over a recent five-year period on important aspects of the UN’s Sustainable Development Goals, also reveals that the country is doing worse on access to health care, clean water and electricity, unemployment, economic inequalities, and trust in state institutions. The country has made no progress on gender equality, increasing access to education, and reducing payment of bribes for public services. Economic Transformation The NPC document states that the ANC’s strategic approach to economic transformation is guided by the Freedom Charter’s injunction that “The People Shall Share in the Country’s Wealth”. The Commission acknowledged the hardships caused by the current economic challenges of stagnating growth, falling investment, rising prices and unemployment. The economic document states that the key pillars for turning the economy around involve accelerating the implementation of the Economic Reconstruction and Recovery Plan to increase infrastructure investment, improve energy security, and provide wider access to improved data services; strengthening industrial policy to support the growth of the manufacturing and services sectors; prioritising youth employment, with an emphasis on public employment programmes; accelerating land redistribution; and expanding trade with Africa countries. Fiscal policy should target our rising national debt and ensure better alignment with the broader industrial development objectives. Industrial policy should prioritise the modernisation of industrial tooling and skills development to ensure the competitiveness of local industrialisation. The industrial base should be re-built and broadened to turn around the de-industrialisation of our economy. A call was made for the South African Reserve Bank (SARB) to implement monetary policy in a balanced manner. It must not merely target inflation, but should consider growth, employment, and exchange rate factors in its modelling forecasts. And then there is Eskom, which represents the biggest policy challenge for government to resolve, as it impacts on the economy and society as a whole. Things have deteriorated, instead of improving over the last few years. Restoring energy security will be critical for lifting confidence, investment, and job creation. The Commission supported the recent interventions announced by the President to stabilise Eskom. The two primary objectives of this energy action plan are to improve the performance of Eskom’s existing power stations and to add new generation capacity to the grid as quickly as possible. Eskom’s unsustainable debt problem must also be resolved. The need for a diverse mix of energy sources and a just transition to a low-carbon economy that ensures energy security, protects jobs and livelihoods, and does not compromise South Africa’s industrial development, was highlighted. On the whole though, it is known that there is an excess of state-owned enterprises (SOEs) in South Africa – in fact, there are over 700. SOEs should play a vital role in terms of the direct services they provide, but many are mired in serious difficulties with regard to finances, governance, delivery, and so on. It is generally recognised that a consolidation of SOEs is necessary and only those that fulfil a useful function of the economy and society should be maintained. Furthermore, many SOEs will struggle to continue existing in a dynamic and efficient environment. The Auditor-General has highlighted this parlous state of affairs: “The ongoing financial and operational crises faced by a number of major state-owned enterprises (SOEs) casts doubt on their practicality and survival. Total SOE debt stands at a staggering R692.9 billion. The most recent budget review indicated that SOEs have reported poor growth, high costs and elevated debt servicing costs, and several appear to be at risk of defaulting on their debts. Prospective reforms and increasing private-sector participation provide some hope for South Africa's SOEs” (AGSA, 2021). Eskom alone owes more than R400 billion. The unsustainable fiscal position of many SOEs cannot continue, given our strained economic position. Government has acknowledged that a consolidated structure and funding model is urgent for the health of most SOEs. Improving corporate governance, clarifying and tightening the mandate, shareholder structure and reporting lines, and general restructuring of SOEs are some of the essential reforms required to turn these entities around. Many of these reforms are contained in recommendations by the Presidential SOE Council as highlighted in the 2022 SONA. The NPC proposed that perhaps the time has come for SOEs to migrate from the Department of Public Enterprises to relevant line function ministries. It is the view of the Inclusive Society Institute to also consider whether the Public Works Department (DPW) is still fit for purpose. It may be more efficient to also transfer infrastructure development and maintenance from the DPW to the line departments. Regarding South Africa’s energy policy, there was not much discussion on the “Just Transition” required to move us away from our coal dependence and towards cleaner energy to assist in the global fight against the climate crisis. Post COP26, the governments of South Africa, Germany, France, the UK, USA, and the EU announced a new, ambitious, long-term Just Energy Transition (JET) Partnership to support our country’s decarbonisation efforts. The JET Partnership aims to accelerate the decarbonisation of South Africa's economy, with a focus on the electricity system, to help it achieve the goals set out in the updated Nationally Determined Contribution emissions goals. It will mobilise an initial commitment of $8.5 billion for the first phase of financing, including mobilising the private sector. On another key point, the NPC reaffirmed the policy of land expropriation without compensation. Although the ANC has not managed to get the Bill passed over the last five years, as it requires a two-thirds majority, President Ramaphosa endorsed it in his closing address, saying, “We must use available means, including the new Expropriation Bill, to accelerate land redistribution.” The ANC also reaffirmed its position that the South African Reserve Bank should be nationalised. The 54th ANC Conference in 2017 resolved that the SARB should be fully publicly owned, but this has not come to fruition. In the view of the Inclusive Society Institute, the call for the SARB to be fully publicly owned and the effect thereof is, in itself, neither here nor there. Rather, the ISI believes the mandate, more than the ownership of the SARB, is the key element with regard to effective monetary policy. Some have also asked whether the costs are feasible and whether the debate serves any useful purpose at this juncture and given the state of our economy. Furthermore, the Policy Conference strongly confirmed previous resolutions on the fundamental imperative and urgency for the establishment of a State Bank. In light of the feasibility study already done in this regard, government was urged to move with speed in implementing the ANC’s resolution by finding a way of capitalising the bank. The Inclusive Society Institute is currently undertaking research into the applicability and feasibility of a State Bank for South Africa. If the objective is to address failings in financing emerging black businesses, factors that need to be considered in the policy discussions, apart from how it can be capitalised, and risks mitigated, are: Since a State Bank may not be exempted from the Financial and Fiscal Commission’s rules and procedures, nor the international banking regulatory authorities, what is it that will differentiate the State Bank from the other retail banks? For example, what room is there for deviating from the current lending criteria of the commercial banks? Could the ruling party’s objectives regarding the implementation of a State Bank be satisfied via other avenues, for example, in partnership with commercial banks, through government guarantees? In the 2022 February SONA, the President committed to developing – within a hundred days – a Social Compact between the key social partners. To date, that has not happened. Feedback from social partners indicates that progress has been slow at NEDLAC and that there is no imminent breakthrough to seal the deal. Cosatu, for example, is totally against the “wage moderation” motion in the proposed Social Accord document. Business is sceptical about government’s commitment to stick to agreements, as evidenced by past experiences. They also want to have assurances that funds will reach the intended targets. A lot of work still needs to be done behind the scenes to make the Social Accord a reality. The recent social sector dialogue was a disappointment, as it was seen by most as a mere tick-box exercise by government, rather than a meaningful interchange. The view of the Inclusive Society Institute is that the current socio-economic crisis demands much deeper consultation. The current dialogue should be considered no more than a process aimed at identifying the issues and themes requiring comprehensive negotiation. The Institute is of the opinion that, given the critical situation the country finds itself in, a CODESA-type process needs to be embarked upon. There has been criticism that the economic proposals make scant reference to fiscal and monetary policy, and that many of the proposals are not very specific or time-bound. They have been presented as a re-hash of old proposals and not containing new, innovative ideas to launch the economy onto a higher and more sustainable growth trajectory. This is the key to turning the fortunes of the country around, ushering in greater prosperity and equality, lowering crime and corruption, and forging greater social cohesion. The very same faults have also been spotlighted in relation to most of the other policy documents. Universal Basic Income Grant (BIG) The NPC came out in support of the introduction of the universal Basic Income Grant (BIG) to meet basic needs and reduce income inequality, based on the principle of universalism and indexed to the Food Poverty Line. Currently, there do not seem to be many dissenting voices on the need for additional income support – and those few who are objecting, especially from business, have homed in on the issue of cost (affordability). The deteriorating socio-economic situation, higher inflation coupled with a tightening monetary policy cycle, and the very real prospect of unrest, is concentrating minds on the necessity for more comprehensive social protection measures. The finance ministry has referenced a “jobseeker’s grant”, while the Department of Social Development has punted a wider basic income transfer measure supported by many civil society groupings. The Presidency is also seized with this matter. The detrimental economic effects induced by the Covid-19 pandemic have been particularly severe on the lower-income groups in South Africa and unemployed persons, many of whom are dependent on other household members for their subsistence. As a result, the debate on the feasibility of a basic income grant has received new impetus, especially in the wake of the implementation of the Social Relief of Distress Grant (SRDG), commonly known as the Covid-grant, which has proven to be fiscally affordable, despite the need to keep a watchful eye on the stability of the country’s public finances. Several studies have been undertaken in recent years to gauge the likely poverty-reducing impact of a permanent extension of South Africa’s welfare grant system, which is widely acknowledged to be one of the most effective in the developing world. Over the past decade, few developing countries in the upper-middle income group have matched South Africa in the quest to reduce the prevalence of poverty, whilst the country also ranks in the top-four regarding the indicator for per capita job creation via public works programmes. Impact studies have nevertheless mostly been restricted to the areas of poverty reduction and lowering the level of income inequality. Recognising the dearth of empirical economic analysis of social protection policies in South Africa, the Inclusive Society Institute commissioned such a study early in 2022. The main objective of the study is to determine the economic impact of a BIG that is fixed at the food poverty line (currently R624 per month), via econometric modelling. Additional sections include a detailed analysis of the evolution of social grants in South Africa, as well as a comprehensive overview of progress with achieving the aims of social protection measures in developing countries (including South Africa). The study is at an advanced stage of completion and preliminary findings include the following: South Africa’s sterling performance with regard to the coverage of Social Protection Programmes (SPPs) at 99% is particularly impressive when juxtaposed with the global average for developing countries of 56% (as determined in a 2018 World Bank study). South Africa is also ranked first amongst developing nations for the key performance indicators of poverty reduction and adequacy of SPPs and is ranked second for the ratio of government expenditure on social protection to GDP, namely 4.3%. Georgia is ranked first at 6.6% and the developing world average is 1.4%. The evidence from econometric modelling (via two different methodologies – vector autoregressive [VAR] and autoregressive distributed lag [ARDL]) confirms the existence of positive effects on aggregate economic output (measured by the GDP), which also translates into higher fiscal revenue for government. International evidence points to superior outcomes of SPPs when linked to workfare and other conditionalities in the areas of human capital formation. Opportunities exist in South Africa to consider such amendments, especially with regard to a proposed BIG. The latter should ideally be targeted at unemployed persons that are listed in an official registry, which also contains information on their educational attainment, skills levels, and work experience. A universal BIG will not be able to match the poverty-reducing impact of a targeted BIG and will also dilute the value of the relevant cash transfers, whilst potentially creating fiscal instability during periods of slow economic growth. Social Transformation This section covers a wide range of issues, from social cohesion and nation building to safety of women and children; eradication of substance abuse and gangsterism; promotion of sports, arts and culture; and the empowerment of vulnerable groups. To begin with, from May 2020 to April 2022, the Covid-19 Social Relief of Distress (SRD) grant of R350 per month for adults aged 18-59 has been delivered to those with no income. In a short space of time, it reached six million new individuals who had no access to a grant. This includes the top-up of existing grants, for example, the Caregiver Social Relief of Distress (CSRD) grant. Over the last few months, however, problems have been encountered with the provision of this measure. There has been non-payment for two months or more, which is totally unacceptable. Another area of concern is that of the National Health Insurance (NHI) Bill. In May, Parliament’s health committee voted in favour of a motion of desirability for the NHI Bill. This represents the first important building block for the vision of universal health coverage, but many questions and concerns remain regarding the roll-out of the NHI policy. Covid-19 has highlighted the parlous state of our public health system, even in the economic powerhouse of Gauteng. It has been claimed that steps have been taken to address the management of the health care system and other challenges, yet there are continuing reports of dysfunctionality, especially in the Eastern Cape. Indeed, reports show that medical personnel are resigning in increasing numbers due to the unsatisfactory conditions in hospitals. The Inclusive Society Institute research on the NHI affirms some of the challenges that exist in the health care system. It supports an NHI and believes it can work, provided that certain of the Institute’s reservations are accommodated. It has identified four key elements that currently need to be addressed in the NHI Bill before Parliament: The proposed mechanisms for supporting governance (and their potential weaknesses). The ISI is of the view that, in contrast to the NHI Bill’s position that the Minister appoints the Board and CEO, the Board appointments must rather follow a public participation process, and that the CEO must be appointed by the Board. The role of medical schemes in the short to medium term. Medical aids should be permitted to provide continued coverage of all procedures, also those covered by the NHI. Whilst all citizens will be required to pay NHI levies, medical aids should, at least until the NHI is fully functioning and sufficient public trust has been achieved, be allowed to provide top-up insurance for private care. The evidence for and against competition amongst funds and the core recommendation emerging from the German experience: to not break anything in the health system until you have built the replacement. The ISI’s view is that, in order to moderate costs and mitigate corruption, competition needs to be built into the system. The NHI Bill proposes a single fund, whilst the ISI proposes a number of public funds in the event of private medical aids being phased out of the sector. It was agreed that there is an urgent need to build and restore trust in the health system – which is intimately tied to questions of the pace and sequencing of reform. Without public trust in the NHI, government will not get the buy-in from society. On another front, concern has been expressed about the decline in research and development (R&D) over the years. This is the case in business investment and inadequate government investment, and in SOEs. The documents note that new innovations and invention of new technologies have to be more vigorously promoted. They further note that good progress is being made in the implementation of policies and programmes towards achieving good quality teaching and learning outcomes. There is no independent verification for this claim though; progress is claimed in the creation of employment opportunities for the youth that are neither employed nor participating in education and training (NEET). Lastly, delegates pushed strongly for the continued empowering of women economically, politically, socially, and culturally. The NPC called for the application of overarching equality legislation that ensures that procurement processes more effectively empower women on the economic front. Peace and stability This discussion document refers to the importance of the rule of law, improved levels of safety and security, and effective protection of economic infrastructure. For South Africa to succeed, it notes that government must deal decisively with corrupt elements, transgressors, those who prey on women and children. Crime is not merely making communities unsafe and unstable, but it is also undermining investment prospects and our economic performance. The July 2021 unrest experienced in mainly KZN and Gauteng was referenced. It resulted in billions of rands in damages, loss of business confidence, and the killing of 384 people. A year later, only minor figures have been charged in connection with this catastrophic event. Both the Peace and Stability and the Balance of Forces documents state that this event represented an assault on the legitimate organs of state, with the intention to remove a democratically established government by extra-constitutional means. The multiple failures of the country’s State Security apparatus are noted. This further undermines state authority and adds to the narrative of a failing state. An expert panel, chaired by Prof Sandy Africa, was established by the Presidency to look into these security forces and intelligence failures. At the 2022 SONA, a promise was made that more police will be appointed and that there is a renewed emphasis on community policing forums; ANC branches have been asked to play a central role in these forums. It is the view of the Inclusive Society Institute that a national criminal justice system dialogue is needed to turn things around in this sphere and restore effectiveness and confidence. Fight Against Corruption and State Capture Corruption is a cancer in the ANC and South African society that must be destroyed. A key litmus test will be how the ANC responds to the Zondo State Capture Report and whether it will stay the course where the NPC document notes that, “we may find some of the observations and findings unsettling, and there may be some assessments that we disagree with, but we must engage honestly and openly with all aspects of the Commission’s report”. There is a need to retain momentum and further strengthen anti-corruption measures to which the ANC claims commitment. But the justice system is weak and takes forever to press charges against those accused of corruption, years in fact, when there are many “low-hanging fruits” that can be plucked from the myriad cases in existence. The Zondo Commission was established in January 2018 as a Judicial Commission of Inquiry into State Capture, flowing from a resolution of the 2017 ANC Conference. The terms of reference of the Commission were mainly to investigate allegations of state capture, corruption, and fraud. However, many of those fingered in the Zondo Commission have still not been charged, more than four years later. This is a totally unacceptable state of affairs. The ANC has called on all South Africans to engage with the Commission’s report and to re-build the state and a society governed by the values of the Constitution and the rule of law. Within four months of receipt of the Zondo report, the President must formally submit the report to Parliament together with implementation plans on the Commission’s recommendations. Conclusion Projections of where South Africa is currently situated As a snapshot of some of the comments by journalists and analysts shows, most views on the NPC are negative. They suggest that there is not much that is new in the policy proposals and that these proposals are often just a regurgitation of old ideas couched in new rhetoric. The terminology, especially with reference to the Balance of Forces and Strategy and Tactics papers, is framed in archaic, impenetrable language that is difficult to understand in the current conjuncture. Most of the papers are also overly long and not specific and time-bound. There is a great deal of cynicism in the country about the current state of affairs. The prevailing sense is that the country has stagnated and suffered reversals in many policy areas. There is a strong view that the ANC has messed up and is bereft of new, innovative ideas on how to unlock our socio-economic gridlock and make partnerships with social partners work for the benefit of the country. This is leading to a growing trust deficit between society and the ANC. In the latest Ipsos poll (published 15 August 2022), 52.9% of respondents were of the view that the ANC could not be trusted. Even amongst ANC respondents, this was high – 40.89%. The ANC is seen as an aging, male-dominated political party out of synch with a predominantly young country. In its own publications, the party says that it is weak on implementation. These are issues that the ANC will need to address in order to ensure its own longevity and electoral sustainability. ISI views: The way forward In 1994, South Africa ushered in a democratic dispensation and a universally recognised Constitution, founded on fundamental human rights for all citizens. In the ensuing years, there were significant advances, and reversals, resulting from the 2008 Great Financial Crisis period and negative internal developments in the ANC and the country. And all happening against the backdrop of a contradictory global balance, characterised by shifts in economic power and tendencies towards populism, authoritarianism, militarism, and now, another heated Cold War. The world has become a more uncertain, unstable, and insecure place and conflict, unrest, and immiseration is on the rise as a result of the worsening socio-economic climate, evidenced by much higher inflation rates and the worst “cost of living” crisis in decades. On the global front, South Africa needs to more clearly define its national interest, in our foreign policy, based upon our foundational constitutional values. President Ramaphosa, in the introduction to the policy papers, threw down the gauntlet to the NPC when he said that the ANC’s priority “has to be the improvement of the quality of lives of people, rather than an often narrow, internal party focus”. The NPC deliberated on an extensive number of policies with the ostensible aim to improve society and the quality of people’s lives. The smooth denouement of the NPC, despite many predictions to the contrary, is a positive development for the ANC and the policy process, despite the shortened period for discussion and debate. It should be noted that nothing is straightforward, and the situation is fluid, four months out from the December conference. As the August 2022 Ipsos poll suggests, the support for the ANC is still tracking negatively and coalition arrangements appear to be in the offing at national and various provincial levels. What awaits potentially post-2024, is instability and chaotic scenarios in governance arrangements. Only time will tell, in December 2022 and then in 2024. The challenge will also be in whether the outlined policies will bear fruit to make South Africa more stable, prosperous, sustainable, and flourishing. Implementation has to substantially improve at all levels of society, but particularly at local level, through a more focused, caring and efficient state bureaucracy, to achieve these laudable objectives. It is the view of the Inclusive Society Institute that the next period must be focused on uplifting the economy, creating jobs, including restoring energy security. The “cost of living” and rising prices, especially in energy and food prices (inflation problems), will not make things easier. Also important is strengthening social cohesion, including making people – especially women and children – feel safer in society. The country cannot afford a repeat of the destabilising July 2021 riots and looting. The entire criminal justice system needs to be overhauled. This requires an urgent national dialogue, which the ISI believes should be convened by the President as a matter of urgency. The conclusion of the Social Accord is essential, but it must go beyond the economic sphere; something akin to the early-90s negotiations process, but as a reset now, for the future. State performance, at all levels, but especially at local level must be drastically improved. Trust in the democratic system and adherence to our constitutional values must be respected and upheld by all, especially those in positions of influence. Policies must be clear, focused, and implemented assiduously to counter the sense of “drift” in the country. The focus must be on a few key policy areas, with measurable timeframes ideally, not long shopping lists. There is no time or space for delays on the implementation front. Government, together with business, labour movement, and civil society formations must work together to put the national interest first and rise above sectional interests. Equally, the governing party must rise above a “narrow focus on internal party matters”, as President Ramaphosa said in his introduction to the policy documents. The focus on the key issues needs to be bold, innovative, resourceful, with less talk and more decisive action in government and at all levels of society. Appendix Snapshot of academics’/analysts’/journalists’ Comments On Thursday 21 July, the eve of the NPC, former President Thabo Mbeki, spoke at the memorial service for ANC Deputy Secretary General Jessie Duarte, in Johannesburg. Mbeki made some telling comments that were seized upon by the media and analysts. Lamenting the ANC’s inability to counter soaring unemployment and poverty, he said: “As a matter of fact, we don’t have a national plan to address these challenges … There is no national plan to address the challenges of poverty, unemployment, inequality. It doesn’t exist.” He also noted that the Social Accord, despite the commitment of President Ramaphosa, has not been finalised in the 100-day period since SONA. In a subsequent interview, Mbeki said his comments were not intended as an attack on the administration of the current president. However, the comments did end up having the desired effect of bringing about movement on various policy fronts by the Presidency and government. Prof Richard Calland (Public Law, UCT) (2022) I asked three of the policy and process junkies to give me one policy innovation that had emerged from the National Policy Conference. There was nothing new, they admitted. One of them said that a few in the ANC leadership are waking up to a certain reality – to achieve either the goal of saving the ANC from electoral defeat or for saving the economy. For the rest it was about holding the ANC together. At a time of mounting crisis, when old ideas have failed, a viable political party of government has to come up with something new, otherwise its demise is inevitable. Did the National Policy Conference in any way respond to this crisis? No. The ANC is now an empty vessel, both policy-wise and politically. It can neither hold the centre nor lead society. The ANC’s future lies behind it, as last weekend amply demonstrated. The next election will mark the start of a new era – of greater electoral competition (and instability and uncertainty) – and the end of an old one, of ANC dominance. Everyone needs to start preparing for this transition. Duma Gqubule (economist) (2022) Gqubule wrote that ANC conferences are a waste of time for anyone who follows macroeconomic policy, because they never discuss such issues, and nothing changes. The party suppresses the will of its branches and gives no explanations to them for why it cannot implement previous resolutions. This means ANC resolutions are just suggestions. Rebecca Davis (journalist, Daily Maverick) (2022) Ahead of the ANC’s national policy conference, its discussion papers reveal an entitled, paranoid party that seems increasingly out of touch with current realities – and with democracy itself. Against this backdrop, the party’s policy papers – heavy on ideology, but low on sensible ideas – seem woefully inadequate to address the country’s problems. If a national plan to address the challenges of poverty, unemployment, inequality, the thousands of delegates expected at the ANC policy conference might have difficulty measuring its effectiveness. The discussion papers state that no data or reports are available to assess, for instance, whether language policies relating to the school curriculum have been implemented. They state that there is no information available on how many mobile schools and mobile clinics there are in SA, or whether learners are being provided with transport. In the absence of such information, how are delegates supposed to assess whether key ANC policies are working? Perhaps as a tacit acknowledgement of the impossibility of such a task, the papers also recommend that ANC policies should only be reviewed every decade, rather than every five years as is currently the case. In addition to the fact that the party lacks a coordinated plan of action to tackle issues such as unemployment in a practical way, the papers contain no shortage of scattered and impractical suggestions regarding all manner of South African challenges. At certain moments, the policy papers give the impression of having been written by ageing academics. Prof Susan Booysen (political scientist, author, and analyst) (2022) The governing ANC’s policy proposals don’t inspire confidence. South Africa is in the throes of an unprecedented, multifaceted socio-economic crisis requiring substantive, impactful policy interventions. Yet, I wonder if it actually appreciates the enormity of the problems facing the nation. The policy deliberations and proposals fell hopelessly short of addressing the country’s pressing problems. The subdued conference exposed a deficit of new policy thinking, and failed to provide solutions. It certainly did not live up to party leader and national President Cyril Ramaphosa’s declaration in his opening address that the conference would be a defining moment for the ANC and the country. In my view, there were mismatches between the crises facing the nation and proposed solutions. There was a flood of small – or partial – stabs at big problems. A few big ideas came with the proviso that they may be “not affordable”. The deliberations were characterised by disingenuous, counter-factual policy pronouncements, and de facto denials of the ANC’s culpability in causing many of the current problems facing the country. Foremost was the country’s high levels of unemployment. Beyond recognition of the problem, nothing new emerged. The conference bore testimony to fact that the ANC remains confused about its role. It has governed the country for nearly three decades, but often protests against its own government. There was no shortage of disingenuous policy statements. On the July 2021 unrest, which cost over 350 lives, the conference concluded that it was the work of those ideologically opposed to the ANC’s advances in government. The conference offered no recognition that ANC internal factional politics had wreaked the havoc. Regarding the dysfunctionality of local governments – most of which are run by the ANC – the proffered solution was the government’s district development model. There were more unconvincing platitudes on Eskom, to pursue a state-owned bank, nationalise the SARB, and promote local production of pharmaceuticals. The poverty of policy ideas on offer was expected, given the ANC’s existential crisis. It is at its weakest moment ever, as Ramaphosa confessed in his opening address. All in all, the lack of sound policy proposals to address South Africa’s myriad challenges may suggest that the ANC has given up hope of making a difference to people’s lives. If people’s hopes of it delivering a better future also dissipates, the party’s decline will be sealed. This will mean that the ANC, while probably remaining the biggest party, will increasingly fail to garner outright majorities and be forced into increasing numbers of unstable coalition governments. Anton Harber (2022) Once armed with a carefully considered package of policies, the party now repeats vacant rhetoric. If you want insight into the state of the ANC, read its media and communications policy document from last weekend’s conference. Ignore that it is a scrappy document nobody bothered to edit before it was put into the special edition of the party’s online journal, Umrabulo. You can skip over the occasional incoherent paragraph. From what is left you will find that this is an organisation disconnected from reality, short on new ideas, but still strong on vacant revolutionary rhetoric. Here’s an inspiring sample: “Ownership of the media assets remain the most powerful strategy adopted in SA and protected by the Constitution, and provided for in various pieces of legislations. The idea of ownership of assets is not only driven by market interest but also hegemony and influencing the agenda in the battle of idea, what gets broadcast.” [sic, sic, sic] The document is headed, as it has been for many years, “The Battle of Ideas”, positioning the ANC as an organisation involved in a perpetual ideological war against enemies in the media. The media, it seems, is not a place to share and swap and debate ideas and information, not a tool to promote your own information or to hear what people outside Luthuli House are saying, but a front in the war against the ANC’s omnipresent and omnipowerful enemies. This “must be fought like a real war”, it says, with the purpose of “attaining political hegemony”. You might think 28 years in power indicates you have achieved some form of dominance in the political arena, but this is the same phraseology carried through from the ANC’s earliest documents, when its leaders arrived back from exile to face a critical and often unfriendly media. Nor does the ANC recognise much differentiation in the media, using the lazy approach of grouping everyone together without acknowledging that there is a range of quite different outlets doing different kinds of work with different standards. You might gain hope if the enemy they were arming themselves against was corruption, lack of implementation or state ineptitude. No, the three enemies are “the SA counter revolution”, “neoliberal forces” and “world imperialism”. It is not clear if these forces are internal to the ANC or outside enemies, though I suspect they are all over, like ghosts in the night. Interestingly, what is not in the document is the long-standing complaint that the print media is untransformed. There is only one paragraph that talks of the need to review and complete the transformation charter, and I had to struggle to remember this long-buried document. While you and I might worry about rebuilding the SABC’s financial health and political independence, the mess-ups in the transition to digital broadcasting that threaten to leave many without television coverage and the dysfunctionality of the Media Development and Diversity Agency, these do not appear to be major concerns for the ANC. We might hope the governing party would address the extent to which the State Security Agency messed with — and severely undermined — journalists during the Zuma presidency. We could wish it would deal with the reports of journalists facing worrying levels of threat and harassment, online and in the field, often from the police. The rest of the world might be debating how to deal with the dominance and power of the social media giants and their effect on local media and journalism. But no, there is just a passing call for print and digital media and the Government Communication and Information Service (not the government itself) to “implement measures that protect [these] sectors”. The SABC, the ANC argues, should be a pure public broadcaster with no commercial interest. It should be funded both from the fiscus and from a household levy, a confused mishmash of wishful thinking. The ANC proposal to deal with the sad state of community media is to license fewer stations, as it argues the sector cannot sustain the competition between stations. You have to remind yourself that this was a body that came to power with a carefully considered package of policies and proposals on the media that laid the ground for rich and important debate about the shortfalls of the sector. No longer. Equally dismal was the questioning by journalists at the post-conference briefing, which also showed little grasp of the major issues facing the sector. References Afrobarometer. 2021. New Afrobarometer SDG Scorecard shows South Africa doing better on climate action but worse on poverty, hunger, and corruption. [Online] Available at: https://www.afrobarometer.org/wp-content/uploads/migrated/files/press-release/South%20Africa/news_release-afrobarometer_releases_sdg_scorecard_for_south_africa-1sept21.pdf [Accessed: September 6, 2022]. ANC, 2020. NGC2020 Discussion Documents, Umrabulo Special Edition. [Online] Available at: https://www.ortamboschool.org.za/wp-content/uploads/2020/11/2020-UMRABULO-SPECIAL-EDITION-draft-16112020.pdf [Accessed: September 1, 2022]. ANC, 2022. 6th National Policy Conference Report. [Online] Available at: https://cisp.cachefly.net/assets/articles/attachments/88865_6th_npc_report.pdf [Accessed: September 1, 2022]. Auditor-General of South Africa (AGSA). 2021. 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[Online] Available at: https://www.worldbank.org/en/publication/wdr2022 [Accessed: September 1, 2022]. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - This report has been published by the Inclusive Society Institute The Inclusive Society Institute (ISI) is an autonomous and independent institution that functions independently from any other entity. It is founded for the purpose of supporting and further deepening multi-party democracy. The ISI’s work is motivated by its desire to achieve non-racialism, non-sexism, social justice and cohesion, economic development and equality in South Africa, through a value system that embodies the social and national democratic principles associated with a developmental state. It recognises that a well-functioning democracy requires well-functioning political formations that are suitably equipped and capacitated. It further acknowledges that South Africa is inextricably linked to the ever transforming and interdependent global world, which necessitates international and multilateral cooperation. As such, the ISI also seeks to achieve its ideals at a global level through cooperation with like-minded parties and organs of civil society who share its basic values. In South Africa, ISI’s ideological positioning is aligned with that of the current ruling party and others in broader society with similar ideals. Email: info@inclusivesociety.org.za Phone: +27 (0) 21 201 1589 Web: www.inclusivesociety.org.za

The Deputy Chairperson of the Inclusive Society Institute (ISI), Prof Zweli, and its Chief Executive Officer, Daryl Swanepoel, met with Hon Bettina Lugk, a member of the German Bundestag’s Foreign Affairs Committee, on 13 September 2022. Hon Lugk was accompanied by Hon Ulla Schmidt and Hon Dagmar Freitag, former members of the Bundestag. Hon Schmidt, a former Minister of Health, who oversaw the implementation of the German National Health System, has been intricately involved in the ISI’s research into the proposed NHI in South Africa, and Hon Freitag has been an active participant in the Institute’s social democracy dialogues. The objective of the meeting was to appraise and update both sides on political developments within their countries and to chart a way forward for further interaction and cooperation between themselves and the broader social democratic movement. Areas of mutual concern included the rise of the far right, populism, such as xenophobic incitement, and a decline in public trust in democracy, which threatened social cohesion and stability. Social democrats from across the globe needed, now more than ever, to constructively seeks solutions to ensure social justice and cohesion. It was agreed that channels of communication and cooperation needed to be maintained and further strengthened.

Copyright © 2022 Inclusive Society Institute PO Box 12609 Mill Street Cape Town, 8000 South Africa 235-515 NPO All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without the permission in writing from the Inclusive Society Institute D I S C L A I M E R Views expressed in this report do not necessarily represent the views of the Inclusive Society Institute or those of their respective Board or Council members. All records and findings included in this report, originate from a panel discussion on developing a new economic blueprint for South Africa, which took place in August 2022 Author: Mariaan Webb, Creamer Media Writer Edited by: Daryl Swanepoel AUGUST 2022 Content Abbreviations & acronyms Introduction Identifying weaknesses • Inadequate understanding from government • Insufficient public- and private-sector cooperation • Volume over value focus • Price-differentiation strategies • Policy implementation challenges • Domestic airline failures • Aviation certification delays • Monopolistic tendencies • Brand reputation neglect • Infrastructure failures Suggestions for fostering growth Conclusion References Abbreviations & acronyms ACSA Airports Company South Africa GDP gross domestic product ISI Inclusive Society Institute SMME small-, medium-sized and microenterprises Stats SA Statistics South Africa SA Tourism South African Tourism TSA Tourism Satellite Account UNWTO United Nations World Tourism Organization WTTC World Travel and Tourism Council Introduction Tourism is of vital economic and social importance to many countries around the world. Before the Covid-19 pandemic, which led to drastic changes in people’s mobility, travel and tourism accounted for one in ten jobs (330-million) globally and 10.30% of the world’s gross domestic product (GDP) (WTTC, 2022a). Tourism is also a valuable contributor to the South African economy. Measured against other industries, tourism’s direct contribution to GDP is bigger than either agriculture, utilities (electricity, gas and water) or construction. The ‘Tourism Satellite Account (TSA) for South Africa’ report, compiled yearly by Statistics South Africa (Stats SA), states that the sector’s direct contribution to GDP was 3.70%, or R209-billion in 2019, before the pandemic crushed the sector (Stats SA, 2021). To measure total contribution of travel and tourism to GDP, TSA relies on data from the World Travel and Tourism Council’s (WTTC’s) country report for South Africa. WTTC calculates the sector’s direct and indirect contribution to the economy in 2019 to be 6.90%, or R363.20-billion (Stats SA, 2021). Direct contribution of tourism to GDP: 2015 – 2019 Source: Tourism Satellite Account for South Africa, Statistics South Africa Travel restrictions implemented by countries to stop the spread of Covid-19 had a major impact on the tourism industry, cutting across all subsectors, from accommodation to aviation. South Africa’s borders were closed from the end of March 2020 to September 2020, preventing tourists from visiting the country. The emergence of new variants of Covid-19 in June and July 2021 also impacted on tourism as many countries prevented their citizens from traveling to South Africa. The UK government, for example, developed a red list, which comprised countries to which its citizens were prohibited from travelling. South Africa was on the red list from May 2021 to October 2021. The WTTC country report estimates that the total contribution of travel and tourism to GDP declined by 55%, to R180-billion, in 2020. As pandemic restrictions eased, tourism rebounded and is estimated to have contributed about R195.20-billion to South Africa’s GDP in 2021 (WTTC, 2022b). Tourism has been identified in the National Development Plan as being of economic priority given it is a labour-intensive sector that could contribute to achieving job creation targets. However, despite its recognised potential, the industry believes that government does not fully recognise or value tourism’s importance as an economic contributor. The Inclusive Society Institute (ISI), in collaboration with the Tourism Business Council of South Africa, convened a tourism sector dialogue in June 2022 as part of a broader research project to develop a New Economic Blueprint for South Africa. The dialogue was attended by a wide range of organisations representing various subsectors within the tourism industry in the country, including the hospitality sector, the airline industry, travel agents, destination marketing agencies and hotel, resort and game lodge establishments. This report gathers the tourism industry’s views on what South Africa must do to remove constraints to economic growth and development in the sector and offers suggestions on what could be done to accelerate and expand tourism’s contribution to GDP growth. Identifying weaknesses Inadequate understanding from government Although statistics highlight the sizeable contribution of tourism to the South African economy, there is a view that government does not fully recognise the importance of tourism to the country’s economy. Having a national Tourism Ministry is not enough and the success of the industry has relied on various departments working together. There is often a lack of trust between departments, preventing government from operating efficiently. Inefficiencies in departments, often other than tourism, can have major implications for the industry. For instance, the Department of Transport’s backlog in issuing operating licence renewals to tour operators, or the regulations imposed by the Department of Home Affairs when it introduced unabridged birth certificates for minor children travelling through any port of entry, can have unintended consequences for tourism. While government must do more to show its understanding of and appreciation for tourism, the industry is also required to accelerate processes of inclusion and black economic empowerment so that owners and operators better reflect the racial demographics of South Africa. Insufficient public- and private-sector cooperation Although the Covid-19 pandemic has assisted in fostering closer cooperation between the public and private sectors, this is an area that remains of great concern to the industry. There is a lack of collaboration between the Department of Tourism, its marketing arm, South African Tourism (SA Tourism), and the private sector in crafting tourism strategies. For instance, there is a view that marketing strategies are developed from a political angle rather than with a commercial slant and, therefore, lack sufficient opportunism. Focusing too much on BRICS countries (Brazil, Russia, India and China) is perceived to be politically opportunistic, but it does not deliver the commensurate commercial dividends. Volume over value focus Government’s tourism growth agenda focuses too much on volume, and not enough on value. SA Tourism’s aspirational target is to reach 21-million tourist arrivals by 2030, although that goal had looked out of reach even before the Covid-19 pandemic. SA Tourism now believes that attracting 14.80-million visitors is a more “realistic target” for 2030 (SA Tourism, 2021). However, the consensus was that instead of focusing on visitor numbers and trying to be “everything to everyone”, South Africa must position itself as a destination that attracts “valuable” visitors who spend money throughout the value chain. It must also guard against overtourism or placing its infrastructure under pressure. Price differentiation strategies Safari camps, luxury lodges and many other supreme tourist destinations dropped their prices and offered South Africans discounted rates when international travel was not possible while Covid-19 travel restrictions were still in place. To revive the tourism industry, price differentiation strategies must be employed more broadly to encourage South Africans and other Southern African Development Community residents to explore the country. The Industrial Development Corporation, in partnership with SA Tourism and the Tourism Business Council of South Africa, recently launched a travel campaign to that effect. As part of the campaign, South Africans will be able to secure discounted rates of up to 35% to selected destinations across the country (Engineering News, 2022). Financial constraints mean that more South Africans are opting to take local holidays than travelling overseas. A recent poll by consultancy group Travel Lifestyle Network indicated that 67% of those canvassed have a domestic holiday once a year or more and 22% once every six months. With the rising cost of living, price is going to be a key differentiator to attract consumer spend in the remainder of 2022 and 2023 (Business Day, 2022). Policy implementation challenges South Africa has an abundance of policy documents, positions and pronouncements, but often these do not yield the desired results, owing to a lack of consistent implementation. The lead up to the 2024 general election will likely compound implementation challenges, as a new government will be elected in less than a year-and-a-half. Implementation success hinges on continuity and a new administration may pursue or prioritise different interests. Domestic airline failures The failure of Comair, the operator of low-cost carrier kulula.com and British Airways, which it operated under a licence agreement, was a major setback for the tourism industry. The company was responsible for 40% of domestic airline capacity before its closure in June 2022 (BusinessTech, 2022). Comair failed to secure funding to stay airborne after being impacted on by global pandemicrelated travel restrictions. However, the group’s problems started before Covid-19, when the Boeing 737 Max aircraft was grounded, and its fleet-renewal programme pushed up debt and debt service costs. Placing South African Airways (SAA) in business rescue in 2020 was another major setback for Comair, which at the time was still owed R790-million by the State-owned carrier as part of a Competition Commission settlement. SAA ran an incentive scheme for travel agents in the early 2000s, which was found to penalise Comair. After SAA went into business rescue, it was ruled that Comair could get back only 7.5c in the rand of the R790-million still owned to it by SAA (Fin24, 2022a). SAA itself resumed operations only in late 2021, having been in business rescue for almost two years, which had a substantial impact on business and leisure travel. SAA’s predicament was caused by several issues, including political interference and leadership turmoil. The liquidation of Comair has substantially reduced domestic seat capacity, exacerbating a crisis in the industry, which over the past two years also lost low-cost carrier Mango Airlines. While other operators will eventually fill the gap left by Comair and Mango, capacity constraints have pushed up ticket prices, further hampering the tourism sector’s recovery from the pandemic. Operators of domestic airlines have warned that ticket prices will remain high owing to the price of fuel (Fin24, 2022b). Aviation certification delays Authorities are slow to process aviation certifications, which is a significant obstacle for the air travel industry. Every aircraft that an international airline uses on a route to South Africa must be registered and this process is taking too long. An aviation sector participant in the ISI dialogue indicated that it takes the South Africa Civil Aviation Authority several months to issue an airline operating certificate, compared with six days in Germany, for instance. Monopolistic tendencies Some of the key services pertaining to aviation and airports, such as Airports Company South Africa (ACSA) and Air Traffic and Navigation Services, are monopoly State-owned entities. There is no visibility on how ACSA, for instance, is ensuring that it gets the most out of its existing assets. Brand reputation neglect There is concern about the ongoing damage to the South African brand as a safe and welcoming tourism destination. Civil unrest and violent crime, especially near popular tourism sites, such as the Kruger National Park, exacerbate perceptions that South Africa is an unsafe destination. Infrastructure failures Delipidated road infrastructure and poorly maintained buildings do not support tourism growth. Many small towns near or on route to key tourist sites are in decay due to poor service delivery and inadequate maintenance resulting from municipal failure. Tourists no longer support towns where streets are riddled with potholes and litter is strewn everywhere. The poor quality of provincial roads in popular tourist hotspots is also of concern. Tourism industry participants have been complaining for years about the poor state of roads in the picturesque Mpumalanga Lowveld, for instance. Suggestions for fostering growth Focus points to accelerate tourism industry growth Conclusion Tourism continues to recover at a strong pace following the Covid pandemic. Globally, destinations welcomed three times as many international arrivals in the first quarter of 2022 as in the same period of 2021. The World Tourism Organisation’s ‘UNWTO World Tourism Barometer’ forecasts that there will be a gradual recovery in tourism throughout 2022, as more destinations ease, or lift, travel restrictions and pent-up demand is unleashed (UNWTO, 2022). South Africa’s tourism figures are also encouraging, with tourist accommodation income rising by 83% in the first quarter of 2022. Income from hotel accommodation doubled in the first quarter, compared with the same quarter of 2021 (Stats SA, 2022). For South Africa to take full advantage of the tourism rebound, collaboration between government and the industry is of critical importance. The country must pitch itself to the right clients and polish its brand to ensure that visitors choose or continue to choose South Africa, and that when tourists do arrive on South African shores they enjoy a world class experience, with full safety and security and supported by adequate tourism-related infrastructure and facilities. References BusinessTech. 2022. Flight costs in south Africa are up 50% – and could go much higher after Comair loss, June 23, 2022. [Online]. Available at: https://businesstech.co.za/news/lifestyle/599518/flight-costs-in-south-africa-are-up-50-and-could-go-much-higher-after-comair-loss/ [accessed August 24, 2022]. Engineering News. 2022. IDC launches domestic tourism campaign to stimulate economic recovery, August 4, 2022. [Online]. Available at: https://www.engineeringnews.co.za/print-version/idc-launches-domestic-tourism-campaign-to-stimulate-economic-recovery-2022-08-04 [accessed August 24, 2022]. Fin24. 2022a. How Comair ended up in a battle for survival, June 2, 2022. [Online]. Available at: https://www.news24.com/fin24/companies/explainer-how-comair-ended-up-in-a-battle-for-survival-20220602 [accessed August 24, 2022]. Fin24. 2022b. Why flights are so pricey right now, July 31, 2022. [Online]. Available at: https://www.news24.com/fin24/companies/its-not-the-comair-gap-why-flights-are-so-pricey-right-now-20220731 [accessed August 24, 2022] South African Tourism. 2021. Annual Performance Plan 2021/22, March 22, 2021. [Online]. Available at https://static.pmg.org.za/SA_Tourism_2021-22_ANNUAL_PERFORMANCE_PLAN.pdf [accessed August 18, 2022]. Statistics South Africa. 2021. Tourism Satellite Account for South Africa, final 2017 and provisional 2018 and 2019, November 30, 2021. [Online]. Available at: https://www.statssa.gov.za/?p=14992 [accessed August 18, 2022]. Statistics South Africa. 2022. Statistical Release: Tourist accommodation for March 2022, June 2, 2022. [Online]. Available at: https://www.statssa.gov.za/publications/P6410/P6410March2022.pdf [accessed August 18, 2022]. United Nations World Tourism Organization. 2022. Tourism recovery gains momentum as restrictions ease and confidence returns, June 3, 2022. [Online]. Available at: https://www.unwto.org/news/tourism-recovery-gains-momentum-as-restrictions-ease-and-confidence-returns [accessed August 24, 2022]. World Bank. 2022. Worldwide Governance Indicators, 2022. [Online]. Available at: https://info.worldbank.org/governance/wgi/Home/Reports [accessed August 18, 2022]. World Travel and Tourism Council. 2022a. Economic Impact Report, 2022. [Online]. Available at: https://wttc.org/Research/Economic-Impact [accessed August 18, 2022]. World Travel and Tourism Council. 2022b. South Africa Country Report, 2022. [Online]. Available at: https://wttc.org/Research/Economic-Impact/moduleId/704/itemId/204/controller/DownloadRequest/action/QuickDownload [accessed August 18, 2022]. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - This report has been published by the Inclusive Society Institute The Inclusive Society Institute (ISI) is an autonomous and independent institution that functions independently from any other entity. It is founded for the purpose of supporting and further deepening multi-party democracy. The ISI’s work is motivated by its desire to achieve non-racialism, non-sexism, social justice and cohesion, economic development and equality in South Africa, through a value system that embodies the social and national democratic principles associated with a developmental state. It recognises that a well-functioning democracy requires well-functioning political formations that are suitably equipped and capacitated. It further acknowledges that South Africa is inextricably linked to the ever transforming and interdependent global world, which necessitates international and multilateral cooperation. As such, the ISI also seeks to achieve its ideals at a global level through cooperation with like-minded parties and organs of civil society who share its basic values. In South Africa, ISI’s ideological positioning is aligned with that of the current ruling party and others in broader society with similar ideals. Email: info@inclusivesociety.org.za Phone: +27 (0) 21 201 1589 Web: www.inclusivesociety.org.za

Photograph source: click here The Inclusive Society Institute (ISI) on Wednesday, 17 August 2022, hosted a roundtable discussion on addressing xenophobia in South Africa. Participants represented a wide range of public and civil society organisations. Presentations were made by: Dr Steven Gordon, representing the Human Sciences Research Council Mr Diego Itturralde, representing Statistics South Africa Professor Loren Landau, from the African Centre for Migration and Society Ms Sharon Ekambaram, representing Lawyers for Human Rights Ms Danaline Franzman, representing the Department of Justice and Constitutional Development Consideration was given to the factors that drive xenophobia, interventions that are needed to reframe plans beyond the National Action Plan on Racism and Xenophobia, an assessment as to whether the immigration laws and policies are fuelling xenophobia, how to address the dichotomy in responses by state actors, and on how to address inconsistency in state responses. It also considered measures to align legislation and policy to ensure consistency in action.

The Inclusive Society Institute (ISI) attended the Electoral Reform Indaba, that was hosted by Defend Our Democracy, My Vote Counts, Rivonia Circle, CASAC and the Ahmed Kathrada Foundation. A total of 130 civil society organisations attended the gathering at the Braamfontein Recreation Centre in Johannesburg. Discussions focussed on: Options for electoral reform, now and in the future The strategy with regard to the current electoral reform processes under discussion in Parliament The state of readiness for the 2024 election What was clear from the discussions was that civil society was not in support of the current Bill before Parliament, in that it does not bring about fundamental electoral reform. It is a minimalistic approach aimed only at accommodating the Constitutional Court judgement requiring Parliament to provide for independent candidates to participate in provincial and national elections. Civil society expect far more reform. Reform that improves accountability, representivity and a constituency-based system that will bring elected public representatives closer to the electorate. The Indaba resolved to embark on a broad public mobilisation campaign to demand such reforms in time for the 2024 national election.

The Communications Directorate of Turkiye’s Presidency organised a panel discussion in Cape Town on 30 August 2022 to discuss reform of the United Nations (UN). The discussion was moderated by Turkish scholar, Mursel Bayram. The panel brought together Turkish Professor, Suay Nilhan Acikalin, South African political analyst, William Gumede, Zaheer Laher, the acting Chief Director of the UN Peace and Security's Department of International Relations and Cooperation (DIRCO), and Daryl Swanepoel, Chief Executive Officer of the Inclusive Society Institute. The meeting was also addressed via video panel by Turkiye's Presidency Communications Director, Fahrettin Altun, who said that although the UN has made significant contributions to peace and stability in various geographies of the world since its establishment, it needs reform. Mr Swanepoel’s contribution pointed to the current deficiencies within the UN system, and focussed on the need and motivation for UN reform. He also interpreted South Africa and Africa’s position on such reforms. He made a number of proposals on what such reforms could entail, such as redefining the veto powers, and he cautioned against a delay in reforming the UN, specifically the Security Council, in that it is contributing to a proliferation of alternative multilateral fora and geo-political polarisation.

The Chief Executive Officer of the Inclusive Society Institute, Daryl Swanepoel, together with Professor William Gumede, a member of the ISI’s expert panel on electoral reform, met with the Minister of Home Affairs, Hon. Aaron Motsoaledi, on Monday, 29 August 2022 to discuss lingering concerns with regard to the current Electoral Amendment Bill, serving before Parliament’s Portfolio Committee on Home Affairs. Civil society remains concerned about the constitutionality of the current Bill before Parliament, which, if an amenable compromise is not reached, threatens to derail the 2024 general election. Whilst civil society stood ready to find an extended pathway to broader electoral reform, they insist on the current Bill being constitutional and they require convincing assurances that meaningful and comprehensive electoral reform will be implemented by no later than the 2029 general election.

Since the last engagement of the Expert Panel, much has happened with regard to on the development of a new electoral model for South Africa: The Institute’s report was concluded and widely promoted to other civil society organisations, the Independent Electoral Committee, the Ministerial Advisory Committee, Parliament, the Minister of Home Affairs and the media. The Electoral Amendment Bill was tabled in Parliament, which Bill does little to promote reform in that it follows a minimalistic approach. That said, the Institute’s engagement with the Minister was constructive in that there is an acknowledgement that broader reform is needed. It is not being done now given the Constitutional Court’s deadline which is prohibitive in terms of what can be achieved in the short term. The Institute proposed a two-step approach, namely, minimalistic amendments in the short term with a commitment to embark upon a process to achieve broader reform for elections post-2024. The Zondo-Commission of Enquiry into State Capture has also recommended that Parliament give consideration to a constituency-based electoral model as well as a directly elected President. With the aforementioned in mind, the Institute convened the Expert Panel on 23 August 2022 to: Give feedback on the journey travelled so far and the roadmap going forward To discuss the merits and demerits of a directly elected presidential electoral system. The purpose was to shape the Institutes thinking on the topic.

Copyright © 2022 Inclusive Society Institute 50 Long Street Cape Town, 8000 South Africa 235-515 NPO All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without the permission in writing from the Inclusive Society Institute. DISCLAIMER Views expressed in this report do not necessarily represent the views of the Inclusive Society Institute or those of their respective Board or Council members. Authors: Percept and 71point4 Editor: Daryl Swanepoel 7 February 2022 Executive summary “What does inequality, poverty and socio-demographic change look like in South Africa – at present, and over the past 27 years of democracy?” This report aims to address that question. To do so, we take a multidimensional approach to assessing inequality (as well as poverty and socio-demographic change), considering inequality in eight dimensions, namely: Economic, Education, Health, Living Conditions, Social and Cultural, Physical Security and Legal, Political, and Environmental. For each of the dimensions, we review the literature and analyse data from various sources to provide a view at present, as well as over time. Our approach moves one beyond referring to a Gini coefficient metric to answer the question of inequality. A shift towards a multidimensional framing of poverty and inequality in South Africa lends itself to a more comprehensive description of what has, and has not, been achieved during the new democratic dispensation. By interrogating the changes made in South Africa in a more granular way, the lived experience of South Africans may be better understood and reflected on. The approach also allows the drivers of inequality to be identified. In this way, levers of change and opportunity can be described, and poverty can be tackled more comprehensively. Where useful, we rely on frameworks to consider how all of the mentioned dimensions link together. Some dimensions relate to ‘fundamental capabilities’ (like equal access to health, education, and economic participation). Others relate to ‘functionings’ (like health and education outcomes, and income and wealth). And yet others relate to ‘conversion factors’ (for example, personal, socio-political and environmental circumstances), where the latter may influence both capabilities and functionings. Following the above approach, key summary points from each section (dimension) are: Economic inequality: We analyse this in various ways, including by looking at income and wealth inequality, inequality in living standards, absolute levels of poverty, and employment statistics. This interrogation of the data follows others’ findings that the aggregate Gini coefficient has not changed significantly over time, which we also find to be the case. We further show that within-group racial inequality has increased, especially for Black African and Coloured individuals. In line with others’ findings, we find that most of the inequality is linked to the labour market: both extremely high unemployment and the distribution of wages drive most inequality in South Africa. There is no clear evidence that inequality has improved over time by taking a generational lens. The evidence on whether the inclusion of older generations (>65 years) in income inequality calculations lead to higher inequality is inconclusive. While population growth has been decreasing over the post-apartheid period, it is still higher than in comparable upper-middle-income countries. Population growth also manifests in household structure. Most South African households are extended family households, and these are also the poorest households on a per capita income basis. Single parent households follow with a low per capita income level, as such fertility rates (even though relatively low) may still not be at the desired level for South African women. Inequality is lower among households with at least one person employed, but only marginally so (relative to the aggregate nationalpicture). Removing the top 1% of households (by income) also does not make a major difference to inequality. Absolute levels of poverty remain high. In 2015, 13.8 million people fell below the food poverty line; and in 2019, 11% of households reported that at least one person went hungry in the last 12 months. Education inequality: We show that access to education and attendance has improved over time, at all levels. It has in some way reduced inequality in education, but there is still room for improvement. Despite this, the proportion of individuals that complete matric is low (less than half of those who start Grade 1 in a certain year matriculate successfully 12 years later), and this (lower levels of education) has serious implications for chances of employment, as the data show. Most concerning, however, is that the quality of (public) education remains low. It is evidenced by data on outcomes and infrastructure – which often points to the weak conversion of resources into learning outcomes as the main driver. Health inequality: Like the picture on education, we see that access to health has increased over time, but that this has not translated into meaningful outcomes for beneficiaries due to poor quality of services. As with education, health also does not occur in a vacuum; many other socio-economic factors matter (outside of the health and education system) in working toward outcomes. Overall, health and education inequalities remain high, and follow socio-economic and racial lines. Living conditions inequality: Like other resources, a clear socio-economic divide exists for housing access. Despite improvement in access to housing over time, including by means of subsidies from the government, many do not have adequate housing. For the 6.8 million households who reportedly have a monthly income of less than R3,500, 64% reported having inadequate housing – defined as informal or traditional houses, dwellings with no flush toilets, and households with more than two people per room. This picture improves slightly for those higher up in the income bracket, but improvement is mainly seen when the household income breaches R15,000 per month (generally the top fifth of households). Access to water, power and sanitation has improved over time, although there is still room for improvement. Social and cultural inequality: While it is difficult to measure this accurately, we were able to elicit some notable findings. They show to which degree South Africans don’t interact with others who are different in some way, how many South Africans report feeling alienated, how factors such as gender link with poverty, and how South Africans perceive social cohesion to have changed over time. Physical security and legal inequality: It is clear from evidence on these points that access to physical and legal security, and the impacts thereof, vary significantly by gender, age and geographical location. We discuss the concerningly high statistics of issues such as violence in this section. Political inequality: Despite South Africa’s democratic system, the voices of individuals are not always heard. According to the data, many also perceive that they cannot discuss their political views freely, and at present, more than 8% of people feel that they cannot vote without feeling pressured. Environmental inequality: In this final section, we discuss pollution and transport inequalities. Poorer people tend to be significantly more exposed to pollution, often because of residing closer to mines, refuse sites, sewage sites, and main transport roads. We also show the data on inequalities in access to different forms of transport. This indicates the high proportion of people whose mode of transport to health facilities is walking (possibly suggesting transport as a barrier in other areas of their lives, such as in accessing work opportunities). Overall, we find that the picture of inequality in South Africa is deeply pervasive and entrenched, and it is difficult for many to truly access and participate in society and the economy, which would allow them a chance to improve their own and others’ well-being in their lifetimes. Despite this, there are examples of progress that deserve to be highlighted. In the past 27 years, South Africa has, for example, expanded its welfare grant programme, housing programme, water and sanitation infrastructure, and access to schooling and healthcare, especially for the poorest and most vulnerable. Unfortunately, the gains made are insufficient to improve the overall well-being of the majority of South Africans in a meaningful way. Grants are not enough to support recipients, housing and infrastructure programmes are not keeping pace with population growth and urbanisation, and the quality of basic services – including those relating to water, sanitation, health and education – are often suboptimal, resulting in inferior outcomes and services. Content Executive Summary List of figures List of tables List of information boxes Acronyms and abbreviations 1. Background and purpose 2. Conceptual framework – assessing multiple dimensions of inequality 3. Note on data sources 4. Inequality for whom? 5. Economic inequality 5.1 Overall income: inequality and poverty 5.2 Inequality in sources of income 5.3 Post-tax income inequality 5.4 Inequality in post-government expenditure (post-transfer) income 5.5 Inequality in Living Standards 5.6 Nutrition and hunger 5.7 Wealth 6. Education inequalities 6.1 Early Childhood Development 6.2 Basic Education 6.3 Tertiary Education 6.4 How does education link to employment and income? 7. Health inequalities 8. Inequalities in living conditions 8.1 Housing 8.2 Electricity, water and sanitation 8.3 Digital connectivity 9. Social and cultural inequalities 10. Physical security and legal inequalities 11. Political inequalities 12. Environmental inequalities 12.1 Pollution inequalities 12.2 Transport inequalities 13. Linking the many dimensions of inequality: Conclusion References List of figures Figure 1: Framework for assessing multiple dimensions of inequality using a capability approach[2] Figure 2: Growth in the number of individuals and households in South Africa, 2001-2019 Figure 3: Household sizes and differences in the measurement of income across household surveys, NIDS 2014/2015 vs. Living Conditions Survey (LCS 2014/2015) Figure 4: Average annual percentage population growth, 1985 – 2020 Figure 5: Distribution of households by household structure type (total SA population) Figure 6: Personal income tax contributions in 2018 Figure 7: Racial composition of post-tax income groups, 2019 Figure 8: Total individualised transfers received by pre-tax income group Figure 9: Households' main income source by LSM group Figure 10: Reported levels of household hunger (17.2m households) Figure 11: Household wealth (Rand billion) according to data of the South African Reserve Bank (2020) Figure 12: More accurate estimate of household wealth (2020, Rand Billion) Figure 13: Residential properties on the deed's office registry by value Figure 14: Linkages to the labour market and access to financial assets (wealth) through employment for the economically active Figure 15: Educational attendance by age and reasons for non-attendance Figure 16: Percentage distribution of education attainment for individuals 20 years and older, 2002-2018 Figure 17: Share of population by highest level of education and age group, 2020 Figure 18: Share of population aged 25-64 by highest level of education and race, 2010 and 2020 Figure 19: Demographic shift in young graduate (<35 years) profiles by race and gender between 2008 and 2020 Figure 20: Proportion of the unemployed by education level Figure 21: Narrow rate of unemployment by highest level of education Figure 22: Educational profile (highest level of education of the economically active population, by race Figure 23: Relationship between highest level of education and unemployment rate for the economically active, by race (2021) Figure 24: Narrow rate of unemployment for young graduates (2008-2020) Figure 25: Means of transport to health facility by geographic location (total households=17.2m) Figure 26: Reason for not using closest healthcare facility (by geographic location) Figure 27: Medical scheme membership by race group Figure 28: Number of households living in different types of housing, 2001-2019 Figure 29: Number of households living in different types of housing, 2015/2015 List of tables Table 1: Mid-year population estimates 2021 by province Table 2: South Africa's age distribution Table 3: The Gini coefficient for the period 2007-2019 calculated from various data sources (tax and household surveys) Table 4: Comparing the Gini coefficient for all households vs. households excluding the top 1% of income households Table 5: Gini coefficient for individuals aged 65 and younger vs. individuals older than 65 Table 6: Inter-group Gini coefficient for those aged 65 and younger (excluding those aged older than 65) Table 7: Median and average monthly per capita incomes of households, by household structure Table 8: Gini coefficient for employed households, all individuals and all households Table 9: Gini coefficients by population group for households with at least one member employed Table 10: Number of registered taxpayers vs actual number of tax payments received, 2016-2020 Table 11: Afrobarometer responses about a survey on voting freedoms without pressure Table 12: Different fuel sources used for cooking, by population group, 2003 & 2019 Table 13: Population groups' modes of transport to healthcare facilities List of information boxes Info Box 1: Impact of the COVID-19 pandemic on social grants Info Box 2: Living Standards Measure Info Box 3: Patient treatment journey Info Box 4: Gugulethu street committee leader Info Box 5: Pollution near coal mines Acronyms and abbreviations ECD Early Childhood Development GBV Gender-Based Violence GEMS Government Employee Medical Scheme GHS General Household Survey IES Income and Expenditure Survey LASA Legal Aid South Africa LCS Labour Conditions Survey LSM Living Standard Measure MDR-TB Multidrug Resistant Tuberculosis NIDS National Income Dynamics Study NIDS-CRAM National Income Dynamics Study – Coronavirus Rapid Mobile Survey OHS October Household Survey QLFS Quarterly Labour Force Survey SAARF South African Audience Research Foundation SARS South African Revenue Service StatsSA Statistics South Africa TERS Temporary Relief Scheme TIMSS Trends in International Mathematics and Science Study 1. Background and purpose “‘Inequality’ has been likened to an elephant: you can’t define it, but you know it when you see it.” (Fields, 2002)[1] Almost three decades have passed since the fall of apartheid, and income inequality persists. Economic growth, equity and social cohesion in South Africa are generally considered poor or regressive despite considerable policy reform aimed at improving these outcomes. The media and political publications continue to place emphasis on income disparities using aggregate income inequality measures, such as the Gini coefficient. While important, this seemingly one-dimensional view of tracking progress post-1994 risks missing out on the dimensions of inequality that could become levers of change if properly understood. Strides have been made in terms of achieving equity in access to services – particularly in the areas of education and health – and these should be acknowledged. At the same time, these strides have not translated into meaningful shifts in outcomes. It is therefore critical to understand the drivers of inequality to ensure that government policies and civil responses achieve the most optimal impact. A shift towards a multidimensional framing of poverty and inequality in South Africa lends itself to a more comprehensive description of what has – and has not – been achieved during the new democratic dispensation. By interrogating the changes made in South Africa in a more granular way, the lived experience of South Africans may better be understood and reflected. The approach also allows the drivers of inequality to be identified. In this way, levers of change and opportunity can be described, and poverty can be tackled more comprehensively. This report takes a deeper look at multiple dimensions of inequality and how it has changed in South Africa over the last 27 years. Priority pathways out of poverty and inequality traps are described in a separate report. 2. Conceptual framework - assessing multiple dimensions of inequality We use various dimensions and metrics to describe and measure inequality. For the purpose of this report, we will be evaluating inequality based on the capability approach taken to the multidimensional inequality framework (explained later in the text) typically used in the broader Human Development context.[2] While the exact dimensions of any multidimensional framework can vary somewhat, we opted to interpret typical dimensions presented in the literature in a way that allows for more concrete analysis given limitations on data availability. “Through the capability approach the Human Development approach redefines the concept of well-being instead of on survival means.” (Bucelli and McKnight, 2021)[2] Figure 1: Framework for assessing multiple dimensions of inequality using a capability approach[2] The framework provides a systematic approach to evaluating eight dimensions of inequality, while emphasising the interconnection between all dimensions.[2] These interconnections are based on Sen’s capability approach. The capability approach distinguishes between conversion factors (drivers of multidimensional inequality), capabilities and functionings.[2] Conversion factors influence the degree to which advantage or disadvantage can move between the individual domains of inequality, some of these being capabilities (e.g. learning and education) and other functionings (outcomes – e.g. health). An environmental factor such as pollution is an example of a conversion factor that can drive the degree to which inequalities are transferred between domains – for example, from health to economic, if individuals are no longer able to work due to ill health because of pollution exposure. The progress (or lack thereof) made in each dimension of the multidimensional inequality framework will be explored using a variety of metrics to provide a comprehensive understanding of inequality in South Africa. 3. Note on data sources Our analysis makes use of various data sources (household surveys, public sector administrative data sources and private sector data sources) to ensure that our evaluation is as comprehensive as possible. Furthermore, this approach ensures robustness since each data source has its own strengths and weaknesses. The underlying data used in this report and quoted in other reports is mainly derived from survey data sources. In some cases, it is possible to calculate income (personal, household and/or per capita income) from these surveys. However, incomes may be poorly reported in surveys – in some cases because respondents deliberately misstate their income and in others because incomes are inherently unstable and difficult to report on. For this reason, many researchers prefer to use expenditure data rather than income data for analysis. At the same time, the household unit itself is not well-defined or stable, which further complicates deriving per capita income measures. 4. Inequality for whom? The starting point for any discussion on inequality is defining the population for whom inequality is being measured. An inequality assessment presupposes a distribution of resources relative to a given population within which the ranking of resources relative to individuals can be done. According to the 2019 General Household Survey (GHS), the most recent version of the survey for which data is available, there are 58.4 million people and 17.2 million households in South Africa. The number of households in South Africa grew at 2.4% per annum while the number of individuals grew at 1.5% per annum between 2001 and 2019. This discrepancy is driven to a large degree by the continued growth in one-person households, a phenomenon commonly associated with urbanisation, and in South Africa, with migration and employment patterns. The growth in households has clear implications for service delivery; an increase in the number of households implies a need for more dwellings, albeit smaller, and more infrastructure to service these dwellings appropriately. Figure 2: Growth in the number of individuals and households in South Africa, 2001-2019 Sources: Census 2001, Community Survey 2007, Census 2011, Community Survey 2016, GHS 2019 Growth in population and households is also not evenly distributed across the country, with noticeably higher population growth in better-developed areas, as individuals migrate to access jobs, better-quality housing, education and healthcare. The latest mid-year population estimates published by Stats SA in July 2021 indicate that Gauteng has seen net in-migration of almost one million people between 2016 and 2021, with the Eastern Cape, Limpopo and Kwa-Zulu-Natal experiencing net out-migration of 320,000, 189,000 and 84,000 people respectively. Table 1: 2021 mid-year population estimates by province Source: Stats SA 2021 Recent statistics also show that 10% of the national population was aged 4 and under, 25% aged 12 and under, and 50% aged 26 and under (see Table 2 below). Table 2: South Africa's age distribution Source: NIDS Wave 5 (2017) 5. Economic inequality When viewing inequality through a capability lens, income and wealth are not ends in themselves but serve as means to achieve welfare and freedom.[3] Because this report uses a multidimensional inequality framework underpinned by a capability approach, income and wealth inequality in South Africa is explored from the perspective that it contributes to suboptimal functionings among those at the bottom end of the distribution. Income can be considered anything that makes consumption possible[4] and therefore, its sources are vast and varied. However, it is useful to categorise income according to its factor source (the factor of production used to generate the income): labour income (wages and salaries), capital income (capital gains and interest), income from entrepreneurship (profit) and land (rent). Understanding the dynamics and structural nature of the factor markets that generate these incomes is essential to figuring out the inequality story. Appreciating these complexities of factor markets also helps with accepting that income inequality is ‘sticky’ (slow changing). Another important source of income in the South African context is transfers from the government in the form of social security grants. Spending on income grants and taxation are fiscal tools used by governments to improve distributive outcomes in the short term. One way to determine the impact of these direct interventions in reducing income inequality is by measuring primary (pre-tax and pre-government spending) income and comparing it to post-tax secondary income (post-tax and post-government spending). Although it’s more difficult to measure than income, we also consider the distribution of wealth in South Africa because of its potential to generate longer-term intergenerational benefits. 5.1 Overall income: inequality and poverty South Africa has been labelled as one of the most unequal countries globally for decades. This is due to the strong focus placed on the Gini coefficient as the primary measure of inequality, which has remained persistently above 0.6.[5] The 2019 Stats SA inequality report[6] that reviewed progress in inequality reduction in post-apartheid South Africa arrived at the same conclusion. It revealed that there had been no substantial change in South Africa’s Gini coefficient during the post-apartheid period. Even though the report[6] also considered non-income dimensions of inequality and numerous measures of inequality, South African media and political organisations focused exclusively on the aggregate Gini as a summary measure of inequality. Throughout this report, we will draw attention to improvements in inequality in other dimensions, where it exists. But ultimately income inequality – as measured by the Gini, in particular – remains the most widely reported and considered measure when assessing post-apartheid inequality. Differences in both the reporting and consequently ultimate measurement of income reported by different households can make it difficult to accurately track income inequality. In the 2014/2015 Living Conditions Survey, one of the biggest household surveys in South Africa, 10% of households reported earning income of R30,000 or more per month. In the NIDS survey, a smaller panel survey conducted in the same period, only 6% of households reported earning income of R30,000 or more. Likewise, at the other end of the market, according to NIDS 2014/15, 38% of households earn less than R3,500 per month, compared to 41% as reported by the Living Conditions Survey. The Gini coefficient for these surveys is 0.6. Figure 3: Household sizes and differences in the measurement of income across household surveys, NIDS 2014/2015 vs. Living Conditions Survey (LCS 2014/2015) Sources: NIDS 2014-2015, Wave 4; LCS 2014-2015 Nevertheless, the reporting errors in and between surveys are typically not large enough to alter the pattern of extreme inequality shown by survey data. For example, while the NIDS, LCS, GHS and SARS tax statistics all provide markedly different estimates for the Gini coefficient, they leave no doubt that South Africa is characterised by extreme income inequality (Table 3). The Gini coefficient is lowest when administrative tax data is used (varying between 0.41 and 0.50 between 2007 and 2019). Data from the GHS shows Gini coefficients between 0.56 and 0.62, while the NIDS data (using a smaller sample) has Gini coefficients varying between 0.61 and 0.7. The LCS is not regularly repeated. Table 3: The Gini coefficient for the period 2007-2019 calculated from various data sources (tax and household surveys)[1] Some critical data sources, such as the Quarterly Labour Force Survey (QLFS), do not include sufficiently useful income measures (household income). Even where personal income data is collected from the respondent, this data is not disseminated publicly. Where this is the case, the analysis uses other proxies to segment the market. Examples of these alternative proxies include Living Standard Measures (or LSMs, which themselves reflect key dimensions of inequality such as access to services), area or area type, race as well as education levels. The unit of analysis relative to which inequality is calculated varies throughout the report. Excluding the top 1% from income inequality calculations only marginally reduces overall inequality. The contribution of the top 1% of the income distribution is a topic of global relevance and concern.7 Removing the top 1% of the income distribution’s income from calculations of the Gini coefficient can indicate to what extent overall income inequality is driven by the phenomenon of the “top 1%”, as the literature often refers to this group. As shown in Table 4, excluding this group’s income from the Gini only marginally decreases overall inequality. It generally lowers the Gini from 0.60 and above to just below, although using GHS income data lowers it to as low as 0.52 – which is still a very high level of inequality. Given that good data on the total population’s wealth is not accessible, this exercise was not repeated with wealth data. Table 4: Comparing the Gini coefficient for all households vs. households excluding the top 1% of income households Sources: NIDS and GHS The evidence on whether the inclusion of older generations (>65 years) in income inequality calculations lead to higher inequality is inconclusive. Older generations have theoretically had more time to accumulate wealth from non-labour market income in the form of both financial and non-financial assets such as housing. However, different older population groups in South Africa would also have been more heavily subject to the inequalities generated by apartheid. Depending on the data source, the Gini coefficient for the population aged 65 and below can be higher or lower than the Gini coefficient for the population older than 65 years (Table 5). Data from the GHS generally shows a marginally lower trend in inequality for the population aged 65 and younger, while data from NIDS shows higher inequality among the population 65 and younger. The inter-group Gini coefficient for different South African race groups (Table 6) shows much higher inequality among Black and Coloured South Africans compared to White and Indian/Asian South Africans. Specifically for Black South Africans aged 65 years and younger, there also was a trend of increasing inequality in later years. Among Coloured South Africans, the inter-group Gini coefficient seems to have decreased between 2015 and 2019. This raises questions about which income distribution brackets within the group experienced increased or decreased incomes. Further investigation is required to answer this question. Table 5: Gini coefficient for individuals aged 65 and younger vs. individuals older than 65 Sources: NIDS and GHS Table 6: Inter-group Gini coefficient for those aged 65 and younger (excluding those aged older than 65) Source: GHS South Africa has experienced a population growth of between 1.2% and 2.3% over the past 36 years. The population growth rate has declined from an average of 2.2% per annum between 1985 and 1990 to an average of 1.2% per annum between 2015 and 2020. The country’s average population growth rate has typically been between the average of upper-middle-income countries’ growth rate and the lower-middle-income countries’ growth rate (Figure 4). Kenya, a comparator African country (but falling into the lower-middle-income category), has experienced a higher average population growth from 1985 to 2020, decreasing from 3.5% to 2.5%. All middle-income countries have experienced declining population growth rates over the period. This is likely due to the increased economic development of these countries and increasing access to education, family planning and other similar services. Figure 4: Average annual percentage population growth, 1985-2020 Source: United Nations, Department of Economic and Social Affairs, Population Division, 2018 Population growth may play out in household structures (in an inequality context). Although fertility levels in South Africa (which contribute to decreasing average population growth rates) have been declining significantly, suggesting a strong fertility transition[8], average fertility may still be higher than women’s and households’ stated preferences. Stats SA recently (2020) published nationwide research in which they asked women who had a baby in the five years preceding the survey (conducted in 2016) whether they wanted to get pregnant at the time. If they answered no, they were asked whether they wanted to rather have a baby later (indicating that the birth may have simply been unplanned or mistimed) or did not want more children (therefore indicating that the birth was unwanted). Unwanted births are therefore births – as recalled by the women surveyed – where no additional birth was planned or wanted at the time of conception. Over 20% of total births from the prior five years were classified as unwanted according to this research. The underlying research also shows that another 34% of the births were mistimed. As we discuss below, this may also have implications, especially for younger mothers. These unwanted births show a decline with increasing education; in 2016 unwanted births to mothers with tertiary education (11%) was four times less compared to mothers with no education (46.3%). 26% of the unwanted births were birthed into households in the poorest wealth quintile and 13% into households in the richest wealth quintile. The highest number of unwanted births were found in the Eastern Cape, followed by KwaZulu-Natal and Mpumalanga.[9] Various factors may contribute to these high levels of unwanted fertility, including low-quality contraceptive services in the public sector, and gender violence and inequality. Recent research indicates that the unmet need for contraception remains high – at 19% – for sexually active women, and at 15% for married/in-union women. This research also highlights the widespread dissatisfaction by both community members and healthcare providers with the level of family planning quality of care.[10] We discuss gender-based violence later in this report under physical security and legal inequalities, where it is found that among adult women in South Africa, 21% have reported experiencing physical abuse in their lifetime. While ideal population growth rates may be ambiguous and even controversial, the findings from stated preferences do provide insights into the possible links between population growth, poverty and inequality. The same report regarding unwanted births by Stats SA discusses that the disadvantages suffered by unwanted children may be in their health, early childhood development and potential future social and economic opportunities.[9] Similarly for parents (especially mothers), unwanted births may, dependent on the mother’s age at birth, limit one’s education, and job and income prospects, with possible knock-on effects for many other aspects that perpetuate inequalities. It is notable that there is also two-way directionality here (fertility influencing income and income influencing fertility), with other studies finding that higher education and income lead to lower fertility levels.[11] Teenage births may have declined over time, but StatsSA shows that in 2020 alone, approximately 34,000 births were to women aged 17 and younger. These births are likely to cause education interruptions and later entry into the labour market. In the same year, it was found that more than 60% of all births were registered without the details of the father. This percentage may change alongside legislative changes and there may be many reasons for this phenomenon, including choices by individuals not to marry (until now prohibiting the father’s details to be included on the birth certificate).[12] Nevertheless, it does raise the question of the prevalence of single parents and what implications this may have for poverty and inequality. In relation to inequality, population growth may indeed play out in household formation and different types of households’ average income and poverty levels. Figure 5 sets out the distribution of different types of households in South Africa in 2015, with 39% of South Africans living in extended family and/or non-related households and 11.9% of households being single-parent family households. Extended family/non-related households typically have larger sizes than the other households. Table 7 sets out the income per capita of each household structure. The median per capita monthly income of the extended and/or non-related households is the lowest of all household structure types at R1,283 per month, followed by single-parent family households at R1,462 per capita per month. Population growth which manifests in extended family/non-related households and in single-parent families (often female-headed) contributes to inequality in that these households typically share a limited set of resources among a large group of people, tend to be grant reliant, and these types of households typically don’t have good labour market links.[13] This type of household formation is both a result of poverty and inequality, as well as a contributor to future inequality. Figure 5: Distribution of households by household structure type (total SA population) Source: Living Conditions Survey 2015 Table 7: Median and average monthly per capita incomes of households, by household structure Data source: Living Conditions Survey 2015 COVID-19 has worsened the economic situation and will affect poverty and inequality. Given the pre-pandemic South African context of weak, non-inclusive economic growth and high unemployment rates, it is expected that the economic effects of COVID-19 may perpetuate existing income inequalities and poverty. In some cases, it may even reverse economic gains made amongst vulnerable groups over the past two decades (e.g., women, the previously disadvantaged). Recent studies already point in this direction. Findings from the nationally representative NIDS-CRAMc survey provide robust evidence of sharp increases in household and child hunger and insufficient money for food during the COVID-19 pandemic, both of which remained disturbingly high from May 2020 to May 2021.14 When considering the impact of the COVID-19 crisis on the labour market - the source of labour income - gendered effects are already emerging. By March 2021, men’s employment and working hours reverted to pre-COVID levels but in contrast, women’s were below February 2020 baseline figures. Furthermore, inequalities in the time spent on childcare and in the income support for unemployed or furloughed workers endured during COVID-19.[15] When Statistics South Africa upper-bound poverty line is used, more than one out every two South Africans were poor in 2015.[16] While there had been a clear decrease in poverty (using the upper-bound poverty line) between 2006 and 2011 from 66.6% to 53.2% of the population, by 2015 poverty had increased to 55.5% of the population.[16] This meant that 30.4 million South African were living in poverty in 2015. A similar poverty trends report has not been produced by Statistics South African since 2017 but the impact of COVID-19 is likely to have exacerbated the poverty situation by a large quantum. 5.2 Inequality in sources of income Since the end of apartheid, a divergence between the top and bottom income deciles in real factor incomes (income generated through labour, capital, land or entrepreneurship) was seen.[17] The 13% increase in national income was largely due to a 30% increase among the highest decile, with an almost 50% increase seen in the top 1%.[17,18] In contrast, the average factor income has remained static in the middle 40% group, while the lower 50% has had a 30% drop.[17,18] Economic growth since the 2000s has primarily resulted in an increase in income among the high-income earners.[17,18] Increases among the lower 90% have failed to rise substantially, and returned to levels observed in 1993 during 2011 (on the back of the global financial crisis). However, the top 10% was largely unaffected during 2011.[17,18] Labour market income and large variation in labour market income play a very significant role in overall inequality. Work done by Stats SA and the French Development Agency found that roughly two-thirds of total inequality derives from inequality in labour market earnings and that half of this is related to the very high levels of unemployment in South Africa. The distribution of wage earnings among the employed also shows a long upper tail which increases overall inequality. In this report, a simple exercise was done to determine the relationship between inequality and access to labour market earnings. Inequality is lower amongst households with at least one employed member, but only somewhat (see Table 8). Compared to data presented for the total population earlier in this report, inequality among households with at least one employed member is only marginally lower than for the total population. This could be because having only one employed member is an insufficient threshold, also given the high variation and longer upper tail described in the income distribution. Using household survey data that contains only household income data (as opposed to personal income) limits the analysis that can be done to households where at least one member is employed. If income is spread between many household members, this reduces per capita income, but total income would still be higher than in households without any employment. The same pattern of lowest inequality within the groups of White and Indian/Asian South Africans hold here, with the highest inequality among Black and Coloured South Africans. Table 8: Gini coefficient for employed households, all individuals and all households Sources: GHS and NIDS Table 9: Gini coefficients by population group for households with at least one member employed Source: GHS 5.3 Post-tax income inequality Personal income tax contributions, a large source of tax income that enables government expenditure, are paid primarily by wealthy South Africans because of the progressive nature of the tax regime. As illustrated in Figure 6 below, the top quartile of earners contributed 73% of the total personal income tax collected in 2018. In 2018, there were about 22.2m registered taxpayers. 19.1m tax payments were received (Table 10), although only 5.9m taxpayers were assessed. Figure 6: Personal income tax contributions in 2018 Source: SARS data, 2018 Table 10: Number of registered taxpayers vs. actual number of tax payments received, 2016-2020 Source: SARS data, 2016-2020 Despite a progressive personal income taxation regimed and substantial changes in service delivery in the post-apartheid period as reviewed elsewhere in this report, racial inequality persists in South Africa. The White-to-Black income ratios remain high at 8 overall, and this divide is even greater when considering wealth.[17] A basic picture of the receipt of post-tax income by population share in 2019 is presented in Figure 7. In this figure, the population has been ranked by income from the lowest to the highest income receiving. After accounting for transfers and taxes, White South Africans account for a large proportion (50%) of the top 1%, indicating that they still receive far more income than their population share.[17,18] The slight reduction in racial inequality over the last two decadeshas largely been driven by the top 1% who are Black African.[18] The increase in incomes of Black South Africans falling in the top 1%and other higher-income groups have, however, increased within group inequality among Black South Africans. Figure 7: Racial composition of post-tax income groups, 2019[18] 5.4 Inequality in post-government expenditure (post-transfer) income Post-transfer income refers to income after government transfers (like social security) and expenditure on social services (education and health) have been taken into consideration. Measuring post-transfer incomes allows one to assess the impact of government transfers on primary income (pre-tax and pre government spending income), and whether it is progressive or regressive. Figure 8 below shows the share of total transfers in grants, education and health that have been allocated to various income groups from 1993 to 2019.[18] It depicts the progressive changes made by the South African government: Individualised transfers as a proportion of the national income have consistently increased in favour of the poor. There has been a relatively rapid growth in transfer income among the bottom 50% who received approximately 12% of the national income.[17,18] The middle income group also experienced an increase in transfers from 3.9% in 1993 to 5.3% in 2019.[17] This is compared to the 1% of national income received by the top 10%.[17] Overall, transfers have been made in the form of cash transfers or in-kind transfers.[17] Figure 8: Total individualised transfers received by pre-tax income group[18] 5.5 Inequality in Living Standards It is possible to consider economic inequality in terms of more than just income. One can also view it in terms of what people choose to buy with their earnings – as well as their everyday living standards, as captured by a measure that not only takes income into account, but also assets and access to services. The South Africa Audience Research Foundation’s (SAARF) Living Standards Measure aims to do precisely this (see Info Box 2). In a way, it’s a multidimensional economic measure. The 2014-2019 period saw households from the LSMs 6 and 7 become more reliant on grants and remittances as their main sources of income. Households in the highest LSMs rely largely on income through salaries, business profits and pensions, and the latter two have become more prominent in the past five years. More than 25% of households at LSM 5 and lower rely on grants as their main source of income. Remittances also play an important role for households in the lower LSMs (approximately 15% of these households’ main source of income), particularly in more recent years. Figure 9: Households' main income source by LSM group Source: SAARF 5.6 Nutrition and hunger Hunger is a sign of insufficient income to sustain good nutritional levels. It is closely linked to income, wealth and living standards. However, we treat it separately here, given its importance as an indicator of insufficient means to sustain a basic human need. In the latest General Household Survey (2019), 11% of all South African households reported at least one person going hungry in the past 12 months. 6% of households reported sometimes going hungry, while 2% said they often go hungry. These percentages are much higher for Black South African households, where 12% of households reported at least one person going hungry in the past twelve months, compared to less than 1% of White South African households. Hunger levels in South African households were exacerbated by the COVID-19 pandemic and associated lockdown measures, which prevented many households from obtaining an income and ultimately, necessary levels of nutrition.[14] Figure 10: Reported levels of household hunger (17.2m households) Sources: GHS 2019 5.7 Wealth Inequality is often calculated using income rather than wealth data, given the complications of accessing wealth data. Recent work by Chatterjee et al.[19] however takes a quite novel approach, using alternative data sources such as tax data. In this study, the wealth-to-national-income ratio provides some context regarding wealth inequality. The South African wealth-to-national-income ratio has remained relatively stable between 2.5 and 2.8 following the end of apartheid.[19] However, the average wealth of individuals has fluctuated over time. Before the early 2000s, the real average wealth per adult stagnated at around R240,000 per person. It then rapidly increased by about 30%, before stabilising at R320,000 after the 2008 financial crisis.[19] Wealth is extremely unequally distributed. The top 1% of the population by wealth own 55% of wealth assets, while the bottom 50% have a negative net worth due to their liabilities exceeding their assets. Age appears to correlate strongly with wealth accumulation in South Africa. The average net worth of individuals increases linearly until age 55. Adults aged 50-55 are approximately 50% more wealthy than the national average. Following this, wealth generally plateaus. In each age group, the top 10% holds the majority of wealth (approximately 85%). It indicates that generational wealth plays a role in wealth accumulation over time.[19] A 2018 review showed that in 2018, financial and non-financial assets respectively amounted to two years and one year of national income. Pension assets represented the biggest component of financial assets (73% of national income), closely followed by equities and fund shares (51%), bonds and interest deposits (45%), and life insurance assets (35%).[19] Figure 11 indicates that this trend has remained consistent over time. Housing is the main driver of individual and household non-financial wealth today.[20] In 2020, residential property amounted to R3,061billion (25%) of household wealth according to official data of the South African Reserve Bank. However, this is likely a gross underestimation. Housing may account for up to R5,500 billion in household wealth, if theassumptions on the average values of houses are adjusted using data from the Centre for Affordable Housing (Figure 12). This adjustment would make housing the biggest source of wealth in South Africa. Figure 11: Household wealth (Rand billion) according to data of the South African Reserve Bank (2020) Source: SARB Quarterly Bulletin, June 2021 Figure 12: More accurate estimate of household wealth (2020, Rand Billion) Source: SARB Quarterly Bulletin, June 2021 The number of households living in formal housing increased by 6.3 million between 2001 and 2019 and is estimated to be around 14 million. While 14 million households live in what appear to be formal structures, there are only 6.6 million registered residential properties on the Deeds Office registry. 18% are valued at under R600,000, comprising a fifth of the value of residential property. The undervaluation of property, and in effect, underestimating the owner’s contribution to wealth, is likely to be a particular issue in the R600,000-or-less property category. [21–23] Figure 13: Residential properties on the Deeds Office’s registry – by value Source: City Mark data compiled by the Centre for Affordable Housing Finance in Africa (CAHF) Financial assets are generally tied to formal employment and employment benefits such as pensions accessed through this type of employment. By the first quarter of 2021, only 14.5m of economically active people in South Africa were employed, of which 10.5m were formally employed. Unemployed workers, using the broad definition, constituted 10.4m, of which 3.1m were discouraged work-seekers. This means that out of a total base population of 24.9m economically active South Africans, 10.4m were unemployed, implying about four out of every 10 economically active South Africans were unemployed. COVID-19 and the associated lockdowns resulted in very large employment losses and a large growth in discouraged workers. However, between the first quarter of 2021 and the second quarter of the same year, there was a reduction in discouraged workers, reflecting the recovery of the post-lockdown economy.[24] Only 5.9m of formal sector workers had access to permanent employment which provided them with paid leave and access to some type of pension that would enable the accumulation of assets for retirement. Figure 14: Linkages to the labour market and access to financial assets (wealth) through employment for the economically active Source: QLFS 2021 Q1 6. Education inequalities In this section, we show that access to education has improved over time. It has gone some way to reduce inequality in education, but there is still room for improvement. Despite this, the proportion of individuals who complete matric is low, which has implications for employment. Most concerning however, is that the quality of (public) education remains low. Education does not occur in a vacuum and the broader socio-economic context in which a child is raised matters greatly. Below, we describe key indicators regarding the education system at different levels, before turning to the link between education and employment (income). 6.1 Early Childhood Development Education begins with early childhood development (ECD), which may be split into community-based ECD for children 0-4 years old, and Grade R, aimed at children 5-6 years old. Despite the fact that ECD centres receive subsidies from the government, access to this type of education is affected by parents’ ability to afford ECD programmes.[25] There are significant differences in the rates of access to ECD by race in South Africa. While 47% of young White children were not enrolled in ECD programmes, 63% of Black African young children were not enrolled. The percentage of non-enrolment is highest for Coloured children – at 72%. The cost of early childhood education as a barrier to access is more frequently reported as an issue by Coloured (5%) and Black African (14%) households than White households (3%). Nevertheless, in most cases, it is the choice of the parent or guardian not to send their child to an ECD centre.[21] On the supply side, studies point to the fact that ECD teachers are poorly paid, which affects the quality of personnel in ECD centres. Many centres also lack basic infrastructure. A 2013 ECD audit showed that 20% of national ECD centres lack adequate water, 25% lack adequate electricity, 26% lack adequate toilets, and 57% are overcrowded. Despite this, there have been improvements in ECD over time, with enrolment in Grade R more than doubling between 2003 and 2013 (300,000 to 779,370 students). This has implications for later education, with research showing that attendance of Grade R significantly elevates learning for the remainder of the child’s education. It is however mainly the case in higher quintile schools, with lower quintile schools showing no indication of benefits. Researchers suggest that this is due to differing quality of interventions.[26] 6.2 Basic Education Data from the GHS show high levels of school attendance across all ages, with a sharp drop-off from the age of 15 onwards. South African children are legally allowed to stop school attendance from the age of 15. By the age of 18, more than 70% of children are still attending school (see Figure 15). For those not attending, financial constraints and being too old or too young are most reported as reasons. Figure 15: Educational attendance by age and reasons for non-attendance Source: GHS 2019[21] The above picture of school attendance and completion across different levels has improved over time, as shown in Figure 16 below. This shows that the percentage of individuals aged 20 years and older who have attained at least Grade 12 has also been increasing consistently since 2002, growing from 30% in 2002 to approximately 45% in 2018 (seen by adding up the top elements in each bar). The percentage of individuals without any schooling decreased from 11% in 2002 to 5% in 2018. Figure 16: Percentage distribution of education attainment for individuals 20 years and older, 2002-2018 Source: GHS 201821 Figure 17 below shows the share of adults in South Africa by their highest level of education, broken down by age group. This again shows the positive shift that has occurred over an even longer time frame. 7% of those currently aged 55-64 report having had no schooling. This has dropped but is not eliminated. Of those currently aged 25-34 years, less than 1% report having no schooling. A similar trend shows for those with less than primary schooling. 19% of current 55-64-year-olds report having had less than primary schooling, while 3% of those currently aged 25-34 report the same. Overall, this picture shows that people are increasingly attaining higher levels of education, with significantly more people reaching and completing secondary school. Figure 17: Share of population by highest level of education and age group, 2020 Source: QLFS 2020 (2021)[27] Figure 18 below looks at the same QLFS data, comparing 2010 and 2020 data for adults (25-64 years old), but breaks this down by race. Black African and Coloured groups had the largest proportions of persons who have had some secondary schooling as their highest level of education. Meanwhile, the largest proportions of Indian/Asian and White people had secondary education (completed) as their highest level of education. This picture has improved over time, however to a large extent the inequalities persist. Figure 18: Share of population aged 25-64 by highest level of education and race, 2010 and 2020 Source: QLFS 2010 and 2020[27] Despite the above improvements, many still stop schooling before matric. 44% of the “class of 2017” successfully matriculated in the standard time, meaning that of the cohort of individuals who started Grade 1 in 2006, 44% completed matric in 2017. Various studies indicate similar outcomes, stating that of a cohort of students entering Grade 1, on average 60% of students reach Grade 12 within twelve years of schooling, 50% pass Grade 12, 14% attend university and 6% obtain a degree.[28,29] While the above focuses on education items such as educational attendance and shows some sign of improvement, the quality of education remains the greatest concern. Not all schools provide a similar quality of education and there are still distinctions in this that follow racial lines. The GHS of 2019[21] shows that 69% of White students attend private (independent) schools and the remaining 31% of White students attend public (government) schools. 94% of Black African students attend public (government) schools and the remaining 6% attend private (independent) schools. The quality of teaching is often challenging for teachers in public schools and most educators report that they lack sufficient training and have very large classes, making it difficult to teach. Absenteeism has also been a downfall for both teachers and students as a result of poor access to transport.[28] Despite international Minimum Norms and Standards for educational facilities, public schools still lack basic infrastructure. Approximately 19% of public schools have pit latrines, 77% of schools do not have a library, 72% lack internet access, and 42% do not have sporting facilities.[28] This has hindered educators’ ability to teach.[28] Inequalities are also highlighted by differences in test scores (education outcomes). Provinces such as Limpopo and the Eastern Cape have high rates of illiteracy, with 91% and 85% of children still being illiterate at age 9 years. This is compared to a national average of 75%.[28] Other studies show that the percentage of Grade 9s that perform above the low international benchmark of 400 in TIMSS (Trends in International Mathematics and Science Study) is around 16-19% for public no-fee schools, 58-60% for public fee-paying schools, and 81% for independent (private) schools.[26] Public resources for school education have been reallocated to the extent that the racial and rich-poor gaps in public spending per child have largely been eliminated, although wealthier urban schools still have more highly qualified teachers, and therefore better-remunerated teachers, and fee-paying schools can supplement public resources through their school fees. Resource shifts have not eliminated infrastructural backlogs in education, but in most cases, they have also not fundamentally changed learning outcomes, because of weak conversion of resources to learning outcomes in much of the school system. In contrast to the above concerns, signs of quality improvement and consequent inequality reduction do exist. For example, analysis of matric performance for 2002, 2009 and 2016 show that the number of non-White students attaining a level of mathematics performance that would allow entry into engineering at university increased by 65%. These improvements occurred inter alia through the expansion of good mathematics performance across rural schools.[26] 6.3 Tertiary Education Despite the challenges mentioned above, higher education enrolment and completion has increased in the post-apartheid period, as already shown in some of the figures above. Figure 19 also shows the distribution of young graduates (degrees) by race, indicating improvement in this overall picture to align more closely with population demographics. Figure 19: Demographic shift in young graduate (<35 years) profiles by race and gender between 2008 and 2020 Source: QLFS 2008 Q1-Q4 and 2020 Q1-Q4[27] (data averaged within each year) In 2019, approximately 1.15 million students were enrolled in universities (953,000 public and 197,000 private), 880,000 in TVET colleges (710,000 public and 170,000 private), and 300,000 in community education and training centres.[30] 6.4 How does education link to employment and income? Figure 20 below shows that of the 6.7 million unemployed persons at the end of 2019, 56% had education levels below matric, followed by those with matric at 34.7%. Only 1.9% of the unemployed persons were graduates, while 6.8% had other tertiary qualifications as their highest level of education. This suggests that lower levels of education are associated with higher levels of unemployment. Figure 20: Proportion of the unemployed by education level Source: QLFS Q4, 2019[27] Figure 21 below shows the (narrow) unemployment rate for individuals of different educational profiles (highest level of education). This again shows that the unemployment rate is highest for those with lower levels of education. It also shows a consistent upward trend across education levels, meaning that having lower levels of education is increasingly associated with unemployment. It also highlights a significant increase in unemployment for all education levels, which is a concerning trend. Figure 21: Narrow rate of unemployment by highest level of education Source: QLFS 2008 Q1-2020 Q4[27] The educational profile of the economically active population (those employed or actively searching for employment) still differs significantly by race. Figure 22 below shows that almost 92% of economically active White South Africans have a matric qualification (43% + 23% + 25%, rounded) while approximately 51% of economically active Black African individuals have a matric qualification (34% + 12% + 5%, rounded). Figure 22: Educational profile (highest level of education of the economically active population, by race) Source: QLFS 2021 (Q1)[27] Figure 23 below shows the economically active population, split by highest educational level (x-axis) and race (y-axis), as well as absolute numbers (size of each circle) and percentage within each circle that are employed and unemployed. This shows that most of the economically active population is represented by Black African individuals with some high school or matric, but that for each of these groups, the rate of unemployment is also highest (42% of 39% respectively). Figure 23: Relationship between the highest level of education and the unemployment rate for the economically active, by race (2021) Source: QLFS 2021 (Q1)[27] (data for economically active only, based on expanded definition; data for those who have only completed primary school not shown) Figure 24 below also shows that even within the upper echelons of the labour force, those with a tertiary degree – Black African females, followed by Black African males – still experience the highest levels of unemployment. There may be many reasons for this, including the difference in the quality of education received by individuals, even within similar levels of education. Figure 24: Narrow rate of unemployment for young graduates (2008-2020) Source: QLFS 2008 Q1-2020 Q4[27] (data averaged over each year) 7. Health inequalities It’s important to understand health inequalities because of their direct bearing on people’s individual quality of life (being healthy or not) – and the spill-overs of its (dis)advantages to other domains of inequality.[2] This is more readily appreciated when one considers that in addition to the initial distribution of health entitlements and endowments, the key drivers of health inequality cut across multiple conversion factors: personal conversion factors (for example, age and gender), socio-political conversion factors (for example, stigma and institutions), and environmental conversion factors (for example, pollution and overcrowding)[31]. Collectively, these factors determine the extent to which dis(advantages) of health inequalities spill over into other domains, such as income inequality. Decades of systematic discrimination under apartheid – a key socio-political conversion factor in the South African context – left a legacy of health inequalities. What remains is a two-tiered health system: a private health sector that services those who can afford it, and a public health sector that services the majority who cannot afford private healthcare. Although the post-apartheid government made strides in increasing access to public healthcare,[32] access gaps remain[33] and the quality of the services provided is not on par with the private sector.[34–36] It is therefore unsurprising that poor health outcomes persist in South Africa, especially among the most vulnerable.[37,38] Before describing the more recent state of health inequalities in South Africa, it is important to reflect on the progress made since the end of apartheid. Since 1994, the South African government prioritised healthcare reform on its development agenda.[32] Improvements in the progressive spending of public healthcare were observed between 1995 and 2008.[39] In 1995, spending on public hospitals was pro-rich and only weakly redistributive for public clinics, but by 2008, spending on both public clinics and hospitals was pro-poor. Indicated by data from the 1995 IES/OHS and the 2008 NIDS, the utilisation of public health facilities increased dramatically over this period (1998-2005) for the poorest 20% of South Africans.[39] Additionally, government healthcare spending on the poorest 20% of the population increased from around 20% in 1995 to around 30% in 2008.[39]The government also increased access to healthcare for the poorest and most marginalised groups of society by expanding the healthcare facility network and abolishing user fees at the primary healthcare level.[32] The success of government interventions to redress financial and physical access to healthcare was also reflected in the low incidence of catastrophic costs and reduced travel time between 1993 and 2008.[39] Despite the post-1994 successes with increasing financial and physical access to care, room for improvement remains. Proxies of access to care vary significantly. In 2019, high rates of immunisation (83.5%) and availability of hospital beds (96.3%) demonstrated that there was adequate coverage of these parameters in South Africa.[33] However, the rates of antiretroviral effective coverage (42.5%), diabetes treatment care (37.9%) and health worker density (15.2%) remained low.[33] In addition to accessing a healthcare facility, the South African government set an 80% benchmark for the availability of medication in each facility.[40] In 2019/2020,[41] medication availability ranged from 78.2% to 93.7%, with a national average of 87.7%.[41] Despite an increase from the 2018 average of 84.7%, two provinces experienced medication shortages below the threshold: Limpopo (78.2%) and the Western Cape (79.9%). The North West also came in on the margin at 80.5%.[41] When it comes to decomposing inequalities in healthcare access by a geographical location, access to healthcare facilities shows a geographical bias, as demonstrated in Figure 25 below, which was generated using 2019 GHS data. Even though walking to a healthcare facility is the most common means of transport for most households (approximately half in both rural and urban areas), rural households use taxis to access care at double the rate of urban households (40% vs. 20%). Using taxis has cost implications, which may present barriers to early care-seeking. It is also interesting to note that using a bus to access care performs poorly in both relative and absolute terms: it ranks the lowest in terms of means of transport when compared to other modes, and its reported use is low (0-2%), irrespective of geographical location. These findings may allude to weak and/or unreliable public transport systems and highlight how environmental conversion factors may perpetuate or alleviate health inequalities. Figure 25: Means of transport to health facility by geographic location (total households: 17.2m) Source: GHS 2019 The geographical bias in access to care also emerges when analysing travel times to health facilities. While just over one in two households in urban areas reported travel times to healthcare facilities in less than 15 minutes in 2019, only one in five households could report the same in rural areas (see Figure 25 above). In rural areas, almost 80% of households take from 15 to 89 minutes to travel to a facility, while only about half of urban households reported the same travel time. Even if care is accessed and received, it is important to ensure that quality standards are upheld. The government implemented an Ideal Clinic benchmark for clinics in 2015 and only 9.2% of clinics achieved this status at the time.[41] It improved to 55.4% in 2018, but decreased slightly to 54.9% in 2019, indicating the challenge to ensure the sustainability of quality assurance initiatives. [41] Basic patient-centric conduct may improve the perceived quality of care by patients. These include being greeted by staff and having their condition adequately explained to them.[36] When simulated (mystery) pre-hypertensive patients were used in a study assessing the quality of care at primary healthcare facilities in South Africa, the latter was poorly performed. Among these standardised patients, 39% received no lifestyle counselling, and 25% did not receive a diagnosis or follow-up appointment.[35] Similarly, among standardised TB patients, only 43% were offered an HIV test and 54% did not have any contact tracing.[34] It is inevitable that demand-side proxies for poor healthcare quality, such as bad experiences or negative perceptions of healthcare services, will negatively impact health-seeking behaviours. More evidence of how client experiences at healthcare services feed into health-seeking behaviour is illustrated in Figure 26 below. According to GHS data, in 2019 the main reasons why households reported bypassing their closest healthcare facility was based on their preference for private healthcare, long waiting times and a lack of required medication. Although the reported proportion was almost twice as high in urban areas as in rural areas (46% vs. 23%), the preference for private healthcare ranked as the top reason for bypassing, irrespective of the household’s geographical location. This finding has financial implications for the poor, who need to pay out of pocket for private healthcare – and are prepared to do so, even when ‘free’ public healthcare is available. Figure 26: Reason for not using closest healthcare facility (by geographic location) Source: GHS 2019 Access to care and quality of care are in part dependent on access to private healthcare. At present, few South Africans (17%) are able to afford private healthcare.42 The Government Employee Medical Scheme (GEMS) has attempted to increase access to private medical care. The coverage of this scheme has grown over the years from 690,000 members and 1,807,538 beneficiaries in 201743 to 750,935 and 1,963,758, respectively, in 2020.44 Figure 27: Medical scheme membership by race group Source: GHS 2019 When disaggregating medical scheme beneficiaries by race (see Figure 27 above), the 2019 GHS survey shows that most of the White population (73%) belong to a medical scheme, followed by 47% of the Indian/Asian population. This skewed medical scheme membership by race is mainly driven by income disparities that remain closely linked to race. Most of the previously disadvantaged race groups simply cannot afford to belong to a medical scheme and rely heavily on the public health sector to meet their healthcare needs. What is evident from the literature presented above is that health inequalities in South Africa remain divided along socio-economic and racial lines. A recent study found that between 2001 and 2016, income- and race-related inequalities for life expectancy and health-adjusted life expectancy favoured those who were relatively better-off and non-Black race groups in South Africa.[45] Race-related inequalities in health-adjusted life expectancy in 2016 were smaller than in 2001. In contrast, income-related inequalities for the same health outcome showed the opposite trend: it was greater in 2001 than in 2016. These trends are suggestive of policy changes that led to the effective rollout of antiretroviral therapy. This shift reduced the health-adjusted life expectancy gap with non-Black South Africans, but simultaneously exacerbated income-related inequalities. Evidence linking income inequality, lifestyle choices and health outcomes in the South African context suggest that poverty-stricken households and communities may exist in environments that are unhealthy or perpetuate an unhealthy lifestyle. A 2017 study by Mukong et al.[46] found that smoking and alcohol use were positively associated with income-related inequality in health in South Africa. More specifically, alcohol consumption accounted for 27.83% of all measured inequality in health (compared to 7.35% for smoking). Differences in the chronicity of poverty also play a role in determining health outcomes in South Africa, with chronically poor children experiencing worse outcomes than those who go in and out of poverty.[47] Important correlates of these socio-economic child health inequalities include access to the labour market, maternal education, water and sanitation, and social norms (including the prevalence of female-headed households and the decision-making power of women in the household).[47] This highlights how inequalities in other domains can exacerbate inequalities in health, and vice versa. As expected, the ongoing COVID-19 pandemic further demonstrates how socio-economic inequalities feed into health inequalities. A recent study by Shifa et al.[48] found that pre-existing socio-economic inequalities in South Africa were linked to inequalities in vulnerability to COVID-19 infection. More specifically, poor households were more vulnerable to infection, partly due to their living conditions. The study also goes on to show that irrespective of where poor households are located, these households are less likely to be able to protect themselves from contracting the virus.[49] The evidence presented above shows that pre-existing inequalities in South Africa, of which there are many, perpetuate health inequalities. 8. Inequalities in living conditions 8.1 Housing Like other resources, a clear socio-economic divide exists for housing. Wealthier individuals largely reside in affluent suburban areas with adequate utilities and services, while poorer people often inhabit townships. People living in townships who have an income have attempted to improve their homes by accessing loans. This is however a luxury that few can afford. Over the years, frustrations have often resulted in protests for basic housing and utilities. Figure 28 below shows the number of households living in different types of housing and how this has changed from 2001 to 2019. Formal dwellings have increased, and 82% of households currently reside in what might be considered as a decent house (basic brick/concrete block structure), up from 69% in 2001. Many however still reside in informal shacks or traditional dwellings. While 14 million households live in what appear to be formal structures, there are only 6.6 million registered residential properties on the Deeds Registry.[50] Figure 28: Number of households living in different types of housing, 2001-2019 Sources: Census 2001, CS 2007, Census 2011, CS 2016, GHS 2019[21–23] Government grants for housing have played a large role, with the percentage of households that report receiving a government housing subsidy increasing from 6% in 2002 to 19% in 2019. Over 10% of households in these state-subsidised houses however report that the roof or walls were weak.[21] More detailed 2015 data show that the proportion of inadequate dwellings decreases as household income increases. This is shown in Figure 29 below, with “inadequate” being defined as informal or traditional houses, dwellings with no flush toilets, and households that have more than two people per room. This suggests that despite formal housing increasing over time, many still have housing that is lacking in many ways. Figure 29: Number of households living in different types of housing, 2014/2015 Source: LCS 2014/2015 8.2 Electricity, water and sanitation Beyond housing, South Africans require adequate utility services to function and yet an urban versus rural and socio-economic divide still exists here. Access (connection) to electricity from the mains (the national power grid) was reported to increase from 77% of households in 2002 to 85% of households in 2019, albeit with major interruptions in supply. In terms of water, data show that 88% of households had access to piped or tap water in their dwellings (off-site or on-site) in 2019, slightly up from 84% in 2002. Many provinces however still lag significantly behind in this. For example, this statistic remains at 74% for the Eastern Cape. Reporting of water interruptions to supply of more than two days at a time, or more than 15 days over the year, varied by province, however more than a quarter of national households reported interruptions by this definition. Despite an overall improvement over the last two decades in access to water and electricity, the percentage of households with access has stagnated, and even slightly declined, over the last decade, because connections have not kept up with household growth. Access to adequate sanitation (toilets) has improved over time. 13% of households used bucket toilets or had no toilet in 2002, with this declining to 2% in 2019. Data also show that in 2002 62% of households had a flush toilet connected to a public sewerage system or a septic tank, or a pit toilet with a ventilation pipe. The percentage increased to 82% in 2019. This improved trend is however most common among urbanised provinces and areas.[21] Free basic services, including those mentioned above, are provided by the government to poor households, albeit that infrastructure or basic access constraints remain once affordability concerns are removed. 8.3 Digital connectivity Over time, access to phones and means of mobile and internet connectivity has increasing implications for inequality as it can help individuals to access many forms of information – including information about education, work searches and general participation in the economy. For this, a device and connectivity are needed – and for the latter, it often requires both mobile connectivity and data connectivity. Device (phone) access is currently high in South Africa, with only about 4% of households not having access to a mobile phone (or landline, although this form of access is minimal – 88% of households have only a mobile phone, no landline). Despite this, in 2019, only 9% of households reported having access to the internet at home. Another 63% reported having at least one family member who had access to the internet somewhere (at home, work, public hotspots, etc.).21 These figures are lowest for provinces like Limpopo (only 1.6% of households have access to the internet at home, and 43% via other locations) and the Eastern Cape (3.2% have access at home and 53% via other locations). This access is by any means, including mobile data on a mobile phone, with both affordability and coverage possibly being reasons why there is no access (this is not in the survey). While varying data sources will show slightly different figures, a gap of well over a quarter of national households that don’t have access to the internet is commonly reported. The above trends show inequality in living conditions and access to basic services. Living conditions impact other drivers of inequality – poor sanitation and limited access to water will impact health inequalities. Lack of access to power may impact many items, from having lighting for safety to being able to refrigerate basic foods. Digital connectivity may increasingly play a role in one’s ability to participate in the economy, and hence a socio-economic divide may also increasingly be seen here. And having decent housing may impact everything from one’s health, children’s ability to do homework, and one’s sense of identity – all of which may in turn impact economic development.[52] 9. Social and cultural inequalities Social and cultural inequalities in South Africa are difficult to measure (and subsequently under-researched) but remain important when considering the socio-political conversion factors that drive overall inequality. Marked differences in society along social and cultural lines – highlighted and entrenched during apartheid – continue to persist in post-1994 South Africa. Although inequality has been viewed through many lenses throughout this report, including gender and race, we add the note below with insightful data that elaborates on social and cultural identities. The social divide is evident in less than a third of South Africans who report that they often engage with people of a different racial group.[53] The Duclos-Esteban-Ray index measures the degree to which citizens feel alienated, and South Africa has had a consistently high result.[54] Poverty is also linked to social standing in many ways. Being female is linked to increased poverty, with 51.2% of female-headed households experiencing poverty compared to 31.4% of male-headed households.[53] Employment gender disparities still prevail in the labour market, resulting in higher rates of unemployment among women. Additionally, children, people with disabilities and Black South Africans face the greatest burden of poverty.[53] South Africa’s rich diversity can bring about tolerance if social cohesion is strong. Social cohesion, measured by the Social Cohesion Index, has improved over time. However, this change has been quite small.[53] Social cohesion has a strong link with access to basic services such as the provision of water, electricity and housing, indicating a link between equality in these parameters and social cohesion.[53] Social cohesion generally only improves when perceived improvements in these services are observed. The majority (70%) of South Africans feel as though inequality has not improved, or has in fact become worse over time.[53] This may have contributed to the very slow improvement in social cohesion over time. 10. Physical security and legal inequalities Physical security and legal issues are other prime examples of socio-political conversion factors – which are the key drivers of inequality. Experiencing safety – both in physical and legal terms – are necessary conditions to achieve well-being. For this reason, it is important to understand how different parts of South African society have been impacted by changes in physical security and legal conditions over the period under review. What emerges in the narrative below is that access to physical and legal security, and the impacts thereof, vary significantly by gender, age, and geographical location. Inadequate state provision of safety and security in post-apartheid South Africa has affected all its citizens adversely. The response to this state inefficiency tends to vary by geographical area, and therefore by socio-economic status (geographical areas are closely tied to socio-economic status and race due to spatial segregation of races during apartheid). In middle-class and affluent suburbs, the safety and security deficit has led to a demand for private home security services which continues to flourish.[55] At the other end of the socio-economic spectrum, Black African and Coloured townships afflicted with long-standing issues of gangsterism, violence and crime have formed street committees in the absence of dependable policing. These committees use a range of strategies – from peace-making to harsher forms of ‘street justice’ – to maintain a semblance of order.[56] However, the success of these localised responses to issues of safety and security varies, and physical security inequalities therefore persist along geospatial lines. Gender-based violence (GBV) has become a growing concern in South Africa. The economic vulnerability of women has been perpetuated by this incredibly high burden of violence. Among adult women in South Africa, 21% have reported experiencing physical abuse in their lifetime.[57] This is most often committed by an acquaintance or partner.[57] According to the first quarter 2021/2022 Crime Statistics for South Africa, sexual violence cases increased by 5% when compared to the 2019/2020 financial year (to adjust for skewed reporting in 2020/2021), with a 2% increase in rape cases over the same period.[58] The occurrence of GBV is linked to social and economic circumstances. Uneducated, unemployed, divorced and impoverished women are more likely to experience GBV.[57] This entrenches a cycle of poverty among these vulnerable women who may lose earnings while recovering from the mental, emotional and physical trauma of GBV.[59] In the President of South Africa’s State of the Nation address on the 17th of June 2020, he reported that violent crimes had increasedsince the COVID-19 Alert Level 3 took effect on 1 June 2020, especially cases of abuse of women and children. The most recent release of statistics for mortality and causes of death in South Africa (for 2018)[60] showed that assault was the second most common non-natural cause of death in the Eastern Cape (22.7%) and Western Cape (20%), the highest proportions compared to other provinces. When decomposing assault as a cause of non-natural deaths by age and gender, it remained the most prevalent cause among males aged 15–29 and accounted for 23.6% of deaths in this group. The data highlights how socio-political conversion factors like safety (or a lack thereof) intersects with health and economic domains and may further entrench inequalities in those groups of the population. During apartheid, the law was used as a tool to create and enforce various racial and gender inequalities. It is therefore unsurprising that in the post-apartheid period, South Africa has undergone an extensive revision of the law – guided by human rights – to redress these past inequalities.[61] The lag in developing gendered policies and substantive rights has perpetuated the economic inequalities that keep poor, Black African women on the bottom rung of the socio-economic ladder.[61] The post-1994 story of legal access is like many of the other domains covered in this report: there is progress in terms of capabilities, but it falls short of being realised (turning into a capability). Despite the development of the legislative framework of Legal Aid SA (LASA) and the right to legal assistance, many South Africans feel as though they are unable to access these services.[62] Citizens have noted that their demand for legal services is unmet and resources remain limited, especially for the poor or middle class.[62] For those who manage to access courts and legal services, administrative burdens delay processes and affect access negatively.[62] 11. Political inequalities Political inequality is defined generally as the unequal influence different groups or individuals have over the political decisions that concern them.[63] It also incorporates the inequality of outcomes of these decisions. Put differently, political equality occurs when each individual’s preferences are taken into account when political decisions are made.[63] This is necessary to ensure the democratic nature of the state. At the outset, it is worth mentioning that 1994 represented a massive change in political equality. This must be acknowledged when considering whether there has been an improvement or worsening in inequality since. One way a democratic country attempts to achieve political equality is by utilising a voting system. In this system, everyone can make their voice heard regarding which political leaders they believe represent their values most accurately. Issues of coercion may be experienced in varying degrees, and therefore appropriate measures should be taken to ensure freedom of choice and opinion when voting. In addition, the more layers of authority that are present in a democratic system, the greater the potential political inequality in a country.[63] This is due to the loss of direct feedback and input made by individuals that occurs when there are many hierarchical layers in a democratic system. In a democratic country, caution needs to be exercised to ensure that everyone’s voice can be heard. Several factors contribute to population perceptions of political freedom. These range from the basic freedom to vote, to the freedom to discuss political matters and be heard.[64] The data of the Afrobarometer survey, collected over several years, provides insights into these factors. The majority of participants indicated a high level of freedom regarding their perception of freedom (45.8% felt completely free) and their right to vote without feeling pressured (67.7% felt completely free).[65] However, many individuals felt as though they could not discuss their political views freely.[65] Over time, citizens have perceived their right to vote without feeling pressured as getting better. However, following 2016, responses indicating a perceived improvement decreased again (Table 11), where the survey question is, “In this country, how free are you: To choose who to vote for without feeling pressured?" Table 11: Afrobarometer responses to survey question on perceptions of freedom to vote without pressure Sources: Afrobarometer 2002, 2006, 2015, and 2021 12. Environmental inequalities In terms of a multidimensional framework of inequality, such as the one applied in this report, environmental factors are considered a ‘conversion factor’.2 This is a factor that is viewed as a key driver of multidimensional inequality. They influence the speed at which individual resources become capabilities (real opportunities) and functionings (outcomes)2. In this section, we consider both pollution and transport as two such conversion factors. When these conversion factors have less inequality associated with them, they enable better lives for individuals. 12.1 Pollution inequalities The effects of population growth have become a global concern due to current levels of global warming. Of particular concern in South Africa is air pollution due to the use of coal power plants. South Africa has some of the world’s highest levels of sulphur dioxide and nitrogen dioxide, both very dangerous pollutants.[70,71] Coal power plants are typically surrounded by relatively economically underprivileged areas (such as Middelburg in South Africa), where residents face enormous health problems that remain for generations as a result.[70,72] This has led to approximately 20,000 premature deaths annually.[70,73] The estimated annual value of the health impact and loss of productivity is $2.4 billion.[72] However, in this report, we are less concerned with the absolute levels of pollution and more about the relative effects of pollution on South Africans from different income groups. The legacy of apartheid still plays out today as impoverished South Africans, mostly Black, are still most likely to reside in areas close to mines, refuse sites, sewage sites, main transport roads and other forms of pollution.[74] There is a limited amount of quality data and literature about the inequalities in pollution exposure at the end of the apartheid era. It is therefore difficult to determine changes in inequalities in pollution exposure. However, it is evident from a range of often science-based literature that strong inequalities in different types of pollution exposure exist later in the post-apartheid period. Given limited data, it is unclear whether these have increased or decreased. However, it is known from international literature that controlling for pollution exposure when calculating income inequality tends to worsen income inequality measures.[75] In the United States, attaching a monetary value to air pollution creates effects similar to those of a regressive tax, so the poor lose income due to greater exposure to air pollution, while the rich gain income due to less exposure to air pollution.[75] Despite a significant expansion of the electricity networks, many South African households still use non-electricity sources of energy for heating and cooking. More than 70% use kerosene, coal and firewood for heating, lighting or cooking.[76] Continuous exposure to these fuel sources and their emissions are known to be associated with various forms of poor respiratory health,[76] generating further inequalities in another dimension for these households. However, as seen in Table 12 below, there has been a marked increase in the use of electricity from the mains as a cooking source for Black South Africans. From 2003 to 2019, the percentage use of this cooking source increased from 48.4% to 73.0%. A probable cause for this is the vast expansion of the electricity networks over the years to reach a greater population. There was also an increase in the usage of gas as a cooking source, for all population groups. Wood, paraffin, and coal saw a general decline in usage over this time. This implies a reduction in pollution from households that stopped using these cooking sources. Table 12: Different fuel sources used for cooking, by population group, 2003 & 2019 Source: GHS, 2003 & 2019 12.2 Transport inequalities Transport inequalities can best be understood by looking at differences in ownership of private transport as well as considering different absolute and relative amounts of money spent on transport and time spent on accessing public transport. Public transport is essential for ensuring that citizens who don’t own modes of private transport have access to employment and recreational activities.[77,78] South Africa has four modes of public transport: the railway system, the Gautrain and the bus system[79], with most citizens making use of minibus taxis as the fourth transport mode.[78] Despite the availability of various modes of public transport, safety, reliability and affordability still remain an issue.[80,81] In rural areas, access to transport is limited, while in urban areas, congestion is a challenge.[80] In order to tackle the problem of segregation between the areas where people live and work based on their socio-economic status, adequate transportation is required.[81] Using data from the GHS of 2010 and 2019, a comparison can be drawn on the differences in access and utilisation of transport methods over time. Specifically, the use of different transport methods to healthcare facilities indicates inequalities between South Africans of different race groups in access to various modes of transport. Table 13 below shows the changes in percentage utilisation of transport methods to healthcare facilities by different population groups. While 94% of White South Africans used their own transport (vehicle) to travel to access healthcare in 2019, only 12% of Black South Africans were doing so in the same year. However, there has been an increase in the use of own transport by Black South Africans from 7.7% in 2010 to 12% in 2019. Minimal use of trains to healthcare facilities is observed for all population groups and throughout the period in question. This, as well as the large percentage of people who walk to healthcare facilities, may point to the increase in the number of facilities in outlying areas, as long-distance travel methods such as trains and buses are seldom used. Additionally, this number may indicate that the trains in South Africa may be sub-standard in terms of efficiency, safety and proximity to services that matter to people. Table 13: Population groups' modes of transport to healthcare facilities Source: GHS 13. Linking the many dimensions of inequality: Conclusion As previously discussed in this report, the dimensions of inequality covered in this report have clear inter-linkages. Some of the dimensions are related to fundamental capabilities (like equal access to health, education, and economic participation) and how it transforms into functionings (like health and education outcomes, and income and wealth), while other dimensions are considered conversion factors (personal, socio-political, or environmental) which influence (positively or negatively) both capabilities and functionings. The very strong convergence of inequalities in all these dimensions does not bode well for South Africa and manifests as pervasive and deeply entrenched inequality. The evidence presented in this report makes it clear that inequality in capabilities and functionings – mediated by inequalities in conversion factors – remains persistently high. Despite this, there are a few stories of progress that deserve to be highlighted. Some of South Africa’s successes over the past 27 years include having the largest welfare grant programme in Africa, and incrementally expanding its housing programme, water and sanitation infrastructure, and access to schooling and public healthcare, especially for the poorest and most vulnerable. Unfortunately, the gains made are not enough to improve the overall well-being of the majority of South Africans in a meaningful way. Grants alone are not sufficient to support recipients and their family members, with the current value of the child support grant (R460 per child per month)[82] being far below the value of the recently adjusted food poverty line value (R624).[83] Policy talks about the expansion of the grant programme continue recognising that healthy unemployed men who do not reside in a household with children currently are not receiving any form of grant support. We cited evidence from in-depth research by Stats SA that two-thirds of overall inequality is related to the labour market, of which half is due to unemployment.[6] The other driver of inequality in the labour market remains the relative scarcity of advanced and specific types of skills. Unless the problem of the labour market and, adjacent to the labour market, the functioning of the education sector is addressed, inequality is likely to remain deeply ingrained in South African society. These should be the two biggest areas of policy concern for all South Africans. Even though public housing programmes are stalling, urbanisation continues at a rapid pace which cities are unable to keep up with. Those who have received housing from the government or who have invested in their own housing are often not able to unlock the full value of it from a wealth leveraging perspective, due to housing being under-valued and not always being registered with the Deeds Office. Issues of quality also need to be considered. While access to water and sanitation may have expanded, the quality of water and sanitation are substandard, and may possibly be deteriorating due to population pressures. Education and healthcare are two other important dimensions where the quality of services remain suboptimal as demonstrated in this report, despite very meaningful improvements in access, resulting in inferior education and health outcomes for those who access these services from the public sector. While there are many areas for improvement within healthcare, the provision of adequate contraceptive care for women may also assist in aligning pregnancies with women’s preferences. Access to effective contraceptives can therefore assist in greater equality for women and their children. Reduced gender-based violence and inequality is critical. The relationship between inequality and fertility is complex and likely bidirectional. However, there is an association that manifests in different ways, including early births for women which interrupts education achievement and delays access to the labour market, as well as the structure of households. What then has been achieved in the last 27 post-apartheid years? There has been a noticeable improvement in living standards and access to services for South Africans previously excluded from critical public services such as education, water and sanitation, health and housing. However, this has occurred without a concomitant increase in income. Improving well-being in South Africa will not happen spontaneously and it will not be an event. Instead, it will require all stakeholders – government, the private sector and civil society – to make a joint, concerted and patient effort to assist with the iterative process of working towards a more equitable society that enables all to optimise their capabilities and functioning. The evidence presented above shows that the government has indeed used the fiscal tools at its disposal to reduce poverty and inequality in some welfare dimensions, particularly related to access to services over the last 27 years, but massive room for necessary improvement remains, a chasm which must be breached if we are to flourish as a cohesive society. Meaningful changes in development require the contribution of the greater society, which in addition to the government, includes the market and civil society. Even though policymaking is the responsibility of the government, the market plays an important role in the allocation of scarce resources and the creation of employment that generates income. Civil society, which covers a broad sector, could focus on filling the gaps left by the government and giving a voice to vulnerable subgroups of the population. References 1. Fields, Gary S. The meaning and measurement of income inequality. 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Accessed November 16, 2021. http://www.statssa.gov.za/publications/P03101/P031012021.pdf - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - This report has been published by the Inclusive Society Institute The Inclusive Society Institute (ISI) is an autonomous and independent institution that functions independently from any other entity. It is founded for the purpose of supporting and further deepening multi-party democracy. The ISI’s work is motivated by its desire to achieve non-racialism, non-sexism, social justice and cohesion, economic development and equality in South Africa, through a value system that embodies the social and national democratic principles associated with a developmental state. It recognises that a well-functioning democracy requires well-functioning political formations that are suitably equipped and capacitated. It further acknowledges that South Africa is inextricably linked to the ever transforming and interdependent global world, which necessitates international and multilateral cooperation. As such, the ISI also seeks to achieve its ideals at a global level through cooperation with like-minded parties and organs of civil society who share its basic values. In South Africa, ISI’s ideological positioning is aligned with that of the current ruling party and others in broader society with similar ideals. Email: info@inclusivesociety.org.za Phone: +27 (0) 21 201 1589 Web: www.inclusivesociety.org.za

Copyright © 2022 Inclusive Society Institute PO Box 12609 Mill Street Cape Town, 8000 South Africa 235-515 NPO All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without the permission in writing from the Inclusive Society Institute D I S C L A I M E R Views expressed in this report do not necessarily represent the views of the Inclusive Society Institute or its Board or Council members. Author: Daryl Swanepoel AUGUST 2022 Content Introduction Literature review South African economy: Pre-pandemic (2008-2019) 2020 Pandemic damage 2020 Aftermath Current snapshot Structural reforms and proposals Mining SMME Manufacturing Construction Tourism Agriculture ICT Growth potential Conclusion References Introduction South Africa has the building blocks within its borders to support a prosperous and high-growth economy, yet the economy has been limping along since the 2008 financial crash (WB, 2020). The Covid-19 pandemic pummeled the last bit of strength the economy had left right out of it (Dell, 2022). Despite government interventions and special programmes, unemployment and poverty have spiraled to record levels in recent years (Stoddard, 2022). For an economy to grow, business needs to expand, while putting more spending money in South African wallets. With this in mind, economists and industry experts have long called for government to stop with knee-jerk interventions and implement structural reforms to support sustainable growth instead (Mahlaka, 2021). These reforms would focus on, among others, policy and regulatory adjustments to support economic drivers by removing any operational obstacles in their way. South Africa has many sectors that could be identified as economic drivers: mining, tourism, agriculture, automated manufacturing, and the renewable energy sector, for example. Streamlining business operations while creating a supportive environment could see these sectors flourish, which will translate into much-needed economic growth. South Africa finds itself in an increasingly desperate situation. Government should, therefore, determine which structural reforms could be implemented the quickest while also having the biggest impact. Choosing the correct measures to implement this is equally important, as the country can ill afford to waste the limited resources it has left. It’s time to tap into the potential South Africa holds. Failing to do so and address the structural weaknesses will see the economy continue to limp until it collapses, taking millions of already struggling South Africans down with it. Literature Review South African economy: Pre-pandemic (2008-2019) In 2008, the US economy sneezed and the globe caught the cold. The American mortgage crisis wiped $2 trillion off of global economic growth (Merle, 2018). The calamity is now aptly referred to as the Great Recession. Most economies have since recovered from the crisis. More than a decade later, South Africa has, however, not been able to return to its pre-crisis levels. Apart from a short-lived boost thanks to the 2010 Soccer World Cup, the country continued to record lacklustre growth, increasing unemployment figures and spiralling debt levels since 2008 (WB, 2020), leaving South Africans ever poorer. And in 2019 the country was plunged into yet another recession, the third since 1994 (Sibeko, 2021). SA real GDP growth (annual %) Source: World Bank (WB, 2020a) SA unemployment (% of total labour force) Source: World Bank (WB,2020b) SA government debt to GDP Source: Trading Economics (TE, 2020) Real GDP per capita growth (annual %) Source: World Bank (WB, 2020c) A dip in commodity prices along with lower demand, especially from China, are among the external factors that hampered South Africa’s recovery (Faure, 2017). However, it has become clear that the main contributing factors to the country’s dismal economic performance is government performance. The deterioration of the South African economy coincided with Jacob Zuma’s term as president. His administration is characterised by deep-rooted corruption, as revealed by the Commission of Enquiry into State Capture. It’s this very corruption that eventually led to Zuma being removed from office in 2018 (Maseko, 2022). The steps taken by the Zuma administration that are widely believed to have had a negative impact on the South African economy include: A 2014 decision that led to South Africa having three finance ministers within a week (Motsoeneng et al, 2015) Stricter visa regulations (ENCA, 2014) Higher BEE requirements for the mining sector (Reu, 2020). Corruption further crippled state institutions, leaving them incapable of fulfilling their mandates (Soko, 2017). It also left various state-owned entities at the mercy of continued government bailouts at the expense of other spending priorities (Parliament, 2022). Business and investor confidence nose-dived as evidence of the widespread corruption and the state’s inefficiencies surfaced (Reu, 2016). As the country continued down this slippery slope, it finally lost its positive credit rating and was awarded junk status by the credit ratings agencies (Naidoo, 2020a). The country was no longer able to attract the necessary foreign or local investment to support economic growth. To this end, it was left with little choice other than to plunge the country into more debt just to support its spending programmes (Muller, 2019). South Africa’s infrastructure also bore the brunt of the Zuma administration. It has become clear that the upkeep of the country’s infrastructure was neglected either due to a lack of expertise or to corrupt activities (Mathews, 2021). Eskom is a sterling example of this. Since 2008, the country’s energy giant has been forced to implement rolling blackouts in a staggered manner. This was largely due to an ageing coal-fired power fleet and delayed (and poor) construction of new plants. Some experts believe Eskom’s inability to supply sufficient electricity is the biggest factor weighing the South African economy down. According to a report by the CSIR, blackouts between 2007 and 2019 have cost the South African economy between R154 billion and R326 billion (CSIR, 2020). 2020 Pandemic damage In 2020, South Africa entered an unprecedented event alongside the rest of the world. As the unknown strain of the coronavirus became prevalent, countries rushed to restrict the movement of people in an attempt to stop the spread. These lockdowns had a severe global economic impact and for a country like South Africa, who experienced a technical recession the previous year, it was devastating (UN, 2020). The pandemic wiped out between 1,5 million and 3 million jobs, while plunging the economy into its deepest recession in a century (Casale et al, 2020) (WB, 2021) (Naidoo, 2020b). The slowdown also had a knock-on effect on the government’s revenue, as SARS collected 12 per cent less (at R1,25 trillion) in tax revenue for the 2020/21 financial year. The damage suffered would’ve been much larger if it wasn’t for an upswing in commodity prices, which boosted mining profits at the time. 2020 Aftermath In an attempt to turn the country’s economic misfortunes around, President Cyril Ramaphosa launched a Reconstruction and Recovery Plan in October 2020 (Pres, 2020). The plan aims to use various levers to stimulate average economic growth of 3 per cent over the next 10 years, while creating 800 000 jobs over the medium term and unlocking R1 trillion in infrastructure investments. The last progress report on the plan was released in December 2020. A more recent update on the Employment Stimulus Package, which forms part of the overall plan, is available. According to a January 2022 progress report, just over 673 000 jobs have been created since the launch (Pres, 2022). The plan is in its second phase, with a cumulative target of creating 1,2 million job opportunities. This refers to the number of full- or part-time employment that could possibly flow from these developments. Although a positive step, these opportunities pale in comparison to South Africa’s unemployment figures, which were at crisis level even before the pandemic struck. Covid-19 and the subsequent lockdowns alone claimed at least 1,5 million jobs (Casale et al, 2020). Together with National Treasury, the Presidency also launched Operation Vulindlela in 2020 to ‘accelerate the implementation of structural reforms and support economic recovery’ (Pres, 2022b). Various ministers, departments and entities are working together to resolve economic hurdles. A dedicated Vulindlela Unit in the Presidency monitors the progress of the operation. It has set out the following 19 goals: Increase role of independent power producers # Restructure Eskom into generation, transmission and distribution entities # Improve energy availability factor on Eskom plants Address institutional inefficiencies in municipal electricity distribution management Increase available digital spectrum # Migrate from analogue to digital TV Finalise policy and policy direction on rapid deployment of electronic communications networks and facilities Improve water-use licensing processes # Strengthen regulation of water pricing and service standards # Finalise and implement the revised raw water pricing strategy Establish a national water resources infrastructure agency Address institutional inefficiencies in municipal water and sanitation services Corporatise the Transnet National Ports Authority # Improve competitiveness and efficiency of ports Establish a Transport Economic Regulator through the Economic Regulation of Transport Bill Implement third-party access policy and concession branch freight rail lines # Finalise and implement White Paper on National Rail Policy # Improve the regulatory framework for skilled immigration Implement e-Visa and visa waivers # * # indicates completion of target Some of the targets reached is merely the conclusion of policies, plans and other documentation. The effective implementation thereof remains to be seen. Current snapshot The South African economy continues its struggle to gain traction, as it no longer faces solely domestic hurdles. Inflationary pressures have accelerated globally due to increased consumer spending following the pandemic along with Russia’s invasion of Ukraine (WEF, 2022). In May, the country recorded a CPI of 6,5 per cent, breaching the SARB’s target band (Stats SA, 2022b). As central banks across the world move to stave off inflation by hiking lending rates, the SARB is left with little choice but to follow suit to protect against capital outflows (Naidoo, 2022). The repo rate currently stands at 4,75 per cent, with further hikes to be expected. In Q1:2022, the country recorded an official unemployment rate of 34,5 per cent (Stats SA, 2022a). When taking discouraged job seekers into consideration, 46,2 per cent, or 11,7 million, South Africans are without a job. The economy has since recovered to pre-pandemic levels, with 1,9 per cent growth recorded in Q1:2022 – although some believe this might be as good as it’s going to get for the country this year (Stats SA, 2022c) (Stoddard, 2022). The return to pre-pandemic GDP figures is, however, little cause for celebration, as the country was already fighting for economic survival before the pandemic struck (with a technical recession recorded in 2019). Devastating floods in KwaZulu-Natal, increasing food and petrol prices, international and national geo-political uncertainty, and rolling blackouts will continue to curtail future recovery efforts. However, there are some structural changes that could have a significant positive impact on the economy if implemented speedily. Source: Stats SA (Stats SA, 2022d) Structural reforms and proposals The state of the South African economy is the result of economic and political mismanagement amid global turmoil. The evidence of economic failure is visible in the rising poverty and unemployment levels. Current GDP levels are nowhere near the required levels to change this trajectory. The potential for growth, however, is locked up by a series of structural constraints. To determine what these hurdles might entail, the ISI embarked on roundtable discussions with industry leaders from various sectors in 2021. The conversations revealed daily challenges to operations, struggles with governmental inefficiencies, and unworkable policy and regulatory environments. Not all of these constraints are necessarily deep-rooted issues and some can be resolved speedily. And should the South African government wish to regain any economic traction, it should tackle these constraints with haste. The ISI recently asked some of the industry leaders who attended the initial discussions which constraint they viewed as the most prominent in their respective sector. In addition, they were requested to give their best considered estimate of how much more their sector would be able to contribute to the country’s national GDP should the specific constraint be removed. For this paper the focus is on the following sectors: Mining SMME Manufacturing Construction Tourism Agriculture ICT The size of the South African economy in: 2020: R5,52 trillion (Stats SA, 2020b) 2021: R6,21 trillion (Stats SA, 2022e) Mining Contribution to National GDP (2021): 8% 8% applied to 2021 National GDP: R496,8 billion Employment: 459 954 (Stats SA, 2022d) (MCSA, 2022) Impediment: Inefficient railway and port systems to support exports (Eskom & Transnet) Contribution in absence of constraint: A further 4% of the sector’s contribution to National GDP p.a. The mining sector is a cornerstone of the South African economy. Due to the large endowment of resources (chrome, platinum, gold, manganese), there is much room for the industry to play a pivotal role in the country’s economic recovery (Wits, 2020). However, the industry is hampered by stringent BEE and labour legislation, policy uncertainty and intermittent energy supply (ISI, 2021a). Comment from industry leader: Transnet and Eskom are currently the two single-biggest threats to the mining sector. Both are functioning far below their available capacity, forcing mining companies to seek alternatives, which often translates to more expensive options being used (like transporting minerals by road). If export capacity is constrained, there is no incentive for mining companies to expand operations. Information shared with the ISI shows that close to zero capital formation is being spent on new mining infrastructure. The funds are mainly being spent on maintenance of existing infrastructure. This is deeply concerning for an industry that has the potential for expansion and could bring about much-needed jobs. SMME Contribution to National GDP (2020): 20%-42% (this study assumes a middle-of-the-road scenario) 30% applied to 2021 National GDP: R1,863 trillion Employment: 7,3 million (OECD, 2020) Impediment: Over-regulation, specifically stringent BEE requirements Contribution in absence of constraint: A further 7% of the sector’s contribution to National GDP p.a. Contribution if sufficient electricity supplied: A further 1,5% of the sector’s contribution to National GDP p.a. South Africa’s National Development Plan envisages an SMME sector that contributes 60-80 per cent to the country’s GDP, while employing 90 per cent of the newly created 11 million jobs by 2030. In spite of promising progress (at least before Covid-19 struck), SMME growth faces many challenges. These include numerous bureaucratic requirements, and insufficient electricity supply (ISI, 2021b). Comment from industry leader: Over-regulation together with domineering labour unions are constraining SMME growth in South Africa. According to the industry leader the ISI spoke to, BEE requirements, specifically, are hampering operations for SMMEs. For one, the accompanying administrative process is a cost that most SMMEs can ill-afford, while the system creates unnecessary obstacles for ease of doing business. Should these be removed, an estimated 20-30 million jobs could possibly be created over the next 10 years. Manufacturing Contribution to National GDP (2021): 13% 13% applied to 2021 National GDP: R807,3 billion Employment: 1,4 million (Stats SA, 2022d; Stats SA, 2022a) Impediment: Trust deficit between manufacturers and the state Contribution in absence of constraint: A further 4% of the sector’s contribution to National GDP p.a. Manufacturing has never recovered to the levels seen before the 2008 financial crash (Stats SA, 2020). This is in part due to cheap exports, mainly from China, which undercut local producers (BP, 2017). In 2021, the utilisation of manufacturing production capacity was at 78,6 per cent of total capacity. This is largely attributed to insufficient demand for local production due to higher prices relative to imported goods (AG, 2021). The manufacturing sector is constrained by red tape, onerous labour legislation, municipal dysfunction and inefficient electricity supply (ISI, 2021). Comment from industry leader: The state’s attitude is perceived by many as being hostile towards business and manufacturers. This view is supported by policies and regulations that are deemed as not business friendly. A trust deficit between business and the state makes owners reluctant to expand their manufacturing operations. It therefore removes the incentive to grow the industry, as they simply have no trust in the state to create the stable environment required to generate a sufficient future return on current investments. The financial strain brought about by the recurrent Eskom blackouts is another cause for concern in the industry. It not only takes away operating hours but also causes damage to machinery and leads to labour disputes (as some employers refuse to pay employees who are unable to work due to loadshedding). Construction Contribution to National GDP (2021): 2% 2% applied to 2021 National GDP: R124,2 billion Employment: 1 million (Stats SA, 2022d; Leshoro, 2022) Impediment: Inept public officials, which will require improved staff development programmes within the public sector Contribution in absence of constraint: A further 4% of the sector’s contribution to National GDP p.a. The construction sector is quite labour-intensive and is perfectly positioned to absorb some of South Africa’s unskilled labour (BT, 2020). A study undertaken by the Centre for Affordable Housing Finance in Africa has found the construction industry has a direct impact output multiplier of 3,21 (CAHF, 2020). Expanding the sector could then hold far-reaching benefits for the economy as a whole. It’s among the reasons why the state has embarked on a R100 billion infrastructure development plan over the next 10 years to unlock economic recovery (Magubane, 2022). The sector is, however, constrained by inadequate infrastructure (water and electricity), corruption and a lack of skills. Public sector capital projects have, by and large, come to a complete standstill. Comment from industry leader: The thick layer of bureaucratic systems facing the construction sector is made worse by incompetent staff at a local government level. Documentation, such as the conclusion of contracts and tender processes, more often takes months longer than it should, delaying the start of entire projects. This convoluted process is not attractive to large-scale investors. It further delays urgent infrastructure development and putting wages in the pockets of labourers. A recent spike in the price of fuel and inefficient electricity supply is causing further damage to the industry. Some report a decline in productivity of as much as 25 per cent due to the ongoing blackouts. The construction sector should be at the forefront of economic recovery, as it can assist in alleviating unemployment while delivering crucial infrastructure for other sectors to flourish. However, for it to play this supportive role, these simple impediments must be removed immediately. Tourism Contribution to National GDP (2019 pre-pandemic): 3,7% 3,7% applied to 2021 National GDP: R229,8 billion Employment: 1,4 million (DoT, 2020) (DoT,2022) Impediment: Policies limiting ease of access, specifically the limitations on e-Visas Contribution in absence of constraint: A further 5% of the sector’s contribution to National GDP p.a. It’s important to reflect on the performance of the tourism sector before Covid-19 lockdowns were instated, as it showcases the industry’s potential. The sector was, however, ravaged by the pandemic. Its contribution to overall economic performance tumbled to 1,3 per cent in 2020 and at least a third of all jobs in the sector had to be cut. The sector has shown signs of recovery as global travel resumes (Vollmer, 2022). Relaxing of some of South Africa’s visa regime could support the industry rebounding faster (ISI, 2022). Comment from industry leader: The tourism sector has the potential to expand rapidly and is one of the easiest to stimulate in order to expand the country’s GDP. Small policy adjustments, promoting ease of travel and aggressive marketing of South Africa as a destination can boost growth in the sector to more than double its current economic performance in the next 5 to 10 years. Unfortunately, there seems to be a lack of urgency from government’s side to take the necessary steps to bring this growth spurt about. Agriculture Contribution to National GDP (2021): 3% 3% applied to 2021 National GDP: R186,3 billion Employment: 838 000 (Stats SA, 2022d) Impediment: Inefficient rail and port infrastructure Contribution in absence of constraint: A further 7,5% of the sector’s contribution to National GDP p.a. Employment in the agriculture sector represents around 5 per cent of total employment in South Africa (Stats SA, 2022a). Despite rising input costs, the industry (especially citrus) has managed to record bumper exports over the last few years. It was among the few economic stars shining even throughout the worst of the pandemic (Campbell, 2022). Inefficient infrastructure, such as ports and the rail network, and electricity as well as policy uncertainty have been identified as some of the aspects hampering growth of the industry (ISI, 2021e). Comment from industry leader: In the absence of efficient rail infrastructure, agricultural produce is forced onto our roads. This in itself is more expensive, but the state of the country’s roads, including gravel roads, is a further burden. Regular strikes that close the N3 between Johannesburg and Durban, the artery to get the produce to the port, poses another cost. Further headache awaits when the produce finally reaches the ports, as those too are operating sub-optimally. These struggles come amid external factors, like new EU export regulations, causing strain to the agricultural export market. As the global socio-economic developments continue to disrupt supply chains, South Africa is ideally located to benefit from the rising opportunities should these constraints be rectified. ICT Contribution to National GDP (2021): 8% 8% applied to 2021 National GDP: R496,8 billion Employment: 56 550 (EN, 2021) (Ica, 2021) Impediment: Lack of incentives for the private sector to deploy broadband to lower-income areas. Contribution in absence of constraint: A further 5% of the sector’s contribution to National GDP p.a. The ICT sector is made up of South Africa’s postal, telecommunications and broadcasting services. It’s an industry that continues to hold much potential for growth and employment opportunities. This is evident by the number of vacant positions in the industry (amid the country’s high levels of unemployment). According to the 2021 ICT Skills Survey, the industry is unable to fill 10 000 positions. This has been attributed to a lack of skills available in the country (Smith, 2021). A Harambee Youth Employment Accelerator study has found that the industry has spent R150 million exporting digital work and expertise to other countries (Malinga, 2020). The centre therefore suggest the immediate skills development to plug this growing gap. This skills shortage along with lagging infrastructure development and prohibitive policies are among the hurdles facing the industry. Comment from industry leader: The digital economy underpins most sectors in South Africa, yet there is a lack in the development of telecommunications infrastructure. Without adequate infrastructure the country will fail to see the necessary digital adoption, which will leave South Africa trailing global developments. Furthermore, deploying broadband to underserved communities could serve as an economic booster. For example, it could promote entrepreneurship in lower-income areas as digitisation (take banking as an example) can ease doing business. Although suggestions have been made to relax visa requirements to attract the necessary skills that South Africa lacks, the focus should rather be on developing local skills to meet the demand. Another crucial point is to reskill those whose jobs may be made redundant through automation in the coming years. Growth Potential Should government effectively remove each sectoral constraint, calculations can be done to determine what the overall impact on the national GDP may be, based on the estimations given by the Industry Leaders. Each sector’s potential contribution to national GDP is calculated based on its 2021 contribution. The difference between the two is used to determine the additional GDP growth in the absence of structural constraints. Table 1: Potential added GDP growth from structural reforms within elected key sectors This means that, based on the current (2021) GDP of R6,210 trillion, roughly 2,1 per cent per annum can be added to South Africa’s GDP just by getting the basics within the few key industries indicated in the table above, right. Add to this the impact of potential growth within the SMME sector, where industry leaders have estimated that the introduction of a few structural reforms could boost its contribution by an estimated 7 per cent. The OECD estimates that the SMME sector’s contribution to the national GDP is somewhere between 20 and 42 per cent, that is somewhere between R1,242 trillion and R2,608 trillion, which means that the structural reforms could potentially mean added GDP growth of between R86,940 billion and R182,774 billion (see table 2 below). Table 2: Potential added GDP growth from structural reforms within the SMME sector The table above therefore suggests that structural reforms within the SMME sector could add anywhere between 1,4 and 2,94 per cent to current GDP. However, one needs to caution against double counting, since many SMMEs fall within the sectors analysed in Table 1 above. For example, an SMME may fall within the manufacturing sector, the tourism sector, etcetera. A globular figure inclusive of the potential additional GDP of the SMME sector is therefore difficult to calculate precisely. It is nevertheless fair to say that the suggested structural reforms will make a material contribution to accelerated GDP growth. At 50 per cent of the midpoint of the OECD’s estimated SMME contribution to GDP (between 20 per cent and 42 per cent), that is 31 per cent, it would mean an additional 1,09 per cent growth in GDP for 2023. Note: The above estimations do not take into account potential additional growth from sectors not explored in this study, nor the additional growth that could emanate from getting the electricity supply challenges of the country sorted out. Conclusion The conversations and research have brought forward overwhelming evidence of overarching problems faced by all the sectors. Unreliable infrastructure, policy shortcomings and failures together with inept decision-makers are among the factors prohibiting sectoral growth. These are constraints that could be fixed, at least in the medium term, should the political will exist to do so. National Treasury forecasts a growth rate of 1,6 and 1,7 per cent in 2023 and 2024 respectively (Treasury, 2022). It’s not nearly enough to pull the somewhat 40 million South Africans out of poverty (Stats SA, 2019). Yet, decisive action to reverse the trajectory is seemingly lacking from government quarters. This when there is low-hanging economic fruit that can easily be reaped by a few policy adjustments. Imagining that the few structural adjustments proposed in this study were already implemented, it would be quite conceivable to expect a scenario of 3,7 per cent growth in GDP for 2023, which is more than double the current projections. Without the reforms, the GDP growth would not be sufficient to enable a systematic reduction of unemployment and other socio-economic backlogs. With the reforms, it would – especially if one takes into consideration the additional contribution of the SMME sector not included in the aforementioned 3,7 per cent. With the SMME sector included, a GDP growth of between 4 and 5 per cent is quite achievable. Table 3: It is therefore imperative that government focusses on these, and other necessary structural reforms, if it has any hope of shaping an economy with long-lasting benefits for its citizens. 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The Presidential Employment Stimulus: Implementation Update – January 2022 [Online] Available at: https://www.stateofthenation.gov.za/employment-stimulus-dashboard [Accessed: 6 June 2022] The Presidency (Pres), 2022b. Operation Vulindlela [Online] Available at: https://www.stateofthenation.gov.za/operation-vulindlela [Accessed: 20 June 2022] Trading Economics (TE), 2020. South Africa Government Debt to GDP [Online] Available at: https://tradingeconomics.com/south-africa/government-debt-to-gdp [Accessed: 2 June 2022] Vollmer, B, 2022. 6 signs that SA’s travel and tourism sector is recovering [Online] Available at: https://www.iol.co.za/travel/south-africa/6-signs-that-sas-travel-and-tourism-sector-is-recovering-95a3e6dd-3044-4e95-ba22-2234a2c0b038 [Accessed: 25 June 2022] World Bank (WB), 2020a. GDP growth (annual %) -South Africa [Online] Available at: https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?end=2020&locations=ZA&start=2008 [Accessed: 2 June 2022] World Bank (WB), 2020b. Unemployment, total (% of total labour force) - South Africa [Online] Available at: https://data.worldbank.org/indicator/SL.UEM.TOTL.ZS?end=2020&locations=ZA&start=2008 [Accessed: 2 June 2002] World Bank (WB), 2020c. GDP per capita growth (annual %) - South Africa [Online] Available at: https://data.worldbank.org/indicator/NY.GDP.PCAP.KD.ZG?end=2019&locations=ZA&start=2008 [Accessed: 2 June 2022] World Bank (WB), 2021. South Africa Economic Update: South Africa’s Labor Market Can Benefit from Young Entrepreneurs, Self-Employment [Online] Available at: https://www.worldbank.org/en/country/southafrica/publication/south-africa-economic-update-south-africa-s-labor-market-can-benefit-from-young-entrepreneurs-self-employment [Accessed: 15 May 2022] World Economic Forum (WEF), 2022. Why is inflation so high and will it stay that way? An economist explains [Online] Available at: https://www.weforum.org/agenda/2022/05/inflation-rising-economist-explains/ [Accessed: 22 June 2022] United Nations (UN), 2020. COVID-19 to slash global economic output by $8.5 trillion over next two years [Online] Available at: https://www.un.org/en/desa/covid-19-slash-global-economic-output-85-trillion-over-next-two-years [Accessed: 6 June 2022] University of Witwatersrand (Wits), 2020. The South African mining sector [Online] Available at: https://www.wits.ac.za/wmi/about-us/the-south-african-mining-sector/ [Accessed: 30 June 2022] - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - This report has been published by the Inclusive Society Institute The Inclusive Society Institute (ISI) is an autonomous and independent institution that functions independently from any other entity. It is founded for the purpose of supporting and further deepening multi-party democracy. The ISI’s work is motivated by its desire to achieve non-racialism, non-sexism, social justice and cohesion, economic development and equality in South Africa, through a value system that embodies the social and national democratic principles associated with a developmental state. It recognises that a well-functioning democracy requires well-functioning political formations that are suitably equipped and capacitated. It further acknowledges that South Africa is inextricably linked to the ever transforming and interdependent global world, which necessitates international and multilateral cooperation. As such, the ISI also seeks to achieve its ideals at a global level through cooperation with like-minded parties and organs of civil society who share its basic values. In South Africa, ISI’s ideological positioning is aligned with that of the current ruling party and others in broader society with similar ideals. Email: info@inclusivesociety.org.za Phone: +27 (0) 21 201 1589 Web: www.inclusivesociety.org.za

The Inclusive Society Institute (ISI) attended the 2022 Counter-Corruption Summit, The need for Change in South Africa and the Region. Hosted by South Africa Regional Centre of Excellence (SARCOE) and The Stellenbosch Dialogue on Wednesday, 27 July 2022. The 2022 Counter-Corruption Summit was held at the Stellenbosch Institute of Advanced Studies. Roger Latchman, the Convenor of the ISI’s Anti-Corruption dialogues and Prof Evangelios Mantzaris, the ISI’s Chief Researcher on Anti-Corruption attended the Summit. The Summit was attended by other luminaries such as, Professor Thuli Madonsela the Law Trust Chair in Social Justice at Stellenbosch University, Justice Minister Ronald Lamola, Minister of Justice and Correctional Services, Constitutional Court Justice Mbuyiseli Madlanga, and the chairperson of the standing committee on public accounts (Scopa), Mr Mkhuleko Hlengwa, et al. The Summit discussed themes, viz, Corruption: the blight of Africa, Challenges posed in countering corruption in Africa and Towards a co-ordinated Pan-African solution.

On 16 August 2022, the Inclusive Society Institute’s (ISI) research team looking into the National Health Insurance (NHI) proposals of government, as contained in the draft bill currently before Parliament’s Portfolio Committee on Health, presented the outcomes of their research to National Treasury. The ISI team was led by the Institute’s lead researcher, Professor Shivani Ranchod, whilst the Treasury team was led by Dr Mark Belcher, their Social Services Director. The ISI did extensive research into alternative pathways to Universal Health Care, including a costing exercise into both the NHI proposals as contained in the Bill, and the alternatives put forward in the research. The Institute also raised its concerns with the Bill, which included, amongst others: Issues of governance, where the Institute maintains too much power vest in the Minister apropos the appointment of the Board and CEO. The ISI position is that the board must be selected via a public process and the CEO should be appointed by the board. The phasing out of private medical aids in South Africa. The ISI’s position is that private medical aids should be permitted to co-exist within the public health environment. Competition needs to be introduced into the NHI system through more than a single fund. The ISI’s view is that the introduction of competition through the establishment of more than one NHI fund will help drive costs down and mitigate against corruption. The pace at which the transition to the NHI is envisaged. The ISI’s position is that the initial focus should be on improving the quality of the public health system, through which public trust in government’s ability to roll-out the NHI could be built. The guiding principle should be ‘don’t break what’s working until an alternative that works is in place’. The Institute’s reports can be accessed via the following links: Towards inclusive healthcare Lessons for South Africa on transitioning to universal health coverage from the German experience Briefing document - Brief to Senior Counsel for formal legal opinion Universal Health Coverage pathways for South Africa Reimagined pathways for UHC in South Africa: A critical policy assessment of NHI choices Trade-offs on the road to UHC: A quantitative assessment of alternative pathways for South Africa

Members of the Inclusive Society Institute’s (ISI) research teams into the proposed National Health Insurance for South Africa and Inequality, on Wednesday, 6 July 2022, met with the Deputy Minister of Finance at the offices of the Institute in Cape Town. The purpose of the meeting was for the ISI to present its research findings into these two themes to the Deputy Minister for purposes of broadening and enriching the search for effective and inclusive policy solutions. The reports are available using the undermentioned links: National Health Insurance Towards inclusive healthcare Lessons for SA on transitioning to universal health coverage from the German experience Briefing document - Brief to Senior Counsel for formal legal opinion Universal Health Coverage pathways for South Africa Reimagined pathways for UHC in South Africa: A critical policy assessment of NHI choices Trade-offs on the road to UHC: A quantitative assessment of alternative pathways for South Africa Inequality Deliberations on the nature and measurement of inequality in South Africa Trends in multidimensional inequality and socio-demographic change in SA during 27years of democracy Ideas of Hope: Policy directions and recommendations for reducing inequality in South Africa

The Chief Executive Officer of the Inclusive Society Institute, Mr Daryl Swanepoel, represented the Institute at the Presidential Social Sector Summit that was held at Birchwood Hotel and Conference Centre in Ekurhuleni in Gauteng from 4 to 5 August 2022. The purpose of the summit was to consult civil society on the Social Compact that was proposed by President Ramaphosa during the State of the Nation address earlier this year. The summit was addressed by, amongst others, President Ramaphosa, Minister of Social Development, Hon. Lindiwe Zulu, and Minister of Employment and Labour, Hon. Thulas Nxesi. Presentations were also made by Statistics South Africa and the Nedlac Community Constituency. Topics that came under discussion included: Sustainable strategies to respond to social-ills and contemporary issues The state of the social sector in South Africa and resource mobilisation A partnership between civil society and the State A South African response to poverty and unemployment International lessons on sustainable development and partnerships The impact of Covid-19 on the social sector

Public dialogue hosted by the Institute for Global Dialogue: The ANC’s International Relations: Navigating a Changing International Strategic Landscape The Inclusive Society Institute (ISI) participated in the aforementioned dialogue, which was held on Monday, 25 July 2022, which sought to analyse the historical and contemporary role of the African National Congress (ANC) in shaping South Africa’s international relations. It came at an opportune moment with the Party going into a National Policy Conference (NPC) at the end of July 2022. The ANC’s approach to international relations has largely centred on the concept of progressive internationalism and solidarity, outlined in its recent discussion paper titled In Pursuit of Progressive Internationalism in a Changing World. However, beyond the Party and its Alliance Partners these concepts remain little understood, with some questioning their relevance in an evolving international landscape witnessing various disruptions in the global North and South. Whilst some trends may in fact enhance the conditions of implementing the Party’s resolutions, other changes pose challenges and even a concerted backlash towards the adoption and implementation of certain policies. The ISI’s CEO, Daryl Swanepoel, bemoaned the current dialogues between (South) Africa, the West and the developing world, which he suggested were being held in silos. He was of the view that triangular dialogue between the three sides was necessary as such inclusive dialogue would respond in a more coordinated and effective manner to the enormous challenges facing the country and the continent.

On the 4th of August 2022, the Inclusive Society Institute (ISI), in partnership with the Centre for Leadership Ethics in Africa (CLEA), hosted a virtual workshop. ISI and CLEA host the African Thought Series which organises workshops, guest lectures, conferences, amongst others. In the first instalment of the African Thought Series, we hosted virtual workshop on Migration and Xenophobia in South Africa. The workshop was composed of two components. The first component involved a book review. Dr. Shepherd Mpofu, an Associate professor from the University of Limpopo, promoted a recent book ‘Mediating Xenophobia in Africa - Unpacking Discourses of Migration, Belonging and Othering’ (https://link.springer.com/book/10.1007/978-3-030-61236-8). This is a co-edited volume by Drs. Moyo and Mpofu that brings together a variety of scholars from different disciplinary perspectives to reflect on the problem of Xenophobia in Africa. In promoting the book, he gave the major highlights of the book. The second component focused on the keynote lecture. Dr. William Mpofu, from Centre for Critical Diversity Studies at the University of the Witwatersrand, delivered the keynote lecture on the theme. The lecture contextualised the debate around Xenophobia on a broad decolonial perspective. He argued that what we might be dealing with in South Africa may not necessarily be xenophobia but a class struggle for survival among the black-bodied vulnerable poor from South Africa and non-South Africans.

Copyright © 2022 Inclusive Society Institute PO Box 12609 Mill Street Cape Town, 8000 South Africa 235-515 NPO All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without the permission in writing from the Inclusive Society Institute D I S C L A I M E R Views expressed in this report do not necessarily represent the views of the Inclusive Society Institute or those of their respective Board or Council members. JULY 2022 Climate change and resilience: An analysis of some global and national measures by Nolubabalo Lulu Magam MA International Relations; D. Phil. International Relations Abstract In essence, climate change affects poor countries that are least responsible for greenhouse gas emissions. Globally, Sub-Saharan Africa contributes the least to greenhouse gas emissions; it is however one of the parts of the world most prone to the dire consequences of the current climate catastrophe. The political language of the climate chaos is also not encouraging, as there has been a failure to reach a global agreement and commitment to limiting greenhouse gas emissions. Given that different parts of the world are affected in different ways or by different forms of climate disasters, it is pertinent for national, and subnational, entities to develop their own adaptation and resilience strategies. This study engages in a systemic analysis of policy documents to examine the current progress and forms of climate mitigation and resilience strategies, at both national and provincial levels. The review goes further to suggest that rather than a procrustean approach, adaptation and resilience strategies must be province specific, within the context of South Africa. This is due to the varying levels of the impact of climate change in different provinces. Introduction Climate change can no longer be ignored or reduced to just another day of bad weather. It is, by far, the most serious threat facing the world. Rising sea levels, global warming, widespread flooding, droughts, and the spread of tropical diseases, have devastated a lot of communities around the world, and South Africa is no exception. Most scientists and researchers studying the potential impacts of climate change posit that the African continent has the potential to face more severe conditions than other regions in the world. Africa is estimated to be likely to experience increased climate variability due to its proximity to the equator. The effects of climate change on individual countries depend on their location and attributes, although all countries are exposed to it and have reason for common cause. But Africa’s ability to adapt to these effects is lower than that of the rest of the world. Evidently, the recent heavy rainfall, flooding, and the resultant loss of life and property in KwaZulu-Natal is said to have sounded the alarm on climate change adaptation. According to Dhesigen Naidoo (2022), the floods have been “centred in the east coast metropolitan area of eThekwini and are arguably one of the most visible and deadly signs of climate change in the country to date”. Naidoo (2022) further elucidates that the floods are not an uncommon occurrence because “the Southern Hemisphere generally has had flooding hotspots very late in the rainy season. This April there have been flood events in Australia, Thailand, and the Philippines”. However, the Durban “events are the expression of climate change in the form of more frequent, high-intensity extreme weather events”. Climate change adaptation in simple terms is the other side of the coin of mitigation. While the aim and goal of climate change mitigation is to prevent the environment, the biosphere, from drastically changing, the goal of adaptation is to provide people with the tools they need to live with the ever-changing environment, due to human activity. Joe McCarthy (2021) describes adaptation as essentially meaning: ​Any measure that protects a community or ecosystem from the effects of climate change, while also building long-term resilience to evolving environmental conditions. Adaptation is open-ended and takes many forms. It can be disruptive, such as when an entire community is relocated, or discreet, such as when a shoreline is reinforced. It covers everything from helping farmers grow crops with less rainfall to making sure buildings can withstand flooding events. It includes installing early-warning systems for natural disasters and improving the management of waterways. Globally, the shift towards climate adaptation policies and measures is gaining sustained momentum. Given the devastating impacts of our ever-warming world, even the parlance has changed – from the problem of “Climate change” to “Climate crisis”. A change that critically underscores the threat to livelihoods because of rapid change in climate and the necessity of promulgating policies, developing plans, and emplacing strategies for systems to adapt to the impacts of the climate crisis (Chersich & Wright, 2019). For McCarthy (2021), in the context of the ever-present environmental catastrophe and its causal link with poverty and the displacement of people and the myriads of climate change challenges, adaptation to climate change is a matter of survival. As a global problem, global efforts and policy measures, despite falling short on an array of occasions, are commendable. They show an intention towards action, albeit not as swiftly as is necessary. According to McCarthy (2021), adaptation to climate change has become morally, economically, and environmentally obligatory. The critical issue, however, is that despite the global, ergo the West’s, culpability for the current climate crisis, Sub-Saharan Africa (SSA) and several low- and middle-income countries (LMICs) suffer from the most severe consequences or impacts of climate change. To put it in context, in a recent report by the Economist, it is stated that the climate crisis will lead to a shrinkage of the total area suitable for growing arabica coffee beans, and even tea. A situation that threatens the stability of economies, as the arabica plants account for about 60% of worldwide coffee production and over 98% of Kenya’s coffee (the countries fourth-largest export) production (Economist, 2022). The coffee industry is said to provide a lifeline in the countryside, as it directly or indirectly provides an income for an estimated six million people. That is more than a tenth of the population of 54 million. In South Africa, the impacts of the climate crisis are rapidly increasing. Extreme weather events like the drought in the Western Cape[1], floods in KwaZulu-Natal and the Eastern Cape, and wildfires, are some of the overt and noticeable effects of the climate crisis. This is in addition to an increase in “vector and waterborne diseases … also gaining prominence. Global warming, which manifests as climate variability, has already been implicated in increased transmission of malaria, Rift Valley Fever, schistosomiasis, cholera and other diarrheal pathogens, and Avian influenza in South Africa” (Chersich & Wright, 2019:2). Again, some studies have documented the deleterious effects of a warming temperature in South Africa to further include a threat to food security. The world’s population is projected to grow to about 9.7 billion, however, agricultural yields are said to likely decrease by 30%, which will effectually leave about five million of the world’s people hungry and in need of water (Economist, 2020). The same is true for South Africa, as it is reported that crop yields are likely to decline in several provinces, with a consequent loss of livestock (Mugambiwa & Tirivangasi, 2017). It bears restating that given the current state of the economy and livelihoods, further negative impacts of climate change on the country’s economy will have profound implications for access to food in the country, which is largely contingent on affordability. The reality of the July 2021 riots shows how tenuous food access is, given the levels of poverty and inequality in the country. More so, ownership of arable land and the capacity to work on land is highly inequitable, reflecting the country’s history of apartheid dehumanisation (Masipa, 2017). Indeed, the impacts of climate change are ubiquitous, and everyone is bound to feel the effects – some to a higher degree than others. Against this background, the critical question now becomes: Who is responsible for fixing climate change? Arguably, the success of any adaptation or prevention strategy does require international cooperation. For instance, there is a recognition in South Africa, and in SSA broadly, that international efforts need to double down on commitments to cut emissions (RSA, 2019). While this will go a long way, it may not be sufficient to protect South Africa – a water scarce, food insecure and unequal country – from the extent of future impacts of climate change. Essentially, measures and policies should be comprehensive and context specific to allow each citizen in different parts of the country to adapt their way of life to an ever-changing climate. For instance, rainwater harvesting and storage systems for irrigation in water-stressed provinces, striving for food security through improved agricultural practices, and building storm and flood defence systems or early weather warning systems could all form part of a layered adaptation plan that can help people cope and adapt to disasters. Given the above, this review provides a succinct elucidation of current progress and forms of climate mitigation and resilience strategies, at both national and provincial levels in South Africa. The review begins with an examination of global efforts and the different stakeholders, and based on critical extrapolation, the review goes further to suggest that rather than a procrustean approach, adaptation and resilience strategies must be province specific, within the context of South Africa (the National Climate Change Adaptation strategy is analysed). Globally, COP26 takes centre stage as the most comprehensive measure towards adaptation because, relative to climate change mitigation, adaptation has been overlooked in terms of its profile and financing. There are signs that a shift in thinking is under way, however, partly as climate change is starting to impact wealthier nations as well as developing countries. At COP26, climate-vulnerable nations called for greater support to address adaptation needs and deal with loss and damage. This was one of the main points of contention during the conference. On adaptation specifically, developing countries managed to secure a paragraph in the Glasgow Climate Pact urging developed countries to collectively at least double (Aberg et al, 2021:7). COP26: An overview of Global Climate Adaptation Measures and Policies The climate emergency poses an extinctive threat to the world as we know it. From rising sea levels, widespread flooding, droughts, to an exponentially growing number of climate refugees, the impacts of the climate emergency are devastating. Sadly, Sub-Saharan Africa, which has a predominance of the world’s poor, is the more likely to suffer the deleterious effects of climate change; despite contributing the least in global emissions of greenhouse gases (IPCC, 2021). According to the Intergovernmental Panel on Climate Change (IPCC), the present has become evermore troubling – with an even bleaker outlook for the future – due to the impacts of climate change. In the IPCC report, a surmise is provided that reiterates what we already experience, which is that things are getting worse. The report made extrapolations by observing increases in extreme, high temperatures: On land and in the seas, in torrential rain, in droughts and weather conducive to wildfires. The changes are affecting people, animals and plants, with widespread shifts in the timing of the seasons and with half of the species scientists have looked at moving towards higher latitudes and/or higher altitudes to cool down (though it is possible that there is some bias there: data may be gathered for species already thought to be on the move more than they are for others). With temperatures currently 1.1-1.3°C above pre-industrial levels, some natural systems are approaching, or surpassing, their capacity to adapt. Some coral reefs, rainforests, coastal wetlands and polar and mountainous ecosystems are butting up against “hard limits” (Economist, 2022). It has become necessary for climate adaptation policies and measures in Africa, and in South Africa, to be more proactive and be guided by local and context specific challenges posed and, in some cases, exacerbated by the climate crises. This can prevent maladaptation, as in the past, businesses were content with buying carbon offset credits and continuing with their level of greenhouse gas emissions irresponsibly (Masipa, 2017). The issue is not an absence of policies; the supposition is that an array of existing programmes has an indirect impact on climate change adaptation and a further explicit framing of them could significantly contribute to climate change adaptation (Thinda, Ogundeji, Belle & Ojo, 2020). It is suggested that in the early days of political action on climate change, adaptation was reduced or rather “was seen as, at best, a poor relation to cutting greenhouse-gas emissions—at worst as a distraction” (Economist, 2020). Because of such a reduction, there was a failure to agree on reduction in emissions in 2010 at the Copenhagen Summit. The world saw a steep rise in emissions post the financial crisis of 2008, and this put adaptation in its appropriate place as a topic of international concern. “The countries party to the UN Framework Convention on Climate Change took on a commitment to a global adaptation framework and set up a Green Climate Fund, with the goal of raising $100 billion annually by 2020 to help developing nations reduce their emissions and establish plans for adaptation” (ibid). Current projections of the climate crisis presage more extreme and erratic weather pattens. In the face of such projections, the necessity for societies and communities to adapt their systems and practices to be more resilient to a hotter climate has become paramount. It is reported that: If nothing is done to prepare for climate change, it could lower global agriculture yields by as little as 5% and as much as 30% by 2050—depending on a range of assumptions. Roughly 5bn people could suffer water shortages at least one month a year. Hundreds of millions of people may have to abandon their homes in coastal cities. Adaptation is not just a matter for poor countries. The damage which Hurricane Sandy wreaked on New York City in 2012 showed that extreme events could bring one of the world’s most important financial centres to its knees. Damages topped $19 billion. Such losses spurred a $19.5 billion urban-adaptation plan (Economist, 2020:4). Adaptation from the above also requires the building of resilience amongst the most vulnerable groups in society, as they will be the ones most faced by the impacts of climate change. The recent United Nations Climate Conference COP26, like previous such gatherings, sought to find resolutions on the reduction of CO2 emissions to stop global temperatures from rising 1.5°C above pre-industrial levels and to limit and adapt to the harms of global warming. The Glasgow Climate Pact was one of the major outcomes of the COP26 Summit, however, in Quiggin et al’s (2021) view, the summit at Glasgow was a crucial opportunity for improved ambition on climate finance and a need for more attention to adaptation, as well as for finalising the rules governing the implementation of the Paris Agreement. In sum, the major outcomes of the summit include: Enhancing the ambition of national emission reduction targets (nationally determined contributions – NDCs) was a critical task for COP26. Regarding the participants in this, governments fell short; indeed, over 120 parties have tendered new or updated NDCs, but these new targets barely managed to narrow the gap to 1.5°C by 15–17 per cent. To fully implement such in their current form would result in a projected warming of 2.4°C by the end of the century. Meeting the goal of limiting warming to 1.5oC above pre-industrial levels would require stringent efforts and additional commitments towards emission reductions before 2030 – this is in addition to extant NDC pledges. Conversation and commitments to climate finance, adaptation, and loss and damage took centre stage in Glasgow, and were critical points of contention. Whilst the Glasgow Climate Pact enjoins developed countries to ‘fully’ deliver on the $100 billion annual climate finance pledge through to 2025, there is still some unclarity as to “when this sum will be raised in full – and if a total of $500 billion will be mobilised between 2020 and 2025 to make up for initial shortfalls. And while the Pact urges developed countries to double their adaptation finance by 2025, and establishes a dialogue on loss and damage finance, much more will need to be done to address the needs of climate-vulnerable developing countries” (Aberg et al, 2021:1). A panoply of plurilateral deals happened at COP26 on key issues, from reducing emissions to the phasing out of various forms of fossil fuels and putting an end to deforestation. “These initiatives have the potential to accelerate decarbonisation but monitoring their implementation and holding governments and other institutions to account will be critical. Future COPs provide a platform for doing this, and governments should seek to incorporate the pledges made outside the formal remits of the UNFCCC process in their NDCs”. Adaptation can be described as a big winner though. In the sense that at COP26, there was provision of adaptation finance by 2025 (with 2019 as the baseline). Several other pledges were also made during the conference. $356 million was raised for the Adaptation Fund, and $413 million for the Least Developed Countries Fund. “Parties also agreed to set up a two-year work programme to operationalise and implement the Paris Agreement’s ‘global goal on adaptation’, the aim of which is to drive collective action on adaptation. This is important, as it has been unclear how the global goal is to be implemented and progress against it assessed” (Aberg et al, 2021:7). National Climate Change Adaptation Strategy: South Africa’s Approach To restate, adaptation and mitigation are the two critical and vital responses to climate change. They are two sides of the same coin, in the sense that mitigation deals with the causes of climate change, whereas adaptation addresses the impacts of climate. Essentially thus, adaptation encompasses changes in how we interact with the environment and changes in practices and policies designed to decrease the vulnerability of our environment to climate change and interventions intended to reduce the vulnerability of people to climate change. There are several approaches to climate change adaptation. One of the most common is the nature-based approach or solutions. Nature-based solutions – including the conservation of, or the restoration of, ecosystems – have a dual utility as mitigation, because they often remove emissions from the atmosphere while supporting adaptation goals. One example of a nature-based solution is evidenced in the replanting of mangroves along the coastlines of Java in Indonesia, which protects communities from flooding. Other examples include that “rehabilitating the Great Barrier Reef boosts the economy of Australia, and contributing to the Great Green Wall across Africa’s Sahel region improves food and water security. These efforts also create carbon sinks that, together with other initiatives, can get the world 37% of the way toward achieving the Paris climate agreement” (McCarthy, 2021). In a country like South Africa, billions of rands are lost annually to climate change induced catastrophe. The 2022 flooding in the province of KwaZulu-Natal led to damages (to critical infrastructure and livelihoods) worth about R17 billion. Adaptation could be critical in saving provinces and, overall, the country from such expenditure. “The UN estimates that $1.8 trillion invested in adaptation programmes would save countries $7.1 trillion in climate costs. Adaptation measures also lead to economic growth — investing between $250 and $500 per hectare of land in climate-resilient farming practices could more than double certain crop yields” (McCarthy, 2021). The successes or probability for success of adaptation strategies hinges on how much they are bespoke to the needs of specific populations, facing specific threats; this is the truth about adaptation. Climate adaptation must “be guided by local priorities. Some areas need help overcoming floods, while others need help coping with heat waves. Although climate change is universally felt, some countries and regions need to adapt more urgently than others. Sub-Saharan Africa is widely considered the most vulnerable region to climate shocks, whereas Scandinavian countries are relatively shielded from major disruptions” (ibid). To put it in another way, what must be done to reduce emissions is similar around the world; “providing resilience through adaptation depends on policies shaped by local needs and capacities. Sub-Saharan communities at risk of more intense droughts that threaten their food supply do not need to deploy the same toolkit as ones on the Florida coastline where the land beneath their homes is eroding” (Economist, 2022:3). South Africa’s national climate change governance is described as the product of over two decades of policy evolution. It has thus been significantly influenced by an elaborate array of stakeholders, executive policies, strategies, regulations, and institutions. The 2004 National Climate Change Response Strategy dovetailed with the National Climate Change Response White Paper (NCCRWP), gazetted, and approved in 2011, form the crux of the national climate policy. In 2012 climate change became a key element of the National Development Plan, the overarching plan for the country. Recently, the National Climate Change Adaptation Strategy of 2019 now forms part of the colourful convergence of efforts to combat climate change, nationally. According to Averchenkova, Gannon & Curran (2019): While there are a number of policies that operate across multiple sectors, there are also those that are targeted at avoiding emissions or supporting more specific sectors. The development of these sectoral level policies in South Africa is skewed by the greenhouse gas emissions profile of the country, with high-emissions sectors such as energy having more developed climate policy landscapes. These strategies are cross-cutting and gave a start to several specific policy mechanisms, including the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) and the cross-sectoral carbon tax. However, since 2010/11 climate change policy overall and mitigation policies in the energy sector, have been delayed (2). The strategic vision of the National Climate Change Adaptation Strategy (NCCAS) (RSA, 2019) is to ensure that South Africa makes an effective transition to climate resilience; one which toes the line of a sustainable development path, guided by anticipation, adaptation and recovery from a changing climate and environment to achieve the country’s development aspirations (Mthembu, 2021). The following form the core strategic focus of the NCCAS: a) Build climate resilience and adaptive capacity to respond to climate change risk and vulnerability; b) Promote the integration of climate change adaptation response into development objectives, policy, planning and implementation; c) Improve understanding of climate change impacts and capacity to respond to these impacts; d) Ensure resources and systems are in place to enable implementation of climate change responses. NCCAS also has some strategic interventions, which are: Reduce human, economic, environmental, physical, and ecological infrastructure vulnerability and build adaptive capacity; Develop a coordinated climate services system that provides climate products and services for key climate-vulnerable sectors and geographic areas; Develop a vulnerability and resilience methodology framework that integrates biophysical and socio-economic aspects of vulnerability and resilience; Facilitate mainstreaming of adaptation responses into sectoral planning and implementation; Promote research application, technology development, transfer and adoption to support planning and implementation; Build the necessary capacity and awareness for climate change responses; Establish effective governance and legislative processes to integrate climate change in development planning; Enable substantial flows of climate change adaptation finance from various sources; Develop and implement an M&E system that tracks implementation of adaptation actions and their effectiveness. Discussion and Conclusion The risks that weather and climate pose to human life are in most cases specific to the particular circumstances of time and place. In more ways than one, they are also a complex function of an array of interwoven factors and on-the-ground realities. Accordingly, several identifiable important gaps in adaptation practices as recommended by global policy include a failure to prioritise local or indigenous knowledge in the building of such mitigation and adaptation measures. It is of great importance that policy and planning frameworks for climate change at all levels should prioritise context, as it can serve as an essential platform for generating local knowledge, which is invaluable for mitigation and adaptation measures. It is also important to highlight that in high-income countries, adaptation has formed a critical part of all policy measures and has been described as yielding positive results. In low-income countries, however, there is often a lack of things like “resources needed to build sea walls, improve agricultural systems, and develop storm-resistant infrastructure. This disparity both reflects and exacerbates the unjust way climate change is unfolding. Although low-income countries are the least responsible for climate change, they’re often the most affected by it. The UN estimates that developing countries currently need an estimated $70 billion annually to adapt to climate change and could need as much as $300 billion by 2030” (McCarthy, 2021). Furthermore, evidence shows that, in some developed countries adaptation is directly linked with the saving of lives. A case in point, it is estimated that about 15,000 people died in France in 2003 because of scorching August temperatures. Similarly, another heatwave in 2019 is said to have killed an estimated 1,500 people. The noticeable decrease in deaths from heatwaves in this situation is a vast improvement, “thanks to increased awareness of the threat, public policy and private investment. There is now targeted support and medical attention for the most vulnerable. Opening hours for swimming pools were extended. The authorities put air-conditioning into some public buildings. Many private citizens installed it, too” (Economist, 2022). In Africa, and in South Africa in particular, adaptation policies are fraught with several challenges. Indeed, it has been observed that amongst developing and emerging economies, South Africa has one of the most elaborate and consultative climate governance systems in place. As efforts are made to implement national climate goals and ramp up ambitions to achieve the aims of adaptation and mitigation efforts, there are still some critical challenges that the country needs to address for success to be guaranteed (Poopola, Yusuf & Monde, 2020). The challenges cited above are not only critical but also diverse. Some are a direct consequence of an overstretched, depleted and eroded human and technical capacity (Grootes, 2019). Others are a consequence of institutional or structural variables such as a historical tension between the main players, confusion about the mandate and lack of clarity in the delegation of responsibilities, lack of ownership “over implementation agendas, multiple ministries dealing with issues concurrently without sufficient coordination, and cumbersome and ineffective communication practices. These challenges have been exacerbated by a wider political context of several years of political crisis and ‘state capture’ over the past 10 years, which resulted in uncertainty over the direction of climate change and energy policy, distracted leadership and low political will to act further” (Averchenkova, Gannon & Curran, 2019:4). Further, it is important that local communities play a critical role in adaptation measures. Their involvement in adaptation initiatives within their local area holds a high chance of success. By giving priority to the context, concerns, and climate-specific challenges of a local population, we can easily evaluate the effectiveness of such measures based on the outcomes and make the adjustments to policies and strategies as required. Inherently, the effectiveness of disaster management systems hinges on the level of preparedness against erratic extreme weather patterns. While the country has led the way globally in promulgating compressive and elaborate climate change policies, it has failed at implementation and in assuming a hegemonic leadership role in this field on the continent. With increased focus, the emplacement of adaptation and resilience measures will be effective, with improved climate governance and political will. In sum, adaptation is primarily a local issue, in the sense that it must be designed in conjunction with local communities, and with cognisance of their climate change induced challenges. In so doing, adaptation is said to significantly provide benefits at the local level, both short term and long term, by reducing vulnerability. Given that South Africa is often described as a water-scarce country, the forgoing fact has an array of implications for agriculture, food security, and on the overall livelihood of the country. The reason being that in addition to being water scarce, there are other parts of South Africa that are flood prone. Consequently, adaptation should be a priority in the water and agricultural sectors and in coastal or low-lying areas – areas prone to floods and droughts. It is important to underscore that the recent floods in KwaZulu-Natal further thrust into the light the necessity for urgent action towards climate change mitigation. By implication, South Africa, as the article has briefly expressed, does not suffer from a dearth of climate change mitigation and adaptation policies. In fact, the city of Durban was one of the first (2014) to enact climate change mitigation and adaptation policy at a provincial level (Meissner, 2022). The problem, however, is the lack of implementation of extant policies. Mismanagement and lack of critical urban planning have been described as factors impeding the efficient implementation of green policies. In Richard Meissner’s (2022) view, the recent floods in Durban (eThekwini municipality) “placed the spotlight on the management of urban areas and their vulnerability to natural disasters. That homes had been built close to rivers and on floodplains indicates a shortfall in urban planning”. Given the events of the aforementioned flood, the need for provincial governments to act decisively and extensively has been accentuated. More so, there is the view held by paradiplomatic scholars like Magam (2018) that provincial government through the devolution of power, enjoy a considerable amount of autonomy, which allows them to promulgate policies that are necessary for the development of the province and the improvement of livelihoods. Similarly, Meissner (2022) concurs that “municipalities have a considerable degree of independence in South Africa. The country’s Climate Change White Paper also recognises local governments as essential actors in the climate change response. They are responsible for providing and managing water. And they can largely choose how they do this”. Indeed, the global goal of climate change mitigation is “to reduce net emissions of CO2 and other greenhouse gases. The Paris Agreement intends to limit global warming to below 2°C and preferably to 1.5°C compared to pre-industrial levels” (Szönyi, 2021). To achieve this goal, Micheal Szönyi (2021) suggests that there is a need to reduce dependence on fossil fuels, industrial farming, inter alia, “as this would reduce human greenhouse gas emissions as quickly as possible and achieve a climate neutral world by mid-century – in other words, a world where we do not emit more greenhouse gases than the Earth can handle without further warming”. As such, the trajectory of climate change mitigation has developed two focus areas: “reducing emissions and increasing carbon sinks. We can reduce emissions by, for example, replacing coal-fired power generation with renewable energy sources like solar and wind. We can also change our personal behaviour by reducing our consumption or by cutting down on our flights. In the end, the goal is to transition towards a low-carbon, and eventually a zero-carbon emitting economy and lifestyle” (ibid). While the global goal for climate mitigation has been clearly articulated and planned, in a country like South Africa there are suggestions that in addition to extant policies, a province like KwaZulu-Natal, for instance, requires other specific measures to combat and adapt to the impacts of climate change. As Meissner (2022) describes it: Much of the global thinking about managing risks like flooding uses the concepts of green and ecological infrastructure. They highlight the role of “natural” infrastructure in mitigating natural and human-induced risks. Examples include open green spaces and water bodies, green roofs and walls, street trees, ponds, urban wetlands, restored watercourses and reconnected floodplains. Green infrastructure refers more to metropolitan environments and ecological infrastructure to rural locations. Both concepts come into play in South African municipalities. This is because they tend to be a mix of city and semi-rural environments, with formal and informal settlements. There is no doubt that climate change policies and action plans are not the priority of the national government, but provincial, and in other cases municipal, climate change adaptation and mitigation measures are necessary. Reference List Åberg, A., Benton, T. G., Froggatt, A., Giritharan, N. J., et al. 2021. COP26: What happened, what does this mean, and what happens next? [Online] Available at: https://www.chathamhouse.org/sites/default/files/2021-11/2021-11-15-COP26-what-happened-summary-Aberg-et-al.pdf [accessed: 28 February 2022]. Averchenkova, A., Gannon, K. E., & Curran, P. 2019. Governance of climate change policy: A case study of South Africa. Policy Report [Online] Available at: https://www.lse.ac.uk/granthaminstitute/wp-content/uploads/2019/06/GRI_Governance-of-climate-change-policy_SA-case-study_policy-report_40pp.pdf [accessed: 25 February 2022]. Chersich, M. F. & Wright, C.Y. 2019. Climate change adaptation in South Africa: a case study on the role of the health sector. Globalisation and Health, 15(22):1-16. Department of Environmental Affairs. 2017. Draft: South Africa’s Third National Communication under the United Nations Framework Convention on Climate Change. [Online] Available at: https://www.gov.za/sites/default/files/reports/draftsouthafricas3rdnationalcommunication_unfccc2017.pdf [accessed: 28 February 2022]. Economist. 2020. Climate adaptation policies are needed more than ever. [Online] https://www.economist.com/schools-brief/2020/05/30/climate-adaptation-policies-are-needed-more-than-ever [accessed 28 February 2022]. Economist. 2022. Why Global Warming Threatens East African Coffee. [Online] Available at: https://www.economist.com/middle-east-and-africa/2022/03/17/why-global-warming-threatens-east-african-coffee [accessed: 20 March 2022]. Government Gazette. 2018. No. 41689 Vol. 636 8. Climate Change Bill 2018. 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[Online] Available at: http://awsassets.wwf.org.za/downloads/wwf_pfu_policy_brief__lowres_.pdf [accessed: 20 March 2022]. Mugambiwa, S. S. & Tirivangasi, H. M. 2017. Climate change: A threat towards achieving 'Sustainable Development Goal number two' (end hunger, achieve food security and improved nutrition and promote sustainable agriculture) in South Africa. Jamba, 9(1):350. National Treasury. 2013. Carbon Tax Policy Paper: Reducing greenhouse gas emissions and facilitating the transition to a green economy. [Online] Available at: http://www.treasury.gov.za/public%20comments/Carbon%20Tax%20Policy%20Paper%202013.pdf [accessed:20 February 2022] Popoola, O. O., Shehu, S., Yusuf, G. & Monde, N. 2020. South African National Climate Change Response Policy Sensitization: An Assessment of Smallholder Farmers in Amathole District Municipality, Eastern Cape Province. Sustainability, 12(2616): 1-22. Quiggin, D., Townend, R. & Benton, T. G. 2021. What near-term climate impacts should worry us most? Supporting the most exposed and vulnerable societies to reduce regional and global climate risks, Research Paper. [Online] Available at: https://www.chathamhouse.org/sites/default/files/2021-10/2021-10-19-what-near-termclimate-impacts-should-worry-us-most-quiggin-et-al_0.pdf [accessed: 20 March 2022]. Republic of South Africa (RSA). 2004. National Environmental management: air quality act No. 39 of 2004. [Online] Available at: http://www.wylie.co.za/wp-content/ uploads/NATIONAL-ENVIRONMENTAL-MANAGEMENT_-AIR-QUALITY-ACTNO.- 39-OF-2004.pdf [accessed: 20 March 2022]. Republic of South Africa (RSA). 2018. South Africa’s Intended Nationally Determined Contribution (INDC). [Online] Available at: http://www4.unfccc.int/ndcregistry/PublishedDocuments/South Africa First/South Africa.pdf [accessed: 18 February 2022]. Republic of South Africa (RSA). 2019. National Climate Change Adaptation Strategy. [Online] Available at: https://www.environment.gov.za/sites/default/files/docs/nationalclimatechange_adaptationstrategy_ue10november2019.pdf [accessed: 18 February 2022]. Szönyi, M. 2021. Mitigation and adaption: how do they help us combat climate change? [Online] Available at: https://www.zurich.com/en/knowledge/topics/climate-change/mitigation-and-adaptation-how-do-they-help-combat-climate-change [accessed: 20 April 2022]. Vignola, R., Harvey, C. A., Bautista-Solis, P., et al. 2015. Ecosystem-based adaptation for smallholder farmers: Definitions, opportunities, and constraints. Agriculture, Ecosystems & Environment, 211:126–132. Williams, P. A., Crespo, O. & Abu, M. 2019. Adapting to changing climate through improving adaptive capacity at the local level: The case of smallholder horticultural producers in Ghana. Climate Risk Management, 23:124–135. [1] The Western Cape province experienced a devastating drought between the years 2016 and 2018. The widely reported “Day Zero” crisis, wherein the Cape Town city faced the possibility of the taps running dry presented an acute shock and highlighted major vulnerabilities in the city’s water supply system, which relies largely on six large dams that had run dry. This water scarcity was and still is associated with the increasing threat posed by climate change impacts (including changing rainfall patterns and rising temperatures) leading to increasing water demand (Fell & Carden, 2022). - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - This report has been published by the Inclusive Society Institute The Inclusive Society Institute (ISI) is an autonomous and independent institution that functions independently from any other entity. It is founded for the purpose of supporting and further deepening multi-party democracy. The ISI’s work is motivated by its desire to achieve non-racialism, non-sexism, social justice and cohesion, economic development and equality in South Africa, through a value system that embodies the social and national democratic principles associated with a developmental state. It recognises that a well-functioning democracy requires well-functioning political formations that are suitably equipped and capacitated. It further acknowledges that South Africa is inextricably linked to the ever transforming and interdependent global world, which necessitates international and multilateral cooperation. As such, the ISI also seeks to achieve its ideals at a global level through cooperation with like-minded parties and organs of civil society who share its basic values. In South Africa, ISI’s ideological positioning is aligned with that of the current ruling party and others in broader society with similar ideals. Email: info@inclusivesociety.org.za Phone: +27 (0) 21 201 1589 Web: www.inclusivesociety.org.za

Copyright © 2022 Inclusive Society Institute PO Box 12609 Mill Street Cape Town, 8000 South Africa 235-515 NPO All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without the permission in writing from the Inclusive Society Institute D I S C L A I M E R Views expressed in this report do not necessarily represent the views of the Inclusive Society Institute or those of their respective Board or Council members. JULY 2022 Challenges and opportunities to enhance social mobilisation to combat corruption by Prof Evangelos Mantzaris Hon Sociology, Public Administration & Economic Science, Ph.D Sociology Opening remarks Part of this article has been based on an empirical report on South Africa’s National Anti-Corruption Advisory Council (NACAC), as identified in South Africa’s National Anti-Corruption Strategy 2020-2030, first announced in President Ramaphosa’s 2021 State of the Nation Address. This article was sponsored and subsidised by the Inclusive Society Institute (ISI), an institution that functions autonomously and independently from any other entity. The question of trust The lack of political trust in South Africa is founded principally, if not exclusively, on political acts such as corruption, lack of ethics, state capture and perpetual legal violations. These everyday realities threaten the very legitimacy of the system, leading to mistrust and non-compliance with the law by citizens. Whereas political trust is founded on good governance based on the existence of accountability mechanisms and ethical codes in all spheres of life. Citizens expect good and ethical governance at all levels of society, meaning that politicians and public administrators are obligated and expected to adhere to the principles of accountability, transparency and integrity, which are the cornerstones of anti-corruption measures such as detection, prevention and deterrence. Policies and their honest and transparent implementation are the foundation of accountable, people-based service delivery. Political trust is not won by verbose party manifestos, distribution of food parcels or pre-election promises, but by politicians’ and administrators’ actions. Once citizens realise that manifestos, policies and promises are forgotten, mistrust becomes a tangible reality and takes on a wide variety of forms – founded on a vast array of individual and community thoughts, perceptions, relationships and actions – leading to political and social outcomes that illustrate a mixture of power relations and contradictions. Trust is both a collective and an individual reality that is inevitably transformed into feelings, relationships, plans and activities – the latter two of which are, in society, determined by the government’s answers to citizens’ questions. Recently, government’s plans and activities have been negatively associated with a plethora of dirty dealings, including two of its Cabinet Ministers spending R3.5 million in hotel accommodation, and the Covid-19 supply chain and procurement-based multibillion-rand theft. The impact of such actions on the relationship between the government and its citizens hugely undermines the honesty, accountability and legitimacy upon which administrative mechanisms operate within a democracy that is healthy and corruption-free. Every time a new policy is announced, political trust is brought into question. All levels and positions in the state apparatus come under scrutiny: from the president to the provincial premier, municipal mayor, judiciary, political parties, ‘corrupt mediators’, even the politicians’ families. In fact, the whole system comes under the spotlight. In most cases, personal distrust overlaps with governmental distrust, because policy, planning and implementation is in most instances personified by a specific individual. Familiar faces in political and senior administration dominate all social media, while middle managers in the small municipalities living it up and driving the Maseratis escape detection until exposed by whistle-blowers. Political leaders are the faces of the regimes and systems they represent. Citizens’ trust in state institutions and their rulings, or opposition parties, is a serious barometer of a healthy democracy. This trust epitomises the very essence of democratic legitimacy that is both internalised and externalised by peoples’ zest for wholehearted willingness to participate and act in the building of a democratic State that rewards honesty and punishes corruption. The South African case The latest widely acknowledged and respected opinion poll by Afrobarometer has shown that trust in the country’s Parliament has declined to 27 per cent and in the president to 38 per cent. And for the first time during the existence of the opinion poll initiative trust in the courts of law has dropped to 43 per cent. Furthermore, the level of trust in the African National Congress has fallen to 27 per cent and is especially low among more educated and younger South Africans, while the opposition parties’ tally is at a lower 24 per cent. The Public Protector received a 42 per cent vote of trust, while only 36 per cent trusted the Electoral Commission of South Africa, with trust levels particularly low among younger respondents. The Department of Health recorded the highest level of trust in comparison to other state institutions (56 per cent). Challenges and opportunities to enhance social mobilisation to combat corruption The path to social accountability is paved through the generation and articulation of citizens’ voices, to elicit enforcement of sanctions when public service provision fails, and to promote answerability of public authorities. Therefore, effective social accountability is made up of three building blocks: voices, enforcement and answers. The fundamental initiatives consist of: The achievement of citizens’ participation in the fight against corruption and paving the way to social accountability initiatives can only be achieved through citizens’ active involvement and coordination that leads to collective action capabilities. The existing local context realities are the foundation of the successful planning, designing and implementing of social accountability initiatives to counter corruption in the delivery of public services. Deep study and understanding of citizens’ expectations and attitudes is at the root of preparing the strategic State path in the process of tailoring capacity building activities that empower citizens to counter corruption. Continuous engagement of all trusted and widely respected stakeholders and actors in their communities, enabling them to share and articulate the communities’ voices. This makes social accountability initiatives more effective. Creation and development of participatory budgeting, leading directly to the planning, formulation, decision-making and monitoring of budget execution, especially at local government level. The challenges and opportunities: Concrete answers for the way forward The focus begins and ends with empirical evidence and is based on known final results. These results point to a fundamental absence of an anti-corruption coordinating body based on concrete and well accepted and known international examples. Historically speaking, it will be nationally and internationally understood that the Zondo Commission has shown with concrete evidence many corrupt individuals in the public sector. And yet, after fair court decisions only ten of these individuals have been jailed. How then, can citizens be expected to trust their government? The answer can be found in the historical success of anti-corruption coordinating bodies in Africa instrumental in enhancing social mobilisation to combat corruption. In Rwanda, the Anti-Corruption Advisory Council is headed by the country’s Chief Ombudsman and includes nine members from the key state departments, civil society organisations and private sector. A coordinating Secretariat is responsible for a daily campaign covering the whole country and reports the corruption and anti-corruption failures and successes daily on radio, television and social media. Furthermore, all the Council members communicate daily with the media, private sector and civil society, convincing them to become actively involved against corruption and mobilise their communities and constituencies to become an integral part of the effort. The Council operates at national level but is also decentralised at district, sector and cell levels. The country’s civil society leadership has been encouraged to cooperate with the Council to sensitise the public to the consequences of corruption, research and reports of corruption to the police, National Public Prosecution Authority, and the Office of the Ombudsman. The Council’s key responsibilities are to research and report/opine on strategies against corruption; thoroughly study and research all reports that emanate from anti-corruption institutions and recommendations to advance the fight against corruption; maintain continuous channels of information exchange on corruption between institutions; research, assess and evaluate all reports that emanate from organisations regarding corruption in Rwanda and recommendations that are based on their positions; planning and implementation of all processes resulting in the approval and publication of an annual report of the achievements in the fight against corruption in Rwanda. The success towards building the foundations that will lead to social mobilisation and, ultimately, social accountability can be easily compromised by specific historical, political or cultural experiences, which can influence the communities’ behaviour and attitudes towards the government at all levels. As international and South African literature has shown, there are key common issues, such as lack of citizens’ knowledge of their rights and corruption realities as well as types and particularities of corruption. These realities could be tackled through several initiatives that are achievable at all government levels, but initially beginning in the local government terrain: Awareness and promotion of the values of honesty and integrity among all communities, with a view to prevent corruption. Organisation of classes and community-based special meetings, beginning with district and local municipalities, on all subjects dealing with corrupt acts, their types, and the role of communities in their defeat. At municipal levels, the community leaders as well as the ward committees can and should play a key role in mobilisation. Identification of the causes of corruption in the context of the area’s socio-economic conditions. Investigation of a public officer’s conduct that the community or its members have reasonable grounds to believe relates to corrupt practices. Coordination and cooperation with all known state institutions and anti-corruption entities and organisations authorised to investigate, prosecute, prevent and combat corrupt practices. Consultation, cooperation and information exchange/s with the appropriate bodies locally, provincially and/or nationally authorised to conduct inquiries or investigations in relation to corruption. Adaptation and strengthening of mechanisms for educating the public to respect the public good and public interest. Development of educational and other programmes in collaboration with civil society organisations and disseminating information and sensitising the public to the negative effects of corruption. The creation of an anti-corruption coordinating body run at its initial phase by a highly trained, knowledgeable and skilled Secretariat will have several key responsibilities, including: Research and reports/opinions on strategies against corruption. Thorough study and research of all reports emanating from anti-corruption institutions and recommendations to advance the fight against corruption. Maintenance of continuous channels of information exchange on corruption among all anti-corruption institutions. Research, assessment and evaluation of all reports that emanate from organisations regarding corruption and recommendations that are based on their positions; planning and implementation of all anti-corruption processes. Collective effort on the part of all government, civil society and communities throughout the country to become aware of and active about reports and existing government strategies and plans against corruption; Secretariat-planned reports and initiatives emanating from anti-corruption institutions and entities in the effort to advance the fight against corruption; continuous exchange of all channels of information on corruption between all anti-corruption institutions and communities and all varieties of media; all reports and results of anti-corruption cases undertaken by anti-corruption agencies and institutions; monthly anti-corruption reports distributed to all national, provincial and local state departments and institutions, including the cases and successes in the corruption and anti-corruption efforts. All these initiatives, plans, designs, and their implementation will take place under the auspices of the Project Management Office. The entity’s main objective is to operationalise the existing policies, strategies and procedures together with the existing multilateral initiatives on governance and anti-corruption; identify the dynamics and realities for risk analysis and institutional assessments; governance and anti-corruption project design measures and supervision monitoring, and evaluation and similar operational matters. The following little-known case points to the need for the next unit, the Whistle-Blower Protection Unit: Grishen Bujram (43) was an underground MK fighter and a UDF activist in the 1980s. Later, as a whistle-blowing ANC councillor in the Endumeni Local Municipality in KwaZulu-Natal, Bujram was gunned down in Sibongile Township near Dundee on 15 June 2007. He had reported the unlawful sale of 17 RDP houses by then-ANC Mayor Thandeka Nukani – who had also acquired one for herself – to the police, the council, and all ANC structures. The two men implicated in the murder used the mayor’s car during the crime. Both were convicted and jailed, one for life and the other for 20 years. The mayor was also charged and appeared in court, but the charges were eventually withdrawn due to insufficient evidence. Whistle-blower protection is crucial for the success of anti-corruption detection and enforcement and should be a key aspect of any whistle-blowing system. Indeed, it will be one of the most important duties and responsibilities of the Secretariat. This is due to the nature of the corrupt individuals involved: those parties who stand to reap substantial benefits through their corrupt activities also stand to be arrested and seriously punished if they get caught out. Politicians and administrators who risk reporting these corrupt activities therefore put themselves and their families, co-workers and managers in potentially serious danger. The Whistle-Blower Protection Unit is responsible for considering the circumstances under which suspicions of wrongdoing can be reported inside and outside the organisation; has the knowledge and means to provide legal and physical protection to whistle-blowers; ensures that existing reporting channels, such as information hotlines, also exist for individuals working in the private sector; encourages positive attitudes towards whistle-blowing among citizens by promoting whistle-blowing policies and publicising post-reporting follow-up; ensures that individuals considering reporting suspected cases of wrongdoing have access to advice that is confidential and free of charge; forms part of external bodies such as NGOs and national associations; and introduces periodic assessments of the effectiveness of rules and regulations on the protection of whistle-blowers. It needs to be understood that as insiders, whistle-blowers have unique knowledge, access and expertise with regards their organisations and, therefore, also with regards the functions and dysfunctions of their institutional realities. This information allows them to detect corruption or other matters of concern that might otherwise remain hidden. However, this knowledge often places them in a difficult position, owing to loyalty to colleagues and supervisors, contractual confidentiality obligations, and the risk of retaliation. This scenario pinpoints the challenges associated with the distinction between the three different types of reporting: anonymous, where a report or information is received, but no one knows the source; open, where individuals openly report or disclose information, or state that they do not require their identity to be kept secret; and confidential, where the identity of the informant is known to the recipient, but will not be disclosed without the individual's consent, unless required by law. The staff of the entity should be enabled to negotiate with and guide everyone connected to such circumstances as well as the ant-corruption units of the specific institutions. While legislation exists that provides protection from occupational detriment for employees who disclose information of unlawful or corrupt conduct by their employers or fellow employees, more needs to be done. There are a number of initiatives that could be introduced – such as proper training, which will have a positive effect on the workplace structure, or the introduction of much stronger policies with severe consequences for the corrupt. The Research and Policy Unit is responsible for researching anti-corruption initiatives. Its key function is to facilitate and conduct research and analytical studies on issues pertaining to the development of anti-corruption initiatives locally, regionally and internationally. Researchers employed in the unit can also be directly involved in staff training throughout the anti-corruption institutional terrain; contacts, meetings and digital conferences can connect staff with colleagues and academic researchers on the African continent for exchange of ideas, research and insights. Potential staff members of such a unit should be university graduates with at least a master’s degree in the social, law or economic sciences, preferably with knowledge of and/or exposure to the anti-corruption genre. The Education Office operates at two levels: the institutional and the public. The institutional focuses on training all members of NACAC as well as those in all other anti-corruption agencies. The foundation is an ‘induction training programme’ providing basic training to new employees, all of whom spend the first few months of their service in the Research and Policy Unit to improve their knowledge on corruption and anti-corruption scenarios, investigations, successes, processes, structures and challenges, before being considered for their final posting. The new recruits’ training could last at least a year, while the trainees work and learn at the Research and Policy Unit. During the process the courses will include corruption prevention, communication skills, rules of evidence, law, computer forensics, financial investigation skills, and cognitive interview techniques, among others. Throughout the period of employment, the training continues at higher levels. On the other hand, is the public pillar, which will be reserved for awareness campaigns and educational programmes to mobilise society in the fight against corruption. Conclusion From 1994 until 2022, the South African government has enacted and implemented a vast number of laws, official rules and regulations, and introduced a populous and widely diversified group of organisations, institutions and entities to fight corruption, including Chapter 9 entities. All the existing laws, rules and regulations have been rigorously amended, so they are extremely detailed and thorough, and the anti-corruption agencies, organisations and entities have had successes and failures. But while the National Development Plan has accepted that all this effort has, for the most part, not worked, it has done so without providing reasons for the failure. The South African transition and the theory and practice of the National Democratic Revolution are still in process for many – if we believe the theorists still praying for the success of the French students’ powerful slogan from May 1968: ‘Be realistic, strive for the impossible’. This transition has been given a variety of names, including the ‘deferred revolution’, ‘first transition’, ‘second transition’, ‘second phase of the transition’. The prophets of the African revolutions, from Thomas Sankara to Oliver Tambo and from Patrice Lumumba to Samara Michel, are gone. The Africanisation of university curricula following the much debated but still misunderstood ‘Fees Must Fall’, is still in the long unveiling process. The late Claude Ake’s 1978 prophetic book, Revolutionary pressures in Africa, comes to two key conclusions. First, the revolution will be televised – as has been seen in Polokwane, Mangaung and the Expo Centre. And second, the National Democratic Revolution against corruption, greed and avarice cannot take place in stages – this is the key message of the National Anti-Corruption Strategy 2020-2030. It can only succeed if it is a continuous and un-interrupted process, coordinated efficiently, professionally and honestly. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - This report has been published by the Inclusive Society Institute The Inclusive Society Institute (ISI) is an autonomous and independent institution that functions independently from any other entity. It is founded for the purpose of supporting and further deepening multi-party democracy. The ISI’s work is motivated by its desire to achieve non-racialism, non-sexism, social justice and cohesion, economic development and equality in South Africa, through a value system that embodies the social and national democratic principles associated with a developmental state. It recognises that a well-functioning democracy requires well-functioning political formations that are suitably equipped and capacitated. It further acknowledges that South Africa is inextricably linked to the ever transforming and interdependent global world, which necessitates international and multilateral cooperation. As such, the ISI also seeks to achieve its ideals at a global level through cooperation with like-minded parties and organs of civil society who share its basic values. In South Africa, ISI’s ideological positioning is aligned with that of the current ruling party and others in broader society with similar ideals. Email: info@inclusivesociety.org.za Phone: +27 (0) 21 201 1589 Web: www.inclusivesociety.org.za

The CEO of the Inclusive Society Institute (ISI), Mr Daryl Swanepoel, attended the ANC National Policy Conference, which was held from 29 – 31 July 2022 at NASREC in Johannesburg. The ISI has as its objective the promotion of public policy based on social and national democratic values. As such it is important to be intricately involved in the broader public policy dialogue in the country; more so with the policy processes of the ruling party with whom it broadly shares the same ideological orientation. It is also through the ruling African National Congress that the Institute could best promote the policy positions it puts forward to advance the ISI’s vision of an equitable, socially just, free and democratic South Africa. The ISI advances a policy framework working towards a modern welfare state using the development state as a vehicle to achieve its objective. The Institute will over the coming months and in the run-up to the ANC’s National Conference scheduled for December 2022, develop a number of papers contributing to the national policy dialogue in response to the policy positions emanating from the ANC Policy Conference.