Search

The Inclusive Society Institute (ISI), represented by its Chief Executive, Daryl Swanepoel and the Center for China & Globalization (CCG), represented by their Director for External Relations, John Zhao and Senior Fellow, Philip Xie, met at the CCG’s Head Office in Beijing, China, on Tuesday, 8 April 2025 to explore potential area for cooperation.   Both the CCG and ISI are seized with dialogue and research aimed at bringing about a fairer and more lust multilateral order. And both organisations are studying BRICS and the Belt and Road Initiative. Similarly both organisations focus on Global South development in the fields of the economy, research and innovation and human development (including skills and talent development).   The two sides agreed that the overlap in work, conflation of areas of interest and influence within their various spheres warranted closer cooperation. It was decided to further explore how their relationship and cooperation could be deepened and actioned.

The Chief Executive Officer of the Inclusive Society Institute, Daryl Swanepoel, visited the Institute for African Studies, Zhejiang Normal University, from 9 – 10 April 2025. He was accompanied by Ms Jenny Wu, a member of the Institute’s Advisory Council. The IAS was represented by their Deputy Director, Prof Xu Wei, Prof Yang Kai, Deputy Director International, and Prof Zhang Qiaowen, Academic Deputy Director.   During the visit the two sides met to discuss and deepen cooperation between the two Institute’s. Among others, they agreed to joint projects related to the programme of the Think-tank 20, which is being hosted in South Africa during 2025. Among the projects agreed was a G20 policy brief development process and the hosting of a T20 Academic Seminar in Cape Town during the second half of 2025.   CEO Daryl Swanepoel, also delivered a guest lecture in his capacity as Distinguished Visiting Professor on Thursday, 10 April 2025. The lecture was titled “ The G20: A Comprehensive Overview & Expectations of South Africa’s Presidency 2025 ” .   Follow the link below to access the guest lecture presentation:

Occasional Paper 4/2025 Copyright © 2025 Inclusive Society Institute PO Box 12609 Mill Street Cape Town, 8010 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. A P R I L 2 0 2 5   Daryl Swanepoel MPA, BPAHons, ND: Co. Admin Research Fellow, School of Public Leadership, Stellenbosch University      Abstract   This Economic Brief analyses the country's precarious economic situation, that is characterised by significant domestic challenges and global trade disruptions. Business confidence has been negatively impacted by the historic withdrawal of the National Budget due to the controversy over the Value-Added Tax increases which, although now agreed, has triggered government instability and legal disputes. Deteriorating relations with the United States threatens South African exports and have raised uncertainties regarding South Africa's ongoing participation in the African Growth and Opportunity Act (AGOA) which will seriously impact particularly the automotive and agricultural sectors. Amidst declining business and consumer confidence, economic growth remains stubbornly low. Persistent levels of high unemployment, particular among the youth, inequality and poverty, exacerbate the crisis, and risks social stability. While inflation is projected to moderate, the deep-seated structural weaknesses hinder recovery efforts. The brief emphasises the urgent need for comprehensive reforms to restore confidence, enhance competitiveness, and address systemic issues vital for sustainable growth.   1. Introduction   For the first time in the history of South Africa the National Budget as presented to Parliament by the Minister of Finance had to be withdrawn due to the controversy over a proposed Value-Added-Tax increase. Whilst the budget was subsequently re-introduced and approved, members within the National Executive voted against the budget proposals. Moreover, the budget is being procedurally challenged in the courts.   The aforementioned dynamics does not bode well for business and consumer confidence.   The budget has also been presented against the backdrop of geo-political turmoil. The United States administration initiated global trade war has put the global economy into turmoil. South Africa has not escaped the impact thereof. In fact, the country’s relationship with the United States has been deteriorating at a rapid pace, which has resulted in billions of dollars of aid being withdrawn.   Moreover, South Africa’s continued inclusion in the African Growth and Opportunity Act (AGOA), an agreement that provides eligible sub-Saharan African countries with duty-free access to the U.S. market for over 1,800 products, in addition to the thousands more than 5,000 products eligible for duty-free access under the Generalized System of Preferences programme (Office of the US Trade Representative, N.d.) is uncertain. The author, with the benefit of having had extensive discussions with senior public policymakers within the US, is of the view that unless the relationship between the two countries are rapidly restored, South Africa’s graduation out of AGOA is almost certain. South Africa’s automotive and agricultural sectors will, under such circumstances, be particularly hard hit.   These dramatic turn of events happen within a slow-growth economic environment, with low business and consumer confidence and economic infrastructure backlogs that are inhibiting the further expansion of the economy. Without expanding the economy the high employment rate cannot be addressed. The social stability of the nation is at risk.   This paper assesses the current state of the South African economy, and the prospects for its recovery and growth. It further considers the implications of the 2025 national budget and the emerging ‘global trade wars’ thereon.   This paper is the result of the combined insights of a number of reputable economists and financial analysts that participated in a webinar workshop and additional interviews in the first part of April 2025. The insights have been synergised by the author. The views expressed during the webinar and interviews have informed the content of the paper, but cannot be ascribed to any one of them. The interpretation of the content is that of the author.   The experts consulted include:   Dr Adel Bosch, Senior Economist, Development Bank of Southern Africa (DBSA) Dr Miriam Altman, Strategist, Economist and Social Activist, Altman Advisory Prof William Gumede, Associate Professor, School of Governance, Witwatersrand University Mr Theo Vorster, CEO and Co-founder, Galileo Capital Mr Isaac Matshego, Senior Economist, Nedbank Dr Roelof Botha, Economic Advisor to the Optimum Investment Group Ms Lara Hodes, Economist, Investec   The webinar workshop and interviews were structured in such a way as to address the following five issues:   A prognosis of the current state of the economy The impact of the 2025/2026 national budget proposals thereon The likelihood of meeting the 1,9% GDP growth target Further interventions needed to spur meaningful GDP growth Should US impose tariffs on and graduate South Africa out of AGOA, how serious will the impact be on the South African economy?   In addition to the content generated through the workshop and interviews, some desktop research was done where further expansion, clarity or verification was needed. The main points of the paper is summed up in the text-box below:     The South African National Budget was withdrawn for the first time due to controversy over a proposed Value-Added-Tax increase, highlighting governance issues. After its re-introduction, the budget faced opposition from some within the National Executive, leading to further procedural challenges in court. This has highlighted fractures within the ruling coalition which has further negatively impacted  business confidence. Business and consumer confidence are under duress, which is detrimental to economic growth and recovery. The global trade war initiated by the U.S. has created a tumultuous international economic environment that negatively impacts South Africa. South Africa’s relationship with the U.S. is rapidly deteriorating, resulting in the withdrawal of billions of dollars in aid and support. There is uncertainty regarding South Africa's continued inclusion in the African Growth and Opportunity Act (AGOA), critical for duty-free access to the U.S. market. Loss of AGOA status could severely impact South Africa’s key sectors, particularly automotive and agriculture. The economy recorded a meagre GDP growth rate of 0.6% in 2024, falling significantly short of the necessary levels for job creation and poverty reduction. Whilst the budget has assumed a 1.9% GDP growth, it is unlikely to be achieved given the structural impediments and global trade turmoil. It is likely to be in the 1% to 1.5% range, making unlikely that the budgeted revenue projections will be achieved. Key indicators highlight low business confidence, with indices hovering around 45 points, indicating a lack of optimism among investors. Consumer confidence continues to decline, reflecting growing scepticism about the economy's recovery and health. The high level of unemployment, currently 33.2%, poses substantial risks to economic stability, especially with youth unemployment at 45.5%. The integration of large segments of the population into the workforce is critical to boosting household consumption and ensuring social stability. South Africa faces chronic poverty and inequality, with some of the highest disparities globally, exacerbating social tensions. Inflation is projected to be around 4.5% in 2025, suggesting moderating prices, though challenges to purchasing power remain. The global “tariff war” could result in upward pressure beyond the 4.5% mark. Overall, the South African economy's fragile recovery is threatened by deep-rooted structural weaknesses, necessitating urgent policy reforms to enhance competitiveness and reduce red tape.     Summary generated by Grammarly AI, verified and amended by author    2. Macroeconomic overview   The South African economy’s recovery is fragile. It remains clouded as growth remains subdued and continues to stagnate. The economy recorded a meagre 0.6% GDP growth rate in 2024. This is way below the threshold necessary to generate significant job creation and to reduce poverty. The growth continues to be slow in spite of the relatively favourable global economic environment during the past years, which would suggests deep-rooted structural weaknesses within the domestic economy.   Key indicators further highlight the severity of the economic malaise:   Business confidence continue to be low. Indices hover around a worrying 45 index points.  (the neutral threshold is 50 points). This is especially troubling given that the low confidence has been sustained below the 50 point mark for at least five years (Trading Economics, N.d.(1)). The below 50 points threshold figure reflects the widespread pessimism and a lack of forward-looking investment sentiment among businesses. For outsiders to invest in the country, the economy will need to be more competitive, for which the ease of doing business will have to be addressed. To this end the levels of red tape will need to be reduced considerably.     Consumer confidence has similarly declined, further illustrating the erosion of public faith in the ability of the economy to mend. Consumer confidence in South Africa decreased to -20 points in the first quarter of 2025 from -6 points in the fourth quarter of 2024 (Trading Economics, N.d.(2)).   This erosion of confidence perpetuates economic underperformance, since businesses delay investment and expansion, while households reduce discretionary spending.   The stubbornly high unemployment rate (32.1%) as at the end of the third quarter of 2024, and especially that of the youth (45.5%) (Stats SA, 2025), undermines South Africa's long-term growth prospects. The failure to integrate large segments of the population into productive employment limits household consumption and contributes to social instability.   Compounding these issues are chronic poverty and high levels of inequality, which are among the highest globally.   Inflation, is expected to be in the region of 4.5% in 2025 (SARB, 2025 (1)), thus showing signs of moderation, but challenges remain. A stable inflation environment is critical for consumer purchasing power. The South African Reserve Bank (SARB) has limited room to further cut interest rates given the inflationary pressures and the need to maintain financial market stability. Thus, the current monetary policy landscape offers little space for expansionary measures to stimulate demand. Alternative view on the cutting of interest rates   The current real lending rate in South Africa is 7.8%, whilst some argue that it should not be above 5%. The lowering of interest rates are important given that the average real prime rate in our major trading partners is a third of what it is in South Africa. The cost of capital in this country, it is argued, is too high.   It is said that the household debt costs as percentage of household disposable income at the beginning of 2022 was 6.7%, compared with the current 9.1%. If it had stayed at 6.7 the interest rates would not have increased by much, but then consumers would have over the three-year period been able to spend R200 billion more in the economy. This would have provided R50 billion more to play with in the budget and the VAT rate increase would not have been on the table. It is argued that the Reserve Bank is overly concerned with inflation, which approach provides an obstacle to growth in this economy, which is impacting the country’s fiscal stability.   High interest rates do not only refer to the supply side, but also the demand side, which is closely related to the type of investment we seek as a country. Investments in bonds, shares and deposits provide relatively high rates of return. Investors find it more attractive to invest in these instruments that a relatively risk-free, as opposed to investment into plant and machinery which carries much higher risk.   The down side of this is that South Africa seeks investment into real production, since this can boost both exports and jobs.   Also to be considered is the inflationary impact of the punitive US tariff regime on global inflation and the real possibility of a US and global recession, which JP Morgan suggest is a 60% probability (Siddarth, 2025).   The above inflation salary increase for the public service (that is 5.5% against the 4,5% anticipated inflation) (Moloi, 2025) will place further upward pressure on inflation and reduce the revenue available for public services and infrastructure.   The electricity supply, whilst relatively stable over the last few months, continues to plague the economy. The threat of loadshedding remains, and is putting the brake on expansion in manufacturing and other high-energy use sectors. The disruption in the supply of electricity negatively impacts productivity and dampens investor sentiment.  The unpredictable nature of the electricity supply has also led to many companies having to incur additional costs by investing in alternative energy solutions, which reduces the overall competitiveness of the South African business environment and discourages both domestic and foreign investment.   The energy crisis is contributing to a broad sense of societal discontentment in the economy's ability to deliver. The power outages hinder educational institutions, medical facilities and small businesses. It is disrupting their daily operations and is exacerbating inequality between communities that have varying access to alternative energy solutions.   The growing disparities need to be addressed urgently. Government can do so through the introduction of targeted interventions, which could include, for example, subsidies for off-grid solutions and the prioritisation of energy reforms.   The national budget presumes a 1.9% GDP growth for the fiscal year (Treasury, 2025). Given the external shocks triggered by the US tariff war, the impact thereof on global inflation and the upward pressure on local inflation resulting from the VAT increase, together with the underperformance of actual 2024 GDP growth against projected GDP growth (as can be seen from the graph below), and a reduction in consumer spending, it is highly unlikely that the 1.9% target will be realised. It would mean a trebling of GDP growth from 2024 levels, and there is little evidence to suggest that the economic structural deficiencies will be dramatically corrected in the short term. A target of around 1.5% is more realistic, and may even be optimistic.   On the back of expected higher inflation and lower than budgeted GDP growth, it is likely that the revenue targets set in the budget will not be achieved.   In terms of gross fixed capital formation, the National Development Plan envisages increasing it from 17 percent to 30 percent by 2030 (Parliament, 2025). However, when one considers current investor confidence and that the average in emerging markets is around 25%, it seems a little over optimistic.   Fragile Economic Recovery:  South Africa's economy is struggling, with only a 0.6% GDP growth rate in 2024, insufficient for significant job creation and poverty reduction, indicating deep-rooted structural weaknesses. Low Business and Consumer Confidence:  Business confidence remains low at around 45 index points, causing delayed investments and expansions, while consumer confidence is also declining, further reducing discretionary spending. High Unemployment and Inequality:  The unemployment rate stands at 33.2%, with youth unemployment at 45.5%, contributing to social instability and limiting household consumption amidst chronic poverty and inequality. Inflation and Monetary Policy Constraints:  Inflation is expected to moderate at about 4.5% in 2025, but the South African Reserve Bank has limited capacity to cut interest rates, complicating efforts to stimulate demand in a challenging economic environment. Energy Crisis Impact : Persistent electricity supply issues, including the threat of loadshedding, are stifling economic expansion and contributing to societal discontent, necessitating urgent government interventions for targeted energy reforms and support for off-grid solutions.   Summary generated by Grammarly AI, verified and amended by author   3. Fiscal framework and revenue composition   Government revenue is far too heavily dependent on a narrowing and shrinking tax base, which places the South Africa's fiscal framework under considerable strain.   Individual income taxes is the largest contributor to government income. It is followed by value-added tax (VAT), corporate taxes, fuel levies and customs duties. This structure exposes government to significant risks during periods of economic downturn, more so when unemployment rises and real incomes decline.   Since South Africa's tax base is so small, the over-reliance on individual taxpayers is particularly problematic. With only around 7.9 million taxpayers out of a population of over 60 million, of which 1 million pay 60% of all income tax, and 28 million welfare recipients, there is a serious risk to fiscal sustainability (Business Tech, 2025 (1)).   The regressive nature of VAT further exacerbates the already high levels of inequality, since it disproportionately affects low-income households who spend most of their income on consumption.   The decision to increase VAT by 0.5% - that is from 15% to 15.5% - will undoubtedly have an impact on consumer spending, as well as on inflation. Economists predict the increase could depress GDP growth by up to 0.1% annually and raise inflation by 0.25%. Given the fragile state of consumer confidence, any tax increase could further erode household disposable income and reduce overall demand.     Case study: Potential to reach the budgeted tax target   One of the economists consulted referred to research that he had previously undertaken.   In 2018, VAT was increased from 14% to 15%.  The total VAT that was projected by National Treasury at that time was R348.1 billion. The proposal itself was expected to raise an additional R22.9 billion. But the actual collection, that is the number released by National Treasury about two years later after the first revisions, was R324.8 billion, R23.3 billion below what National Treasury had forecasted.   But that does not tell the full story, because when one examines the breakdown, refunds were estimated at just under R200 billion, but it came in at R229, that is R29 billion more than expected.   This was due to the impact of State Capture. Under the previous Commissioner, the South African Revenue Services (SARS) was weak, there was corruption within the SARS system, and because of the widescale corruption, there was no public buy-in. People were disillusioned, so found ways to cheat the system.   Now that corrective action has been taken at SARS, which Commissioner Edward Kieswetter has to a large extent transformed back into its former efficient state, it is believed that the VAT revenue shouldn’t be far off of the VAT projected should the GDP growth be achieved.   That said, as discussed previously, the likelihood of a GDP growth being achieved is questionable.   Because what also needs to be noted is that most of South Africa’s economic growth over the last decade has been from consumer spending. Unless other areas of the economy and other sectors of the economy can stimulated, household consumption is expected to drive economic growth in the immediate period. It is important to note that consumer spending last year most probably prevented South Africa from going into recession. And the two-pot pension reform, increased household spending towards the end of the year, which further helped.   In the context of consumer driven growth, to raise value added tax, even if  only by 0.5%, will dampen consumer confidence and undermine the consumer spending growth. It is likely to drag down economic growth. In a VAT increase scenario, businesses are likely to pass on the cost to consumers. That, in turn, will drive up inflation. This means that any rise in VAT, even if it's only 0.5%, is unlikely to bring the revenue as envisaged by the Treasury, as it would depress other parts of the economy.   Customs duties, while a smaller component of total revenue, play a significant role in regional economic relations. South Africa collected approximately R160 billion in 2023/4 in customs duties of which it retained only around R80 billion (approximately 50%). The balance was distributed to neighbouring countries through the Southern African Customs Union (SACU) (SARS, 2024).   Even though only 10% of imports incur duties, these revenues form a crucial fiscal pillar for SACU member countries such as Lesotho, Eswatini, Namibia, and Botswana. Transfers to these countries of around 50%, a figure that vastly surpasses their proportional share of the duty-bearing imports. South Africa 97.4% to the pool (SARS, 2024).This raises questions with regard to the equity and sustainability of the current revenue-sharing arrangements.   The current structure of SACU revenue distribution not only strains South Africa's budget but also creates a dependency syndrome among member countries, where in some cases, these transfers often make up more than 50% of their revenue. It also serves as a disincentive for the diversification of their economies.   Consideration should be given to the re-evaluation of the SACU formula. The new arrangements should balance actual trade values and development needs in order to foster a more equitable regional partnership.     Over-reliance on a Narrow Tax Base : South Africa's government revenue is heavily dependent on individual income taxes from a small taxpayer base, which poses risks to fiscal sustainability and equity. Impact of VAT Increase:  A proposed 0.5% increase in value-added tax (VAT) may negatively affect consumer spending and inflation, potentially dampening economic growth and undermining consumer confidence. Role of Consumer Spending:  Consumer spending has been the main driver of South Africa's economic growth over the past decade, and any tax hikes could reduce household disposable income and overall demand. Customs Duties and SACU Dynamics:  Customs duties contribute significantly to South Africa's revenue but much of this is redistributed to neighbouring countries through the Southern African Customs Union (SACU), raising questions about equity and sustainability. Need for SACU Reform:  The revenue-sharing arrangements under SACU strain South Africa's budget and create dependency among member countries, highlighting the need for a re-evaluation of the distribution formula to foster regional equity and diversification.     Summary generated by Grammarly AI, verified and amended by author    4. Public expenditure and debt dynamics   South Africa's commitment to social support - which includes welfare grants, health and education - is reflected in its public spending. This commitment, however, brings pressure to bear on the national budget. Education receives over R500 billion annually, aimed at improving school infrastructure, teacher remuneration and the provision of other educational resources. But, despite the significant investment, the outcomes remain uneven. The high levels of disparity between urban and rural schools persist.   Social services, such as grants for the elderly, children, and disabled, receives R431 billion annually. These programmes are essential in mitigating poverty and inequality, but cognisance needs also to be taken of its growing share of the budget. As such, they limit fiscal space for other essential functions like infrastructure investment and innovation.   Perhaps most worrying is the rising cost of debt servicing.   As debt-to-GDP levels increase, more of the budget is being absorbed by interest payments that reduce the funds available for development. The fiscal crowding out is becoming a pressing issue, because it is constraining the government's ability to adequately invest in long-term growth drivers, such as economic infrastructure.   The South African government's gross loan debt is projected to reach nearly 75% of GDP in the coming fiscal years (Trading Economics, N.d.(3)), which some consider high. The reality is that South Africa does not has a super-high debt-to-GDP ratio, it just does not have the growth trajectory to support the payments, which is the problem.     Debt per se is not problematic, it what the debt is used for that matters. Investment into economic infrastructure will serve as a stimulus to generate growth and future revenue to service the debt. Unfortunately, the performance in public infrastructure spending is poor. Creating opportunity through the reform of Public Private Partnership (PPP) regulations – which government has started doing - can serve to overcome poor spending performance. An approach similar to the lifting of the embedded electricity generation restrictions enabling the private sector to invest, is another example.   But as confidence in the country's fiscal sustainability declines, borrowing costs may very well increase, further worsening the ability to service the debt burden. This dynamic creates a vicious cycle that can only be broken by sustained fiscal consolidation and/or economic growth.   To mitigate long-term risks, South Africa's approach to public spending needs to be more strategic. Treasury will need to conduct comprehensive spending reviews in order to evaluate efficiency, to eliminate duplication and to improve the outcomes of its spending.   Investments in digital governance and fiscal transparency could enhance accountability and improve budget implementation. So too, a switch to performance-based contracts and incentives to attract the private sector into managing some public services will introduce efficiencies with concomitant savings.   Currently Treasury is making cuts to education and health personnel, which is not sensible for long-range growth and capacity, since this will negatively impact the skills and capacity needed ten years down the line.   Public Spending and Budget Pressure : South Africa allocates significant funds to social support, including education and welfare grants, but this creates pressure on the national budget and limits fiscal capacity for other essential functions. Education Investment vs. Outcomes:  Although over R500 billion is spent annually on education to enhance infrastructure and resources, disparities between urban and rural schools persist, indicating uneven outcomes. Growing Debt Servicing Costs:  Rising debt-to-GDP levels, projected to approach 75%, result in a larger portion of the budget being consumed by interest payments, which hinders investment in growth-oriented infrastructure. Need for Strategic Spending:  South Africa must adopt a more strategic approach to public spending, including spending reviews to improve efficiency, eliminate duplication, and enhance outcomes, while investing in digital governance and fiscal transparency. Impact of Budget Cuts:  Current cuts to education and health personnel by Treasury may adversely affect long-term growth prospects and the development of essential skills and capacity needed for future economic stability.   Summary generated by Grammarly AI, verified and amended by author 5. Infrastructure investment and economic revitalisation   Infrastructure investment serves as a major catalyst for economic recovery. It is therefore assuring that the 2025–2026 budget has allocated more than R1 trillion for the development and revitalisation of the country's energy and transport infrastructure (Magubane, 2025), since these investments will address key supply-side constraints, facilitate trade, and attract foreign direct investment (FDI).   However, for this to materialise, the existing implementation gap will have to be addressed, since projects are often held up in the planning stage as a result of bureaucratic inefficiency, the lack of project preparation, and insufficient feasibility assessments. Realising the benefits of infrastructure spending will require urgent improvements in project management capacity, procurement efficiency, and intergovernmental coordination.   Structural reforms have begun to create space for greater private sector participation, particularly through public-private partnerships (PPPs). These frameworks aim to de-risk infrastructure projects and leverage private capital in order to supplement public investment. Successful examples in the energy sector serve as a model that can be replicated and expanded to other sectors such as transportation, logistics, and housing.   Government should be the flywheel that crowds in capital. It should accept that it hasn’t got all the capital and it can’t do everything, but it can be the flywheel. It can allow infrastructure projects or supply chains or the regulatory environment to act as the stimulant to expand capital investment beyond its own sources.   The infrastructure backlogs in municipalities also needs to be urgently addressed. Inadequate water, sanitation and road infrastructure, serves as a barrier to development and hinders productivity and the communities' quality of life. Municipalities often lack technical expertise and financial management capacity, leading to underspending and inefficient use of grants. National government must play a proactive role in capacity-building and oversight.   In addition to conventional infrastructure, digital infrastructure is emerging as a key enabler of economic growth and development. Through the expansion of broadband access, particularly in underserved rural areas, new opportunities in education, healthcare and e-commerce can be unlocked. Government should, therefore, prioritise digital inclusion as a strategic component of its long-term infrastructure planning.   Special attention will also have to be given to reviving the manufacturing sector, which has all but collapsed. In the late 1980’s manufacturing contributed 25% to South Africa’s GDP. It now stands at around 9%. Contraposed to this, Malaysia also stood at 25% in the late 1980’s, but manufacturing now contributes around 30% to their GDP.   In this regard, more attention needs to be given to the beneficiation of minerals and other raw materials.   Infrastructure Investment Significance:  The 2025–2026 budget allocates over R1 trillion for energy and transport infrastructure, which is crucial for economic recovery, addressing supply-side constraints, facilitating trade, and attracting foreign direct investment. Implementation Challenges:  To realise the benefits of infrastructure spending, the existing implementation gap must be closed, requiring improvements in project management, procurement efficiency, and intergovernmental coordination. Private Sector Participation:  Structural reforms are fostering greater private sector involvement through public-private partnerships (PPPs), which can de-risk projects and enhance public investment in various sectors. Municipal Infrastructure Backlogs : Urgent action is needed to address inadequate municipal infrastructure, such as water and sanitation, which hampers development and quality of life. The national government should assist municipalities with capacity-building and oversight. Digital Infrastructure Expansion:  Prioritising digital infrastructure, especially broadband access in rural areas, is essential for economic growth and can unlock new opportunities in education and healthcare. Digital inclusion should be a key focus in long-term infrastructure planning.   Summary generated by Grammarly AI, verified and amended by author     6. The investment climate and private sector dynamics   Due to policy uncertainty, infrastructure constraints, and the private sectors limited confidence in the government's ability to deliver the required reforms that will enable economic growth, current investment levels remain weak.   Investors are hesitant to commit capital when returns on safer instruments, such as government bonds, offer risk-free and guaranteed yields of 6% or more. This crowding out effect is particularly significant for sectors like manufacturing and agriculture, where risk-adjusted returns are less certain.   For the private sector to flourish, it requires less red tape, and a clearer and more supportive regulatory environment. Delays in licensing, opaque decision-making processes and shifting policy signals deter investment. To address these challenges a streamlined regulatory regime, improved transparency, and a commitment to policy continuity is needed.   There are also concerns about South Africa's potential growth rate. A decade ago, potential growth was estimated at around 3.5%, but this figure has likely declined due to institutional decay and lost capacity. Rebuilding institutional effectiveness—particularly at the municipal and provincial levels—is essential for restoring investor confidence.   Foreign direct investment has also been impacted by perceptions of corruption, weak enforcement of contracts, and limited investor protections. South Africa must strengthen the rule of law, improve dispute resolution mechanisms, and instil confidence amongst investors so that they believe that they will have recourse to fair treatment.   To reinvigorate local investment, the government should support small, medium and micro enterprises (SMMEs), which are critical to job creation. It should take steps to improve access to finance, to simplifying tax compliance, and to tailor support programmes that will empower entrepreneurs and stimulate grassroots economic activity.   Impacting each of these interventions are the real and perceived anti-growth policies. The recently promulgated Expropriation Act being one example, where the ambiguity as to what constitutes ‘’property” and under what circumstance expropriation without compensation may occur lead antagonists to suggest that property rights are under threat. What is needed as a minimum is clearer definition; which definition should be defined collaboratively between the state, the private sector, civil society, and professionals in order to ensure that all sectors of the economy are in sync and sing from the same hymn sheet.   Such clarity will also reduce the potential for misunderstanding such as that of the current US administration who have embarked on punitive measures against South Africa based on what some infer to be a false narrative (Mbembe & Gilmore, 2025). The reality is, however, that differences in interpretation do exist.   Investment Hesitation:  Current investment levels in South Africa are weak due to policy uncertainty, infrastructure issues, and low confidence in the government's reform capabilities, leading investors to favour safer, guaranteed returns like those from government bonds. Regulatory Challenges : A clearer, more supportive regulatory environment is necessary for the private sector to thrive, as delays, opaque decision-making, and shifting policies deter investment. Streamlining regulations and improving transparency are critical steps. Concerns About Growth:  South Africa's potential growth rate has declined from an estimated 3.5% due to institutional decay. Rebuilding effective institutions, especially at municipal and provincial levels, is essential for restoring investor confidence. Foreign Investment Issues:  Perceptions of corruption, weak contract enforcement, and limited investor protections are hindering foreign direct investment. Strengthening the rule of law and improving dispute resolution mechanisms are needed to rebuild investor trust. Support for SMEs and Clarity on Expropriation:  Government support for small and medium enterprises (SMMEs) is vital for job creation. Additionally, clearer definitions around property rights and expropriation are necessary to prevent misunderstandings that may lead to international tensions and miscommunications.     Summary generated by Grammarly AI, verified and amended by author     7. Trade and international relations   South Africa's external trade environment is under pressure due to the emergence of global protectionist tendencies and shifting international trade alliances. The unilaterally imposed punitive tariffs of the United States call into question the feasibility of continuing exports to them at current levels, which can have a significant impact on the economy, given that the US accounts for 8% of South African exports (Mohamed & Moloi, 2025). Source: Stanlib in Daily Investor (15 April 2025)   Exporters will have to find new markets for their products as South African products and produce in the US will become expensive and uncompetitive. This is however not a short term solution as one market cannot be shut down today, and a new market opened tomorrow. It will take time to develop. In the interim manufacturers need to survive in the short term; the possibility of some not, is real.   Automotive exports could be particularly hard hit, posing a direct threat to this vital manufacturing sector. The auto industry supports thousands of jobs and is a major contributor to export earnings. The 25% tariff that has been imposed could be devastating for local producers, especially for small and medium enterprises that lack the capital to absorb such shocks.   Negotiations with key trade partners like the United States must be prioritised to preserve favourable terms under the African Growth and Opportunity Act (AGOA).  Potentially, up to 200,000 jobs (125,000 in automotive industry alone) (Libera, 2025) may be threatened. AGOA in 2024 accounted for about 46% of total exports to the US (Business Tech, 2025 (2)), and somewhere between 3% - 4% of total exports. Although this may appear to be a small exposure, it does have an impact downstream, because a lot of the exposure is concentrated in certain sectors such as agriculture and manufacturing – particularly motor vehicles and component parts.   One economist pointed out that many manufacturers of component parts are not large enterprises and thus do not have the balance sheet to support shocks of this magnitude. Some concessions need to be considered.   At the same time, diversification of trade partners—especially within Africa and Asia—can reduce dependence on any single market. The strategic planning in this regard should assume South Africa’s graduation out of AGOA, especially given the fractious  relationship between US and South Africa.   Regional trade also needs reform. SACU revenue sharing, as noted, is skewed and lacks transparency. South Africa effectively subsidises the budgets of its neighbours, with little reciprocal benefit. These arrangements must be re-evaluated to ensure long-term fiscal fairness and regional economic stability.   The African Continental Free Trade Area (AfCFTA) presents a unique opportunity to expand intra-African trade. However, success will depend on harmonising standards, improving logistics and investing in cross-border systems and infrastructure. In order for South Africa to position itself as a regional trade hub, it should play a leadership role in operationalising AfCFTA.   Global Trade Pressures:  South Africa's trade is facing challenges due to rising global protectionism, particularly with the imposition of US tariffs, which threaten the viability of exports to the US, accounting for 8% of South African exports. Need for Market Diversification:  Exporters must find new markets as US tariffs make South African products less competitive; however, this is a long-term process and short-term survival for manufacturers is critical. Impact on Automotive Industry:  The automotive sector, a significant contributor to jobs and export earnings, is especially vulnerable to the 25% tariff imposed by the US, which could adversely affect small and medium enterprises. Importance of Trade Negotiations:  Prioritising negotiations with key partners like the US is crucial to maintaining favorable trade terms under the African Growth and Opportunity Act (AGOA) and preventing potential job losses of up to 200,000. Regional Trade Reform and AfCFTA:  South Africa needs to reform regional trade arrangements for fairness and stability while seizing the opportunity presented by the African Continental Free Trade Area (AfCFTA) to enhance intra-African trade through improved logistics and standards.     Summary generated by Grammarly AI, verified and amended by author     8. Social Considerations: Welfare, consumption and human capital   Social grants support millions of South Africans and serve as an important consumption driver. However, this model is not sustainable in the long term. With only a small proportion of the population paying income tax, the balance between support and dependency must be carefully managed.   Consumer spending has historically driven economic growth, but this trend is weakening due to wages that have been stagnating and persisting inflationary pressures. The recent introduction of the two-pot pension system, which allows partial early withdrawals, offers short-term liquidity but may undermine long-term savings.   Investing in human capital is paramount. The educational outcomes we now have in the public schooling system are quite unsatisfactory. According to one of the world’s leading development economists and specialist on education reform, Professor Lant Pritchett, South Africa is the single biggest learning underperformer relative to GDP per capita among low and middle income countries. In short, we get extremely poor education outcomes despite our high levels of public expenditure (Schirmer, 2023).     Education must be re-imagined and vocational training must be aligned with market needs. Programmes that promote entrepreneurship, digital literacy, and technical skills that can empower citizens to contribute productively to the economy, must be rolled-out.   Healthcare is another key pillar of human development. The proposed National Health Insurance (NHI) aims to provide universal access but faces funding, infrastructure, and administrative hurdles. A phased, consultative approach is necessary to ensure that healthcare reforms are inclusive and fiscally sustainable.   9. Institutional capacity, integrity and governance   Poor governance and corruption have been a recurring themes in South Africa's economic stagnation. State capture has significantly eroded institutional integrity, and has affected everything from procurement processes to service delivery. Rebuilding trust requires transparent governance, accountability, and a capable public sector.   That is, however, only part of the story. The reality is that we have been in as low growth economy for decades – we have an institutional problem, and constraints.   The first part of the constraint has the infrastructure SOEs, Transnet, Eskom, the water boards, etcetera, which are in disarray. Their roles in lifting growth by investing and driving infrastructure are not that strong anymore. And the breakdown of infrastructure has also driven up inflation, prices, the cost of living and the cost of doing business; and it has eroded savings. It has a deterring effect, or at least threatens to deter future investment. The Reserve Bank, for example, has warned that a breakdown in infrastructure is threatening the stability of South Africa's financial system also (SARB, 2024 (2)).   Municipal governments, which are key to local economic development, suffer from under-capacity and corruption. Reforms in municipal finance, procurement and service delivery will be crucial to achieving inclusive growth.   Improving the ease of doing business must remain a top priority. Urgent attention needs to be given to measures such as digitising licensing processes, reducing red tape, and clarifying land rights, all of which can unlock significant investment.   Civil society and the media are important watchdogs that enhance and ensure accountability. These institutions must be strengthened so as to ensure the protection of the freedom of expression and similarly, civic engagement must be encouraged, as both are vital components of a resilient democracy and economy.     10. Strategic recommendations and conclusion   South Africa's economic revival requires a multifaceted approach:   Accelerate infrastructure implementation: Shovel-ready projects need to be expedited and public project management capacity must be improved. Reform revenue sharing: Revise SACU arrangements for equitable fiscal contributions and reduced dependency. Promote private investment: Lower barriers to entry, improve investor protection, streamline regulatory approvals and reduce the levels of red tape. Target key sectors: Provide targeted incentives to revive agriculture, manufacturing, energy, and construction. Rebuild institutions: Focus on governance, transparency, and public sector training at all levels of government. Diversify trade and exports: Strengthen regional and Asian trade ties to reduce vulnerability to Western protectionism. Support SMEs: Simplify tax compliance and provide financial support to small businesses and start-ups. Foster innovation and skills: Increase investment in R&D, higher education and vocational training. Strengthen civic institutions: Empower watchdog organisations and ensure freedom of the press and civil participation.     Conclusion   South Africa stands at a crossroads. The choices made in the next few years will determine whether the country continues on a path of stagnation or begins a journey toward inclusive and sustainable growth.   The building blocks exist: a diversified economy, a young population, and robust institutions that, though weakened, can be rebuilt and restored.   But for it to be achieved, action must be decisive and coordinated. By implementing bold reforms, investing in infrastructure and human capital, and by fostering a culture of accountability, South Africa can reclaim its position as a dynamic emerging market and a leader on the African continent.     References   Business Tech. 2025 (1). South Africa has 7.9 million taxpayers funding 28 million grant recipients. [Online] Available at: https://businesstech.co.za/news/budget-speech/816563/south-africa-has-7-9-million-taxpayers-funding-28-million-grant-recipients/ [accessed: 15 April 2025]   Business Tech. 2025 (2). R70 billion disaster for South Africa. [Online] Available at: https://businesstech.co.za/news/finance/821032/r70-billion-disaster-for-south-africa/  [accessed: 15 April 2025]   Libera, M. 2025. South African province in crisis, and 125,000 jobs at risk. [Online] Available at: https://businesstech.co.za/news/5-things/820748/south-african-province-in-crisis-and-125000-jobs-at-risk/ [accessed: 15 April 2025]   Magubane, K. 2025. BUDGET 2025 | R1-trillion infrastructure drive 'will jolt economy to higher level'. [Online] Available at: https://www.timeslive.co.za/sunday-times-daily/business/2025-03-12-budget-2025-r1-trillion-infrastructure-drive-will-jolt-economy-to-higher-level/  [accessed: 15 April 2025]   Mbembe, A. & Gilmore, R.W. Trump’s attacks on South Africa are a punishment for independence. [Online] Available at: https://www.theguardian.com/commentisfree/2025/mar/07/trumps-attacks-on-south-africa-are-a-punishment-for-independence  [accessed: 14 April 2025]   Mohamed, S. & Moloi, T. 2025. [Online] Available at: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.parliament.gov.za/storage/app/media/PBO/Budget_Analysis/2025/17-02-2025/PBO_Pre-budget_brief_South_Africas_trade_relations_with_the_USA.pdf [accessed: 15 April 2025]   Moloi, D. 2025. DPSA Issues Circular Announcing Public Service Cost of Living Adjustments 2025/26.  [Online] Available at: https://www.dpsa.gov.za/thepublicservant/2025/04/03/dpsa-issues-circular-announcing-public-service-cost-of-living-adjustments-2025-26/#:~:text=In%20light%20of%20this%20resolution,with%20effect%20from1%20April%202025. [accessed: 15 April 2025]   Office of the US Trade Representative. N.d. Africa Growth and Opportunity Act (AGOA) [Online] Available at: https://ustr.gov/issue-areas/trade-development/preference-programs/african-growth-and-opportunity-act-agoa [accessed: 14 April 2025]   Parliament. 2025. 2025 Budget Analysis. [Online] Available at: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.parliament.gov.za/storage/app/media/PBO/Budget_Analysis/2025/3-march/18-03-2025/PBO_2025_Budget_analysis_18_March_2025.pdf [accessed: 15 April 2025]   Schirmer, S. 2023. South Africa’s failing education system. [Online] Available at: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.cde.org.za/wp-content/uploads/2023/03/The-Silent-Crisis-South-Africas-failing-education-system.pdf  [accessed: 15 April 2025]   Siddarth, S. 2025. Global brokerages raise recession odds; J.P. Morgan sees 60% chance [Online] Available at: https://www.reuters.com/markets/jpmorgan-lifts-global-recession-odds-60-us-tariffs-stoke-fears-2025-04-04/ [accessed: 14 April 2025]   South African Reserve Bank (SARB). 2025 (1). Statement of the MPC March 2025. [Online] Available at: https://www.resbank.co.za/en/home/publications/publication-detail-pages/statements/monetary-policy-statements/2025/march#:~:text=The%20overall%20result%20of%20these,the%20better%20fuel%2Dprice%20projections. [accessed: 15 April 2025]   South African Reserve Bank (SARB). 2025 (2). Reserve Bank warns poor infrastructure is a major threat to SA's financial system.  [Online] Available at: https://www.news24.com/fin24/economy/reserve-bank-warns-that-poor-infrastructure-is-a-major-threat-to-sas-financial-system-20241129  [accessed: 15 April 2025]   South African Revenue Services (SARS). 2024. Media release: Joint media statement National Treasury and South African Revenue Service on the release of the 17th annual edition of Tax Statistics. [Online} Available at: https://www.sars.gov.za/latest-news/media-release-joint-media-statement-national-treasury-and-south-african-revenue-service-on-the-release-of-the-17th-annual-edition-of-tax-statistics/#:~:text=In%20the%202023/24%20fiscal,9%20billion%20(R32. [accessed: 15 April 2025]   Statistics South Africa (Stats SA). 2025. Statistics South Africa on official unemployment rate in third quarter of 2024. [Online] Available at: https://www.gov.za/news/media-statements/statistics-south-africa-official-unemployment-rate-third-quarter-2024-12-nov#:~:text=The%20official%20unemployment%20rate%20was,persons%20to%208%2C0%20million [accessed 15 April 2025]   Trading Economics. N.d.(1) South Africa Business Confidence. [Online] Available at: https://tradingeconomics.com/south-africa/business-confidence [accessed: 15 April 2025]   Trading Economics. N.d.(2). South Africa Consumer Confidence. [Online] Available at: https://tradingeconomics.com/south-africa/consumer-confidence [accessed: 15 April 2025]   Trading Economics. N.d.(3). South Africa Government Debt-to-GDP. [Online] Available at: https://tradingeconomics.com/south-africa/government-debt-to-gdp#:~:text=In%20the%20long%2Dterm%2C%20the,according%20to%20our%20econometric%20models. [accessed: 15 April 2025]   Treasury.2025. 2025 Budget. Budget Review. [Online] Available: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.treasury.gov.za/documents/National%20Budget/2025/review/FullBR.pdf [accessed: 15 April 20125] - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 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, represented by its Chief Executive Officer, Daryl Swanepoel, attended the Civil Society Policy Forum 2025 on Wednesday, 23 April 2025. The meeting was held at the Headquarters of the International Monetary Fund in Washington and Online. The focus of the meeting was on hidden debt and how to tackle grand corruption in debt management in order to safeguard financing for development.   Debt is essential for the economy. But what happens when it is captured, mismanaged, acquired improperly, or hidden? Amid increasing democratic backlash, greater transparency and accountability in debt are urgently needed. The session also explored lessons from Mozambique to shape FfD4 discussions on preventing debt capture and safeguarding economic sustainability and future generations’ welfare. Speakers included:  Daniela Patino Pineros, Lead Public Resources, Transparency International (moderator) Aslak Jangård Orre, Senior Researcher Chr. Michelsen Institute Kjetil Abildsnes, Senior Policy Officer - Debt Justice, Eurodad Sally Torbert, Policy Manager, International Budget Partnership Alessandro Gullo, Assistant General Counsel, IMF

Copyright © 2025   Inclusive Society Institute PO Box 12609 Mill Street Cape Town, 8010 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 its Board or Council members.   April 2025   Author: Prof Jan van Heerden Editor: Daryl Sw anepoel   Table of Contents             Introduction      Models used      The core principles of the CGE models used in the simulations           The baseline forecast           The policy forecasts Macro-economic interventions      1. Alternative debt-reduction roadmap      2. Youth solidarity tax      3. Limited public salary bill increases Conclusion Bibliography             List of Figures             Figure 1 The baseline and policy forecasts Figure 2 Debt to GDP ratio (policy simulation) Figure 3 Increase in public sector debt above the baseline Figure 4 Government Deficits (policy simulation) Figure 5 Investment Expenditure and Imports (deviations from the baseline) Figure 6 GDP and its components (cont.) (deviations from the baseline) Figure 7 Industry survivors (relative to the baseline) Figure 8 Short run industry losers Figure 9 Real GDP % deviation from the baseline Figure 10 Change in the income tax rate on rich households Figure 11 Annual deviation from the baseline in the main GDP expenditure components (% change) Figure 12 Cumulative deviation from the baseline in main GDP expenditure components Figure 13 Cumulative % change from the baseline in Industry output Figure 14 Deviation from the baseline in household consumption by income group Figure 15 Cumulative deviation from the baseline in the main GDP expenditure components levels (revenue not recycled) Figure 16 Cumulative deviation from the baseline in the main GDP expenditure components (revenue recycled) Figure 17 Cumulative deviation from the baseline in the Supply Side components of GDP, as well as real wages and the CPI. Introduction   The report below is a summary of a more technical modelling report of three macroeconomic simulations done for the Inclusive Society Institute in 2024. The three macroeconomic interventions are listed in the textbox at below.    Macro-economic interventions   Alternative debt-reduction roadmap – increase debt to GDP to 100 percent over the next five years followed by a systematic reduction. Proviso: increased debt ringfenced purely for economic infrastructure development, NO consumption spending.   Youth solidarity tax: Increase personal tax by one percent for all taxpayers earning R600,001+ per annum. In the form of a transitional tax for five years only. Ringfenced for youth enterprise development to be administered by the Solidarity Fund. See if this can be funded by delaying inflationary bracket adjustments over the next two or three years.   Limit the public salary bill increases to inflation   Models used   The study was done using Computable General Equilibrium (CGE) models. The Department of Economics at the University of Pretoria has various CGE models, with the same core set of equations, but with different extensions, depending on the tasks at hand. We have used three different models for the simulations: (i) The national model was used for the first macroeconomic intervention where the debt-to-GDP ratio was increased temporarily; (ii) An older version of the provincial TERM model was used for the remaining two macroeconomic interventions, since the national model does not have income taxes (personal or corporate) integrated into the model, and (iii) the latest version of our provincial TERM model was used for some sectoral interventions, included in the technical report, but not reported on here.     The core principles of the CGE models used in the simulations   A CGE model is basically a system of thousands of equations describing the relationships that exist in the economy. It uses data from Statistics South Africa (StatsSA), namely the Supply and Use tables, which resembles a snapshot of the economy at a specific point in time. The Supply and Use tables show that the economy is in equilibrium, or balanced, in the sense that the supply and demand for every commodity or factor of production is equal at that point in time. So, Computable General Equilibrium (CGE) starts with a general equilibrium of all goods, services and factors of production in the economy, and then uses a computer to solve a very large system of equations that describes all the relationships between role players in the economy. We start with equilibrium and then change one or two things in the model, such as a tax rate or spending by the government, or investment by the private sector, and then let the computer calculate the values that will hold in a new equilibrium. A CGE model could be a national model that studies the economy of the country at large, or a multi-regional CGE model which treats each province of South Africa as a separate economy. The regional model not only studies the equilibria of each province, but could also calculate the effects that actions of one province would have on the national economy as well as on all other province.   The equations of the CGE model describe the relationships between all the role-players in the economy, namely the Industries, Households, Investors, Governments and Foreigner buyers, who could be foreign industries, households, investors, or governments, or merely buyers from other provinces in the case of the regional models.   Unlike the Australian CGE model, we have multiple households in our South African models, namely twelve groups distinguished by income: we have the poorest decile split into two ventiles; then the eight next deciles by income, and finally the richest decile also split into two ventiles. The model is therefore very well suited to measure changes in the income distribution or poverty levels. In the older models we had 48 household groups, by income as well as race group.   The basic production function for all industry production is the so-called Leontief function, which means that inputs into the production process are used in fixed proportions: if an industry wants to double output, it has to double all inputs, irrespective of input prices. The Leontief production function is generally accepted by economists world-wide: for example, to produce one car, the factory needs four wheels, one engine, one steering wheel, etc., and to produce ten of those cars, it will need ten times as many wheels, engines, steering wheels, and so forth. Even though we assume that the basic production function has this simple form, industries can choose where  to buy their intermediate inputs from, according to CES [1] demand functions: depending on relative prices and the substitutability of the goods from different sources, industries may decide to source their inputs from the local market, or from abroad, depending on price.   Transportation cost in the model plays a very important role, and is included in the purchaser’s price of a commodity. A buyer would therefore rather source from a nearby industry than from one far away. Distances between the capitals of the nine provinces as well as to the different ports of import and export are used to build a gravity  mechanism, determining where industries would source their inputs from, or which ports of import and export they will use.   The demand for factors of production also follows the CES functional form: an average level of factors grows proportionally with output, according to the Leontief  function, but an industry could substitute labour for capital or vice versa. Labour demand is also modelled using the CES demand functional form: once the industry has decided about the capital-labour ratio it prefers, different occupational groups – we have 11 in the model – are chosen: different wage levels play a strong role, as well as the substitutability of one occupation for another.    Export demand is a very simple function of domestic versus foreign prices of commodities: if South Africa’s price levels increase relative to world prices, which are exogenous in our model, then the demand for South African commodities decrease. Since South Africa is a small open economy, exports play a very significant role in the model.   Household demand follows the LES (Linear Expenditure System) format: households have a subsistence demand for all commodities, which they will buy first, without looking at the price of the goods. Then they will use the money left over in their budgets to buy “luxury” components of the same goods. For example, we have a subsistence demand for petrol to drive to work every day, but when we go on holiday, the demand for petrol becomes a luxury demand. Subsistence demand is not a function of the price of a good – it is a must have - but luxury demand is a function of the disposable incomes of households.   Unlike households, who maximise utility, given their budget constraints, and industries, who minimize costs or maximise profits, given certain quantities to be produced, we do not have a theory of government in the model. We model the government in two possible ways: (i) exogenously, with its behaviour determined by the modeler (from information published by the government itself, such as in the regular medium-term budget information sessions), or (ii) endogenously, and specifically tied to household behaviour. Governments receive direct and indirect tax income, as well as transfers from all the role players in the economy. The indirect taxes could be modelled as GST’s or a VAT system, and we use the latter. Individual households as well as companies pay direct income taxes as well, while we also have production taxes and subsidies in the model. The government could borrow and build up debt over time, which needs to be serviced on an annual basis. In our simulation we keep the annual government budgets balanced: they give grants to all households, but need to raise either indirect or direct taxes to finance the grants, or a combination of the two types of taxes.   The general method of performing dynamic simulations with a CGE model is to start with a baseline forecast of the macroeconomy, without the economic interventions that we try to implement. A second forecast – the policy simulation – is then performed and compared to the baseline. We generally only report the deviations from the baseline that happen as a result of the policy simulations. So, to some extent we always perform two forecasts: one with the current state of affairs, and a second with some external intervention into the economy. We are then interested in the difference between the two forecasts.    The baseline forecast   The task at hand is to compare the results of three simulations, suggested by the Inclusive Society Institute, to a “baseline” forecast. Any economic forecast is difficult, so we try to keep the baseline forecast as simple as possible. We would typically incorporate macroeconomic forecast data from the National Treasury of South Africa and the International Monetary Fund, amongst others. Specifically, we adopt forecasts for the GDP expenditure components, employment and population growth. We do a “vanilla” forecast, which means that we assume the economy would run on a smooth and moderate path, rather than jumping up and down in a zig-zag fashion. For this study we adopted the strategy of gradually bringing the economy to GDP real growth of around 2% in 2026, and keep it at that level throughout the forecast period.   The policy forecasts   The baseline graphs of all the variables are usually quite smooth, especially of the future forecast values of the variables. We then apply “shocks” to the model – suggested by the Inclusive Society Institute -  by changing one or more of the exogenous variables in the model, which will then alter the smooth path of all the model variables to higher or lower levels than in the baseline. In Figure 1 below the blue line depicts the baseline path of some variable from 2023 to 2039. In 2026 some policy measure is implemented which alters the path of the variable to the orange line. We are typically interested in the size of the deviation from the baseline , and not necessarily the absolute values of the baseline and policy variable values.   Figure 1 The baseline and policy forecasts   Macro-economic interventions   1. Alternative debt-reduction roadmap   The first macroeconomic intervention to be modelled was to “increase debt-to-GDP to 100 percent over the next five years followed by a systematic reduction”, with the proviso that “increased debt (would be) ringfenced purely for economic infrastructure development (and) NO consumption spending”.   It might sound like simple tasks to “increase debt-to-GDP ratio” and “build economic infrastructure” but unfortunately neither task is straight forward.   Debt is built up over time when government expenditure exceeds government income from year to year, so, to increase the debt-to-GDP ratio, the government needs to spend more , or receive less  income , given the size of the GDP. To build infrastructure (and not spend on consumption goods) is tricky in our models. The model database has as its core the National Supply and Use Tables, published occasionally [2] by Statistics South Africa. UN-DESA (2018) describes the Supply and Use Tables (SUTs) as follows:   The SUTs describe the whole economy by industry (for example, the motor vehicle industry) and by product (for example, sports goods). The tables show links between components of GVA, industry inputs and outputs, and product supply and use. The SUTs link different institutional sectors of the economy (for example, non-financial corporations) together with details of imports and exports of goods and services, final consumption expenditure of government, household and non-profit institutions serving households (referred to as NPISHs), and capital formation.   The Supply and Use Tables form part of the system of National Accounts, measuring all aspects of the GDP of a country. However, infrastructure   per se  is not part of the measurement of GDP! We therefore cannot simply increase government expenditure on “infrastructure” to increase the government deficit in a particular year, and hence the debt over time. The industries building the infrastructure do  have their activities recorded in the SUTs, such as all the commodities that they buy or sell, and the values thereof, but the value of old or new infrastructure does not form part of GDP. So, how do we respond to the goal of simulating the government increasing their debt and building infrastructure? (And answer questions such as” how much growth will this bring?” and “how many jobs would be created?”).   Simulation Design   The industry most closely linked to the building of infrastructure is the Construction Industry, so one might let the government buy more Construction Goods and Services, increasing the deficit in that way. However, even if the government would buy all the available Construction Goods and Services, it would not increase the deficit enough to reach the 100% goal of the debt-to-GDP ratio. Moreover, the government does not actually buy any Construction Goods and Services in the model: of their total expenditure, less than 1% goes to Construction Goods and Services. So, even if they would start buying all available Construction Goods and Services, it would not lead to more or better infrastructure, since they are not directly involved in infrastructure development. Private firms  are hired to build infrastructure, and they do buy significant amounts of Construction Goods and Services, when they increase their investment spending. Even though the government does not buy much Construction Goods or Services, or spend much directly on infrastructure, we could let them subsidize everyone else who does! So, in our simulation we let the government borrow funds (increase their debt) and use the funds to subsidize all investment expenditure. All Investment expenditure in the model takes place according to a fixed recipe: one unit of investment has specific inputs into its production process, and Construction Goods and Services form 64,9% of all domestic inputs into the production of Investment Goods. This means that any R100 spent on Investment in the model would automatically buy R64,90 worth of Construction Goods or Services, and the rest on other inputs such as transport equipment, real estate, business services, etc., which are converted into what we know as infrastructure.   In our view all capital goods in the economy, whether privately or publicly owned, form part of the total economic infrastructure. Capital goods are produced through investment activities and Construction Goods and services form more than half of all investment. So, a subsidy on investment would be the best avenue in our model to improve the general infrastructure in the model.   Simulation Results   Figure 2 shows the results for the debt-to-GDP ratio in our simulation. We could not reach a higher level than 84% of GDP without crashing the model, using a subsidy on all investment activities. CGE models are designed for small shocks to their variables: we typically start with the economy in equilibrium and then apply small changes to one or more variables, and let the computer find a new equilibrium accordingly. We then compare the two equilibria and make conclusions about the differences.  Trying to achieve a debt-to-GDP ratio of 100% is an abnormal type of simulation to try with any CGE model.   Figure 2 Debt to GDP ratio (policy simulation)   To achieve the debt-to-GDP ratios in Figure 2, we needed to apply a subsidy on all investment done by all industries in the model of 30% in 2024, an additional 20% in 2025 and an additional 10% in 2026. To get the debt-to-GDP ratio back to its starting value, we then had to remove the subsidies again from 2027 to 2030. Figure 3 shows the level of extra debt to be generated above the baseline to achieve the said goals, peaking at R639bn in 2027. Figure 3 Increase in public sector debt above the baseline     The government’s debt increases from one year to the next if they spend more than their income, that is, when they incur a budget deficit in a specific year. If they continuously incur deficits, the debt will grow larger and larger.   Figure 4 shows how the government deficit has to increase significantly at the start of the simulation, to achieve the debt-to-GDP ratios in Figure 2, and subsequently decrease again to get back to the baseline levels of debt-to-GDP.   Figure 4 Government Deficits (policy simulation)     The GDP components   The blue line in Figure 5 shows the deviation from the baseline in total Investment expenditure, which is the sum of all investment expenditure by all industries. In the beginning of the graph investment expenditure shoots up to 20% above the baseline, because all investment expenditure is subsidized by the government. It becomes profitable to invest and all role-players therefore respond to the government’s subsidy, and buy investment goods. The graph looks much like the one in Figure 4, because the deficit there was exactly caused by the introduction of a subsidy on investment expenditure in the first place, and then the reverse policy later on. The orange line in Figure 5 shows the deviation in Import expenditures from the baseline. Buying investment goods typically entails a high proportion of Imports (24% of all new investment expenditure is on imports), so we expect that the Imports graph should look similar to the Investment graph.   Figure 5 Investment Expenditure and Imports (deviations from the baseline)   Figure 6 shows the trends in GDP itself, as well as the remaining GDP components, Household Consumption, Government Expenditure and Exports. All the graphs show the deviation from the baseline, in percentage points. For example, the blue line shows that real GDP moves above the baseline and increases to 2,2 percentage points above the baseline in 2027. This is a wonderful result! The government borrows money and subsidize investment expenditure, and then the economy grows 2,2 percent higher than without the government’s intervention. It then decreases and lies below the baseline from 2029 onwards. The baseline portrays what would have happened without the policy intervention. So, the policy intervention of increasing government debt in the short run, is good for real GDP in the short run. However, when we apply the contractionary counter policy in the latter part of the simulation, real GDP would be worse than what it would have been for the last decade of the simulation.   Figure 6 GDP and its components (cont.) (deviations from the baseline)     The orange line shows that Household Consumption starts off very poorly as a result of the policy simulation, and then grows significantly above the baseline for five years, before following real GDP into the negative zone. The first two periods are very significant and poses a dilemma for the policy makers. However, GDP is reacting well to the policy intervention in the short run: it is the massive investment increases that cause the positive results in GDP, while households fare not good at all. The increased demand for investment goods as a result of the subsidy, pushes up the demand for construction goods, which forms half of all the components of investment. Construction goods also forms significant parts of many goods that households buy, such as real estate, transport equipment, all transport services, business and other services. The said goods’ prices increase relative to other goods, with the result that the basket of goods that the typical household buys, becomes more expensive than without the policy intervention. Households move above the baseline when we start to reverse the investment subsidy policy intervention in 2026. However, in the long run household consumption follows the rest of the economy into the red zone.   Exports perform better than in the baseline until 2030, and then also falls below it. The export equation in the model is very simple: export demand increases if South African prices increase at a slower rate than foreign prices (or decrease faster). With investment subsidies all industries benefit, and except for the prices of construction goods and a few other ingredients of a unit of investment, most prices fall, relative to the baseline. South African industries thus become more competitive in the world and therefore export more.    Industry winners and losers   Of the 56 industries in our National Model, only 6 end up above the baseline at the end of the simulation period, as shown in Figure 7. It is clear that the forms of their graphs over time are very similar to the graph of total investment in Figure 5 above, since all of them are closely related to the production of investment goods, or the construction industry itself.   Figure 7 Industry survivors (relative to the baseline) A second series of industry graphs simulates that of Household Consumption in Figure 6, and reading through the industry names reminds one of the goods that we as households buy on a regular basis: Bakery, Dairy and Grain products, Education and Health services and Water.   Figure 8 Short run industry losers     Discussion   Increasing the debt-to-GDP ratio temporarily to allow for infrastructure development shows positive results for all industries directly related to the production of investment goods, such as the Construction industry and other hard-core Manufacturing industries. Exports also perform well in the short to medium term because the industry subsidies make South African firms more competitive than before due to lower costs of production. Unfortunately, Households are paying the price for this policy intervention in the short run because many of the goods in their shopping baskets have become relatively more expensive. In the long run all the GDP components fall below the baseline, while only a handful of the 56 industries produce more per annum than what they would have produced in the baseline.   Productivity improvement   Fortunately, the story does not end here. Investment expenditure forms part of GDP, alongside household expenditure, government expenditure, exports and imports. It is a straight forward result that a subsidy on investment expenditure would lead to increased investment and increased GDP, if the decrease in household consumption does not outweigh the increases in investment.   However, why does GDP dip below the baseline towards the end of the simulation period and not benefit from the better infrastructure? Because we have not simulated the effects of better infrastructure yet! Until now we have only subsidized investment expenditure for three years, and then reversed the subsidy subsequently.   Let’s assume that the new infrastructure would improve total factor productivity in all industries, from 2027 onwards, when the subsidy on investment is completed. Figure 9 shows the percentage deviation from the baseline in real GDP as a result of the initial (three year) subsidy on investment and the subsequent removal of the subsidy. There are two graphs, namely, the original graph of GDP from Figure 6 above, and the resulting GDP (orange line) when we let total factor productivity in all industries improve by a mere 0,3% per annum.   The conclusion could be made that it could be a good policy measure to borrow funds for infrastructure development, because (i) in the short to medium term the investment itself would lead to significant growth in GDP, and (ii) in the longer run the productivity in the economy would improve enough to secure a permanently higher level of growth over time.   Figure 9 Real GDP % deviation from the baseline 2. Youth solidarity tax   The task at hand in this Section was defined as “Youth solidarity tax: Increase personal income tax by one percent for all taxpayers earning R600,001+ per annum. In the form of a transitional tax for five years only. Ringfenced for youth enterprise development to be administered by the Solidarity Fund. See if this can be funded by delaying inflationary bracket adjustments over the next two or three years.”   Simulation Design   “Youth enterprise development” is quite difficult to define in terms of our CGE model. The labour force in the model does not have an age dimension, and we are convinced that the youth is working in all of the industries in the model. What the model does have, is a labour force divided into ten different occupational groups. So, in this simulation we are modelling a one per cent increase in the income tax rate on all “rich” households, and recycling the tax revenue in the form of wage subsidies to three of the ten occupational groups. The three chosen groups are elementary workers , operators  and skilled agricultural workers . In reality, wage subsidies are paid to industries for extra  workers hired, but in the model, they are paid to all the workers in the three said occupational groups. Since the cost of labour comes down, industries would certainly hire more labour in each of the three categories, including new young workers.   Figure 10 Change in the income tax rate on rich households   In this simulation we define “rich” households as everybody in the three top deciles according to labour income received [3] .  Figure 10 shows the change in the income tax rate for the top three deciles of households, above the baseline.   Simulation Results   The simulation results look very good, and could serve as part of a policy recommendation to the government. The GDP Components   All the GDP components benefit from this policy intervention. Government consumption (yellow line) is not allowed to deviate from the baseline because all the new income tax revenue is recycled into wage subsidies, while all other government expenditures remain the same. The graph of Real GDP is hidden behind the Household consumption graph. Exports is the biggest winner, and it stems from the decreased labour cost to firms as result of the wage subsidies to some occupational groups. The CGE model is a neo-classical model, which means that all the savings on labour are given through to the consumers of the goods produced. South African firms become more competitive in the world because they are able to charge lower prices for their goods as a result of the wage subsidies. Lower labour cost implies that more labour will be hired, which increases the purchasing power of households, leading to increased household consumption. Lower cost of production also leads to increased investment, since investment goods are produced using capital and (cheaper) labour, just like all other goods.   Figure 11 Annual deviation from the baseline in the main GDP expenditure components (% change)   Figure 11 shows the annual differences between the policy simulation results and the baseline during the five years of higher direct taxes, recycled as wage subsidies. After five years all the GDP expenditure items move back to the baseline. That means that cumulatively over time the five years would result in permanent increases in all the variables above the baseline. This is shown in Figure 12: the expenditure components increase to levels above the baseline during the five years of the policy intervention, and then remain there. Take investment as an example: in Figure 11 we see that investment grows 0,1% faster than in the baseline, for five years. Then it grows at baseline levels again. Five periods of 0,1% growth each adds up to about 0,5% cumulative growth, which is the level portrayed in Figure 12. Figure 12 Cumulative deviation from the baseline in main GDP expenditure components   Industry Winners and Losers   Industries are very dependent on the GDP expenditure components that they are connected with. For example, the Food industry is strongly related to Household expenditure, while the Mining industries are related to Export demand. If all the GDP expenditure components have positive trends as in Figure 12, we could expect all industries to also have similar positive outcomes. This is indeed confirmed by all 30 industry graphs in Figure 13. It is clear that some industries gain much more than others, but in general, this policy intervention does not show any real losers.   Figure 13 Cumulative % change from the baseline in Industry output.     Discussion   This policy intervention looks very promising, with mostly positive results on the macroeconomic as well as industry levels. The increased income taxes would certainly harm some industries that supply consumer goods to the rich group of households who pay extra taxes in the simulation, but their harm should be compared to the benefits of other groups, to determine whether the policy should be implemented or not.   Are these results too good to be true? What is the catch here? If this is such a good policy measure, why does the government not just implement it permanently? Wouldn’t there be a significant cost to the economy if the rich has to pay more income tax?   Figure 14 shows the changes in household consumption for the twelve income groups in the model. The richest 3 deciles (four groups) who pay higher percentages of income tax are depicted by the bottom four lines in the graph. One of the groups (D8) increase their consumption, while V19 stays more or less on the baseline, with D9 and V20 dropping below the baseline in the simulation. The moral of the story is that higher income tax rates do not necessarily mean that household consumption of the taxpayers would decrease. It could, but it does not always happen. In the simulation the wage subsidy causes the cost of production and price levels to decrease, which could lead to an increase in consumption. The poorer groups – V1 to D7 – do not pay more tax, and all consume more as a result of (i) lower price levels of consumption goods and services, and (ii) higher total wage income for three of the occupational groups, due to wage subsidies.   Figure 14 Deviation from the baseline in household consumption by income group     3. Limited public salary bill increases   The requested policy intervention was to “limit the public salary bill increases to inflation”. We briefly report the results here, because most of the explanations of what would happen has been done in Section 3 above. Limiting the public salary bill is contractionary government policy, if they do not spend the savings on other priorities. We could expect similar results to those reported above.   Simulation Design   In the model we have three government “industries”, namely General government, Education and Health and Social Services. It is necessary to think about the government like that because they are employers of factors of production, such as labour and capital, and they produce something, namely “Government Services”. So, in the policy simulation we fix all real wages of the three government industries for seven years, starting in 2024, which means that nominal wage increases are limited to the rate of inflation. Since other industries are not limited in the same fashion, government wages seem to be lower than other wages and the model would let the government employ more labour. We therefore also need to fix the number of workers in government to avoid anomalous results.   Simulation Results   Case 1: Government revenue not recycled   All the macroeconomic results shown in Figure 15  could have been anticipated from what we learned in Section 3 above. Contractionary government policies lead to decreased total demand in the economy, resulting in decreasing price indices. South African goods seem to be cheaper than those of the rest of the world, so that exports increase. Household consumption would be less than in the baseline, because all the workers in the public sector receive lower wages than in the baseline, and therefore have less buying power. In Figure 15 below only exports lie above the baseline, while the other GDP expenditure components look very similar to those in Figure 17 above where the corporate tax rates were increased without recycling the revenue.    Figure 15 Cumulative deviation from the baseline in the main GDP expenditure components levels (revenue not recycled)   Industry Winners and Losers   The three government industries would perform better than any other industry, because their labour cost is relatively lower, by design. A handful other industries who are very reliant on exports also perform better than in the baseline, but the majority of all industries lose with the contractionary government policy.   Discussion   Enough was said above about contractionary government policies, so we would rather do something with the savings that the government build up through paying lower nominal wages than in the baseline.   Case 2: Government revenue is recycled   We ran a second simulation where we used all the savings from the government wage bill to subsidize the sale of Construction Services, to all users thereof. This should have similar results to our subsidy on all investment done in Section 1 above, because Construction Services forms about half of all investment goods, and  Figure 16 shows that this is exactly the case. The big winner is Investment that grows to 5% above the baseline towards the end of the simulation period. This is to be expected because all Construction Services are subsidized, so Investors’ cost of production is decreased. Real GDP benefits from the higher levels of Investment also. However, Households are again the worst off. Many people work for the government and they are being paid less than in the baseline, so their purchasing power is decreased. They cause a decrease in total demand for many goods in the economy, which leads to decreasing real wages and price levels, which benefits Exports.   Figure 16 Cumulative deviation from the baseline in the main GDP expenditure components (revenue recycled) Figure 17 shows how a subsidy on Construction Services, funded by lower government wages, would distort the supply side of the economy. Investment is growing fast, which leads to the economy becoming capital intensive: the capital stock is growing while employment is decreasing. Even though GDP is higher than the baseline, Households suffer because employment is decreasing, and the employed work force have to face lower real wages.   Figure 17 Cumulative deviation from the baseline in the Supply Side components of GDP, as well as real wages and the CPI.    Discussion   This forth macroeconomic policy intervention should stress two important points from above: (i) decreasing government expenditure through lower real wages would lead to a contraction of the economy with mostly negative results on both the macro- and industry levels, and (ii) the choice of recycling mechanism is a matter of paramount importance.   Conclusion   The three macroeconomic interventions modelled above used three different methods of increasing the government’s spending power, namely (i) increasing the debt-to-GDP ratio (borrowing money), (ii) increasing the personal income tax rates on the rich, (iii) keeping government wages constant in real terms, rather than giving annual increases.   One fact that should be clear after reading the three sets of simulation results, is that increased savings by the government is generally bad for the economy if the government does not spend the savings properly. Keeping the increased revenue in or under the sofa is contractionary economic policy which decreases total economic activity; it is deflationary and mostly inefficient.   One of the three macroeconomic interventions showed very positive results, namely, a wage subsidy on youth labourers. The subsidies on investment and construction services also have positive GDP results, but these two recycling schemes would only benefit households in the longer run, and would therefore be unpopular for the government to implement in the short run, but which will yield positive economic infrastructure development to enable future production expansion and GDP growth.   This report should not be interpreted, read or understood as a fixed set of recommendations, but rather as a catalyst for dialogue on proposed interventions.    Bibliography   UN -DESA. (2018). Handbook on Supply and Use Tables and Input Output-Tables with Extensions and Applications. Available at https://unstats.un.org/unsd/nationalaccount/docs/SUT_IOT_HB_Final_Cover.pdf   [1]  Constant elasticity of substitution [2]  They are not published on an annual basis, but rather every five or ten years, or so. [3]  One percentage point is very small and if only those above R600 000 were chosen the additional revenue would not get very far in terms of wage subsidies.   - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 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

Occasional Paper 3/2025 Copyright © 2025 Inclusive Society Institute PO Box 12609 Mill Street Cape Town, 8010 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. M A R C H 2 0 2 5 Prof William Gumede Former Programme Director, Africa Asia Centre, School of Oriental and African Studies (SOAS), University of London; former Senior Associate Member and Oppenheimer Fellow,   St Antony’s College, Oxford University; and author of South Africa in BRICS (Tafelberg).      Abstract Despite evidence from climate experts that 6% of the world’s coal use must be terminated every year until 2040 to prevent a climate disaster, global coal use continues to rise. The global challenge now lies in securing a just transition from coal. Developed countries – the biggest emmitters – have made funding promises to developing countries that fall far short of what these nations need to transition and adapt, and largely take the form of loans that leave these poorer nations heavily indebted and without any power over how the transition unfolds. In South Africa, about 80% of its power is generated by coal. Mine closure will have a severe impact on millions of already poverty-stricken people. At present, South Africa has no effective plan to mitigate the transition shock on the economy, which could destabilise its financial institutions. So, how can South Africa pursue a just transition from coal that takes into consideration local realities, energy security, development and economic growth, indebtedness, and poverty, unemployment and social stability? The country has well-developed infrastructure, abundant natural resources, and critical minerals, offering opportunities to create a formidable green economy. The way forward is global funding based on grants and investment funding, a focus on technology to clean coal, a massive step-up in developing renewable energy, and a manufacturing, skills and technology revolution. But most importantly, is the need for an industrial policy based on a compact between the state, private sector, and civil society.   Introduction   Following energy shortages generated by the Russia-Ukraine war, and the Middle East conflict, many industrial and emerging powers have either returned to the use of coal for power, whether temporarily, or slowed down on decommissioning of coal plants.   A new December 2024 report from the International Energy Agency (IEA) said global demand for coal is set to hit fresh records every year through at least 2027 (IEA, 2024a). Coal demand in 2024 was about 9% higher than a forecast made a few years ago. The forecast from the IEA sees demand for coal rising to nearly 8.9 billion tons by 2027, about 1% higher than 2024 levels.   While there has been a global rise in the deployment of wind turbines and solar panels, it has not slowed down the use of coal. The IEA states: “Coal is often considered a fuel of the past, but global consumption of it has doubled in the past three decades. At the height of lockdowns related to the Covid-19 pandemic in 2020, demand declined significantly. Yet the rebound from those lows, underpinned by high gas prices in the aftermath of Russia’s full-scale invasion of Ukraine, has resulted in record global coal production, consumption, trade and coal-fired power generation in recent years” (IEA, 2024a: 3).   “Separate to the rise in the use of coal due to energy supply shortages because of the Russia-Ukraine war and the Gaza conflict, accelerating demand for electricity around the world could give coal another boost. Our models show global demand for coal plateauing through 2027 even as electricity consumption rises sharply,” Keisuke Sadamori, the IEA’s director of energy markets and security, said in a statement (IEA, 2024b).   Climate researchers have pointed out that 6% of the world’s coal use must be terminated every year until 2040 to prevent a global climate disaster (GEM, 2023).   In 2015, global nations signed the Paris Climate Change Agreement, which outlined a long-term strategy the world must adopt to keep the rise of global temperatures under 1.5C, the temperature limit compared with preindustrial times (AP, 2025; UNFCCC, 2015). The Agreement proposed that all the world’s coal plants should be closed by 2040, unless they have carbon-removal technology.   A key challenge in the energy transition is how to make renewable energy fully replace coal generation, without imperilling energy security, development, and economic growth (Dresselhuys,   2024).   G7 countries battle to reduce coal usage   In April 2024, the Group of Seven (G7) countries pledged to end what they called, euphemistically, “unabated” coal power plants by 2035 (G7, 2024). It published a pledge to “phase out existing unabated coal power generation in our energy systems during the first half of the 2030s” to curb the rise in global greenhouse gas emissions (G7, 2024).   The G7 nations – the UK, US, Canada, France, Italy, Germany and Japan –had for years struggled to reach agreement on phasing out coal. These seven countries are collectively responsible for one-fifth of global greenhouse gas emissions (Fyson et al, 2022).   The G7 left space for members to continue to use coal beyond the deadline if plants are fitted with carbon-capture technology to prevent emissions from entering the atmosphere. Many G7 and European Union member countries have transitioned from coal to natural gas, which “has acted as a lower-carbon ‘bridge fuel’” (Dresselhuys,   2024).   Germany and the UK have nine coal-fired power plants each in the list of the top 30 CO2-polluting thermal power plants in the EU, according to a July 2024 report called “Europe’s Dirty 30” released today by CAN Europe, World Wildlife Fund, the European Environmental Bureau, the Health and Environment Alliance, and Climate Alliance Germany.   Germany uses more coal to generate electricity than any other EU country, while the UK comes third in absolute coal consumption for power after Poland, according to the “Europe’s Dirty 30” report.   Germany, Europe’s largest economy, was set to phase out coal by 2030. The German statistics office Destatis reported that during July and September 2022, more than a third (36.3%) of the electricity fed into the German power grids came from coal-fired power plants, compared with 31.9% in the third quarter of 2021 (Eckert & Sims, 2022).   In October 2023, to avoid winter power shortages and to replace scarce natural gas, after a sudden drop in Russian imports to Germany, the German Cabinet approved putting on-reserve lignite-fired power plants back online from October 2023 until the end of March 2024. Berlin reactivated coal-fired power plants and extended their lifespans.   In its bid to cut planet-warming  emissions  in the region  by 55% by 2030  from 1990 levels, the European Commission in 2022 proposed a 100% reduction in CO2 emissions from new cars by 2035 (Pole, 2022).   That means it would not be possible to sell combustion engine cars from then. However, the German government refused to accept the EU ban on new fossil fuel cars from 2035. The EU has stated ambitions to reduce carbon emissions, including a pledge to become carbon neutral by 2050 (Le Monde, 2022).   In 2023, France extended the life of its two remaining coal plants, located in Cordemais and Saint-Avold, long after they were initially due to shut down ( Cossins-Smith , 2023). Many countries only temporarily shut down coal-fired plants to be brought back online during high energy demands or crises. France brought back its coal plants “as a precaution” to “ensure reliable electricity production” during winter. The French government aims to completely phase out coal power by 2030 ( Cossins-Smith , 2023).   In March 2023, the UK called on its reserve coal capacity to manage increased demand following a colder than expected winter (Ambrose, 2024). The UK had in the past pledged to phase out coal by the end of 2024.   Italy, Austria, and the Netherlands in 2023 started up their coal power stations. Italy’s Energy Minister told the country’s Parliament that the country was committed to stopping electricity generation from coal by the end of 2025 nationwide, except on the island of Sardinia (Reuters, 2024a). Italy will move to gas-fired plants instead. It had initially targeted to abandon coal by 31 December 2025; however, Italy’s updated National Climate Energy Plan was revised to end the use of coal only between 2026 and 2028 (Reuters, 2024a). The country is trying to coordinate coal exits until it has brought on board new gas-fired power plants (Reuters, 2024a).   In 2022, Austria announced it would reopen its Mellach power plant in the southern Styria region of the country, which was closed in 2020, over Russian supply shortages because of the war in Ukraine.   The Austrian decision, taken by a “small crisis Cabinet”, was to convert the gas-fired power plant so that it can produce electricity with coal. The Mellach power plant had been shut down but kept on stand-by for coal use when needed.    Previously the Netherlands had capped coal power to 35% of the country’s power output. In 2022, the Netherlands activated an "early warning" phase of the country’s energy crisis plan when it lifted a cap on production by coal-fired power plants to reduce reliance on Russian gas following the war in Ukraine. 2011 Fukushima nuclear disaster pushed Japan to increase coal   Japan is the fourth-largest economy in the world. The 2011 Fukushima nuclear disaster, when a 9 magnitude earthquake caused explosions at the Fukushima Daiichi nuclear power plant, pushed Japan to increase the amount of coal and natural gas it used. Japan has increased renewable energy capacity, like solar and wind, however, shortage of land limits the expansion. Before Fukushima, nuclear power provided one-third of Japan’s power.   Coal makes up 32% of Japan’s electricity mix. Gas-fired power stations supply 34% of the country’s power. Nuclear power accounts for 10%. The country pledged that renewable energy would account for more than a third of its power generation by 2030 and it would achieve carbon neutrality by 2050 (Irfan, 2024).   Japan is the world’s eighth-largest greenhouse gas emitter. It imports 98% of its natural gas in the form of liquified natural gas. The country has large gas storage capacity, the world’s largest LNG storage capacity, which allows the country to use natural gas energy during periods of power downturns (EIA, 2024).    Although in 2023 two new coal power stations came on board (Jera, 2023),  Japan’s target is to reduce the share of coal in electric generation from 32% to 19% by 2030. The country’s policies over the past two decades have focused on “clean coal”.   The government not only intends, over time, to get rid of old and inefficient coal power stations, but it is also prioritising developing technologies that reduce emissions from coal. Since 2023, new coal-fired power stations must come with emission reduction measures (EIA, 2024).   It is also working on increasing the efficiency of coal stations through “integrated-gasification combined-cycle infrastructure, carbon capture and sequestration, and fuel blending with ammonia and biomass” (EIA, 2024).    To continue to keep 12 GW of coal-fired power capacity going beyond 2030, the government has proposed “adding 20% or more ammonia to the coal supply or blending 25% or more wood pellets into the coal boilers to help lower CO2 emissions and keep the plants open” (EIA, 2024). The government is offering, for 20 years, a feed-in-tariff (FIT) paying coal-fired power stations for every kilowatt hour generated by wood pellets in a coal boiler (EIA, 2024). To qualify, coal power stations must keep greenhouse gas emissions under specified limits. Trump ascendancy to the US presidency may increase coal use   The US Environmental Protection Agency in early 2024 set new rules requiring coal-fired power plants to either shutdown before 2040 or if they stay in operation, to capture nearly all of their climate pollution. It is likely that under new US Republican President Donald Trump, who says climate change is overhype, coal use is likely to rise. Trump in his presidential election campaign promised to deregulate the energy sector, cut environmental regulations, and drill for shale gas.   Coal makes up 16% of US power generation. The US exported more than $5 billion of coal in 2023, as they shipped out more than 32.5 million metric tons of thermal coal, the second highest since 2017.   In November 2024, Texas and 10 other Republican-led states sued BlackRock, State Street and Vanguard, alleging they conspired to curtail supplies to further “a destructive, politicised environmental agenda” (Reuters, 2024b). Texas and the 10 Republican-led states said the large asset managers violated antitrust law through climate activism that reduced coal production and boosted energy prices.   The complaint was filed in the Federal Court in Tyler, Texas. Texas and the 10 Republican-led states accused the companies of exploiting their market power and involvement in climate advocacy groups to pressure coal companies to slash output and reduce carbon emissions from coal by more than 50% by 2030, driving up consumers’ energy bills (Reuters, 2024b). Republicans have used US antitrust laws since 2021 to fight what they alleged is collusion among investment managers to combat climate change.   The lawsuit cites the defendants' investments in nine coal companies, including combined respective stakes of 34.2% and 30.4% in Arch Resources and Peabody Energy, the largest publicly traded US coal producers (Reuters, 2024b). The lawsuit tries to block the companies from making any shareholder decisions that will reduce coal production. Texas Attorney General Ken Paxton, whose office filed the lawsuit, accused the companies of promoting an “illegal weaponisation of the financial industry in service of a destructive, politicised ‘environmental’ agenda” (Reuters, 2024b).   In January 2025, the six biggest banks in the US all quit the global banking industry’s net zero target-setting group, ahead of the inauguration of Donald Trump as US president in anticipation of pushbacks against climate change action from his government (Gayle, 2025). The banks that left the UN-sponsored net zero banking alliance included JP Morgan, Citigroup, Bank of America, Morgan Stanley, Wells Fargo, and Goldman Sachs.   The banking industry’s net zero banking alliance (NZBA) was established by the UN Environment Programme finance initiative but is led by banks. Members commit to align their lending, investment and capital markets initiatives with net zero greenhouse gas emissions by 2050 (Unepfi, 2024). In 2022, a number of US Republican states threatened to launch anti-trust legal action against US banks that are members of the NZBA for their commitments to reduce fossil fuels. However, the NZBA group amended the guidelines for action to soften commitments to cut fossil fuels.   In December, the Republican-led judiciary committee of the House of Representatives, the US Congress’s lower house, in a new report attacked what it called “a cartel” of global financial firms and climate activists and civil society organisations of colluding to “impose radical ESG-goals” on US companies (US Congress, 2024).   Countries faced a February 2025 deadline for updated country climate change plans. The outgoing Joe Biden administration in December 2024 proposed a climate change plan for the US in which greenhouse gas emissions will be cut by more than 60% by 2035 (Daly & Borenstein, 2025). On 21 January 2025, US President Donald Trump signed executive orders directing the United States to again withdraw from the Paris Climate Agreement (Daly & Borenstein, 2025). Trump also signed a letter to the United Nations stating the US withdrawal from the 2015 Agreement. BRICS country coal consumption steady   Coal has dropped to only 4.4% of Brazil’s energy mix in 2023, with its use falling 5% between 2022 and 2023. Brazil ranks 25th in the world for coal consumption, accounting for about   2.4% of the world’s total consumption, and imports 89% of its coal.   Renewable energy sources account for 49% of Brazil’s energy mix, whereas the global national average for use of renewable energy is 15% (Argus, 2024). Natural gas has averaged around 10% of energy used.   Renewable energy – wind, solar, water, biomass, biodiesel, ethanol, green diesel, carbon capture and storage, sustainable aviation fuel and green hydrogen – is the largest energy component in Brazil’s new energy transition policy, making the country a leader in clean energy production.   Brazilian President Lula da Silva (2024) asked recently: “People respect us, because we can go anywhere and say: 80% of our electricity is renewable and 51% of our total energy matrix is already renewable and we can reach 100%. Who would have thought, 30 years ago, that we’d be talking about biomass, biodiesel, ethanol, that we are going to make the energy transition, that we are going to have wind, solar and green biodiesel?”    China enjoys new coal power construction boom   Fossil fuels now make up under 50% of China’s power generation capacity, whereas a decade ago, fossil fuels made up two-thirds. China’s share of coal power generation is around 60%, with its usage reaching an all-time high in 2024 (Slav, 2024).   Coal-fired power is enjoying a construction boom in China, the world’s biggest emitter may be turning a corner (Harvey & Hawkins, 2024). China constructed more coal-fired power plants in the first half of 2024 than any other country, presenting 90% of the world’s new coal plant construction last year (GEM, 2023).   China has been building the equivalent of two new coal plants per week, more than at any time in the past seven years, according to the Centre for Research on Energy and Clean Air and the Global Energy Monitor (GEM, 2023). In coal producing areas in northern China, such as Shaanxi, coal employs more than 8% of the workforce (Tridimas, 2024).   China repositioned coal as a source of continuing use following the 2022 drought the country experienced, which reduced the country’s hydroelectricity capacity, causing factory closures, and the war in Ukraine, which caused global energy shortages and price fluctuations. China sees coal as not only a backup for renewables during weather crises or high energy demand, but also as a form of energy security (GEM, 2023).   China’s grid has many inefficiencies – the country struggles to share power across regions during shortages, energy production is itself often inefficient, and it lags behind on storage capacity. However, the country has recently made big strides in building energy storage capacity (Xinhua, 2025). In China, some regions, cities and districts provide subsidies for energy storage power stations (WEF, 2024).   China’s energy strategy is based on the country’s leader Jinping Xi’s speech to the Chinese Communist Party Congress in 2022, when he said the government led by “the principle of building the new before discarding the old” (Harvey & Hawkins, 2024). This means that the Chinese government tries to reduce emissions in a way that will ensure energy security. India vowed to ensure its coal sector remains “vibrant”   Although India in recent times has expanded its renewable energy capacity, the country’s coal fleet is still the second largest in the world after China. More than 70% of India’s electricity needs are met by coal. India grew its renewable energy – wind and solar power – by 25 times in the past decade, to 195 gigawatts.   Peak electricity demand in May 2024 reached 250 gigawatts – and it is expected to rise to 300 gigawatts within two years. The Indian government wants to install 500 gigawatts of wind and solar power by 2030. However, the growth of renewable energy installation slowed after 2016. Between 2022 and 2023 the government only installed less than 15 gigawatts a year. It needs between 50 to 60 gigawatts of new wind and solar power per year to meet future demand. The decline has been due to delivery failures, policy inertia, and supply chain challenges (Arasu, 2024).   On the campaign trail in April 2024 ahead of the elections, Prime Minister Narendra Modi said India had achieved an “historic milestone” by reaching the production of one billion metric tons of coal and lignite. Modi said it was proof of the country’s “commitment to ensuring a vibrant coal sector” (Arasu, 2024).   India is planning to build even more coal plants. In 2023, India’s coal demand rose 10%, the biggest of any country. Coal demand in China in 2023 rose 6%, according to the International Energy Agency, and India’s electricity demand is projected to grow 6% annually.   India also suffers from a shortage of energy storage capacity to allow the country to use available energy more efficiently, with less than 4 gigawatts of power storage (Arasu, 2024). India subsidised fossil fuels to the tune of $350 billion per year, according to the IMF. The country exempted coal mining equipment from customs duty, gave knockdown rates for coal transport on long-distance rail, and provided low interest loans to build coal plants (McFarlane, 2023). South Africa’s coal use   South Africa in 2023 relied on fossil fuels for 83% of its electricity generation. The country’s coal value chain forms a large part of the domestic economy and energy generation infrastructure.   About 80% of South Africa’s power is generated by coal. Its well-developed infrastructure, abundant natural resources such as wind and sun, and critical minerals offer lots of opportunities for the country to create a formidable green economy. South Africa’s coal mining is 160 years old. It directly employs 100 000 people, and its ecosystem and indirect jobs and industries are multiples more.   Five coal-fired power plants and 15 coal mines will likely close by 2030 in South Africa, and another four plants and 23 mines by 2040. This will impact the livelihoods of 2.5 million people, most of them in Mpumalanga.    There are 66 operating coal mines in South Africa, most in Mpumalanga and KwaZulu-Natal, owned by 32 private companies, with the five largest companies – Seriti, Sasol, Exxaro, Thungela and Glencore – producing 77% of the country’s coal. Coal mines produced 231 million tons of coal in 2022, which translated into earnings of R28 billion and employment of over 91 000 people. And earnings would have been higher, if not for the crisis at state-owned entity, Transnet, which has resulted in lost export revenues of R22.7 billion in 2022.   Research published in the Journal of the Southern African Institute of Mining and Metallurgy  said the closure of 15 mines by 2030 will withdraw 29.5 million tons a year (mtpa) from South Africa’s coal production, followed by a further 106 mtpa as an additional 23 mines are closed by 2040. This will have an impact on 69 mining communities and 21 municipalities.   “The impact of mine closure on the 2.5 million residents of host communities will be significant, particularly as levels of income, employment, and education are already very low and many municipalities are in financial distress,” according to the Journal of the Southern Africa Institute of Mining and Metallurgy  article authors, Megan J Cole, Mzila Mthenjane and Andrew Van Zyl.   The Journal’s authors say coal mining communities are concentrated in the western part of Mpumalanga and north-western KwaZulu-Natal, where just under 40% live below the poverty line of R19 600 annual household income, and over 39% are unemployed. Mine closures will impact on these poverty-stricken communities; and will reduce the funds for municipalities, businesses and income tax depending on income from mine companies and employees.   Renewable energy investment around the world has produced double the number of jobs compared to fossil fuels. “Many of these communities have experienced mine closures and do not have the skills and opportunities to take advantage of the inevitable transition, let alone the transition to clean energy”.   A recent South African Reserve Bank paper warned that South Africa has no effective plan to mitigate the transition shock on the economy, the drastic cut in coal production and utilisation that the country’s commitments to climate change goals requires (Monnin, Sikhosana & Singh, 2024).   Six industrial sectors are disproportionately exposed to climate change transition risks: the fossil fuel, utilities, energy-intensive, transport, housing and agriculture sectors. Around R980 billion of corporate credit loans of South African banks are tied up in sectors, called “transition-sensitive economic sectors”, which are vulnerable to the global energy transition.   The South African Reserve Bank warned that the transition shock, unless it is mitigated with adequate policies, currently absent, could destabilise South Africa’s financial institutions.   “Losses in some segments of the financial sector, even compensated by gains in others, may affect the system at large and trigger a degree of financial instability,” said the Reserve Bank researchers.   Standard Bank, Africa's biggest lender of assets, has defended its investment in fossil-fuel projects, saying the continent's energy needs have to be balanced with climate concerns (Burkhardt, 2023). Africa accounts for only 4% of global greenhouse gas emissions. Standard Bank’s exposure to coal mining, oil and gas, and power generation from fossil fuels rose 21% in 2022. The bank’s lending to green-power initiatives rose 84% over the same period. Standard Bank’s lending to coal mining, oil and gas, and power generation from fossil fuels was still five times that of its investment in green power (Burkhardt, 2023).   “It is not possible for Africa and many of the African countries to ignore the shortage of electricity supply,” according to Kenny Fihla, Chief Executive Officer of Standard Bank’s corporate and investment banking unit, said in an interview in 2023 with Bloomberg news agency. “Today's challenges are not going to be resolved overnight and therefore a much more balanced approach is required.” Industrial countries increased fossil-fuel subsidies   Many industrial countries have also increased fossil-fuel subsidies for their domestic companies and households to reduce energy prices (Black, Parry & Vernon-Lin, 2023; IMF, 2023). The OECD (2022) found that total global subsidies for fossil fuels doubled in both 2021 and 2022.   Industrial countries and emerging powers collectively paid out $7 trillion in 2022, for producing coal, oil and natural gas, in the form of subsidies such as tax breaks and price caps (IMF, 2023). The fossil-fuel subsidies increased by $2 trillion over the past two years.   Fossil-fuel subsidies rose during the global increase in energy prices caused by Russia’s invasion of Ukraine and the country’s economic reboots following the Covid-19 pandemic. The subsidies were the equivalent of 7.1% of global gross domestic product. China is the biggest subsidiser of fossil fuels, followed by the US, Russia, India, and the EU. Climate change funding needs to be sustainable for recipient developing countries   The UN estimated that combined developing and emerging countries, including Africa, need $2 trillion annually by 2030 to deal with climate change. In 2009, in the New Collective Quantified Goal for climate finance, devised at the Copenhagen Climate Summit, developed countries promised $100 billion annually by 2020 to support developing countries to meet their climate change targets.   At the 2015 Paris Agreement, developed countries extended the commitment to 2025. However, developed countries only met the $100 billion yearly target in 2022. African countries have called on industrialised countries to “scale up climate finance to make up for the shortfall caused by failure to deliver $100 billion per year by 2020 and through 2025”.   If countries like South Africa are to make good on their climate target objectives, annual climate financing commitments from developed countries need to increase more than tenfold to “at least $1.3 trillion (R23.02 trillion)” annually, according to South African Forestry, Fisheries and Environment Minister Dion George, speaking at the National Stakeholder Consultation on South Africa’s negotiating mandate ahead of the UN Climate Change Conference (COP29) in Baku, Azerbaijan.   At COP29 in 2024, rich countries pledged $300 billion a year for climate finance, however, the funding promises from these nations were criticised by developing and African countries as too little. The climate finance that is available often does not include funding for climate adaptation – dealing with the floods, fires and hurricanes caused by climate change.   “Without a dramatic upscaling of international support, developing country governments may not be able to implement the necessary pace and scale of emissions cuts to keep 1.5°C in reach, nor to put in place adequate adaptation measures to cope with the worsening impacts of climate change” (Fyson, 2022:5).   The G7, for example, has been criticised for the fact that “none of the G7 members are providing sufficient support for decarbonisation measures in developing countries” (Climate Action Tracker, 2021).   However, even where promised climate change funding from developed countries has been given to developing countries, it has been based on the outdated development aid model of developed country loans with conditions, including using advisors, companies and plans from donor countries, which in an overwhelming number of cases are misguided.   Such climate finance allows donors to claim they have contributed, but the donor money is recircled back to the donor countries, with high interest rates, with companies, experts and ideas – with little knowledge of local needs – from donor countries used as part of the conditions.   This is the classic development model, which has caused developing countries so much harm, with little positive impact, and with massive loans to repay, while doing hardly anything for combating climate change. Very little of the funding is fit for purpose.   An Oxfam analysis of developed country funding for climate change concluded that only a small amount of the promised funding has been delivered. And where money was given, it was mostly in the form of punishing loans, with very few grants. Not much has been provided to help developing nations with adapting to climate change. Worse, many developed nations have been dishonest in the way they report their financial contributions, exaggerating the amounts they have given.   Oxfam uncovered that many developed countries are guilty of misleading accounting, reporting funding for climate change to developing countries, when the funding never actually reached the supposed beneficiaries. Rather, the funds were being used to pay donor country consultants, agencies and plans.   Global private companies are reluctant to finance high-risk climate projects in developing countries. Firstly, private investors demand that African governments, or private companies, provide ‘bankable’ projects, often meaning low-risk projects with high or immediate returns. International funding for climate change should prioritise high-risk, low-return climate projects, for which developing countries struggle to secure funding. For another, funding should also prioritise start phase project preparation and development, as many developing countries lack project preparation capacity, resources and funding. South Africa’s climate change funding from developed countries will leave the country indebted, without a sustainable transition     South Africa received $11.6 billion in climate change funding from developed country donors to shift to renewable energy, and to prevent economic decline during the movement away from coal. Sadly, the overwhelming majority of the funds were old-style development aid-type loans, with conditions including the use of consultants, organisations and ideas from donor countries. Grants make up only $676 million of the total.   This means that South Africa will be indebted, while the ‘funding’ is recycled to donor organisations, consultants, and to generate donor-country ideas. Very little of the money is likely to go to South African organisations, expertise or South African-generated ideas, or to local communities. Furthermore, by ‘giving’ donor funding to developing countries, donor governments dictate to developing countries how they should pursue their climate change transitions – often without consideration for the context of these countries.   Yet, developing countries do not have the same power to dictate to developed countries – the major emitters – how they should pursue their climate transitions. Global climate financing from developed countries to developing countries therefore entrenches the existing skewed power inequalities in favour of developed countries.   Of the money, so far, $1.9 billion has been spent, mostly as policy-based loans to the government; the other large proportion has gone to agencies, consultants and organisations from the donor countries. Even funding that ostensibly goes to projects to revive the coal belt province, Mpumalanga, went to consultants, donor development agencies, or to support donor-originated development ideas. A planned green hydrogen hub, skills training and community development similarly went largely to consultants, donor development agencies, and donor country origin ideas.   In 2019, South Africa enacted a carbon tax, which industry has criticised as too onerous. Furthermore, Eskom, the state power utility, has been criticised for passing the cost of the transition to renewables on to customers.   It was revised recently and will come into effect in 2026. A National Treasury policy paper released in November 2024, indicated that the carbon offset allowance for combustion emissions will be increased to 25% in 2026, from 10%. This will be counterbalanced by cutting tax-free allowances from 60% to half in 2026 and by a further 2.5% annually until 2030 (National Treasury, 2024). The amended National Treasury proposal in the policy paper replaced a 3.5c/kW levy on non-renewable power with the carbon tax. The big challenge will be how to prevent Eskom from passing on the cost of the transition to renewables to customers.   Way forward for South Africa   The challenge for South Africa is to secure a just transition from coal. A just transition “is a process aimed at ensuring the benefits of a green economy shift are shared widely, while supporting those who may lose out economically, whether nations, regions, industries, communities, workers or consumers” (Teixeira, 2022).   Global funding for climate change to South Africa must be in the form of grants and concessional financing that can be allocated to create enabling environments for climate change investments. The funding for the just transition must not be in the form of loans, as is currently the case, but rather, it must be based on grant and investment funding.   South African Forestry, Fisheries and Environment Minister Dion George said that by “de-risking investments and creating new asset classes for clean technologies, we can unlock and leverage greater amounts of public and private finance” for climate change.   South Africa must either renegotiate the terms of the $11.6 billion climate change loans it received from developed countries’ donors, or change them to grants, and change the provision that says donor country agencies, staff, ideas and ideologies must be used in the design of South African just transition projects.   Countries have specific timetables to transition from fossil fuels to renewable energy, based on their domestic circumstances. South Africa must identify a timetable that takes into account local contexts, one which ensures energy security, development needs, and stability.   “The South African approach to the just transition needs to take local realities into account, and the narrative must support an effective transition that does not undermine energy security and economic growth,” rightly argues the authors from the Journal of the Southern African Institute of Mining and Metallurgy .   South Africa must pursue a triple energy generation strategy: coal, gas and renewables. This can be done by collaborating with African neighbours to apply comparative advantages. Sadly, many of South Africa’s neighbours are politically unstable, with autocratic governing parties and leaders mismanaging their countries, meaning their economies are also unstable, so it will not always be practical to partner with energy producing neighbours to leverage comparative advantages.    Unlike many of the G7 countries, South Africa is struggling with gas resources. Mozambique, with its gas resources, has been run autocratically for years by the liberation movement Frelimo, and the country is facing a civil war. Sasol, the petrochemical giant, for example, has said the company will have to recalculate its carbon emissions target, set in 2021, for a 30% reduction in emissions by 2030, as it may not be achievable due to gas shortages (Faku, 2024).    Given South Africa’s coal bounty, there has to be more focus on technology to clean coal. Japan is a good example of a country that prioritised a policy of producing “clean coal” over the past two decades. South Africa can also fit its coal plants with carbon-capture technology, as many G7 nations have been given the option to do, to prevent emissions from entering the atmosphere.   There are lessons to be learnt from Japan’s “clean coal” strategy (Hakko & Petersen, 2024). Japan has focused on “efficient coal power”, which gets more energy from less coal through advanced technologies and coal plants (IEA, 2020). In 2007, Japan introduced the abatement technology of carbon capture and storage (CCS), which can secure 90% emission reductions. The country also introduced co-firing coal and ammonia, to reduce emissions.   Ultimately, for South Africa, there has to be a massive step-up in the development of renewable energy, wind and solar. Brazil is a great example of how to develop the full spectrum of renewable energy – wind, solar, water, biomass, biodiesel, ethanol, green diesel, carbon capture and storage, sustainable aviation fuel, and green hydrogen.   South Africa needs a manufacturing, skills and technology revolution linked to renewable energy. Green hydrogen is a key source of renewable energy in which the country must invest. Any laws or regulations, ideologies and policies inhibiting the development of renewable energy will have to be abolished.   The South African government must provide substantial incentives to families and business to install solar technology, like Vietnam did to kickstart its renewable energy programme (Govindarajan, Bin Mohideen Batcha & Bin Abdullah, 2023). Consumers who have excess power must be able to channel it back into the power grid and get compensated for it.   Coal power stations that have been decommissioned could also become sites for renewable energy generation and energy storage (Dresselhuys, 2024). Coal power stations can be adapted for renewable energy generation.   “These legacy coal assets offer an opportunity. Instead of abandoning coal-generating sites, many are good candidates for conversion to clean energy hubs where the large tracts of land and existing grid connections can rapidly connect renewable capacity without the need for new transmission infrastructure” (Dresselhuys, 2024).   South Africa will have to establish greater energy storage capacity. Kristen Panerali and Zhang Xun write that the industrial energy storage sector offers promising opportunities (WEF, 2024). “On the one hand, the market potential is vast, with an increasing number of industrial users recognising the importance of energy storage and showing a growing willingness to install storage systems. On the other hand, industrial companies are confronted with high costs of the procurement and deployment of energy storage systems, such as land acquisition, grid connection and financing” (WEF, 2024). In China, different levels of government provide subsidies for energy storage power stations (WEF, 2024). South Africa can learn from this.   To make it all happen, there has to be an effective industrial policy to make the shift from fossil fuels to renewables that involves the state, private sector, and civil society in a compact. Corruption, cadre-deployed state managers overseeing state implementation, and giving tenders to politically connected businesses based on patronage will have to be eliminated.   The just transition policy must be put together by local expertise, entities and groups, and with local ideas, not based on the outdated development aid model where foreign funding comes with foreign companies, foreign expertise and foreign ideas.   Conclusion   The challenge for South Africa is how to pursue a just transition from coal that takes into consideration local realities, which means not undermining the country’s energy security, development and economic growth, not leaving it highly indebted to developed countries, and not multiplying poverty, unemployment and society instability.   Many G7 and emerging powers have specific timetables to transition from fossil fuels to renewable energy, based on their domestic circumstances. South Africa must identify a timetable that takes into account the local context.   A prerequisite for any successful just transition framework is the absolute need for an industrial policy that is not based on fundamentalist ideology, wishful thinking or state control, but rather, it must be compact driven, involving the state being in partnership with the private sector, public institutions, professionals and civil society.   References   Ambrose, J. 2024. Powering down: end times for the UK’s final coal-fired station . [Online] Available at: https://www.theguardian.com/business/2024/apr/21/end-times-for-the-uks-final-coal-fired-power-station [accessed: 10 March 2025].   Arasu, S. 2024. India has pushed hard for solar. But as its billions demand more power, coal always gets the call . [Online] Available at: https://apnews.com/article/india-coal-climate-change-renewable-energy-storage-ff656f172c8e5dfbd0b9b0ea4ce0b6d5 [accessed: 10 March 2025].   Argus. 2024. Coal loses ground in Brazil's energy mix .  [Online] Available at: https://www.argusmedia.com/en/news-and-insights/latest-market-news/2606370-coal-loses-ground-in-brazil-s-energy-mix [accessed: 10 March 2025].   Black, S., Parry, I. & Vernon-Lin, N. 2023. Fossil Fuel Subsidies Surged to Record $7 Trillion . [Online] Available at: https://www.imf.org/en/Blogs/Articles/2023/08/24/fossil-fuel-subsidies-surged-to-record-7-trillion [accessed: 10 March 2025].   Burkhardt, P. 2023. Standard Bank defends investment in fossil fuels due to Africa's energy needs . [Online] Available at: https://www.news24.com/fin24/climate_future/news/standard-bank-cites-energy-needs-in-fossil-fuel-defense-20230509 [accessed: 10 March 2025].   Climate Analytics. 2021. 1.5°C remains out of reach in the IEA’s announced pledges scenario . [Online] Available at: https://climateanalytics.org/media/15_c_remains_out_of_reach_in_iea_s_announced_pledges_scenario.pdf [accessed: 10 March 2025].   Cole, M.J., Mthenjane, M. & Van Zyl, A. 2023. Assessing coal mine closures and mining community profiles for the ‘just transition’ in South Africa. Journal of the Southern African Institute of Mining and Metallurgy , 123(6): 329–342.   Cossins-Smith , A. 2023. France to extend life of its final coal plants ahead of winter . [Online] Available at: https://www.power-technology.com/news/france-to-extend-life-of-coal-plants-2024/ [accessed: 10 March 2025].   Daly, M. & Borenstein, S. 2025. Trump signs executive order directing US withdrawal from the Paris climate agreement — again . [Online] Available at: https://apnews.com/article/trump-paris-agreement-climate-change-788907bb89fe307a964be757313cdfb0 [accessed: 10 March 2025].   Dresselhuys, E. 2024. Euroviews.  Shuttered coal power plants can find a second life as clean energy hubs . [Online] Available at: https://www.euronews.com/green/2024/04/30/shuttered-coal-power-plants-can-find-a-second-life-as-clean-energy-hubs [accessed: 10 March 2025].   Eckert, V. & Sims, T. 2022. Energy crisis fuels coal comeback in Germany . [Online] Available at: https://www.reuters.com/markets/commodities/energy-crisis-fuels-coal-comeback-germany-2022-12-16/ [accessed: 10 March 2025]. Energy Information Agency (EIA). 2024. Japan’s energy policies aim to reduce use of fossil fuels in electricity generation .   [Online] Available at: https://www.eia.gov/todayinenergy/detail.php?id=61945 [accessed: 10 March 2025].   Faku, D. 2024. Activists fume as Sasol says it will ‘relook’ emission targets . [Online] Available at: https://www.businesslive.co.za/bt/business-and-economy/2024-11-17-activists-fume-as-sasol-says-it-will-relook-emission-targets/ [accessed: 10 March 2025].   Fyson, C., Hare, B., Lissner, T., Ancygier, A., Attard, M-C. & Hörsch, J. 2022. G7 climate policy: what good looks like . [Online] Available at: https://ca1-clm.edcdn.com/assets/g7_climate_policy_-_what_good_looks_like.pdf [accessed: 10 March 2025].   Gayle, D. 2025. Six big US banks quit net zero alliance before Trump inauguration . [Online] Available at: https://www.theguardian.com/business/2025/jan/08/us-banks-quit-net-zero-alliance-before-trump-inauguration [accessed: 10 March 2025].   Global Energy Monitor (GEM). 2023. Boom and Bust Coal 2024 . [Online] Available at: https://globalenergymonitor.org/report/boom-and-bust-coal-2024/ [accessed: 10 March 2025].   Global Energy Monitor (GEM). 2024. China accounted for 95% of the world’s new coal power construction activity in 2023 . [Online] Available at: https://globalenergymonitor.org/in-the-news/china-responsible-for-95-of-new-coal-power-construction-in-2023-report-says/ [accessed: 10 March 2025].   Government of Brazil. 2023. National Energy Transition Policy . [Online] Available at: https://www.gov.br/planalto/en/latest-news/2024/08/president-launches-national-energy-transition-policy-expected-to-bring-brl-2-trillion-in-investment [accessed: 10 March 2025].   Govindarajan, L., Batcha, M. & Abdullah, M. 2023. Solar energy policies in southeast Asia towards low carbon emission: A review. Heliyon , 9(3).   Group of Seven (G7). 2024. Communique: Climate, Energy and Environment . [Online] Available at: https://www.g7italy.it/wp-content/uploads/G7-Climate-Energy-Environment-Ministerial-Communique_Final.pdf [accessed: 10 March 2025].   Gumede, W. 2024. Was COP29 a success or failure? For starters, things got heated . [Online] Available at: https://www.timeslive.co.za/sunday-times-daily/opinion-and-analysis/2024-12-11-william-gumede-was-cop29-a-success-or-failure-for-starters-things-got-heated/ [accessed: 10 March 2025].   Gumede, W. 2025. Strategies for a green economy in SA . [Online] Available at: https://www.businesslive.co.za/bd/opinion/2025-01-10-william-gumede-strategies-for-a-green-economy-in-sa/ [accessed: 10 March 2025].   Hakko, H. & Petersen, K.T. 2024. Japan’s new leader must leave “clean coal” in the past in upcoming energy strategy . [Online] Available at: https://www.e3g.org/news/japan-s-new-leader-must-leave-clean-coal-in-the-past-in-upcoming-energy-strategy/ [accessed: 10 March 2025].   Harvey, F. & Hawkins, A. 2024. China’s coal-fired power boom may be ending amid slowdown in permits . [Online] Available at: https://www.theguardian.com/environment/article/2024/aug/22/chinas-coal-fired-power-boom-may-be-ending-amid-slowdown-in-permits [accessed: 10 March 2025].   International Energy Agency (IEA). 2020. The role of CCUS in low-carbon power systems . [Online] Available at: https://www.iea.org/reports/the-role-of-ccus-in-low-carbon-power-systems/the-co2-emissions-challenge [accessed: 10 March 2025].   International Energy Agency (IEA). 2023. Net Zero Roadmap: A Global Pathway to Keep the 1.5 °C Goal in Reach . [Online] Available at: https://www.iea.org/reports/net-zero-roadmap-a-global-pathway-to-keep-the-15-0c-goal-in-reach [accessed: 10 March 2025].   International Energy Agency (IEA). 2024a. Coal 2024:   Analysis and forecast to 2027 . [Online] Available at: https://www.iea.org/reports/coal-2024 [accessed: 10 March 2025].   International Energy Agency (IEA). 2024b. Global coal demand is set to plateau through 2027 . [Online] Available at: https://www.iea.org/news/global-coal-demand-is-set-to-plateau-through-2027 [accessed: 10 March 2025].   Irfan, U. 2024. Why Japan is struggling to kick its coal dependency .   [Online] Available at: https://www.vox.com/climate/24152942/g7-coal-phaseout-end-japan-power-climate-energy-emissions [accessed: 10 March 2025].   Jera. 2023. Commercial Operation Begins at Yokosuka Thermal Power Station Unit .   [Online] Available at: https://www.jera.co.jp/en/news/information/20231222_1759 [accessed: 10 March 2025].   Le Monde. 2022. Despite climate commitments, the EU is going back to coal . [Online] Available at: https://www.lemonde.fr/en/economy/article/2022/09/02/despite-climate-commitments-the-eu-is-going-back-to-coal_5995594_19.html [accessed: 10 March 2025].   Lula da Silva. 2024. President Lula launches National Energy Transition Policy, expected to bring BRL 2 trillion in investment . [Online] Available at: https://www.gov.br/planalto/en/latest-news/2024/08/president-launches-national-energy-transition-policy-expected-to-bring-brl-2-trillion-in-investment [accessed: 10 March 2025].   McFarlane, S. 2023. Global fossil fuel subsidies on the rise despite calls for phase-out . [Online] Available at: https://www.businesslive.co.za/bd/world/2023-11-23-global-fossil-fuel-subsidies-on-the-rise-despite-calls-for-phase-out/#google_vignette [accessed: 10 March 2025].   McKinsey. 2024. Global Energy Perspective 2024 . [Online] Available at: https://www.mckinsey.com/industries/energy-and-materials/our-insights/global-energy-perspective [accessed: 10 March 2025].   Monnin, P., Sikhosana, A. & Singh, K. 2024. Transition and systemic risk in the South African banking sector: assessment and macroprudential options . [Online] Available at: https://www.resbank.co.za/content/dam/sarb/publications/working-papers/2024/transition-and-systemic-risk-in-the-south-african-banking-sector-assessment-and-macroprudential-options.pdf [accessed: 10 March 2025].   OECD. 2022. Support for fossil fuels almost doubled in 2021, slowing progress toward international climate goals, according to new analysis from OECD and IEA . [Online] Available at: https://www.oecd.org/en/about/news/press-releases/2022/08/support-for-fossil-fuels-almost-doubled-in-2021-slowing-progress-toward-international-climate-goals-according-to-new-analysis-from-oecd-and-iea.html [accessed: 10 March 2025].   Pole, P. 2022. Germany refuses to agree to EU ban on new fossil fuel cars from 2035 . [Online] Available at: https://www.euronews.com/green/2022/06/22/germany-refuses-to-agree-to-eu-ban-on-new-fossil-fuel-cars-from-2035 [accessed: 10 March 2025].   Reuters. 2024a. Italy to phase out coal from 2025, excluding Sardinia island . [Online] Available at: https://www.reuters.com/sustainability/climate-energy/italy-phase-out-coal-2025-excluding-sardinia-island-2024-03-06/ [accessed: 10 March 2025].   Reuters. 2024b. BlackRock, Vanguard, State Street sued by Republican states over climate push . [Online] Available at: https://www.reuters.com/legal/blackrock-state-street-vanguard-sued-by-republican-states-over-climate-accords-2024-11-27/ [accessed: 10 March 2025].   Reuters. 2024c. G7 discussing 2035 end date for coal-fired power plants . [Online] Available at: https://www.reuters.com/sustainability/climate-energy/g7-discussing-2035-end-date-coal-fired-power-plants-source-says-2024-04-29/ [accessed: 10 March 2025].   Reuters & Magubane, K. 2024. Carbon tax harsher – but more offsets . [Online] Available at: https://www.businesslive.co.za/bt/business-and-economy/2024-11-17-south-africas-revised-carbon-tax-to-be-harsher-but-with-more-offsets/ [accessed: 10 March 2025].   Slav, I. 2024. Coal’s Share of Electricity Generation in China Dips Despite High Demand . [Online] Available at: https://oilprice.com/Energy/Coal/Coals-Share-of-Electricity-Generation-in-China-Dips-Despite-High-Demand.html [accessed: 10 March 2025].   Teixeira, F. 2022. Brazil extends coal use to 2040 under new ‘just transition’ law . [Online] Available at: https://www.reuters.com/markets/deals/brazil-extends-coal-use-2040-under-new-just-transition-law-2022-01-06/ [accessed: 10 March 2025].   Tridimas, B. 2024. Why is China upping coal power despite green energy boom?  [Online] Available at: https://www.context.news/just-transition/why-is-china-upping-coal-power-despite-green-energy-boom [accessed: 10 March 2025].   UN Climate Change Conference (COP21). 2015. The Paris Agreement: What is the Paris Agreement?  [Online] Available at: https://unfccc.int/process-and-meetings/the-paris-agreement#:~:text=It%20was%20adopted%20by%20196,force%20on%204%20November%202016 [accessed: 10 March 2025].   UN Environment Programme Finance Initiative. 2024. Guidelines for Climate Target Setting for Banks (Version 2) . [Online] Available at: https://www.unepfi.org/wordpress/wp-content/uploads/2024/03/Guidelines-for-Climate-Target-Setting-for-Banks-Version-2.pdf [accessed: 10 March 2025].   US Congress. 2024. Sustainability Shakedown: How a Climate Cartel of Money Managers Colluded to Take Over the Board of America's Largest Energy Company . [Online] Available at: https://judiciary.house.gov/media/press-releases/new-report-sustainability-shakedown-how-climate-cartel-money-managers-colluded#:~:text=WASHINGTON%2C%20D.C.%20%E2%80%93%20Today%2C%20the,world's%20largest%20financial%20institutions%20and [accessed: 10 March 2025].   World Economic Forum (WEF). 2024. Next step for China’s clean energy transition is storage deployment in its world class industries . [Online] Available at: https://www.weforum.org/stories/2024/06/next-step-for-china-s-clean-energy-transition-is-storage-deployment-in-its-world-class-industries/ [accessed: 10 March 2025].   Xinhua. 2025. China’s new energy storage capacity exceeds 70 million KW . [Online] Available at: https://www.macaubusiness.com/chinas-new-energy-storage-capacity-exceeds-70-million-kw/ [accessed: 10 March 2025].          - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 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), Ms Buyelwa Sonjica, and the Institute’s Chief Executive Officer, Daryl Swanepoel, attended a prestigious gala dinner organised by the African Chinese Women’s Association in Johannesburg on Saturday evening, 15 March 2025. The event coincided with International Women’s Day.   The Gala Dinner was held in celebration and appreciation of South Africa’s diversity by showcasing cultural exchanges between South Africa and China in order to help build cohesion in South Africa. The evening featured a number of high level speeches and a concert with musical and dancing performances by local South African and Chinese performers.   Speeches were delivered by the Consul General of China in Johannesburg, Pan Qingjiang ,  who undertook to increase exchanges and cooperation between Chinese and South African women in line with the unprecedented bilateral relations between the two nations. Other speakers included the South African Deputy Minister for Tourism, Hon. Maggie Sotyu, the Counselor at the Embassy of China in South Africa, Liao Xiaoying,  Li Xinzhu, director of South Africa Chinese Community and Police Cooperation Centre, Jenny Wu, chairwoman of the African Chinese Women’s Association, who is also a member of the ISI’s Advisory Council; and the ISI’s Chief Executive Officer. Click here for speech by Ms Jenny Wu   Click here for speech by Daryl Swanepoel

Good evening ladies and gentlemen.   Firstly allow me to thank the organisers of the event for the invitation to be here this evening. I am joined by the Deputy Chairperson of the Inclusive Society Institute, former Cabinet Minister Buyelwa Sonjica.   The Inclusive Society Institute is committed to the pursuit of a just and equal South Africa that works for all who live in it. A nation built on non-racialism and non-sexism, and in which people from all cultural, religious and social groupings live freely, and build towards the common goal of a united country that rises above the troubles of its past,  and looks towards a brighter, better and more inclusive future.   This evening’s event is a perfect fit with our objective. The invitation says that tonight we appreciate and celebrate the diversity of our community. And we will witness tonight how working together, playing together and socialising together, strengthens our character and make us better and happier people.   As an Institute we recently released our South Africa Social Cohesion Index . At an event in Cape Town the Deputy President of the Republic, HE Paul Mashatile, launched the report. Jenny Wu, your chairwoman was also there. We are proud to have her on our Advisory Council.   The essence of the report pointed to a country that still needs to do a lot to properly reconcile and build our nation.   The index reflects an overall moderately high level of social cohesion. But the overall score of 53.3 index points does not tell the full story. There are areas of serious concern.   Acceptance of diversity in the country has steadily declined from an already low 47.1 index points in 2021 to only 46.8 in 2024; Trust in institutions has declined from 50.1 index points to 47.9; Perceptions of fairness has declined from 42.4 index points to a mere 42.7; and Respect for social rules has declined from 40.3 to an alarming 36.6   What distorts the perception that South Africa is doing ok in terms of social cohesion is that across all demographics identification with the country is very high. In 2021 it was 73.2 index points and in 2024, 72.2. Were this not so, it would be just above/just below the 50 index points level. It is indeed the strong identification with the country that is holding the nation together.   Unfortunately identification alone is not enough. When one domino falls, all dominoes fall. We must work on every dimension that is required for social cohesion.   But let’s recognise the fact that South Africans from all areas of life and all communities are proud to be South African, and love our country. And let’s use that as the foundation to strengthen the weaker areas that need attention. It must and can be done.   That makes an evening such as tonight so important. When we socialise together from all walks of life, we realise we are all human, we all have red blood, we all have moments of happiness and moments of sadness. In essence we all just want a decent life for our families and for those we love.   Thank you Africa Chinese Women’s Association  for this evening. And for the initiative to celebrate our diversity, and to bring communities together just to celebrate and appreciate being South African and being human. You will be surprised how initiatives such as this build and strengthen the nation. Keep it up.   As the Inclusive Society Institute we certainly learn from this. We will be launching our Good Relations Programme  this year, which also aims to do just that.   To the Chinese community of South Africa, thank you for your constructive involvement in the lifeblood of our nation, for the businesses you have set up, for the jobs you have created, for the community work that you do. Know that it is seen, and know that it is appreciated.   Thank programme director.

Honorable Deputy Minister of Tourism of South Africa, Ms. Maggie Sotyu, Honorable Consul General of the Chinese Consulate-General in Johannesburg, Mr. Pan Qingjiang, Honorable Counselor of the Chinese Embassy in South Africa, Ms. Liao Xiaoying, Honorable Chairperson of the Inclusive Society Institute, Mr. Daryl Swanepoel, Honorable Director of the South Africa Chinese Community and  Police Cooperation Center, Mr. Li Xin Zhu, Distinguished community leaders, esteemed guests, dear friends, Good evening! As we gather here in this vibrant month of March to celebrate International Women’s Day, I would like to extend my highest respect to every woman present. Today is not only a time for women to shine but also an occasion to honor resilience, wisdom, and dedication. On this special day, on behalf of the African Chinese Women Association, I extend my sincere gratitude to the Chinese diplomatic missions, local government officials, community leaders, and friends from all walks of life who have continuously supported us. I also send my heartfelt best wishes to every woman here—may you continue to thrive and inspire! As the 7th Executive Council, we are deeply aware that every step forward for our Association has been made possible by the strong support of the community. Tonight, I would like to express my sincere appreciation: To the Chinese Embassy and Consulates in South Africa, thank you for your continuous guidance and support. The Chinese government and its diplomatic missions have always been our strongest pillar overseas. To Deputy Minister Maggie Sotyu, your steadfast support over the past three years has been invaluable. Your commitment exemplifies responsibility and leadership, affirming the South African government’s recognition of our work and inspiring us to keep moving forward. To our fellow Chinese community organizations, your respect and support have given us the strength to continue our journey. To the esteemed experts and artists from the Chinese Minority Music Academy, thank you for traveling across continents to bring us a magnificent cultural performance. To the generous sponsors, entrepreneurs, and friends who support our events, your kindness and generosity have made it possible for us to shine on this stage. To the members of our Cheongsam team, Hanfu team, dance troupe, and choir, your relentless rehearsals and sacrifices of family time to perfect each performance are truly admirable. To the event planners, program directors, technical teams, and videographers—words cannot fully express our gratitude. It is this spirit of unity and mutual support that has allowed us to create a remarkable chapter for Chinese women in South Africa. This year marks the third year since our 7th Executive Council took office. Staying true to our mission of “uniting Chinese women to promote social integration and development,” we have made significant progress across various fields: Cultural Confidence Every March, we celebrate International Women’s Day, providing a platform for women to shine and express themselves through art and culture, spreading confidence and strength. Social Responsibility With warm hearts, we continue giving back to local communities—visiting nursing homes, supporting underprivileged neighborhoods, and funding over 400 students in disadvantaged communities for six consecutive years. We have helped build schools and sports facilities, bringing hope to those in need. Integration into Mainstream Society As part of the Chinese women’s community, we actively engage with South African society, participating in social science research and African think tank forums to contribute insights for Africa’s development and deepen China-Africa cooperation. Mutual Support On this journey, we remain committed to supporting Chinese women in South Africa, providing assistance to those in difficulty and ensuring that every sister finds a sense of belonging and warmth, even far from home. Educational Support Education is the foundation of social progress. We are committed to promoting educational equity, sponsoring underprivileged university students, and helping them change their destinies through knowledge. Building Harmony We actively support the South African Chinese Police-Civil Cooperation Center and the cause of peaceful reunification of China. We participate in Chinatown cultural events, fostering dialogue and collaboration to enhance the safety and development of the Chinese community. Dear sisters, today’s achievements belong to all the resilient, dedicated, and hardworking women in this room. Looking ahead, we will continue to uphold our mission, embrace new opportunities, and work together to showcase the intelligence and brilliance of Chinese women on a broader stage. We will strive to contribute more to China-Africa friendship and social progress! May today’s celebration inspire us for the future, and may every woman shine brightly in the tides of our time! Wishing you all a wonderful Women’s Day, filled with happiness and prosperity! Thank you!

Copyright © 2023 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: Percept Actuaries and Consultants Editor: Daryl Swanepoel JANUARY 2023 This research has been enabled through the generous support of the Embassy of Denmark in Pretoria, South Africa Content Executive summary Introduction Defining youth and youth agency The youth unemployment crisis A life course approach to inequality Perinatal Early childhood Adolescence Early adulthood Transitions into post-school education Transition into the labour market The experience trap Young women’s disadvantage in the labour market Financial exclusion Social exclusion Pathway support The young workforce Young people in the informal sector Key interventions to alleviate youth inequality over the life course Perinatal Advance the Maternal Support Grant Schools must implement national policy by supporting pregnant learners and young mothers to stay in school Early childhood Government must invest in the ECD workforce and quality ECD services Adolescence: basic education Implement early warning systems Open access to psychosocial support Adolescence: post-school education Support alternative pathways to a matric qualification Improve TVET education in terms of access and quality Early adulthood: transitions into work and between jobs Employer readiness Matching Social protection The young workforce Enabling environments Public employment Youth citizenship and political participation Executive Summary Policy discourse in South Africa is preoccupied with the country’s vexing ‘triple threat’ of poverty, unemployment and inequality. What remains comparatively muted in these discussions is the reality that many South Africans have the odds stacked against them well before they reach their second birthday. Young people’s vulnerabilities rarely emerge out of a single crisis. More often, they reflect the cumulative effects of multiple events and pressures, which unfold in young people’s homes, institutions and communities, as well as in wider society. This report takes a ‘life course’ approach to youth inequality [1] that focuses on five critical life stages: perinatal, early childhood, adolescence, early adulthood, and the young workforce. Young South Africans (aged 15-34) make up over a third of the country’s total population. They should be the engine of the economy, society, and democracy. But instead, nearly half of these young people are without work, education or training opportunities. While the working-age population is growing, the South African economy has struggled to keep pace. A key driver of youth inequality arises at the intersection of income levels, access to quality early learning programmes, and child outcomes. Children from contexts characterised by poor access to nutrition, inadequate living and infrastructural environments, and a lack of security and social protection have few opportunities for quality early learning and stimulation. They therefore enter school on a significantly uneven footing, vulnerable to worse health and developmental outcomes. Without the right support and intervention, this can impact their success in school, their future economic and social participation, and ultimately contributes to deepening inequality. South Africa’s inequality is intergenerational and cyclical. Despite expanded access to health, education and social security in democratic South Africa, the livelihood prospects of children often remain tied to those of their parents. Two-thirds of Black children live below the poverty line compared to 2% of White children, which illustrates the racial dimension of entrenched inequality. Hence, youth inequality is locked in place by stubborn racial and class inequalities that limit access to quality schooling, propel learner dropout, and obstruct transitions into post-school education and employability. Furthermore, gender discrimination means that women bear the brunt of social reproduction, with many young women forced to participate in unpaid care work. Regardless of their level of qualification, women also earn less than their male counterparts. The knock-on effects of these racial, class and gender inequalities show up profoundly in infant and children’s lives, which is why the recommendations propose a maternal support grant to safeguard perinatal outcomes. By improving mothers’ wellbeing and nutrition, the wellbeing and nutritional status of their children will be positively impacted too. This report draws attention to the important relationship between early influences and later outcomes in young people’s lives, while exploring their life trajectories in social, political, economic and cultural context, as youth are not a homogenous category. The analysis draws on transdisciplinary evidence to show not only how youth inequality accumulates over the life course, but also critical moments where policy and programming might intervene to alleviate inequality and safeguard more just futures for young people. This includes interventions that support pregnant women, invest in early childhood development, reduce school dropout, bolster alternative routes to matriculation and better match young people and employers. Introduction South Africa is widely regarded as the most unequal country on earth.[2] By January 2020, the top 20% of the population earned over 68% of income[3]; while the bottom 40% of the population earned just 7% of income.[4] The country’s inequality is multidimensional,[5] transcending income and wealth to include matters of land, capital, and access to quality public services. This multidimensional inequality also intersects with gender, race, and geography in ways that entrench historical fault lines. The country’s inequality is also viciously circular. It is both characterised, and reproduced, by a reality in which only four out of 10 young people have work.[6] While the working-age population has grown, job creation has not kept pace. This has given way to a backlog of young people without work, whose livelihoods are uncertain and whose opportunities of entering the labour market are narrowing. While there is stark inequality between young people and other generations in the labour market, there is also inequality between youth: young women have less access to employment, earnings and job security than men; and race and income remain tightly bound. Policy discourse in South Africa is preoccupied with the vexing ‘triple threat’ of poverty, unemployment and inequality. What remains comparatively muted in these discussions is the reality that many South Africans have the odds stacked against them, well before they reach their second birthday. This is because the inequality is intergenerational. Notwithstanding expanded access[7] to health, education and social security in democratic South Africa, the livelihood prospects of children often remain tied to those of their parents.[8] Any meaningful shift in the stark, and long-entrenched inequality will demand that we unlock the social and economic mobility of these youth. Defining youth and youth agency ‘Youth’ is a culturally constructed category, with different meanings in different places and times, and often involving contradictions[9]: The United Nations defines ‘youth’ as those aged between 15 and 24 years. In South Africa, youth consist of those aged 15 to 35 years,[10] as defined by South Africa’s National Youth Commission (NYC) Act of 1996. The essence of this categorisation, according to the act, is that because many older youth were disadvantaged by their role in the struggle against apartheid, they needed to be included in youth development initiatives.[11] Today, the extension to 35 years of age continues to speak to the ambiguity and dynamism of youth transitions in the country, where some markers of adulthood – like having stable work or attaining educational qualifications – might be delayed; while others, like parenthood or domestic responsibility may begin in early adolescence. Young men, for example, might be culturally assigned as adults while still remaining economically dependent. In South Africa, most young people in their early twenties have some work experience, and one third of women at this age are mothers. But they also move in and out of employment and education, and many continue to live with their parents, delaying marriage and cohabitation. The fluctuations between, and overlapping of, assumed ‘child’ and ‘adult’ roles is most powerfully symbolised in teenage mothers. South African youth undertake household chores, raise younger siblings, and are sometimes involved in paid labour. Yet, despite their participation in social and economic processes, they remain marginalised from the formal political and economic domain.[12] Dominant understandings of young people in South Africa have often reflected the political context of the time. In the 1980s and 1990s, researchers were preoccupied with young people as political activists.[13] Some positioned youth as irresponsible, irrational and uncontrolled opponents of apartheid, while others saw them as heroes of the liberation struggle. In both cases, ‘youth’ were treated as a homogenous entity, acting as one, with a unified set of motivations. In the early 1990s, a growing body of research sought to muddy constructions of youth as either ‘heroes’ or ‘villains’,[14] surfacing the complex range of motivations and circumstances that attracted young people to political action. Following the democratic transition, the militancy of adolescents who had boycotted against apartheid, stayed away from school, and challenged adult authority was rapidly recast as a liability. Nineties youth attracted labels like ‘the lost generation’ or ‘marginalised youth’ – a generation likely to threaten social stability. In the early years of democracy, the generation of young people who had left school to join the liberation struggle and were now seen to be ‘aimless’, provoked a sense of moral panic.[15] In the latter years of the decade, youth researchers adopted an increasingly policy-oriented focus, producing studies on ‘at-risk’ youth like AIDS orphans and street children. Some have argued that the dominant line of cleavage in post-apartheid South Africa has been that of ‘generation’, and that young people’s lives in particular have been at the heart of post-1994 change.[16] In the ‘new’ South Africa, youth are positioned amidst a range of overlaying tensions, as opportunities and constraints shift. On the one hand, democracy promises increased economic and social mobility for young Black South Africans, allowing them to aspire to possibilities previously denied to their parents. However, these new possibilities have emerged in a context of skyrocketing youth unemployment, a frequently dysfunctional education system, and other stark socio-economic inequalities that often make young people’s high ambitions unattainable. While the new constitution has protected the rights of children, especially in terms of independent access to healthcare,[17] this empowerment does not always translate into young people’s home or community lives. Instead, young people are especially vulnerable to physical, sexual and emotional abuse, and often take on a significant burden of unpaid household labour. To understand the lives of young people growing up in post-apartheid South Africa, one must appreciate both rapid change and oppressive continuity, which create stark ambivalences and contradictions in young people’s lives. [18] Post-apartheid South African policy has described the country’s youth both as the “greatest threat to social stability” and as a “demographic dividend”.[19] The former invokes a “ticking time bomb” of increasingly impatient, disillusioned and economically inactive young people. The latter anticipates the economic potential of a disproportionately large working-age population. Indeed, young people are viewed with both trepidation and tremendous expectation. These binaries have been symptomatic of political discourse for some time,[20] but fail to capture a much more ambiguous reality. By 2012, the South African Reconciliation Barometer[21] was showing that South African youth were optimistic about the future and confident in their ability to shape political decision-making, while at the same time being sceptical of political parties. Their expressions of agency and constraint were complex and varied, which was not reflecting in the dichotomies of policy discourse. Young people are all-too-often described as personifications of their circumstances – as instigators of violent service delivery protest, or as pawns in the political plays of organised labour, politicians and business. Rarely do we hear about young people as dynamic social and cultural agents. There is now a robust and growing body of ethnographic literature on the everyday lives of young people in South Africa, with the earliest antecedent being Burman and Reynolds’[22] volume, ‘Growing up in a Divided Society: The Contexts of Childhood in South Africa’. In the early 1990s, social anthropologists Mamphela Ramphele[23] and Patti Henderson[24] worked with teenagers from New Crossroads township in Cape Town. Both described young people’s everyday mediation of high ambitions and harsh structural constraints. This work has since been furthered by qualitative research on the gulf between youth ambitions and their ad-hoc plan-making in light of limited resources.[25] Acknowledging the “ambiguous agency”[26] of young people – as both vulnerable and virulent – might shift how we think about them, and how we intervene in their lives. The youth unemployment crisis South Africa is in the midst of a much-anticipated ‘demographic transition’: declining fertility rates and increasing life expectancy have meant that the ratio of working-age people to dependents is changing, giving rise to a growing, economically productive youth population and associated hopes for an economic boom (see Figure 1). This lower dependency ratio is unlike other upper-, middle-, or high-income countries, and represents an economic opportunity that other wealthier regions don’t have access to. Young South Africans (aged 15-34) make up over a third of South Africa’s total population.[27] They should be the engine of the economy, society, and democracy. But instead, nearly half of young people are without work, education or training opportunities.[28] While the working-age population is growing, the South African economy has struggled to keep pace: according to Quarterly Labour Force Statistics (QLFS), for example, the number of people employed increased by just under 2 million from 2007 to 2019, while the working-age population increased by 6.5 million over the same period.[29] However, in the second quarter of 2022, the expanded unemployment rate (which includes discouraged job seekers) was over 72% for young people aged 15–24, compared to 51% for those aged 25-34 years, while the overall rate stood at around 44% (see Figure 2). This reality doesn’t shore up with the large economic opportunity presented by the lower dependency ratio. Figure 1: Old-age dependency ratio across the globe An analysis of QLFS data between Q1 2017 and Q2 2022 (see Figure 2) shows that this is not a new phenomenon. Rates of youth unemployment have been stubbornly high throughout the five-year period, increasing with the effects of Covid-19 lockdown, before returning to 2017 levels. And indeed, high youth unemployment rates long precede 2017: the earliest estimates of youth unemployment originate from the 1996 National Census, conducted just after the country’s transition to democracy and reported that 53.2% of young people between the ages of 15 and 34 were unemployed.[30] Figure 2: Unemployment rate (expanded) by age group Table 1: Unemployment rate (expanded) by age group Among the working-age population, vulnerability in the labour market seems to decrease with age: youth in the younger age group are most severely affected by unemployment. Because of this, South Africa’s unemployment crisis is often framed as a ‘youth unemployment crisis’. Yet the root of the problem is the scarcity of quality jobs, the structural constraints within the South African economy, and the challenges of industrial change, rather than with young people themselves. Undoubtedly, young people are uniquely affected, and often uniquely vulnerable. Relative to older adults, they have less work experience and financial capital, weaker social networks and are prone to higher levels of informality and in-work poverty. Young people’s vulnerability in the labour market means they are particularly affected by job and earning loss when financial shocks hit. National survey data show that, among those who lost jobs in April 2020 as a result of Covid-19 lockdown, young people were least likely to have recovered those jobs by October 2020.[31] We know that South Africa’s youth unemployment rates are significantly affected by high levels of early school-leaving which translates into low access to post-secondary education, and ultimately higher levels of unemployment.[32] More so, economic wellbeing is often an intergenerational transfer, with a large part of earnings inequality explained by the educational attainment of one’s parents.[33] But ‘youth’ are also not a homogenous group; there are significant inequalities between them. In fact, this report shows that young people’s future chances often begin articulating in early childhood, setting in motion a range of inequities that tend to widen as children move through school and into the workforce. Race, geography and gender, all of which are outside of young people’s control, continue to constrain the possibilities available to them in profound ways. In 2022, 8.8 million young people (15-34 years old) in South Africa were not in employment, education, or training (NEET).[34] The majority of this group are Black, income-poor, without a qualification, and live in households with no employed members.[35] Figure 3: Educational status attained by race Moses, van der Berg, and Rich[36] suggest that there are a few primary routes through which young people from low-income households can achieve social mobility and ultimately access the upper end of the labour market: (1) by attending either moreaffluent schools or better-performing schools in poor communities; (2) by performing well in Grade 12, despite being in a lowerquality school, and acquiring enough resources to gain entry to university; or (3) by entering the labour market at the lower end and progressing upwards. This report will show the immense challenges entailed in all three paths: from undoing historic inequalities in access to quality education, to reaching and passing matric, to gaining university access, to gaining any momentum in the labour market (Figure 4). On their journey towards quality jobs, most of South Africa’s young people have the odds stacked against them, starting as early as their first years of life. Figure 4: Road to South Africa’s youth unemployment rate This report is about how those inequities play out over young people’s life course and what strategies we might take to interrupt them, both to improve their chances of social and economic mobility, and disrupt structural patterns of inequality. A life course approach to inequality This report takes a life course approach to youth inequality.[37] This approach draws attention to the important relationship between early influences and later outcomes in young people’s lives, while also exploring their life trajectories in social, political, economic and cultural context. Young people’s vulnerabilities rarely emerge out of a single crisis. More often, they reflect the cumulative effects of multiple events and pressures, which unfold in young people’s homes, institutions and communities as well as in wider society. What happens to a child at each developmental stage is influenced by what happened at earlier stages, which means that for young people to reach their potential, we need enabling environments across the life course.[38] For the purposes of this report, a life course approach entails four levels of analysis, which have also been used in global studies of youth vulnerabilities[39]: The life course model frames development as a cumulative and continuous process and cautions against approaches to youth programming that would silo risks or particular age groups. It also implies that interventions should be tailored differently for different youth populations, given the unique combinations of risk and protective factors to which they are currently, and have previously been, exposed.[40] To see a life course framing in action, let’s imagine the journey of the average South African child (Box 1). In a recent article[41] by Percept and the Inclusive Society Institute, we called them Nation. Box 1: Nation’s story ​While pregnant, Nation’s mother will almost certainly be able to access antenatal care at her neighbourhood clinic. But she will also have a nearly 3 in 10 chance of experiencing antenatal depression.[42] Once Nation is born, important aspects of their emotional, social, and cognitive development, as well as their future health, will already start to coalesce.[43] The stimulation, nourishment and care Baby Nation receives will lay the foundations for their future learning, school performance, health and wellbeing. This, in turn, will affect their ability to participate meaningfully in social and economic life as a young adult.[44] ​If Nation is lucky, they may be one of the 6 in 10 South African children to benefit from the Child Support Grant in their critical first year of life.[45] This type of support is critical, since, as a toddler, Nation will have a 3 in 5 chance of growing up in poverty, and a 2 in 5 chance of living below the food poverty line.[46] This will reduce their chances of nutritional stunting, which is estimated to affect 27% of the country’s children, with ramifications for their future health, learning and earning prospects.[47] ​When Nation grows up, and becomes more independent, and their mother needs to find, create or return to work, Nation might be among the 32% of children (under age 4) to attend an Early Learning Programme (ELP).[48] These critical early learning services are delivered by a women-led, non-state and largely informal sector, including sole-proprietors, microenterprises and Non-Profit Organisations (NPOs). Since Nation has a less than 30% chance of their fees being subsidised by government,49 early learning will be expensive for their mother. ​By the time Nation turns five, they will have a less than 50% chance of being developmentally ready to start primary education.[50] This setback will make it harder for Nation to stay in, and succeed in school – with knock-on effects for their ability to enter the labour market and build a secure livelihood. This may sound like a deterministic outcome: how can we possibly curb inequality if it has been set in motion from the womb? But, in fact, life course research tells us that intervening at critical points in a young person’s life course can radically alter not only their own trajectory, but also the trajectory of future generations. This report draws on transdisciplinary evidence to show not only how youth inequality accumulates over the life course, but also critical moments where policy and programming might intervene to alleviate inequality and safeguard more just futures for young people. We focus on five critical life stages (see Figure 5), as described below: a. Perinatal (period in-utero) b. Early childhood (birth to 6 years) c. Adolescence/basic education d. Early adulthood/post-school transitions e. The young workforce Figure 5: Critical life stages Perinatal A healthy pregnancy is essential to safeguard the health and wellbeing of children in the critical early stages of their lives. For example, maternal stress, depression and anxiety in pregnancy can lead to lower birth-weight, increased attention and behavioural difficulties and sleep disorders for children.[51] One of the greatest victories of the post-apartheid South African public health system has been its improved access for maternal and child health. Since 1998, Demographic Health Surveys have indicated that over 92% of women access Antenatal Care (ANC) services. But the timing of the first ANC visit, as well as the number of visits, are also important for child outcomes.[52] While availability of antenatal care has improved, pregnant women are still not accessing it early enough: only 67% of women have their first ANC visit before 20 weeks in South Africa.[53,54] Despite the victories of clinic-based maternal and child health services, pregnant women in South Africa remain inordinately vulnerable. Research suggests that pregnant women in South Africa are 45.6% less likely than other women of reproductive age to earn an income.[67] In a Western Cape study, 71% of pregnant women were unemployed, and 83% of those reported no prospects of future employment.[55] The overrepresentation of women in the informal sector[56] means that many pregnant women who do earn an income will not be granted paid maternity leave. Pregnant women’s unemployment and under-employment has significant implications for the health and wellbeing of both women and children, and can deepen pre-existing inequality. Robust research has shown that many life-long patterns of illness and health, as well as emotional and cognitive development, are catalysed in a child’s first years of life, especially during pregnancy.[57] The physiological and neurological capabilities accumulated in these early years influence not only child survival, but also their growth, learning and ability to rise out of poverty.[58] Just over a quarter (27%) of South Africa’s children under five are believed to be nutritionally stunted,[59] making them more likely to drop out of school, struggle to find work, and live in poverty. More recent data suggests significantly more conservative figures among children (aged 50-59 months, or between four and five years old) attending early learning programmes, where moderate and severe stunting was found to be at 5.7%.[60] Growth deficits at a young age have long-term effects on social and cognitive development.[61] Undernutrition, with stunting being one of its more severe consequences, is not only a manifestation of poverty, but also “one of the key mechanisms by which poverty – and its consequences – are transmitted intergenerationally”.[62] Stunting is driven, in part, by mothers’ mental health and nutritional status,[63] and research indicates that pregnant women in poorer communities are experiencing high rates of food insecurity and depression.[64] Nearly four in 10 of the pregnant women surveyed between 2020 and 2021 in the Western Cape reported going to bed hungry in the previous week, while six out of 10 had felt depressed.[65] Currently, there is low uptake of the Child Support Grant (CSG) among caregivers with 0-2-year olds who meet the criteria due to lags in registration. Surveys of more than 5,000 children conducted between 2018 and 2022 in nine food-vulnerable districts in South Africa, show that 44% of children under one year old were not benefitting from a child support grant.[66] As a result, the grant is not as effective as it could be. Early childhood There are about 6.5 million children in South Africa under the age of six; 4 million of them live in the poorest 40% of households.[67] This means that the majority of children are born into contexts that make it difficult for them to realise their potential. These contexts are characterised by poor access to nutrition, inadequate living environments, a lack of security and social protection, and few opportunities for quality early learning and stimulation.[68] Far too many children experience malnutrition and toxic stress. Research shows that across all developmental domains, outcomes were worst among the poorest children, and best among the wealthiest children.[69] This means that children from poor backgrounds enter school on significantly unequal footing, with impacts on their success in school, and their ultimate economic and social participation.[70] The relationship between income levels, access to quality early learning programmes, and child outcomes, is a key driver of South African inequality. To alleviate inequality, we must find ways to reduce this gap before it is widened in later years. Although adults are still more likely than children to live in urban homes, a significant majority (57%) of South Africa’s young children (below the age of six) now live in cities and major metros, and this proportion is increasing.[71] Meanwhile, 3 million children under six still live in rural areas, primarily in the former homelands.[72] Rates of poverty for young children are highest in Limpopo, KwaZulu-Natal and the Eastern Cape.[73] Whether urban or rural, children who grow up in poor living conditions – with inadequate water, sanitation or energy – are vulnerable to worse health and developmental outcomes.[74] Poor sanitation, in particular, has strong links to rates of childhood stunting.[75] In 2019, almost a third (29%) of young children live in households without piped water on site.[76] Young children who grow up in poor households are at highest risk of being excluded from early learning and health services because they cannot afford transport to clinics or government offices, or because the fees of early learning programmes are unaffordable. Early Childhood Development (ECD) services – including nutrition, early learning, healthcare and social services – can facilitate children’s development and future chances, increasing primary school enrolment, improving academic performance and reducing school dropout.[77] Although access to early learning programmes has expanded over time, there is still stark inequality in the distribution and quality of programmes, and the level of funding from the government.[78] Deeply entrenched inequality is also illustrated by the fact that two-thirds of Black children live below the poverty line compared to 2% of White children.[79] Currently, only about 1.5% of the country’s GDP is spent on ECD, most of which goes to child support grants. A mere 6.5% of this budget is allocated for early learning, nutrition support and supportive parenting programmes.[80] While early learning in South Africa is a heterogenous and predominantly informal sector, the current institutional framework for supporting Early Learning Programmes (ELP) is geared towards formal and registered providers. This means that the vast majority of ELPs are excluded from any government oversight or support. Of the estimated 70,000 ELPs, only around 16,000 – 20,000 are formally registered.[81] ELP attendance is partly a function of age: children under the age of two are least likely to attend an ELP. But it is also a function of income – Figure 6 shows ELP attendance for children age 3-5 years old by income quintile. Figure 6: Early learning programme attendance for 3-5 year-old children by income quintile Source: Hall, K. et al. 2017. South African Early Childhood Review[82] The ability of parents or caregivers to afford ELP fees will continue to be a driving factor for ELP access – and indeed inequality – without wider and deeper public financing.[83] The first step to giving children an equal start in life is to ensure that all young children have access to quality and comprehensive early childhood development services.[84] If not, these foundational setbacks become more and more difficult to overcome as they move through school and into adult life. Adolescence Access to basic education has improved dramatically in South Africa. By the early 1990s, the country had near-universal enrolment rates at primary school level. Between 1985 and 2007, secondary school enrolment had risen from 51% to 91%.[85] Despite arriving on unequal footing, almost every young person in South Africa starts school. But, from the moment they enter a Grade 1 classroom, most will have the odds of success stacked against them. Only four out of every 10 Grade 1’s reach and pass Grade 12.[86] Rather than being a once-off event, school dropout is a process, propelled by a range of factors in young people’s schools, homes and communities that serve to either push or pull them from school (Figure 7).[87] Figure 7: Predictors of school drop-out The school environment can either be a protective or a risk factor in driving learner dropout. School is a vital space for education. But beyond learning, a quality school environment can also play other important roles in young people’s lives, offering them safety, socialisation, freedom and community. This can deepen young people’s attachment to school and make it less likely that they will drop out. However, many learners continue to feel unsafe, uncomfortable and unstimulated at school. Bullying, absent teachers, irrelevant curricula and poor sanitation are just some of the factors that make learning difficult and often drive learners from school.[88] An obstructive learning environment can contribute to learners’ academic struggles, which are another important predictor of dropout, particularly for those who start to fall behind early on. The early years of school are about building a basic understanding of words and numbers. Without the basic tools to understand what is being taught, further learning cannot take place and it becomes very difficult for learners to progress through the curriculum.[89] Robust research suggests that the South African education system is failing children in these early years.[90] By Grade 4, less than half of the learners who started Grade 1 three years earlier, are on track academically, and many are older than the expectation for their grade. In the poorest schools (quintiles 1 and 2), only one in three of these learners are on track.[91] Grade repetition is the single greatest predictor of school dropout.[92] Over 1 million school learners repeat grades each year.[93] An estimated 20% of learners in Grades 10-12 are three or more years over-age, having repeated grades.[94] In 2018, the cost of repetition to the public schooling system was estimated at R20 billion – 8% of the annual basic education budget.[95] Government progression policy does not allow learners to repeat a grade more than once per ‘phase’, whether Foundation Phase (Grade R-3), Intermediate Phase (Grades 4-6) or Senior Phase (Grades 7-9), or Further Education and Training (Grades 10-12). Instead, learners failing for a second time simply ‘progress’ to the next grade, but often without the academic support they need to succeed.[96] Learners that are struggling academically can feel alienated and inadequate, deepening their sense of disengagement from school.[97] As they fall further behind, some might feel unable to catch up, or that they don’t have the academic ability to complete their schooling. In South Africa, boys are significantly more likely to repeat grades than girls, which is undoubtedly a significant driver of their higher dropout rates.[98] National survey data over the course of 2020–2021 showed that the Covid-19 pandemic had amplified disruptions to education: deepening learning losses, reducing access to school meals, and exacerbating learner disengagement from school.[99] Outside challenges in the learning environment and academic curricula can push young people from school. Young people can also be pulled from school by pressures at home or in their communities. Given that most young people across South Africa attend no-fee-paying schools, it may come as a surprise that many don’t have the financial resources to complete their basic education. Even those enrolled in no-fee-paying schools, or supported by government bursaries, often struggle to make ends meet because of the added costs of education, which include uniforms, learning materials, transport, and stationery.[100] In rural areas in particular, barriers to schooling extend beyond finances: many must travel long distances to the classroom. In his research in the Mpumalanga province, Lawrence Mboweni[101] found that young children aged between seven and 13 years walked a total of 16km each day to and from school. Along these journeys, children face many possible dangers. In KwaZulu-Natal, children have been reported to be crossing a lake with hippos in order to reach school.[102] Many learners undertake household chores and caregiving responsibilities that, in some contexts, can pull them away from their schoolwork. Girls and young women tend to carry a greater burden of caregiving and domestic responsibilities, which can limit time for homework and even keep them from the classroom.[103] In rural areas, girls and young women carry an especially heavy load of household duties, carrying water and fetching firewood.[104] Covid-19 and lockdown also exacerbated burdens for girls: when relatives fell sick or there were younger siblings at home and in need of childcare, girls were more likely to take on caregiving responsibilities than boys.[105] South African public discourse is gripped with moral anxiety over pregnancy among adolescent girls, partly because of its perceived age-inappropriateness, and partly because of the possible impacts on the wellbeing of mothers, families, and children. Notwithstanding the recent dramatic spike in young pregnancy over the Covid-19 lockdown,[73] South Africa’s adolescent fertility rates have been steadily declining over the years, dropping by 27% over the past 50 years.[74] Although adolescent girls are more likely to fall pregnant in South Africa than in other upper middle-income countries, the country’s adolescent fertility rate is well below the sub-Saharan African average.[106] Research[107] tells us that there is a mutually reinforcing relationship between pregnancy and school dropout: young women that leave school are at higher risk of falling pregnant, while pregnant youth are also at higher risk of leaving school. In addition to financial pressures, parenting learners carry the responsibility of childcare, which can affect their ability to stay in, and succeed at, school. What is often missing from the story is the role that schools, families, and policymakers play in determining whether a young mother returns to school or not. For many girls and young women, an unintended pregnancy means social stigma and isolation, along with major disruptions to schooling. Without the right type of support, the physical toll of pregnancy, regular antenatal visits, and caring for a newborn often come at the expense of young women’s schooling. Research into the effects of early childbearing on young people’s educational and economic attainment show that delaying childbearing can improve young women’s educational outcomes as well as their chances of employment.[108] In South Africa, young people without a matric year, or an equivalent qualification (Level 4 of National Qualifications Framework), are often cut off from pathways to tertiary education, employment and higher earnings. They not only struggle more than their peers to find work, they also remain unemployed for longer periods of time, and if they do find work, have less stable and lower earning jobs.[109] Figure 8: The Qualifications Hierarchy: Outcomes of the 2008 Matric Cohort Source: Spaull, N. 2016. Important Research Inputs on #FeesMustFall Levels of qualification also affect job security, which also means that in economic downtimes, those with fewer qualifications are disproportionately affected. From 2017 Q1 to 2022 Q1, overall employment decreased 8%.[110] Within that figure, employment among those with tertiary qualifications decreased 4%; matric-educated employment decreased 8%; and those with less than matric saw an employment decrease of 20%. School completion rates in South Africa are both a driver, and a reflection, of South Africa’s inequality. Dropout rates differ significantly by race. Black and Coloured youth are half as likely to complete Grade 12 as their White and Indian counterparts.[111] Young Coloured men appear to be at highest risk of dropping out: one survey showed that 29% of 16-18-year old Coloured men were not in school.[112] But across genders, it is Black youth who are at highest risk of dropout. This is certainly not for want of trying, since young Black learners also tend to stay in school for longer, repeat more grades, and leave school at an older age.[113] Because of the country’s history, race in South Africa is a proxy for other inequalities. Different races have different dropout rates because of how South Africa’s education system, together with its towns and cities, were planned under apartheid. Apartheid spatial planning gave White families privileged access to quality schools and urban infrastructure. These inequities have persisted in the post-apartheid context, such that poor, Black and particularly rural youth are disadvantaged in their access to quality education, which would otherwise improve their access to jobs and advance their social mobility.[114] In the poorest 80% of schools, only 1% of Grade 8 learners will go on to pass matric and be eligible to study maths and science at university (i.e. achieve above 60% for these subjects). In the wealthiest 20% of schools, nearly ten times as many learners will pass Grade 12 with these grades.[115] Early adulthood Transitions into post-school education Young people who leave school with a matric certificate have a labour absorption rate of 31.5% (see Figure 9 below), 13.8% percent higher than for those without one (17.8%). But chances of finding work are improved exponentially by a tertiary qualification, which increases absorption rates by a further 26.8%. Tertiary-educated youth have a labour absorption rate of 58.0%. Figure 9: Absorption rate by education status This is also borne out in the expanded unemployment rate for young people (aged 15–34) by education level (see Figure 10). While having a matric certificate marginally decreases young people’s chances of being unemployed, it is only when this certificate is used as a passport to a tertiary qualification that chances of being employed are exponentially increased. This is partly because the economy of South Africa has shifted to one in which higher levels of skills are increasingly in demand.[116] Figure 10: Unemployment rate (expanded) by education status We know that most young people who drop out of school do so between Grades 10 and 12. Despite having completed compulsory schooling, historically they have had no formal qualification to aid their transition into further training or employment. The proposed General Education Certificate (GEC)[117] is intended to address this problem, giving those who have completed Grade 9 a national certificate. While the Technical and Vocational Education and Training system (TVET) should provide young people with a Grade 9 or GEC qualification opportunities to further their education, very few young people without a matric access these institutions.[118] Among young people without a matric, only 1% have some other school certificate or diploma (from a TVET college for example).[119] Quarterly Labour Force statistics show that as many as three in 10 young people in this category (aged 15-24) are not only unemployed, but are also not enrolled in education or training.[120] TVET enrolment is low, in part because unlike university degrees, TVET qualifications are not perceived to improve young people’s employability.[121] There is further evidence that young people’s aspirations for a university degree, and for a professional career as opposed to a menial job, also contribute to them valuing university education over TVET education.[122] TVET education has therefore often carried with it assumptions of inferiority, which have been exacerbated by difficulties with the quality of teaching and learning at these institutions.[123] Research shows that, rather than acting as an alternative route to a matric-level qualification, TVETs have become ways for young people who already have a matric certificate to bide time, before qualifying for a university degree programme or finding a job.[124] Despite the important impact that a post-school qualification can have on young people’s future, most who start a tertiary level programme do not complete it: only 60% of university undergraduates, for example, complete their degrees within 6 years.[125] TVET students are even less likely to graduate.[126] Notwithstanding increased access to post-school education,[127] only 8% of 15-24-year olds attend a university or college, and even fewer complete their qualifications.[128] Culture shock, poor quality teaching, social exclusion, bullying, along with physical and mental illness can constrain young people in completing their qualifications, particularly if they are from vulnerable or rural homes.[129] In 2016, the Dell Foundation, which offers bursaries to students in two top South African universities, published a report about the types of support that students felt they most needed. 50% said psychosocial and community support made the most difference to their success.[130] Low rates of access to and completion of post-school qualifications contribute to stubborn racial and class inequities in youth employment outcomes.[131] An analysis of QLFS data between Q1 2017 and Q2 2022 shows marked, and continued, inequality in unemployment by race (see Figure 11). This illustrates the stubbornness of apartheid-era racial hierarchies, and reflects broad, historical patterns in educational attainment by race (see Table 2). Figure 11: Unemployment rate (expanded) by race In South Africa, 60% of young people either leave school before matric, or have failed their matric exam, and are left without any kind of recognised educational qualification. And yet, chances of finding work are improved exponentially by a tertiary qualification. Any meaningful shift in South Africa’s stark, and long-entrenched, inequality will demand that we unlock the social and economic mobility of these youth. Table 2: Youth education status by race, 2017 Q1 and 2022 Q2 Transition into the labour market South Africa’s fast-growing labour force presents both a tremendous challenge and an unprecedented opportunity. Over the past five years (Q1 2017 – Q2 2022), South Africa’s working-age population has continued to grow steadily: from 37.1 million in the first quarter of 2017 to 40.0 million in the first quarter of 2022. When they leave school, young people in South Africa enter a world of uncertainty, often unprotected. Many will lose the routine, daily meals, and adult mentorship that the school environment provided. When they turn 18, those who had benefited from a child support grant will stop receiving it, putting added financial pressure on their households.[132] Among those without a matric qualification, there are a variety of different pathways in terms of movement into and out of the labour market. An analysis of five waves of the National Income Dynamics Survey shows that over a 10-year period, two-thirds of young people who had not completed Grade 12 experienced some degree of churn in the labour market, with a smaller proportion remaining consistently in or out of employment and the education system.[133] But even within this group, there is significant inequality. The consequences of not having a matric certificate differ depending on young people’s connectivity to the labour market. Those from poorer households and disadvantaged schools are more likely to be long-term unemployed, which translates into poorer mental health and subjective wellbeing.[134] Between 2008 and 2021, the number of young people who had been looking for work for more than three years tripled.[135] The number who had given up entirely, tripled.[136] Figure 12 shows the composition of the working-age population across its four constituent categories over the period 2017 Q1 – 2022 Q2. Figure 12: Composition of the working-age population Table 3: Composition of the working-age population Over this time, the employed population shrunk from 16.2 million to 15.6 million despite the overall growth in the working-age population, while the other three categories all grew: unemployed from 6.2 to 8.0 million, discouraged job-seekers from 2.3 to 3.6 million, and other not economically active from 12.4 to 13.1 million. This underscores the size of the challenge for South Africa: in a period in which the working-age population has grown by over 8%, the economy was able to accommodate 4% fewer in employment. The rising number of discouraged job-seekers is a pressing concern for South Africa, reflecting not only the financial and psychosocial cost of job-seeking but also deepening chronic unemployment. Research suggests that the longer someone is unemployed, the more difficult it becomes to find work, not only because they become increasingly discouraged, but also because employers view them as riskier hires.[137] South African research[138] suggests that unemployment is also associated with stigma and shame, as well as stress, depression and anxiety, which in turn make it more difficult for people to seek and find work. Over the past five years, the number of young job-seekers (aged 15–34) who have grown discouraged (i.e. had not acted to find work in the previous four weeks) has increased by almost 40%.[139] The experience trap Part of the challenge of the job search is in how to gain, and then signal, experience as an entry-level worker. Qualitative evidence suggests that young people are frequently denied jobs or interviews on the basis of their ‘lack of experience’.[140] A Western Cape survey of middle-class youth showed that those who gained some work experience during high school transitioned more easily into the workplace than those without experience.[141] This is reinforced by national panel data, which shows that school learners and tertiary students who undertook part-time work were more likely to be permanently employed.[142] Indeed, after race and gender, being able to demonstrate some work experience appears to be the most important factor in finding work in South Africa, regardless of whether it is formal or informal, paid or voluntary.[143] But how does one gain experience if experience is often an entry-requirement for work opportunities? Indeed, part of the reason that unemployment is so high for young people is that many struggle to gain first entry into the labour market. The unemployment rate (using the narrow definition) is markedly worse (63.9%) for younger youth (aged 15-24) than older youth (aged 25-34). Some evidence suggests that, by the time they turn 24, 60% will have never had a job before.[144] Long-term unemployment, as well as an extended and unsuccessful job search, can lead to discouragement and depression among young people.[145] In 2019, the South African government relaxed requirements for prior work experience for job openings in the public sector. But the ‘experience trap’ has nevertheless remained a major barrier for young job-seekers. In a context where employers often receive large numbers of applicants, many continue to use level of experience (along with formal qualifications) as a sifting tool. Young women’s disadvantage in the labour market Young women are most likely to be stuck outside of employment,[146] owing in large part to domestic and childcare responsibilities.[147] South Africa has achieved parity in school enrolment, and although girls and women generally outperform boys and men as they move through primary, secondary and tertiary education, they continue to fare worse in the labour market. International research suggests that equity in education does not necessarily translate to workplace equity, often because of the motherhood wage penalty.[148] But women not only have worse wages, they are also less likely to be employed, despite often having higher qualifications. In the second quarter of 2022, 13.2% of women had tertiary qualifications compared to 11.2% of men, and 46.7% had completed secondary education compared to 43.5%. Yet despite being more qualified than men, women fare worse than men in the labour market. Figure 13 shows that young women (aged 15-34) are being absorbed into the workforce at a far lower rate than young men at all qualification levels. This can be partially explained by maternity, domestic and childcare responsibilities forcing women to opt out of the workforce. While their analysis was not particular to youth, Schoer and Leibbrandt[149] show that domestic responsibilities can also keep women from the job search. In the early months of the 2020 Covid-19 lockdown, women accounted for two-thirds of net job losses and have also been slower to recover employment since. This was attributed, in part, to inequities in time spent on childcare.[150] Figure 13: Youth absorption rate by gender and education status While women’s disproportionate caregiving responsibilities may be part of the story, Figure 14 shows that even for young women who opt into the workforce and are actively seeking work, young women with the same qualifications have higher unemployment rates than men, suggesting gender discrimination in the labour market. Gender discrimination in the labour market means that young women’s full economic participation remains untapped, and targeted policy and programmes are needed to redress gender disadvantage. Figure 14: Youth unemployment rate (narrow) by gender and education status This is further confirmed by looking at the proportional difference between male and female absorption and expanded unemployment rates. These statistics are calculated as female divided by male, and emphasise the magnitude of the gaps shown in the previous two graphs. In the first section, “Absorption rate”, the table shows how much less likely women are than men to be absorbed into the workforce. In the second, “Expanded unemployment rate”, it shows how much more likely women are to be unemployed. Overall, the gaps seem to be slowly shrinking over time. However, there is a long way to go. In 2022 Q2, a matric-educated woman is 20.9% less likely to be absorbed into employment than a man with the same education and 10.1% more likely to be unemployed. Table 4: Proportional gender gaps in select employment statistics by education level Financial exclusion In 2019, the Siyakha Youth Assets Study estimated that young South Africans spent an average of R938 a month looking for work[151]: about R558 for transport and an added R380 for internet access, printing, application fees, and agent’s fees.[152] The cost of job-seeking was more than young people’s monthly income (an average of R527), which meant that many could not look for work without becoming indebted. Nearly two-thirds of young people in South Africa relied on family members to help fund the cost of job-seeking.[153] Many have to weigh up the costs of job-seeking with basic necessities.[154] In 2021, a Youth Capital survey of over 2,000 young people across the country suggested that eight in 10 young people were choosing between looking for work and buying food.[155] Apartheid spatial planning exacerbates inequalities in the job search. Because poor youth typically still live either in townships on the outskirts of the cities, or in less economically-developed rural areas, they are often removed from where jobs and industry are located and lack reliable, affordable transport.[156] Ironically, it is then the poorest youth for whom work-seeking is most expensive. Even if these young people find work, the costs of getting to and from work, means that they ultimately make less income. And in fact, there are some jobs that would cost them money to accept.[157] It is perhaps unsurprising then that several studies have found that when households start receiving social grants, there is a positive association with job-seeking among working-age household members.[158] Even before Covid-19 lockdown, almost 90% of young people were using the internet to look for work, with mobile data being among their biggest expenses.[159] But with only 10% of South Africa’s population having internet access at home,[160] the majority of young people are dependent on local hotspots, internet cafés and mobile data. High data costs impact how young people access information on education and work opportunities, producing a digital divide between better-resourced and connected youth, and those with limited connectivity or resources. Given the financial and psychosocial costs of the job search, it is unsurprising that three out of four young people in a 2019 study reported having been looking for work for more than a year.[161] Nearly one in 10 had given up the job search altogether.[162] Social exclusion Most people in South Africa find jobs through friends and family, who either refer them to employers, tell them about work opportunities, offer start-up capital, or lend them money to fund the job search. Employers also often rely on employees to refer people they know and trust when there are job openings. In the early 1990s, researchers found two dairies in Gqeberha and Cape Town that had recruited all their staff from a single Ciskei village, propelled through a chain of referrals.[163] Indeed, a strong body of South African evidence[164] shows the power of social ties and social privilege in determining entry, stability and success in the labour market. This reality means that having social ties to people already in the labour market is critical to gaining entry. But as many as four in 10 young people find themselves on the margins of the labour market, living in homes with no employed members.[165] In the Eastern Cape, the proportion of young people living in homes where no one is employed increases to almost 60%, and in the poorest municipalities in the country, as much as 80%.[166] Because of the interplay between class privilege, social networks and economic power, some researchers[167] have argued that the South African labour market can be split into two camps: a wellconnected group of ‘insiders’, and a second (much larger) group of ‘outsiders’, whose social exclusion locks them out of quality work opportunities. Pathway support The South African labour market experiences a high degree of churn. This has been especially acute over the past few years as a consequence of Covid-19 lockdown. National survey data tracking employment dynamics between February 2020 and March 2021 showed that 23% of participants who had been employed in February were no longer employed the following year, while 30% who had been jobless in February 2020 had found jobs by March 2021.[168] But young people were experiencing this churn well before Covid-19 struck. Many of South Africa’s young workers will cycle through short-term training, jobs or self-employment opportunities, struggling to find a stable foothold in the labour market. Young people who do find jobs often battle to keep them. Instead, they find themselves moving in and out of training, informal work, and short-term positions, unable to translate their experience into stable employment.[169] Although chronically unemployed and transitory unemployed people in South Africa share many of the same characteristics – they tend to be Black, women and younger – transitory-unemployed people are 10 times more numerous than chronically-unemployed people.[170] This reality, coupled with the increase in part-time jobs, means that policy and programming must be designed to support those in transitory employment, bridging them to their next opportunity. The young workforce Like much of the rest of the world, wage labour has been a central economic, social, and political organising force in South Africa: first through colonial and then apartheid capitalist accumulation.[171] Both enforced the employment of Black men on the mines and attached urban residence with formal employment. Over the second half of the 20th century, the South African economy grew exponentially, shifting from agriculture to minerals, and finally to manufacturing.[172] But these structural changes in the economy were also attended with some of the widest unemployment rates in the world and deepening inequality. Since the final decades of apartheid, the economy has become increasingly capital- and skills-intensive,[173] while growth has stalled. Today, the services sector is the key to both growth and employment, while agriculture, mining, and manufacturing have contracted significantly.[174] South African youth face a future without the prospect of industrial waged work and uncertain possibilities for livelihoods in the agricultural sector. Despite skyrocketing unemployment, South African social protection is reserved for those presumed unable to work (children, the elderly, and the disabled), while there is no direct support for the young and unemployed. Structural change towards a service-oriented economy is reflected in young people’s rates of employment in key industries. Among those young people (aged 15-34) who were employed in the second quarter of 2022, 24% were employed in community, social and personal services; 24% in wholesale and retail; and 16% in financial intermediation, insurance, real estate and business services. In other words, the vast majority (about 64%) of young people who are employed, are employed in these service-driven industries. Between Q1 2019 and Q2 2022, the proportions of those employed in mining and manufacturing decreased across the board, but particularly for young people (see Table 5). Table 5: Youth versus overall proportion of employed across industries While some sub-sectors of the service industry are able to absorb low- and medium-skilled workers, the overall absorption capacity of the sector is severely restricted, particularly since most young job-seekers have limited formal qualifications. One diagnosis of the youth unemployment problem is a ‘supply-side problem’. Here it is argued that the primary driver of youth unemployment is that young people do not have the right qualifications, technical or ‘soft’ skills to meet the needs of a changing labour market. This includes the skills demanded by a growing digital economy, as well as the shift to a high-skill, service-oriented sector. As the economy becomes more service sector-oriented and digitisation and automation play a bigger role, some argue that South Africa will need to produce 1.7 million more tertiary graduates to take advantage of the opportunity that an increasingly digitising economy presents, and alleviate job losses.[175] Supply-side solutions work off a deficit model that positions young job-seekers as lacking the capacities that industries and employers need. In doing so, they arguably place the burden of responsibility on young people to equip themselves for work, with little guarantee that the labour market will be able to absorb them or that they will have the support, recognition and resources required to secure a job.[176] The previous section about transitions into the labour market suggests that skills deficits are not the only, or necessarily the primary, barrier to entry for young people. Indeed, young people’s experience of social and financial deficits are as, if not more, pressing. More so, young women may experience gender discrimination in the labour market regardless of their level of their qualification. While we know that more education and training generally equates to higher employment and higher earnings for youth, and demands proper investment, the relationship is not inevitable. There also must be livelihood opportunities to absorb these better-skilled young people. Young people in the informal sector Over the period Q1 2017 – Q2 2022, the proportion of young people employed in the formal sector shrunk by 16%, relative to 6.5% overall (see Table 6). While employment prospects for young people also contracted in agriculture and private households, the informal economy was the only sector in which young people experienced a growth in employment. This is all the more impressive considering the sector was also hardest hit by the Covid-19 pandemic. Among young people, informal employment increased 4% over the period, despite decreasing 23% compared to the formal sector’s 15% in South Africa’s first lockdown. Table 6: Youth versus overall proportion of employed across sectors Literature on youth employment in South Africa often falls into two camps with respect to its approach to the formal economy. For some, shrinking possibilities in the formal sector, both within South Africa and globally, compel us to think differently about work. They argue that ‘the prevalence and persistence of “informal”, “precarious”, and “non-standard” employment in so many sites around the world… requires a profound analytical decentring of waged and salaried employment as a presumed norm or telos, and a consequent reorientation of our empirical research protocols’.[177] Others argue that stimulating formal wage employment is the only way to transform the economy at the scale required to shift livelihood prospects. By looking to expand livelihoods for young people outside the formal wage job, those in the former camp might be accused of valorising ‘precarious work’ and placing the burden on young people themselves to transform their own prospects. Meanwhile, those who view job creation in the formal economy as the only solution to youth unemployment often invoke a false binary between the informal and formal sectors. Here, interventions in the formal economy are perceived as systemic and sustainable, while those in the informal economy are seen piecemeal and individualised; formal work is understood as decent and secure, while informal work is not.[178] Given the lower earnings and poor access to social protection for informal workers, we cannot romanticise the informal economy. But we also cannot ignore it. Nor can we continue to hold rigid dichotomies that fail to capture a much more complex reality. The lines between the formal and informal economies often blur, with connections and overlaps between them. Stereotypes that describe ‘decent, dignified work in the formal economy’ and ‘insecure, exploitative work’ in the informal economy often do not hold. Despite apparent job security, wage-workers in the formal economy can also be exploited, treated as ‘disposable’, and forced to work in unsafe conditions.[179] In South Africa, low-paid wage work has been coupled with colonialism and apartheid,[180] and relatedly forced migration, oppression and abuse.[181] This is part of why some young South Africans report opting for insecure selfemployment as opposed to the indignities of certain forms of wage labour.[182] Descriptions of work outside the boundaries of a formal wage job often rest on what it is not: informal, non-standard, unstable or insecure . This leaves us with far less research or description of what it is, and how we might meaningfully respond to it. In South Africa, young people in the informal economy are often understood in terms of ‘entrepreneurship’, with the assumption that young people’s innate entrepreneurial potential needs only to be unlocked through training and skills.[183] While some see young people in the informal sector as untapped vessels of entrepreneurial potential, others see them as a ‘ticking time bomb’. Outside of formal employment young people are regularly assumed to be lazy, idle and dangerous.[184] With persistently high rates of youth unemployment, post-apartheid South African has been awash with images of ‘waiting youth’,[185] pushed to the margins of society by under-employment and unemployment, and growing increasingly detached from their aspirations for their lives and livelihoods. But rarely are young people just waiting. Instead, research illustrates that young people without jobs are routinely creating new strategies to navigate changing labour markets. In a recent ethnographic study, Hannah Dawson[186] explored social connections among young men working in-and-around a car wash in Zandspruit informal settlement, Johannesburg. Rather than operating in isolation, the car wash business formed part of a web of informal business activity, connected to the taxi industry, informal mechanics and the ‘chesanyama’ (a buy-andbraai informal butchery). The car wash offered young men a place to socialise, pass time, and ‘hustle’ for work. In 2022, a survey conducted by Youth Capital[187] found that neighbourhood hubs, including train stations, schools, clinics and community centres, play a key role in linking young people to opportunity. By becoming visible to potential employers and business partners, young men at the Zandspruit car wash gained leverage in their local economy. Their livelihoods were created and sustained by “making plans with other people”.[188] Those who currently had money or work could support those who didn’t, offering a form of informal insurance that held them from one job to the next.[189] These relational and reciprocal aspects of self-employment are often muted in the literature on entrepreneurship, which has historically centred on individual agency and self-reliance.[190] As it turns out, entrepreneurship is a particularly limiting frame for the work that young people are undertaking outside the formal economy and in the interstices of formal and informal work. This work includes forms of self-employment, side-hustle and opportunism, and enterprises ranging from at-home businesses to sole-proprietors to sophisticated networks of employees. The vast majority of young South Africans will be forced, at some point in their lives, to create their own living through forms of self-employment. But only a small percentage will be able to create businesses that employ others. There is limited crossover between these two types of entrepreneur; not very many microenterprises will develop into Small and Medium-size Enterprises (SMEs). Yet both micro-enterprises and SMEs regularly operate in hostile economic environments with limited capital or networks. Programmes aiming to ‘unlock’ entrepreneurship through business training, financial literacy, access to finance, business plan development, and mentoring are widespread. What is less common are interventions to improve key infrastructure – like electricity, broadband, transport and other infrastructure – that would allow businesses to thrive. Key interventions to alleviate youth inequality over the life course To alleviate youth inequality demands that we attend to vulnerabilities and protective factors throughout the life course. This is particularly pertinent for their economic participation, around which most of the concern about young people’s vulnerability has circulated. Equalising opportunities at birth and in early childhood, for example, sets the foundation to allow for more merit-based systems later on. Similarly, by supporting young people to stay in school and attain formal qualifications, they might gain a firmer foothold in the labour market. If we fail to support young people in their early lives, inequalities only widen as they grow older. But we also cannot afford to fail young adults, who will in turn become the parents of future generations. The recommendations listed below are by no means exhaustive. But they do suggest critical interventions at key moments of the life course that can help alleviate structural inequality and ignite young people’s potential. Perinatal Advance the Maternal Support Grant Research shows that childhood stunting, together with other aspects of children’s physical and mental wellbeing, is driven in part by mothers’ mental health and nutrition during pregnancy.[191] Research suggests that in South Africa’s most disadvantaged communities, pregnant women are experiencing high rates of mental illness and food insecurity.[192] Yet these women will not be able to access any income support from the state until their child is born, and even then, access to the Child Support Grant within the first year of life is low. By extending social protection to caregivers, before they give birth, we can safeguard the health and wellbeing of both mother and child, and take the first steps to disrupting intergenerational poverty. Income support, together with affordable antenatal care, can improve pregnant women’s nutrition and psychological wellbeing, as well as the physical and cognitive functioning of their babies.[71] Research suggests that if stunted children receive extra nutrition and cognitive stimulation, their life-time earnings potential can increase by 25-40%.[72] Schools must implement national policy by supporting pregnant learners and young mothers to stay in school Pregnancy can disrupt young women’s schooling in a range of ways. First, pregnant learners often need to take leave from school for antenatal visits, as well during and after the baby is born. This can disrupt their learning and make it difficult to catch up later. Second, in addition to the physical difficulties of pregnancy, many pregnant learners also suffer shame and bullying in their homes, schools, neighbourhoods and health facilities. The admonishment pregnant learners face both on the journey to school and from their peers can discourage their attendance. Just as judgement and bullying might cause pregnant learners to drop out of school, those who fall pregnant after having dropped out might be discouraged to return, fearing hostility from teachers or classmates. Finally, having a child puts additional responsibilities and financial pressures on parenting learners, which can come at the expense of their schooling if they are not adequately supported.[193] In light of the interplay between pregnancy and dropout, policy and programming must support pregnant learners to stay in school and young mothers to return to school as soon as possible after giving birth. This has been the driving force behind recent (2018) national policy.[194] Indeed, evidence[195] shows that the longer a new mother waits to return to school, the more at-risk she is of dropout. But, even when they want to return to school, attitudes among school staff and classmates often keep young mothers from doing so.[196] But the implementation of new recommendations has varied across schools and provinces with some places completely ignoring policy in favour of expelling pregnant learners.[197] More often, schools have chosen to follow a more outdated government policy[198] that keeps young mothers from school for the first year of their child’s life. Schools remain hostile environments for pregnant women and young mothers, and very few have baby-changing or childcare facilities. Schools can also create other barriers for pregnant learners. In some schools, learners that are more than six months pregnant must submit a doctor’s note indicating whether they are fit to learn; in others, pregnant learners must be accompanied to school by a guardian.[199] At the level of policy and implementation, we must support both expectant and new mothers to stay in school. Pregnancy and early motherhood are critical moments, both in the life course of the pregnant learner themselves, and in the life course of children born to learners, affecting the future chances of both parent and child. Early childhood Government must invest in the ECD workforce and quality ECD services In the critical first 1,000 days of a child’s life, infants and caregivers are expected to receive Early Childhood Development (ECD) services at home, from community health workers, hired as part of clinic-based outreach teams. Community health workers form part of a cadre of about 270,000, mostly Black, women delivering ECD services across the country.[200] These women, who operate largely informally, are all-too-often underpaid, under-resourced and unprotected. The achievement of minimum wage for informal care workers (now R23.19 per hour) has been an essential lever in reducing the gender wage gap at the lower end of South Africa’s wage distribution.[201] As they grow older, children are most likely to receive care through an Early Learning Programme (ELP), but with limited government subsidies, access to these services is dependent on caregivers’ ability to pay fees. Research shows that investing in early childhood accrues benefits over the life course, with returns for schooling, tertiary education, employment prospects, and ultimately national budgets. Some models suggests that the elimination of stunting, alone, could generate an additional R62 billion a year,[202] which would be enough to subsidise a national early learning programme for 0–5-year-olds, while also reducing the funding shortfall at tertiary institutions. If universal access to early learning translated into better basic education outcomes and a fully-literate working-age population, some researchers suggest the country’s GDP would be expected to grow by a quarter.[203] But investing in ECD goes far beyond a return on investment, presenting an opportunity to radically shift intergenerational inequality in South Africa. This is not only because it unlocks the developmental potential of children, but also because it means supporting quality jobs in the community and social services sector, where women are heavily represented. Community, social, and personal services is the only sector that added jobs for young people from 2017 Q1 to 2022 Q2, most of which (over 60%) have been to women. Expanding quality, affordable childcare not only has benefits for young children and young women in the early childhood sector, it also enables more caregivers (usually women) to participate in the labour market. Given that caregiving responsibilities can often delimit young women’s labour participation, this is essential to unlocking their economic potential and alleviating gender inequality in the labour market. Key levers for the government to unlock the multiplier effects of early childhood development: Unlock public financing to pay and skill the ECD workforce through Sector Education and Training Authorities or Public Employment Programmes; and Develop more inclusive regulatory frameworks that allow unregistered sites to access funding and quality support. Adolescence: basic education Implement early warning systems For young people to reap the benefits of basic education, they must be supported to complete their schooling. This starts by developing and supporting thoughtful dropout-prevention programmes. Schools can implement early warning systems[204] for school dropout by tracking signs of learner disengagement, and then delivering the right support at the right time. Research suggests that three indices are critical to identify early signs of disengagement: academic performance, behaviour change, and chronic absenteeism. Academic performance: when learners’ grades begin to drop, it may mean they are falling behind in the curriculum. Without the right support, this can put them at risk of grade repetition, which research shows is a leading predictor of dropout.[205] Behaviour change: disruptive or disengaged behaviour can be an early warning sign, especially if it appears alongside other indicators. Chronic absenteeism: absenteeism usually increases over time. Documenting this can help to trigger support to absent learners before they drop out. Open access to psychosocial support Many children in South Africa are exposed to trauma, violence, loss of family members, hardships at home, inadequate living conditions and limited access to services. This can have both short- and long-term consequences for children’s emotional wellbeing, mental health, academic performance, and ultimate ability to finish school.[206] Evidence from South African longitudinal research shows that adolescents struggling with mental illness are less likely to have completed secondary school or be formally employed, and more likely to report psychological distress.[207] Psychosocial support services for children can include role modelling, mentoring and monitoring from trusted adults and peers. It may also involve individual and group counselling, life-skills training or referral to professional state services. These support interventions are reliant on early warning systems that help trigger the right support at the right time. Adolescence: post-school education Support alternative pathways to a matric qualification Recent research suggests that, at any given time, there are as many as a quarter of a million young people pursuing a matric outside the full-time school system.[208] That equates to a third of the annual matric cohort.[209] This includes young people who are seeking to rewrite their matric exams as well as those who left school before reaching Grade 12. Government must expand and support these alternative routes to a matric qualification, which include the National Senior Certificate, the Senior Certificate and the National Senior Certificate for Adults. As a first principle, this should include easily accessible application information, academic resources, and support services that help young people navigate second-chance matric qualifications. Improve TVET education in terms of access and quality To boost tertiary education rates and equip young people for the labour market, we must increase access to quality Technical and Vocational Education and Training (TVETs). Despite a radical expansion in access to tertiary education since democracy,[210] fewer than two in 10 young people who start Grade 1 will be eligible to attend university, let alone afford university fees or have enough support to finish their degrees.[211] Six out of 10 young people will not leave school with a matric certificate and will need to find pathways to further education where this is not a requirement. TVETs can help prepare young people for the labour market through targeted skills training and opportunities for workplace-based learning. When they work well, these colleges can equip young people with knowledge, skills, and professional know-how that improve their employability and open up networks to potential employers. High schools must educate Grade 8 and 9 learners about the learning pathways available, including TVET colleges and courses on offer. The Department of Basic Education’s (DBE) introduction of the General Education Certificate offers hope for a national qualification for Grade 9 graduates, but for this to serve them, the DBE must ensure that this is a meaningful benchmark qualification that is recognised by employers and tertiary institutions. More so, the DBE should work in collaboration with the Department of Higher Education and Training to help bridge learners leaving school in Grade 9 to a post-school environment. TVET colleges should build strong relationships with industry to ensure the relevance of their curricula, facilitate workplace-based training, and improve the industry reputation of TVET qualifications. These post-school approaches are about building young people’s qualifications and skills. But this, on its own, is not enough. Young people’s disadvantage in the labour market needs redress through wrap-around support, receptive employers, social security, and an enabling environment. These are addressed in the recommendations below. Early adulthood: transitions into work and between jobs As young people exit the schooling system, there are few readily accessible or reliable points of information about how to apply for jobs, how to compile a CV, or how to access further education and training opportunities. Instead, young people must often feel their way through the systems with little to no guidance, mentorship or knowledge-sharing in the process.[212] This means that many young people find themselves floundering in the job search, applying with masses of other applicants to jobs that do not match their qualifications or aptitudes, and with little knowledge of how to signal their particular skills to employers. Endless applications and trips to interviews can be time-consuming and extraordinarily costly, with little payoff, leaving many young people feeling discouraged.[213] Employer readiness Relative to the literature focused on building young people’s aptitudes and preparedness for the world of work, there is far less research about employer-driven drivers of youth unemployment in South Africa. This includes employers’ attitudes and practices with respect to hiring young people.[214] Employers can be supported and incentivised to hire young people through interventions like the Employment Tax Incentive and including youth employment as a pillar on the BB-BEE scorecard.[215] Employee hiring practices must shift from exclusionary norms that necessitate prior work experience and unnecessary educational qualifications. Instead, attention needs to be paid to alternative signals of a young person’s capability.[216] Matching Matching support is about building bridges between young people and employers, where there is often an information chasm, with both parties struggling to find the right people at the right time. Recent South African research[217] shows the impact of providing a young job-seeker with a documented assessment of their skills and capabilities, including not only their educational qualifications, but also their soft skills, experience, and learning potential. When job-seekers were able to provide employers with a summary skills report, their chances of finding work improved by up to 17% and their earning potential increased by up to 32%.[218] Matching is not only about making young people visible in the right ways to their first potential employer, it is also about linking them to their next opportunity, given the rate of churn in the South African labour market.[219] SAYouth.mobi offers one route to doing this. Through a zero-rated mobile site, SAYouth.mobi provides young people with workseeking content, from listings of available income-generating opportunities, to interview techniques and CV-building software. Because it is digital, young people can access and apply for work opportunities without incurring transport or printing costs. SAYouth.mobi also helps to directly link young job-seekers to employers seeking talent, combating inefficient work-seeking behaviours. Matching is based on a range of criteria, including socio-economic circumstances (household income and access to a social grant), geography (proximity to opportunity), capabilities (numeracy, literacy, and skills), gender, and disability. Social protection About a third of South Africans benefit from a social grant. The introduction of the Covid-19 Social Relief of Distress (SRD) grant over the past few years had added a further 10 million recipients, meaning that, by 2022, close to half of the country is supported by social welfare.[220] The rapid expansion of South African social welfare is informed by a robust body of evidence that shows the impact of social grants on poverty alleviation, labour participation, sustainable economic growth, and social cohesion. Quantitative analysis suggests that the introduction of the SRD has alleviated household poverty and inequality, while stimulating labour market participation. Access to an SRD increased the likelihood of looking for work by 25%.[221] In a 2021 Youth Capital survey of over 2,000 youth, nearly three in 10 young people said they had used grant money to support their job search.[222] Given this effect, the National Treasury is considering proposals to transform the SRD into a job-seekers support grant. However, both the South African Federation of Trade Unions (SAFTU) and the Institute for Economic Justice (IEJ) have slammed these proposals, arguing that the eligibility requirements currently being tabled for the job-seekers grant would exclude the vast majority of current SRD recipients, by imposing a range of unfounded conditionalities and ignoring non-financial barriers to job-seeking.[223] Welfare policy in both developed and developing countries, including South Africa, remains focused on providing social protection to those physically unable to enter the labour market: children, the elderly, the sick and the disabled. Everyone else is expected to rely on waged work or entrepreneurship, despite limited opportunities for either. The young workforce Enabling environments For young job-seekers, informal workers and entrepreneurs alike, mobile data is increasingly critical. Data-light platforms can help bridge the digital divide by functioning on low-end smartphones, slow and unreliable networks, and requiring very little data to operate.[224] Reliable electricity, telecommunications, and transport infrastructure are equally important for industry to thrive. The Presidency’s Operation Vulindlela, for example, recognises the energy shortfall[225] as a critical inhibitor to employment and growth. A number of additional key strategies have recently been identified by The Presidency to create a more enabling environment for employment.[226] These include enabling private sector employment, and small and medium enterprises, by reducing their regulatory burden, and shifting towards labour-intensive growth sectors. For young people, this will mean investing in the services sector in particular, with special focus on the social economy together with wholesale and retail. Global Business Services (GBS) is another sector showing significant growth potential in an increasingly digitised economy. Creating enabling environments for self-employed young people is particularly important in a South African context. Here, selfemployment represents just 10% of jobs, relative to 30% in most upper- and middle-income countries. Some suggest that by boosting self-employment rates, South Africa might halve its unemployment rate.[227] Public employment NIDS-CRAM survey data showed that between February 2020 and March 2021, young people experienced the largest employment-to-population ratio increase.[228] At this point industry-level data was already suggesting gains in community, social, and personal services (likely attributable to large-scale, youth-targeted public employment programmes), and wholesale and retail trade. Both industries also had a high level of youth intensity of employment. One such youth-targeted public employment programme was the Basic Education Employment Initiative (BEEI), launched in April 2020 as part of The Presidential Employment Stimulus Package, which sought to stimulate work in response to the economic effects of Covid-19. The BEEI is a large-scale public employment programme, ring-fenced particularly for young people (aged 18–35), who are recruited through the SAYouth.mobi platform and placed as education assistants or general school assistants in schools across the country, remunerated at minimum wage. Phase I of the BEEI was executed between 1 December 2020 and 31 March 2021, with the QLFS showing that the sector added some 115,000 jobs in the final quarter of 2020 and the first quarter of 2021. According to the Presidency, 65% of those placed were young women.[229] Recruiting through SAYouth.mobi enabled scale, because of the reach of its online network. It also meant democratised opportunity beyond employers’ social networks. Evidence shows that public employment can offer short-term earnings, a funded entry into the labour market, and valuable work experience for young people that can improve their long-term stability and success in the labour market.[230] But without transferable skills and supported pathways to their next opportunity, it risks being yet another stop-gap as young people trampoline in and out of the labour market. Youth citizenship and political participation Factors beyond the control of youth can cause huge inequality. Youth today must grapple with serious social, political, and environmental problems inherited from their elders. Even though they possess the energy, creativity, and passion to take on the intractable problems they have inherited, they are systematically excluded from policy decisions. Achieving youth equality requires active participation and involvement of youth in decision-making at all levels, starting in the home and extending to the highest levels of government. Yet youth are largely excluded from formal political processes and government policy. Participation equality implies political representation at national, provincial, and municipal level. The Ladder of Citizenship Participation (LCP) holds that representation and participation of all groups in society is key and fundamental to the existence of a vibrant democracy.[231] In other words, a vibrant democracy requires that all social groups have a voice in how they wish to be governed, while institutions tasked with the exercise of this civic duty must provide spaces that allow for full and effective participation. In spite of the growth in the number of political parties, there has been a noticeable decrease in voter turnout in South African elections since 1994. The poor and disjointed participation by the youth in particular is concerning. If the process of participation is skewed and twisted to benefit only a select group, then the electorate’s disenchantment with political processes becomes a threat to democracy. Reasons for voter apathy and political disengagement, particularly by youth, include a lack of political party membership and low levels of political participation, a disinterest in electoral politics, high levels of cynicism about politics and a low level of confidence in the country’s democracy.[232] References [1] A Hardgrove, K Pells, and P Dornan, “Youth Vulnerabilities in Life Course Transitions,” Occasional Paper (UNDP Human Development Report Office, 2014), https://assets.publishing.service.gov.uk/media/57a089eeed915d3cfd0004ca/youth-vulnerabilities-in-life-course-transitions.pdf. [2] Based on Gini Coefficient. The Gini is useful but limited, given its exclusive focus on income inequality. Adopting a wider scope that includes access to quality nutrition, health services, housing, education, water, and caring networks within the frame of inequity can offer us a better sense of its real effects on human life and flourishing, while still recognising the centrality of money, especially in circumstances where public services and infrastructure do not function well. [3] IMF, “Six Charts Explain South Africa’s Inequality.” [4] IMF, “Six Charts Explain South Africa’s Inequality.” [5] Inclusive Society Institute. 2021. Trends in multidimensional inequality and socio-demographic change in SA during 27-years of democracy. Available at: https://www.inclusivesociety.org.za/post/trends-in-multidimensional-inequality-and-socio-demographic-change-in-sa-during-27years-of-democracy [6] QLFS2022: Q1 [7] Access is not an indicator of the quality of these services, and in fact, access to quality services remains a key driver of South Africa’s inequality. [8] Inclusive Society Institute. 2022. Inequality & Demography; Von Fintel D, Richter L. Intergenerational transfer of health inequalities: exploration of mechanisms in the Birth to Twenty cohort in South Africa. BMJ Glob Health. 2019;4(e001828). [9] D Durham, “Youth and the Social Imagination in Africa: Introduction to Parts 1 and 2,” Anthropology Quarterly 73, no. 3 (2000): 113–20. [10] Stats SA, “Youth Still Find It Difficult to Secure Jobs in South Africa.” [11] Juta and Company Ltd, Electoral Act 73 of 1998. [12] A Honwana and F De Boeck, “Children and Youth in Africa: Agency, Identity and Place,” in Makers and Breakers: Children and Youth in Postcolonial Africa (Oxford: James Currey, 2005). [13] J Seekings, “Beyond Heroes and Villains: The Rediscovery of the Ordinary in the Study of Childhood and Adolescence in South Africa,” Social Dynamics 32, no. 1 (2006): 1–20. [14] Seekings; L Ntsebeza, “Youth in Urban African Townships. 1945–1992” (Master of the Arts, Durban, University of Natal, 1993); G Straker et al., “Violent Political Contexts and the Emotional Concerns of Township Youth,” Child Development 67, no. 146–54 (2007). [15] Seekings, “Beyond Heroes and Villains: The Rediscovery of the Ordinary in the Study of Childhood and Adolescence in South Africa.” [16] Honwana and De Boeck, “Children and Youth in Africa: Agency, Identity and Place.” [17] R Bray and S Moses, “Children and Participation in South Africa: Exploring the Landscape,” in Perspectives in Education, vol. 29 (University of the Free State, 2011). [18] Bray and Moses. [19] K Lefko-Everett, “Ticking Time Bomb or Demographic Dividend: SA Reconciliation Barometer Survey 2012” (Cape Town: Institute for Justice and Reconciliation, 2012). [20] Seekings, “Beyond Heroes and Villains: The Rediscovery of the Ordinary in the Study of Childhood and Adolescence in South Africa.” [21] Lefko-Everett, “Ticking Time Bomb or Demographic Dividend: SA Reconciliation Barometer Survey 2012.” [22] S Burman and P Reynolds, Growing up in a Divided Society: The Contexts of Childhood in South Africa (Johannesburg: Raven Press, 1986). [23] Mampela Ramphele, “Steering by the Stars,” in Youth in Cities: A Cross National Perspective (Cambridge University Press: Cambridge, 2002). [24] P Henderson, “Living with Fragility: Children in New Crossroads” (Cape Town, University of Cape Town, 1999). [25] A De Lannoy, “The Stuff That Dreams Are Made of...Narratives on Educational Decision-Making among Adults in Cape Town,” Centre for Social Science Research Working Paper Series (University of Cape Town, 2007); L Swartz, J Harding, and A De Lannoy, “Ikasi Style and the Quiet Violence of Dreams: A Critique of Youth Belonging in Post-Apartheid South Africa,” Comparative Education 48, no. 1 (2012): 27–40. [26] L Bordonaro and R Payne, “Ambiguous Agency: Critical Perspectives on Social Interventions with Children and Youth in Africa,” Children’s Geographies 10, no. 4 (2012): 365–72. [27] Statistics South Africa, “Mid-Year Population Estimates,” 2022. [28] M Khuluvhe and E Netshifhefhe, “Fact Sheet on NEETS” (Department of Higher Education and Training, 2022), https://www.dhet.gov.za/Planning%20Monitoring%20and%20Evaluation%20Coordination/Fact%20Sheet%20-NEET%20_%20March%202022.pdf. [29] Inclusive Society Institute, “Inequality and Demography,” 2022, https://www.inclusivesociety.org.za/post/inequality-and-demography. [30] A De Lannoy et al., “Why Is Youth Unemployment So Intractable in South Africa? A Synthesis of Evidence at the Micro-Level,” [31] G Espi, M Leibbrandt, and V Ranchhod, “Age, Employment History and Heterogeneity of COVID Era Employment Outcomes,” Wave 3, NIDS-CRAM, 2021, https://cramsurvey.org/reports/ #wave-3 . [32] De Lannoy et al., “Why Is Youth Unemployment So Intractable in South Africa? A Synthesis of Evidence at the Micro-Level.” [33] N Branson, C Hofmeyr, and D Lam, “Progress through School and the Determinants of School Dropout in South Africa,” Development South Africa 31 (2015): 106–26. Journal of Applied Youth Studies 3 (2020): 115–31. [34] Statistics South Africa, “Quarterly Labour Force Survey 2022 Q2,” 2022, https://www.statssa.gov.za/publications/P0211/P02112ndQuarter2022.pdf. [35] Youth Capital, “Beyond the Cost: What Does It Really Cost Young People to Look for Work?” 2022, https://youthcapital.co.za/beyond-the-cost-research-report/. [36] E Moses, S van der Berg, and K Rich, “A Society Divided: How Unequal Education Limits Social Mobility in South Africa,” Programme to Support Pro-Poor Policy Development (University of Stellenbosch, 2017). [37] A Hardgrove, K Pells, and P Dornan, “Youth Vulnerabilities in Life Course Transitions,” Occasional Paper (UNDP Human Development Report Office, 2014), https://assets.publishing.service.gov.uk/media/57a089eeed915d3cfd0004ca/youth-vulnerabilities-in-life-course-transitions.pdf. [38] M Tomlinson et al., “Optimising Child and Adolescent Health and Development through an Integrated Ecological Life Course Approach.,” BMJ 372, no. m4784 (2021). [39] Hardgrove, Pells, and Dornan, “Youth Vulnerabilities in Life Course Transitions”; Tomlinson et al., “Optimising Child and Adolescent Health and Development through an Integrated Ecological Life Course Approach.” [40] Tomlinson et al., “Optimising Child and Adolescent Health and Development through an Integrated Ecological Life Course Approach.” [41] B Vale and D Swanepoel, “The Childhood Catalyst,”Collective Insight: Generation Reset, 2022, https://www.businesslive.co.za/fm/special-reports/collective-insight/2022-09-22-free-to-read-collective-insight-september-edition/. [42] S Redinger et al., “First Trimestor Antenatal Depression and Anxiety: Prevalence and Associated Factors in an Urban Population in Soweto, South Africa,” Journal of Developmental Origins of Health and Disease 9, no. 1 (2017): 30–40. [43] National Scientific Council on the Developing Child, The Science of Early Childhood Development (Cambridge: Harvard University Press, 2007). [44] R Martorell, “Improved Nutrition in the First 1000 Days and Adult Human Capital and Health,” American Journal of Human Biology 29, no. e22952 (2017); HK Biesalski, RE Black, and B Koletzko, Hidden Hunger: Malnutrition and the First 1000 Days of Life: Causes, Consequences and Solutions, vol. 115 (Basel: Karger Medical and Scientific Publishers, 2016); SE Cusick and MK Georgieff, “He Role of Nutrition in Brain Development: The Golden Opportunity of the ‘First 1000 Days,’” Journal of Paediatrics 175 (2016). [45] Iilfa Labantwana, “South African ECD Review,” 2019. [46] M Tomlinson, S Kleintjies, and L Lake, “South African Child Gauge: Child and Adolescent Mental Health” (University of Cape Town: Children’s Institute, 2022). [47] NDoH et al., “South Africa Demographic and Health Survey 2016,” 2019, https://dhsprogram.com/pubs/pdf/FR337/FR337.pdf. [48] M Ashley–Cooper, LJ van Niekerk, and E Atmore, “Early Childhood Development in South Africa: Inequality and Opportunity,” in South African Schooling: The Enigma of Inequality (Cham: Springer, 2019). [49] Ibid. [50] Thrive by Five, “Thrive by Five Index,” 2022, https://thrivebyfive.co.za/. [51] T Rochat and S Redinger, “A Life-Course Perspective on the Biological, Psychological and Social Development of Child Mental Health,” South African Child Gauge Part 2 (2022), https://bettercarenetwork.org/sites/default/files/2022-06/child_gauge_2021_final_screen.pdf#page=58. [52] Iilfa Labantwana, “South African ECD Review.” [53] Ndlovu, N, Day, C, Gray, A, Busang, J and Mureithi, L. Chapter 29. South African Health Review. 2020 [54] National Department of Health, “Saving Mothers Annual Report 2017,” 2017. [55] GrowGreat, “Cocare Maternal Support Study,” 2021, https://www.growgreat.co.za/wp-content/uploads/2021/03/GG-COCARE-REPORT-final-1.pdf. [56] M Rogan and L Alfers, “Gendered Inequalities in the South African Informal Economy,” Agenda 33, no. 4 (2019): 91–102. [57] National Scientific Council on the Developing Child, The Science of Early Childhood Development. [58] UNICEF, “The First 1000 Days,” 2017, https://www.unicef.org/southafrica/media/551/file/ZAF-First-1000-days-brief-2017.pdf. [59] NDoH et al., “South Africa Demographic and Health Survey 2016.” [60] Thrive by Five, “Thrive by Five Index.” [61] R Burger et al., “Priority Areas for Reducing Stunting in South Africa: Estimating the Implications of Recent International Evidence,” Ilifa Labantwana & RESEP Working Paper Series (Ilifa Labantwana, 2022). [62] N Nisbett et al., “Why Worry about the Politics of Childhood Undernutrition?” World Development 64, no. 2 (2014): 420–33. [63] GrowGreat, “Cocare Maternal Support Study.” [64] GrowGreat. [65] GrowGreat. [66] GrowGreat, “Community Stunting Scorecard,” 2022, https://www.growgreat.co.za/wp-content/uploads/2022/11/GG-STUNTING-SURVEY-HANDOUT1-final-1.pdf. [67] Ashley–Cooper, van Niekerk, and Atmore, “Early Childhood Development in South Africa: Inequality and Opportunity.” [68] Iilfa Labantwana, “South African ECD Review.” [69] A Dawes et al., “Early Learning Outcomes Measure: Technical Manual” (Cape Town: Innovation Edge, 2011). [70] Iilfa Labantwana, “South African ECD Review.” [71] Iilfa Labantwana. [72] Iilfa Labantwana. [73] Iilfa Labantwana. [74] Iilfa Labantwana. [75] O Cumming and S Cairncross, “Can Water, Sanitation and Hygiene Help Eliminate Stunting?” Maternal and Child Nutrition 12, no. S1 (2016): 91–105 [76] Iilfa Labantwana, “South African ECD Review.”. [77] Ashley–Cooper, van Niekerk, and Atmore, “Early Childhood Development in South Africa: Inequality and Opportunity.”. [78] Ashley–Cooper, van Niekerk, and Atmore. [79] C Aubrey, “Sources of Inequality in South African Early Childhood Development Services,” South African Journal of Education 7, no. 1 (2017): 1–9. [80] Ilifa Labantwana and Kago Ya Bana, “A Plan to Achieve Universal Coverage of Early Childhood Development Services by 2030,” Discussion Document (Unpublished, 2018). [81] Estimates from Ilifa Labantwana. 2022. Unpublished. [82] K Hall et al., “South African Early Childhood Review” (Cape Town: Ilifa Labantwana, 2017). [83] G Wills and J Kika-Mistry, “Early Childhood Development in South Africa in the COVID-19 Pandemic: Evidence from NIDS-CRAM Eaves 2-5,” Wave 5, NIDS-CRAM, 2021, https://cramsurvey.org/rep orts/#wave-5.. [84] Iilfa Labantwana, “South African ECD Review.” [85] Brian Levy, “Improving Basic Education – the Governance Challenge,” in The Politics and Governance of Basic Education: A Tale of Two South African Provinces (Oxford University Press, 2018). [86] H Van Broekhuizen, S van der Berg, and H Hofmeyr, “Higher Education Access and Outcomes for the 2008 National Matric Cohort,” Economic Working Papers (University of Stellenbosch, 2016), https://ssrn.com/abstract=2973723 or http://dx.doi.org/10.2139/ ssrn.2973723. [87] Zero Dropout, “School Dropout: What’s the Catch?” (Cape Town: DG Murray Trust, 2019), https://zerodropout.co.za/the-campaign-against-school-dropout/. [88] Zero Dropout, “School Dropout: Gender Matters” (Cape Town: DG Murray Trust, 2021), https://zerodropout.co.za/school-dropout-gender-matters/. [89] Spaull, N., “South Africa’s Education Crisis: The Quality of Education in South Africa 1994-2011,” 2013, https://nicspaull.files.wordpress.com/2011/04/spaull-2013-cde-report-south-africas-education-crisis.pdf. [90] Spaull, N. [91] K Hall, “Grade Progression,” Children Count: Statistics on Children in South Africa (University of Cape Town: Children’s Institute, 2017). [92] C Kritzinger, “The True Cost of Our Failing Education System” (DG Murray Trust, 2019), https://dgmt.co.za/the-true-cost-of-our-failing-education-system/. [93] Youth Capital, “Shift: Unlock Jobs,” 2021, https://youthcapital.co.za/youth-capital-research-shift-unlock-jobs/. [94] S van der Berg et al., “Learner Flows through School: Using High Quality Administrative Data to Understand Education System Performance” (RESEP, Stellenbosch University, 2021), https://resep.sun.ac.za/wp-content/uploads/2021/08/Resep-Document-V05-SvdB-edits.pdf. [95] S van der Berg et al., “The Cost of Repetition in South Africa.,” Economic Working Papers (University of Stellenbosch, 2019), www.ekon.sun.ac.za/wpapers/2019/wp132019. [96] Youth Capital, “Shift: Unlock Jobs.” [97] Zero Dropout, “School Dropout: Gender Matters.” [98] Zero Dropout. [99] N. Spaull et al., “Synthesis Report Wave 5” (NIDS-CRAM, 2021), https://cramsurvey.org/wp-content/uploads/2021/07/1.-Spaull-N.-Daniels-R.-C-et-al.-2021-NIDS-CRAM-Wave-5-Synthesis-Report.pdf. [100] Indira Pillay, “The Impact of Inequality and COVID-19 on Education and Career Planning for South African Children of Rural and Low-Socioeconomic Backgrounds.” [101] Mboweni, L., “Challenges and Factors Contributing to Learner Absenteeism in Selected Primary Schools in Acornhoek.” [102] Xolo, N., “The Learners Who Cross a Lake with Hippos in It to Get to School.” [103] T Carney et al., “Adolescent Female School Dropouts Who Use Drugs and Engage in Risky Sex: Effects of a Brief Pilot Intervention in Cape Town, South Africa,” AIDS Care 31, no. 1 (2018): 77–84. [104] G Porter et al., “Youthscapes and Escapes in Rural Africa: Education, Mobility and Livelihood Trajectories for Young People in Eastern Cape, South Africa,” Journal of International Development 22, no. 8 (2010): 1090–1101. [105] S Mkhwanazi and N De Wet, “School Dropout among African Adolescents in South Africa: Is There a Gender Differential?” Gender and Behaviour 12, no. 4 (2014): 5930–51. [106] World Bank, “Human Capital Country Brief: South Africa” (World Bank, 2022), https://thedocs.worldbank.org/en/doc/7c9b64c34a8833378194a026be4e247-0140022022/related/HCI-AM22-ZAF.pdf. [107] Marie C. D. Stoner et al., “The Relationship Between School Dropout and Pregnancy Among Adolescent Girls and Young Women in South Africa: A HPTN 068 Analysis,” Health Education & Behaviour: The Official Publication of the Society for Public Health Education 46, no. 4 (August 2019): 559–68, https://doi.org/10.1177/1090198119831755. [108] De Lannoy et al., “Why Is Youth Unemployment So Intractable in South Africa? A Synthesis of Evidence at the Micro-Level.” [109] N Branson, A De Lannoy, and A Kahn, “Exploring the Transitions and Well-Being of Young People Who Leave School before Completing Secondary Education in South Africa.” (SALDRU, 2018), http://www.opensaldru.uct.ac.za/bitstream/handle/11090/959/2019_244_Saldruwp.pdf?sequence=1. [110] Statistics South Africa, “Quarterly Labour Force Survey 2022 Q2.” [111] N Spaull, “Schooling in South Africa: How Low-Quality Education Becomes a Poverty Trap,” South African Child Gauge (University of Cape Town: Children’s Institute, 2015). [112] S Straussberg, S Meny-Gibert, and B Russell, “Left Unfinished: Temporary Absence and Drop-out from South African Schools” (Social Surveys and Centre for Applied Legal Studies, 2010), https://www.socialsurveys.co.za/factsheets/AccessToEducation-UnfinishedBusiness/b06615.pdf. [113] Straussberg, Meny-Gibert, and Russell. [114] Zero Dropout, “School Dropout: What’s the Catch?” [115] Spaull, “Schooling in South Africa: How Low-Quality Education Becomes a Poverty Trap.” [116] De Lannoy et al., “Why Is Youth Unemployment So Intractable in South Africa? A Synthesis of Evidence at the Micro-Level.” [117] Department of Basic Education, “Draft Policy for the General Education Certificate,” 2021, https://static.pmg.org.za/210604Draft_Policy_for_the_General_Education_Certificate_GEC.pdf. [118] Branson, Hofmeyr, and Lam, “Progress through School and the Determinants of School Dropout in South Africa.” [119] Spaull, N., “The Economic Value of Matric and the Potential of Further Education Colleges” (Africa Check, 2014), https://africacheck.org/2014/01/10/the-economic-value-of-matric-and-the-potential-of-further-education-colleges/. [120] Statistics South Africa, “Quarterly Labour Force Survey 2022 Q2.” [121] van der Berg, S and H Hofmeyer, “Incomplete Transition: Overcoming the Legacy of Exclusion in South Africa” (World Bank Group, 2018), http://documents.worldbank.org/curated/en/339291529320964248/pdf/127304-Education-in-South-Africa.pdf. [122] De Lannoy et al., “Why Is Youth Unemployment So Intractable in South Africa? A Synthesis of Evidence at the Micro-Level.” [123] De Lannoy et al. [124] DNA Economics, “Performance and Expenditure Review: Technical and Vocational Education and Training” (Pretoria: National Treasury, 2016), https://www.gtac.gov.za/perdetail/10.2%20Techical%20report.pdf; Zero Dropout, “School Dropout: What’s the Catch?” [125] Van Broekhuizen, van der Berg, and Hofmeyr, “Higher Education Access and Outcomes for the 2008 National Matric Cohort.” [126] DNA Economics, “Performance and Expenditure Review: Technical and Vocational Education and Training.” [127] De Lannoy et al., “Why Is Youth Unemployment So Intractable in South Africa? A Synthesis of Evidence at the Micro-Level.” [128] Branson, Hofmeyr, and Lam, “Progress through School and the Determinants of School Dropout in South Africa.” [129] T Lewin and M Mawoyo, “Student Access and Success: Issues and Interventions in South African Universities” (Cape Town: The Kregse Foundation, 2014), https://kresge.org/sites/default/files/Issues%20and%20Interventions%20in%20South%20African%20Universities.pdf. [130] Dell Foundation, “Dell Young Leaders Case Study,” 2016, https://www.msdf.org/case-studies/dell-young-leaders-case-study/. [131] Branson, De Lannoy, and Kahn, “Exploring the Transitions and Well-Being of Young People Who Leave School before Completing Secondary Education in South Africa.” [132] Youth Capital, “Shift: An Action Plan to Tackle Youth Unemployment in South Africa,” 2020, https://youthcapital.co.za/youth-capital-annual-publication-shift-2020/. [133] Branson, De Lannoy, and Kahn, “Exploring the Transitions and Well-Being of Young People Who Leave School before Completing Secondary Education in South Africa.” [134] Branson, De Lannoy, and Kahn. [135] Youth Capital, “Shift: An Action Plan to Tackle Youth Unemployment in South Africa.” [136] Youth Capital. [137] Youth Capital. [138] Melanie du Toit et al., “Unemployment Experiences in Context: A Phenomenological Study in Two Townships in South Africa,” Journal of Psychology in Africa 28, no. 2 (2018). [139] Own analysis of StatsSA QLFS data 2017Q1-2022Q2 [140] De Lannoy et al., “Why Is Youth Unemployment So Intractable in South Africa? A Synthesis of Evidence at the Micro-Level.” [141] J Seekings, “Young People’s Entry into the Labour Market in South Africa” (Carnegie III: Strategies to overcome poverty and inequality conference, University of Cape Town, 2012). [142] C Mhlatsheni and V Ranchod, “Youth Labour Market Dynamics in South Africa: Evidence from NIDS 1–2–3,” Working Paper (University of Cape Town, 2017), http://www.redi3x3. org/paper/youth-labour-market-dynamics-south-africa-evidence-nids-1-2-3. [143] C Marock and C Harrison–Train, “Next Generation South Africa” (British Council, 2018), https://www.britishcouncil.org.za/next-generation-south-africa. [144] D Yu, “The Lesser Known and Scarier Facts about Unemployment in South Africa,” Mail and Guardian Online, 2017, https://mg.co.za/article/2017-09-04-the-lesser-known-and-scarier-facts-about-unemployment-in-south-africa. [145] Branson, Hofmeyr, and Lam, “Progress through School and the Determinants of School Dropout in South Africa.” [146] Branson, De Lannoy, and Kahn, “Exploring the Transitions and Well-Being of Young People Who Leave School before Completing Secondary Education in South Africa.” [147] A De Lannoy and G Mudiriza, “A Profile of Young NEETs: Unpacking the Heterogenous Nature of Young People Not in Employment, Education or Training in South Africa,” Working Paper (SALDRU, 2019), http://www.opensaldru.uct.ac.za/bitstream/handle/11090/963/2019_249_Saldruwp.pdf?sequence=1. [148] M Budig and P England, “The Wage Penalty for Motherhood,” American Sociological Review 66, no. 2 (2001): 204–25. [149] V Schoer and M Leibbrandt, “Determinants of Job Search Strategies: Evidence from the Khayelitsha/Mitchell’s Plain Survey,” South African Journal of Economics 74, no. 4 (2006): 702–24. [150] Spaull N, Ardington C, Bassier I, et al. NIDS-CRAM Synthesis Report Wave. Work Pap Ser. Published online 2020:17. [151] Lauren Graham et al., “Siyakha Youth Assets Study: Developing Youth Assets for Employability” (Centre for Social Development in Africa, 2019), https://www.uj.ac.za/wp-content/uploads/2021/10/siyakha-report-june-2019-web-lowres.pdf. [152] Graham et al. [153] Graham et al. [154] Graham et al. [155] Youth Capital, “Beyond the Cost: What Does It Really Cost Young People to Look for Work?” [156] Mhlatsheni and Ranchod, “Youth Labour Market Dynamics in South Africa: Evidence from NIDS 1–2–3.” [157] De Lannoy et al., “Why Is Youth Unemployment So Intractable in South Africa? A Synthesis of Evidence at the Micro-Level.” [158] De Lannoy et al. [159] Youth Capital, “Beyond the Cost: What Does It Really Cost Young People to Look for Work?” [160] Statistics South Africa, “General Household Survey,” 2018. [161] Graham et al., “Siyakha Youth Assets Study: Developing Youth Assets for Employability.” [162] Youth Capital, “Shift: Unlock Jobs.” [163] F Sperber, “Rural Income, Welfare, and Migration: A Study of Three Ciskeian Villages” (Masters’ Thesis, University of Cape Town, 1993). [164] Schoer and Leibbrandt, “Determinants of Job Search Strategies: Evidence from the Khayelitsha/Mitchell’s Plain Survey”; KS Newman and A De Lannoy, After Freedom: The Rise of the Post-Apartheid Generation in Democratic South Africa (Beacon Press, 2014); Mhlatsheni and Ranchod, “Youth Labour Market Dynamics in South Africa: Evidence from NIDS 1–2–3”; Youth Capital, “Linked in: Rising through Social and Economic Connections,” 2022, https://youthcapital.co.za/linked-in-werise-socialconnections-brief/. [165] Youth Capital, “Beyond the Cost: What Does It Really Cost Young People to Look for Work?” [166] A De Lannoy et al., “What Drives Youth Unemployment and What Interventions Help?” (Southern Africa Labour and Development Research Unit (SALDRU), University of Cape Town; Centre for Social Development in Africa (CSDA), University of Johannesburg, 2018), https://www.saldru.uct.ac.za/wp-content/uploads/Youth-Unemployment-exec-summary_181117_for-print.pdf. [167] R Barber, “The Structure of Livelihoods in South Africa’s Bantustans: Evidence from Two Settlements in Northern Province.” (DPhil, University of Oxford, 1998). [168] G Espi, V Ranchhod, and M Leibbrandt, “Age, Employment and Labour Force Participation Outcomes in COVID-Era South Africa,” NIDS-CRAM, 2021, https://cramsurvey.org/repor ts/#wave-5. [169] Youth Capital, “Shift: Unlock Jobs.” [170] Hayley Innez Wakefield, Derek Yu, and Christie Swanepoel, “Revisiting Transitory and Chronic Unemployment in South Africa,” Development Southern Africa 39, no. 2 (March 4, 2022): 87–107, https://doi.org/10.1080/0376835X.2020.1799761. [171] N Nattrass and J Seekings, “The Economy and Poverty in Twentieth Century South Africa,” Working Paper (University of Cape Town: Centre for Social Science Research, 2010). [172] Haroon Bhorat et al., Structural Transformation, Inequality, and Inclusive Growth in South Africa, 50th ed., vol. 2020, WIDER Working Paper (UNU-WIDER, 2020), https://doi.org/10.35188/UNU-WIDER/2020/807-8. [173] Nattrass and Seekings, “The Economy and Poverty in Twentieth Century South Africa.” [174] Bhorat et al., Structural Transformation, Inequality, and Inclusive Growth in South Africa. [175] Mckinsey & Company, “The Future of Work in South Africa: Digitisation, Productivity and Job Creation,” 2019, 24. [176] Louise Fox et al., “Africa’s ‘youth Employment’ Crisis Is Actually a ‘Missing Jobs’ Crisis,” Brooke Shearer Series, 2020. [177] J Ferguson and TM Li, “Beyond the ‘Proper Job’: Political-Economic Analysis after the Century of Labouring Man.,” PLAAS UWC Working Paper 51 (2018). [178] Sumberg et al., “Formal-Sector Employment and Africa’s Youth Employment Crisis: Irrelevance or Policy Priority?” Development Policy Review 38 (2020): 428–40. [179] KA Siegman and Schiphorst, F, “Understanding the Globalising Precariat: From Informal Sector to Precarious Work.,” Progress in Development Studies 16, no. 2 (2016): 111–23. [180] Genevieve Lebaron and Alison Ayers, “The Rise of a ‘New Slavery’? Understanding African Unfree Labour through Neoliberalism,” Third World Quarterly 34, no. 5 (2013): 873–92. [181] H. J. Dawson and E. Fouksman, “Labour, Laziness and Distribution: Work Imaginaries among the South African Unemployed,” Africa 90, no. 2 (February 2020): 229–51, https://doi.org/10.1017/S0001972019001037. [182] Chris Webb, “‘These Aren’t the Jobs We Want’: Youth Unemployment and Anti-Work Politics in Khayelitsha, Cape Town.,” Social Dynamics 16, no. 2 (2016): 111–23. [183] Fox et al., “Africa’s ‘Youth Employment’ Crisis Is Actually a ‘Missing Jobs’ Crisis.” [184] Dawson and Fouksman, “Labour, Laziness and Distribution.” [185] Alcinda Honwana, “Waithood: Youth Transitions and Social Change,” in Development and Equity. An Interdisciplinary Exploration by Ten Scholars from Africa, Asia and Latin America (Leiden: Brill, 2014), 28–40. [186] Hannah Dawson, “‘Making Plans through Other People’: The Social Embeddedness of Informal Entrepreneurship in South Africa,” Social Dynamics 47, no. 3 (2021). [187] Youth Capital, “Linked in: Rising through Social and Economic Connections.” [188] Dawson, “‘Making Plans through Other People’: The Social Embeddedness of Informal Entrepreneurship in South Africa.” [189] Dawson. [190] H Dawson, “‘Be Your Own Boss’: Entrepreneurial Dreams on the Urban Margins of South Africa,” in Beyond the Wage: Ordinary Work in Diverse Economies (Bristol: Bristol University Press, 2021), 115–38. [191] Von Fintel D, Richter L. Intergenerational transfer of health inequalities: exploration of mechanisms in the Birth to Twenty cohort in South Africa. BMJ Glob Health. 2019;4(e001828). [192] GrowGreat. 2021. Cocare Maternal Support Study. Available at: https://www.growgreat.co.za/wp-content/uploads/2021/03/GG-COCAREREPORT- final-1.pdf [193] Zero Dropout, “School Dropout: Gender Matters.” [194] Department of Education, “DBE National Draft Policy on the Prevention and Management of Learner Pregnancy in Schools,” 2019, https://www.education.gov.za/Portals/0/Documents/Policies/Draft%20 Pregnancy%20Policy%202018.pdf?ver=2018-06-26-142235-687. [195] J Jochim, A Groves, and L Cluver, “When Do Adolescent Mothers Return to School? Timing across Rural and Urban South Africa,” South African Medical Journal 110, no. 9 (2020): 850–54. [196] Stoner et al., “The Relationship Between School Dropout and Pregnancy Among Adolescent Girls and Young Women in South Africa.” [197] Zero Dropout, “School Dropout: Gender Matters.” [198] Department of Education, “Measures for the Prevention and Management of Learner Pregnancy,” 2017, https://www.gov.za/sites/default/files/gcis_document/201409/learnerpregnancy0.pdf. [199] P Mokoena and A van Breda, “School Dropout among Female Learners in Rural Mpumalanga, South Africa,” South African Journal of Education 41, no. 3 (2021): 1–9. [200] Department of Social Development and Economic Policy Research Institute, “Audit of Early Childhood Development Centres National Report” (Department of Social Development, 2006). [201] M Oosthuizen, “Inequality and the Generational Economy: Race-Disaggregated National Transfer Accounts for South Africa,” Working Paper, Inequality and the Generational Economy (UNU-WIDER, 2019). [202] L Jamieson, L Berry, and L Lake, “South African Child Gauge” (University of Cape Town: Children’s Institute, 2017). [203] M Gustafsson et al., “The Costs of Illiteracy in South Africa,” Working Paper (University of Stellenbosch, 2010). [204] Zero Dropout Campaign, “Early Warning System (EWS) Toolkit” (Cape Town: DG Murray Trust, 2021), https://zerodropout.co.za/wp-content/uploads/2021/09/Learner_Dropout_Early_Warning_System_How_to_Guide_Spreads-1.pdf. [205] van der Berg et al., “The Cost of Repetition in South Africa.” [206] Zero Dropout, “Learning Brief: School Dropout Prevention Strategies,” 2020, https://zerodropout.co.za/wp-content/uploads/2020/07/Zero-Dropout-Final.pdf. [207] Linda M. Richter et al., “Adolescent Mental Health Problems and Adult Human Capital: Findings From the South African Birth to Twenty Plus Cohort at 28 Years of Age,” Journal of Adolescent Health 69, no. 5 (2021): 782–89, https://doi.org/10.1016/j.jadohealth.2021.04.017. [208] Youth Capital, “Matrics on the Fringe,” 2021, https://youthcapital.co.za/wp-content/uploads/2021/04/YC-SECOND-CHANCE-MATRIC-REPORT-final-digital.pdf. [209] Youth Capital. [210] Institute for Social Inequality, “Trends in Multidimensional Inequality and Socio-Demographic Change in South Africa during 27 Years of Democracy,” 2022, https://www.inclusivesociety.org.za/post/trends-in-multidimensional-inequality-and-socio-demographic-change-in-sa-during-27years-of-democracy. [211] N Spaull, “Important Research Inputs on #FeesMustFall,” Blo g, 2016, https://nicspaull.com/2016/09/29/important-research-inputs-on-feesmustfall/. [212] De Lannoy et al., “Why Is Youth Unemployment so Intractable in South Africa? A Synthesis of Evidence at the Micro-Level.” [213] De Lannoy et al. [214] De Lannoy et al. [215] The Presidency, “Putting South Africa to Work: An Integrated Approach to the Working Age Unemployed,” 2022, https://www.groundup.org.za/media/uploads/documents/putting_sa_to_work_-_outlining_an_integrated_approach_29072022.pdf. [216] K Soni, “The Economy and Business Environment – without a Silver Bullet, We Need Collective Action on the Youth Unemployment Crisis,” Daily Maverick, 2022, https://www.dailymaverick.co.za/article/2022-11-24-youth-unemployment-no-silver-bullets-no-scapegoats/. [217] Harambee, “It’s All about Employability,” 2019, https://harambee.co.za/its-all-about-employability/. [218] Harambee. [219] Spaull et al., “Synthesis Report Wave 5.” [220] BusinessTech, “South Africa’s Unemployment Rate Is One of the Highest in the World – but Companies Struggle to Hire for These Jobs” (BusinessTech, June 5, 2022), https://businesstech.co.za/news/business/583766/south-africas-unemployment-rate-is-one-of-the-highest-in-the-world-but-companies-struggle-to-hirefor-these-jobs/. [221] T Kohler and H Bhorat, “Can Cash Transfers Aid Labour Market Recovery? Evidence from South Africa’s Special Covid-19 Grant,” Working Papers (Cape Town: University of Cape Town, 2021). [222] Youth Capital, “Beyond the Cost: What Does It Really Cost Young People to Look for Work?” [223] SAFTU, “Plans to Evade the Basic Income Grant Must Be Rejected,” 2022, http://saftu.org.za/plans-to-evade-the-basic-income-grant-must-be-rejected/;Mary-Anne Gotsana, “Government Documents Outline New Social Grant Plans,” Groundup, 2022, https://www.groundup.org.za/article/government-documents-outline-new-social-grant-plans/. [224] Youth Capital, “Beyond the Cost: What Does It Really Cost Young People to Look for Work?” [225] The Presidency, “Putting South Africa to Work: An Integrated Approach to the Working Age Unemployed.” [226] The Presidency. [227] The Presidency. [228] Espi, Ranchhod, and Leibbrandt, “Age, Employment and Labour Force Participation Outcomes in COVID-Era South Africa.” [229] Rudi Dicks, Stakeholder Engagement, 2022. [230] Graham et al., “Siyakha Youth Assets Study: Developing Youth Assets for Employability.” [231] LCP, “Ladder of Citizen Participation.” [232] ACCORD, “Political Fatalism and Youth Apathy in South Africa.” - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 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 © 2023 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. Authors: Daryl Swanepoel Editor: Olivia Main FEBRUARY 2023 Content Chapter 1: Background and introduction of the study Chapter 2: The literature review 2.1 The role of political parties in a democratic dispensation 2.1.1 Why are political parties important for democracy? 2.1.2 What is the role and functions of political parties in a democracy? 2.2 The need for party-political funding 2.3 How political parties are funded 2.4 The imperative to ensure transparency through the regulation of private donations 2.5 The rationale for state funding of political parties 2.5.1 Enabling parties to fulfil their democratic responsibilities 2.5.2 State funding of political parties to combat corruption and as mitigation for anti-corruption measures 2.6 The different forms of state funding for political parties 2.7 The relationship between private donations, disclosure regulations, state funding and the viability of political parties 2.8 The post-1994 history of party-political funding in South Africa 2.9 Conclusion Chapter 3: The legislative review 3.1 The Constitution of the Republic of South Africa, Act 108 of 1996 3.1.1 Section 19(2) 3.1.2 Section 57(2)(c) 3.1.3 Section 59(1)(a) 3.1.4 Section 236 3.2 Political Party Funding Act, Act 6 of 2018 3.2.1 Direct funding of political parties 3.2.1.1 Prohibited donations 3.2.1.2 Donations from juristic persons 3.2.2 Represented Political Party Fund 3.2.3 Multi-Party Democracy Fund 3.3 Appropriation Bill B7-2022 and Parliament’s Annual Performance Plan 2022–2025 3.3.1 Appropriation Bill B7-2022 3.3.2 Parliament’s Annual Performance Plan 2022–2025 3.4 Conclusion Chapter 4: Research design and methodology 4.1 Research objective 4.2 Research question 4.3 Research design 4.4 Research subjects 4.5 Measurement 4.6 Data collection 4.7 Analysis 4.8 Ethics 4.9 Limitation of the study Chapter 5: Findings 5.1 The public party-funding regime of Germany 5.1.1 Public funding of German political parties 5.1.1.1 Restrictions of private donations to political parties 5.1.1.2 The various forms of public funding that German parties are entitled to 5.1.1.3 Incentives to encourage individuals/corporates to make donations to political parties 5.1.1.4 Indirect public funding 5.1.1.5 Private versus public funding of political parties ratio 5.1.1.6 Quantifiable public funding to support political parties 5.1.2 Funding to party-aligned political foundations 5.1.3 Germany–South Africa Purchasing Power Parity (PPP) 5.1.3.1 PPP in relation to direct public funding to political parties 5.1.3.2 PPP in relation to funding to politically aligned foundations 5.1.3.3 PPP in relation to the funding of the German party-political dispensation as a whole 5.1.3.4 Public annual-spend per person on political parties and foundations 5.2 The public party-funding regime of Sweden 5.2.1 Public funding of Swedish political parties 5.2.1.1 Restrictions of donations to political parties 5.2.1.2 The various forms of public funding that Swedish political parties are entitled to 5.2.1.3 Incentives to encourage individuals/corporations to make donations to political parties 5.2.1.4 Indirect public funding 5.2.1.5 Private funding versus public funding of political parties ratio 5.2.1.6 Quantifiable funding to support political parties 5.2.2 Funding to party-aligned political foundations 5.2.2.1 Quantifiable funding to support political foundations 5.2.3 Sweden–South Africa Purchasing Power Parity (PPP) 5.2.3.1 PPP in relation to direct public funding to political parties 5.2.3.2 PPP in relation to funding to politically aligned foundations 5.2.3.3 PPP in relation to the funding of the Swedish party-political dispensation as a whole 5.2.3.4 Public annual-spend per person on political parties and foundations 5.3 The public party-funding regime of the Netherlands 5.3.1 Public funding of Swedish political parties 5.3.1.1 Restrictions of donations to political parties 5.3.1.2 The various forms of public funding that the Netherlands political parties are entitled to 5.3.1.3 Incentives to encourage individuals/corporations to make donations to political parties 5.3.1.4 Indirect public funding 5.3.1.5 Private funding versus public funding of political parties ratio 5.3.1.6 Quantifiable funding to support political parties 5.3.2 Public funding to political foundations 5.3.3 The Netherlands–South Africa Purchasing Power Parity (PPP) 5.3.3.1 PPP in relation to direct public funding to political parties 5.3.3.2 Public annual-spend per person on political parties and foundations 5.4 The public party-funding regime of South Africa 5.4.1 Public funding of South African political parties 5.4.2 Indirect public funding 5.4.3 Private funding versus public funding of political parties ratio 5.4.4 Quantifiable funding to support political parties 5.4.5 Public annual-spend per person on political parties Chapter 6: Discussion of findings 6.1 Comparative analysis: The amount of public funds allocated to the political parties in selected jurisdictions Chapter 7: Conclusions and recommendations 7.1 Conclusions 7.2 Recommendations References Cover photo credit: istockphoto.com – Jacques Kloppers Chapter 1: Background and introduction of the study Prior to 2019, donations to political parties in South Africa were unregulated. But in light of the growing scandals flowing from alleged illicit donations to parties, such as money for tenders, civil society began to agitate for private donations to political parties to be more transparent. It was, for example, alleged that the ruling African National Congress was being bankrolled by the now fugitive Gupta family and that the Democratic Alliance was captured by the so-called “white monopoly capital” (M&G, 2017). Donations to political parties, pre- and post-1994, have always been shrouded in secrecy, and therefore “it has never been possible to tell whether political parties act in the best interests of the public, or whether they act in the best interests of those who fill their pockets” (M&G, 2017). This led to the Institute for Democratic Alternatives in South Africa (Idasa) lodging a legal challenge in 2004, to ensure the introduction of legislation to limit private funding to parties and compel them to make public their sources of funding (M&G, 2017). Against this background, the High Court in Cape Town, in 2017, ruled that legislation needed to be introduced to regulate the funding of political parties (De Wet, 2017). This led to the passage of the Political Party Funding Act (PPFA), Act 6 of 2018 (RSA, 2019a). The Act was subsequently assented to by the President of the Republic and came into effect on 1 April 2019 (The Presidency, 2019). Since the introduction of the legislation, private funding of political parties has, to a large degree, dried up, with many – including the ruling party – finding it difficult to meet their operational obligations. It has, for example, been widely reported in the media that the ruling party is unable to regularly pay its staff their monthly salaries (Moichela, 2022). Parties have directly linked the evaporation of private funding to the disclosure requirements contained in the PPFA. Former ANC Treasurer General, Paul Mashatile, is reported to have said that the Act “is making regular donors reluctant to give” (Letshwiti-Jones, 2022). It is recognised that, in order for political parties to effectively conduct their democratic obligations, they need adequate funding so that they can carry out their core functions, and to fund their election campaigns (Venice Commission, 2020:56). State funding for parties is essential to guarantee parties’ independence from undue influence of private donors and to ensure that they “have the opportunity to compete in accordance with the principle of equal opportunity”. But private contributions are also a form of political participation. Therefore, a balance needs to be achieved between encouraging moderate contributions and limiting unduly large contributions on the one hand, and state funding on the other (Venice Commission, 2020:56). It is evident that the South African parties are struggling to keep afloat. Whether this is due to insufficient funding or because the available funds are not being appropriately applied, is an open question. Whether the balance between private funding and state funding within the highly regulated South African dispensation is adequate, needs to be assessed. This study aims to carry out such an assessment by benchmarking the South African party-political funding regime against a selection of European democracies whose election systems are similarly based on proportional representation. Germany, Sweden and the Netherlands have been chosen, since, as stated, their elections are based on proportional representation. In Germany it is a system of personalised proportional representation, where “each voter has two votes: the first for an individual constituency candidate, and the second for a party-list in a particular state” (Federal Ministry of the Interior and Community, N.d.). In Sweden the number of seats each party receives in the Riksdag is in proportion to the number of votes the party received in the election (Sveriges Riksdag, N.d.), and in the Netherlands citizens vote for a candidate on the candidate list, with parties represented in Parliament in proportion to the total number of votes they received in the election (Tweede Kamer. Der Staten-Generaal, N.d.). The study will attempt to settle the question as to whether our democracy is sufficiently funded. It will do so through the lens of political parties, the primary building blocks of our country’s parliamentary democracy. The theoretical motivation for the public funding for political parties is that it will have a positive impact on the role of money in politics and “ensure that all political forces have access to enough resources to reach the electorate, thereby encouraging pluralism and providing the electorate with a wider choice of politicians and policies” (International IDEA, 2014:22). However, as has been alluded to, the introduction of party-funding regulation in South Africa has led to financial instability within the political party environment. The level of public funding should therefore take into account the impact that high regulation has on party income from private sources. Should practice prove that such public funding be insufficient, the objective of bolstering democracy could very well be undermined. This study therefore aims to evaluate the South African party-funding dispensation against international best practice. It intends to make recommendations to the public-policymakers as to what adjustments are needed, if any, to ensure that sufficiently resourced political parties adequately underpin the country’s democratic dispensation. Chapter 2: The literature review The literature review aims to garner an understanding as to the role of political parties in a democratic dispensation, their need for income and how they are funded, and to understand the interaction between private and state funding of parties. 2.1 The role of political parties in a democratic dispensation Before we delve into the financing aspects of political parties, the review starts by asking two fundamental questions: Why are political parties important for democracy and what is the role of parties in a democratic dispensation? 2.1.1 Why are political parties important for democracy? The influential International Institute for Democracy and Electoral Assistance (International IDEA) argue that “political parties are crucial for the functioning of representative democracy”, since they produce a variety of policy options for the electorate to consider and choose from. They also provide the mechanism “through which citizens express diversity of interests and aspirations” (International IDEA, N.d.). Political parties bring people with the same political ideas together, for them to take part in elections collectively, in the hope of getting as many of those of the same ‘thinking’ as possible elected into legislatures, such as Parliament or a municipal council. And similarly, to hold as many posts as possible in the government (Government of the Netherlands, N.d.). In this vein, many prominent scholars have lamented the importance of political parties for democracy. They have said that parties are indispensable, make democracy workable, and provide a mechanism for the public to be represented in the legislatures through electoral competition (Ezrow, 2011). Political parties allow for broader societal participation in the drafting of coherent public policy, serve as an intermediary between members of society and the government, connect them and allow for the interpreted communication between government and society (Ezrow, 2011). Political parties make government accountable for its actions by helping the public identify the executives’ past performances, and by diminishing the power of dominating personalities. The existence of opposition parties also allows for non-performing incumbent governments to be challenged at the poll (Ezrow, 2011). Individuals attempting to challenge incumbent governments tend to be “fragile, fragmented and incoherent, with limited capacity to mobilise, organise and coordinate collective action”. When individuals group themselves into parties, they become more capable of overcoming coordination problems. And they create longer-term time horizons, since parties normally have long-term goals with a broader spectrum of priorities (Ezrow, 2011). They also help politicians solve these coordination problems, since they act in a collective manner and are able to present disciplined goals by keeping politicians in line with the goals of their parties, as opposed to individuals that can opportunistically manoeuvre their message as the wind blows (Ezrow, 2011). “Parties also enable the opposition to stand firm against divide and rules tactics by the incumbent regime”, something that individuals acting on their own accord will find difficult to do. So too, independent politicians may not be able to credibly commit to policies that do not coincide with their own preferences, whereas, by being a member of a party, they are put in a position where they can convincingly commit to policies that they normally would not support in order to win a larger support base (Ezrow, 2011). Furthermore, governments comprise collective leadership capable of carrying out cogent and coordinated policies. This requires likeminded individuals acting in unison. Parties play a role in creating such cohesive leadership through their internal recruitment, nomination and socialisation processes. Unlike individual politicians, parties, because of their diversified process of recruitment, are also able to create ways for individuals of diverse ethnic and economic backgrounds to rise to political power (Ezrow, 2011). And parties are more likely to be in a position to provide valuable training in negotiation, compromise and coalition building; and broader socialisation with regard to democratic practices (Ezrow, 2011). Whilst acknowledging the right of individuals to compete for political office, there seems to be broad consensus that political parties are, given their greater capacity to coordinate and function over a far wider sphere within the democratic machinations, an essential component of a functioning democracy. Ezrow (2011) quotes the authoritative American political scientist, E.E. Schattschneider, who argued that "democracy is unthinkable save in terms of parties”. 2.1.2 What is the role and functions of political parties in a democracy? Having, in the aforementioned section, established that political parties are indeed important for democracy to succeed, in this section we examine the role of political parties and the functions they carry out. Although somewhat dated, being written in 1950, it was then argued that political parties consist of individuals that hold common views on important public questions, and who promote their principles in order to gain control of government so that they can put their ideas into operation. These parties generally have three things: organisation, fidelity to certain principles, and they must follow constitutional means to reach their objectives (Singh & Singh, 1950). This remains true today. Similarly, the authors contended that political parties did not exist in Greek times, as citizens participated in the democratic processes in their own capacity. But in modern times, due to the complexity of government and the vast increase in the population, it is not practical for all to be directly involved in the democratic processes. Political parties now act as “brokers of ideas and carriers of government”. Indeed, they are the principal go-betweens in the constitutional process. Parties are the ‘people’ – the apex norm of all democratic constitutions – organising themselves. They therefore act as the organisational vehicle for the people, with the value proposition being that they can be better enabled if properly organised and through the sharing of resources (Kangu, 2001). Kangu affirms the 1950 assertion that political parties are in fact an “association of private citizens formed to promote certain political and economic beliefs … [with the purpose of having] … them adopted as government policy”. Political parties fulfil a range of important functions in a democracy, such as: Drawing together those people who share similar philosophies and ideas. They are vehicles through which those with broadly similar interests can organise and campaign. Since governments are composed of people who belong to political parties, political parties are in reality the way in which political power is exercised. Political parties therefore provide the government and the opposition. Parties select candidates to contest elections. It is therefore parties that provide the nation’s political leadership. Parties provide organisational support for organising and financing election campaigns, for recruitment and training of candidates, and for developing policy, all of which are crucial for the sustainability of the party’s elected members. Through the debating of issues and formulation of policies to be presented to the electorate during elections, parties articulate the shared beliefs, values and philosophies of its members. They then utilise these to determine their attitude to legislation, public policy, and the issues of the day. Parties are often an avenue for community groups to shape the decision-making process. Many civil society organisations, such as trade unions, organised business, advocacy groups, etcetera, have close ties with political parties. They interact with the parties in order to influence the development or implementation of public policy. Parties are one of the main avenues for political debate and discussion in the community. Given that statutory authority vests in the hands of government, parties are ultimately responsible for the structure of the machinery of government, in that, in practice, it is they who can make appointments to the public sector from the ranks of their members and supporters. (AustralianPolitics.com, N.d.) Parties also fulfil important ancillary roles in society that go beyond their own narrow interests. In many societies, including South Africa, they also fulfil the role of educating society on the role of politics and the political processes. For example, they provide political education for their members and broader society. This includes, amongst others, voter education – that is, the activities and processes designed to deliver a free, fair, efficient and cost-effective election, the value of democracy and human rights (Sirivunnabood, N.d.). And they contribute to the legitimisation of the political system, in that their activities help connect citizens and social groupings to the political system. In this, they anchor the political order in the consciousness of the citizens and in social forces (Hofmeister & Grabow, 2011). 2.2 The need for party-political funding Whilst much has been written on the shady influence of money in politics, the fact is that political parties need resources to effectively carry out their constitutional and democratic mandates. Money in politics is not a problem per se; it is whether that money has been ethically secured, legally applied, and fairly distributed amongst the political role-players. Should the nation aspire to a well-functioning and effective representative democracy, it must accept that political parties – lest the country is to slide towards authoritarianism – need to be well-resourced and that money is necessary for inclusive democracy and effective governance, for allowing candidates and parties to reach out to voters and for them to build long-term political organisations (Lee-Jones, 2019). Political parties need appropriate funding in order for them to carry out their core functions, activities and programmes, all of which involve expenses “which should be seen as the necessary and unavoidable costs of democracy”. Parties need to maintain their party organisations, employ staff, campaign in elections, and communicate with the electorate at large (Van Biezen, 2003). Political parties have at least eight spending needs (IEC, N.d.): Developing the political will of people. For this, programmes and actions need to be put in place to inform, empower and mobilise citizens. Shaping public opinion. This would, for example, include the costs attached to carrying out media and advertising campaigns, hosting public outreach programmes such as town hall meetings, etcetera. Inspiring and furthering political education, which will include activities such as voter education, informing the electorate with regard to their constitutional rights and the value of democracy and human rights. Promoting active participation of individuals in political life, for example, the identification and recruitment of young leaders, their training and equipping them for future political leadership roles. But also ‘foot soldiers’ training’ to ensure that the party has sufficient manpower to carry out campaigns, act as party agents during elections, etcetera. Exercising an influence on political trends, which could entail, for example, empirical research; policy and message development; and the carrying out of polls and surveys. Ensuring linkages between the people and organs of state, for example, through the maintenance of constituency offices to service the electorate, and to deal with their complaints. It may be necessary to arrange contact meetings with government and political leadership to engage the electorate on various issues as the need arises. Operational expenses such as staff, travel, administration, office rental, the hosting of meetings, running of programmes and publications. Election campaigns, for example, the hosting of rallies, media advertisement, posters and billboards, pamphlets, town hall meetings, etcetera. Access to sufficient funding for political parties is crucial to the overall vibrancy of an electoral and democratic system. Without funding, political parties would not be able to reach out to the electorate to explain their goals and policies, nor would they be able to maintain mechanisms for them to receive input from the electorate about their views. Similarly, they would not be able to run dynamic election campaigns capable of engaging citizens in the electoral process. Neither would they be able to maintain the democratic dialogue between elections (Ohman, 2014:1). What is therefore being inferred is that parties that lack organisational coherence and institutionalisation, and/or programmatic substance, will fail to perform. Neither will they be able to get much traction amongst the electorate (Cotón, 2008). Needless to say, poor performing political parties are counterproductive to the building of dynamic, responsive and inclusive democratic dispensations. 2.3 How political parties are funded This literature review has revealed that political parties are funded via a range of sources. Apart from passive income in the form of interest or dividends that parties may receive from investments lodged at registered financial institutions, at least six streams of funding have been identified. Direct state funding In many democracies, political parties receive funding via the national fiscus. Direct funding from the state may take on different forms, differing from jurisdiction to jurisdiction. Similarly, there may be different streams of direct state funding within the same jurisdiction. In Germany, for example, there is no distinction drawn between campaign funds and political party funds, since campaigning is considered part of the normal duties of a party. Campaign expenditure therefore forms part of the normal operation of a political party and is included in the party's total budget (DW, 2021). Germany’s state funding of political parties is votes-based, with further contribution-based funding dependent on the extent to which they are established in society. Whilst there are preconditions for entitlement and absolute limits set, the basic tenet of the funding is that parties receive an amount for each vote received. Section 18 (3) of the Act on Political Parties states that they are entitled to state funding in the amount of €0.85 per valid vote won at the most recent European, Bundestag and Land parliament elections up to a total of four million votes, and €0.70 for every additional vote thereafter. In other words, the financial rewards given by the state vary depending on electoral success (Deutscher Bundestag, 2012). These amounts may have been adjusted since 2012, the discovery of which will be made during the interviews envisaged by the research. For contributions given by natural persons, the parties receive €0.38 per euro donated per person per year up to a total of €3,300 (Deutscher Bundestag, 2012). Similarly, these amounts may have been adjusted since 2012. In other countries a distinction is drawn between regular annual funding of parties and reimbursement for election campaign expenditure. For example, after each federal election or by-election in Australia, the Australian Election Commission distributes money to eligible political parties, candidates and Senate groups to reimburse them for election campaign expenditure (AEC, N.d.). The current election funding rate is AU$ 3.016 for every first preference vote received. An automatic payment in the amount of AU$ 11,029 is made. Further funding of expenditure greater than the automatic payment can be claimed. The amount payable will be calculated as the lesser of the calculated election funding entitlement; or the amount of demonstrated electoral expenditure. The payment will be reduced by the amount that has been paid as an automatic payment (AEC, N.d.). Indirect state funding for parties In addition to the direct state funding to political parties, elected representatives and political groups receive varying degrees of support for their work as parliamentarians. For example, the House of Commons in the United Kingdom reimburse MPs for the costs of running an office, employing staff, and travelling between Parliament and their constituency (UK Parliament, N.d.) In South Africa, Parliament also provides allowances for the setting up of constituency offices. These payments are, however, made directly to the parliamentary party. Further administrative allowances are also made to parties to employ parliamentary support staff and to enable them to effectively perform their parliamentary function. The administrative allowances are distributed in proportion to the seats each party occupies in Parliament (Parliament of the RSA, N.d.). In addition, a feature of European democracies is the state-funded politically aligned foundations. Germany currently has, for example, six political foundations that receive funding from the government. Each foundation is associated to a party that is represented in the federal Parliament (Unmüssig, 2017). These foundations are tasked to, amongst others, promote civic participation, and support young academic talent with scholarships and support the development of democracies abroad. They offer socio-political and democratic education and provide information and policy analysis at home and abroad. Their purpose is to build on the principles of liberal democracy and to solidify the basic principles of societal solidarity, subsidiarity and tolerance (Unmüssig, 2017). Whilst the foundations act autonomously and are legally and financially independent, each foundation is “politically associated and close to a political party”. Their work therefore stimulates and indirectly underpins the work of political parties (Unmüssig, 2017). Membership fees, trade union and other voluntary contributions; and public representative levies Party membership subscriptions are normally not high, but can collectively can make up a material portion of a party’s income. In 2014, for example, membership income for parties in the United Kingdom was 23% for the Green Party, 15% for the Labour Party, 9% for the Liberal Democrat Party, but just 2% for the Conservative Party. In 2015 the Labour Party also introduced a registered supporters’ scheme by which people can pay £3 per annum, which gives them the right to vote in the leadership elections (Brit Politics, N.d.). In South Africa, the ruling African National Congress has uninitiated the Progressive Citizens’ Forum, a debit-order campaign aimed at soliciting regular contributions from its members and supporters (PCF, N.d.). So too, trade unions in the United Kingdom have been linked to the Labour Party since its foundation in 1900. Most charge their members a political levy, which can be used for campaigns, publicity on issues they are concerned with and so on. Some can affiliate to the Labour Party and pay the Labour Party for the number of members that they have. In 2014 this provided twenty-seven percent of Labour’s income (Brit Politics, N.d.). And in some countries, parties levy their public representatives a monthly contribution based on their earnings from their position as a public representative. In South Africa, for example, the ruling African National Congress collects levies from their public representatives. In 2009 they took in about R250,000 from their parliamentarians and cabinet ministers each month. MPs were then levied around R500, while cabinet members paid between R1,500 to R2,000 a month. Councillors are also levied (politicsweb, 2009). The DA public representatives pay around 2% of their salary, while the ID levies 10% per month. The IFP charged MPs R3,300 a month (politicsweb, 2009). Donations Direct donations and sponsorships from corporates and wealthy individuals also remain a feature of modern-day politics, albeit that jurisdictions are insisting on greater regulation to various degrees of late. This will be further explored later in this study. Standard Bank, for example, donated R5 million to political parties in 2009, split amongst political parties based on the IEC’s funding formula, “in terms of which funding is distributed to political parties in proportion to their representation in the National Assembly" (politicsweb, 2009). Commercial investments It is not uncommon for political parties to own companies as investments to augment their income. The SPD of Germany, for example, has a one hundred percent shareholding in German Printing and Publishing mbH (dd.vg, N.d.). Until as recently as 1997 the SDP of Sweden owned the advertising company, Folkreklam and Förenade ARE-Bolagen (Lakomaa, 2019). And in South Africa, the African National Congress set up Chancellor House as an investment vehicle to make the party self-sufficient over time (Jolobe, 2010). Fundraising events Parties also raise funds through hosting dinners, holding raffles, and so on (Brit Politics, N.d.). These events are sometimes organised on a national scale, providing a substantial stream of income. In South Africa, for example, the ruling party, under the auspices of its Progressive Business Forum, regularly hosts presidential gala dinners, business breakfasts and corporate exhibitions on the sidelines of its national conferences (Ticketpro, N.d.). In a similar vein, the UK Labour Party hosts exhibitions at their national conferences (UK Labour Party, N.d.). 2.4 The imperative to ensure transparency through the regulation of private donations It has been established that effective and functioning political parties are crucial for democracy. For them to be so, they need to be adequately resourced. This funding can be either via the fiscus or from private sources. Funding from the fiscus is open and transparent. From private sources, less so but needs to be. Why? Because a lack of information on how much money circulates in and around elections, where resources are coming from and how they are spent, makes it harder for the electorate to make informed decisions (International IDEA, 2019). Donations to political parties, be it direct or indirect, can materially impact, influence and distort both the electoral process and passage of legislation. And it has also proved to be a major motive for grand corruption (GSDRC, 2001; Bodede, 2022). Therefore, society needs to know who are funding the parties so that: The electoral process is fair and equitable. Parties need to be able to compete on an equal footing. Elections can be distorted should some parties be flooded with funds that are illicitly obtained, since it could create unfair advantage for them. In a multi-party election, there is often a spending rat race between the parties, where governing parties are often in a stronger position to solicit donations, thereby placing the opposition in a disadvantaged position (GSDRC, 2001). The passage of legislation can be unduly influenced should donors exercise financial coercion to manoeuvre certain policy and legislative outcomes, which may not be in the interest of the broader public. It may even sway elected representatives to either actively, or through inertia, go against their undertakings to the electorate (GSDRC, 2001). This is because when politicians become overly dependent on donations from a limited group of donors, the danger is that their policy programmes can be co-opted (International IDEA, 2019). It also facilitates corruption and erodes citizen trust in political institutions (International IDEA, 2019). And, as has been demonstrated in the South African context, shady donations to parties, for example cash for tenders, as has been highlighted in the Zondo Commission of Enquiry into Corruption. This led to corruption on a grand scale (Bodede, 2022). According to Webb and Drury (2020), “big political donations are intended to have political influence”. They say that there is a “sliding scale of influence” that is facilitated by such donations: Access: It can ensure the donor gets access to a public representative that ordinary citizens would not normally get. Clientelism: This is the kind of corruption where officeholders are influenced through large donations to decide issues not on the merits of the argument, or the interests and desires of their constituents, but according to the biddings of the donor upon which the officeholder may have become dependent. Quid pro quo: Where politicians make promises in exchange for donations. Pressure: The running of political parties and election campaigns has become very costly. Parties and politicians are accordingly being placed under enormous pressure to keep donors happy, lest they walk away with their support. Big money effectively builds inequality between the haves and the have-nots into the political system. There are at least four arguments in favour of transparency in party finance: The United Nations Convention against Corruption (UNCAC) considers it paramount for parties to make their funds transparent in order to prevent corruption. The objective of regulations aimed at making party funding more transparent is to, in the first instance, rebuild public trust amongst those that have disengaged from politics due to the marginalisation of the voter through the dominance of money in the political environment. And secondly, to prevent affluent and illicit donors from dominating modern politics. Transparency creates a mechanism through which the adherence to party finance regulation can be monitored. Where parties receive state funding, transparency ensures that parties can be effectively monitored in order to prevent the misuse of public money. It ensures that the electorate can be better informed as to who is supporting which political parties, thereby creating for them a tool to observe whether parties’ special interests may be motivated by external influences. (Tonhäuser & Stavenes, 2020) Thus, it is safe to conclude that the only way that the electorate can hold their public representatives accountable for their actions and make an informed vote in the knowledge that their representatives have not been unduly influenced by donor monies, is for them to know how the parties (and individual public office-bearers) have been financed and by who (Essop, N.d.). In conclusion: Clearly, money is needed to stimulate, maintain and enhance political competition, an essential component of any effective democracy. But if the quantum and source of that money is not transparent, it could pose a serious challenge to the democratic dispensation – should donors, for example, channel their resources to the political elite, essentially negating the ordinary citizens’ ability to influence policies and policymakers through their vote (International IDEA, 2019). 2.5 The rationale for state funding of political parties There are two overarching reasons that motivate for the state to fund political parties. The first being a mechanism to strengthen democracy by ensuring that political parties are empowered to fulfil their constitutional and democratic roles, and that they are able to do so within a system that is fair and equitable. The second is to combat corruption. A consequence of high transparency regulation as to who funds political parties, is a loss of private funding to political parties, as private funders shy away from being publicly exposed. This creates a funding gap, which public funding needs to address. 2.5.1 Enabling parties to fulfil their democratic responsibilities There are three central arguments in favour of the state providing political parties with financial resources for purposes of ensuring that they can effectively carry out their constitutional and democratic mandates. First, as has been repeatedly argued, political parties are critical to democracy. It is implausible to suggest that a functional democracy is possible without effective parties and party organisation. For them to be effective, they must be able to mobilise the electorate, socialise the citizenry, recruit and train future leaders and party workers, research and formulate policy, and fund their operational costs, such as rent, salaries, etcetera. Their mere existence offers support to the democratic process. And the character of the modern state depends directly on the abilities of the parties serving as integrative links between state and society. State funding can contribute to this. Secondly, parties are the vehicles through which the electorate express their political views, and they are the mechanisms through which citizens can become involved in the governing of society. However, there may be vast differences between interest groups and spheres of society – financial and otherwise – that could translate into the powerful having a disproportionate ability to mobilise the electorate behind their narrow cause. The provision of state funding helps safeguard political equality. It also mitigates against the problem of private and corporate funding potentially being channelled to only some parties, since this undermines the principle of equality in the parties’ ability to be responsive apropos their linkages and interactions with the citizenry. Thirdly, the costs of running a political party in a modern democracy is costly and they are competing against far better resourced external think-tanks and interest groups, who exert significant influence. Parties need to compete with them for the public mind. For this they need to develop and present to the public coherent policy proposals on a wide range of issues, which requires highly qualified staff and institutionalised expertise. State funding can help sustain the central role of political parties in the political system by providing funding support to enable them to develop and communicate their messages to the voters. (Pierre, Svåsand & Widfeldt, 2000:1-24) A further strong argument in favour of funding political parties, is that it is necessary to develop strong opposing political parties so that there is capable and healthy competition within the political system. And funding by the state guards mitigates against an incumbent party misusing the programmes and resources of the state to further its own interests (Marfo, Musah & Owiredu-Amankwah, 2021). 2.5.2 State funding of political parties to combat corruption and as mitigation for anti-corruption measures Once again, to fulfil their core functions, political parties need appropriate funding. When there is inadequate funding, political parties are ‘forced’ to adapt various strategies to fund their activities and programmes, which has to pay back in cash or kind. This often leads to “corruption and kickbacks and appointment of incompetent people to hold public positions” (Marfo, Musah & Owiredu-Amankwah, 2021). To minimise the danger of corruption, in particular state capture and influence peddling, best practice suggests that the funding of political parties ought to be regulated. In this regard, article 7(3) of the United Nations Convention against Corruption (UNCAC) requires states to improve transparency in the funding of political parties and public office candidates (UNODC, N.d.). A growing number of countries subsidise political parties through the fiscus, or direct provision of goods and services. This is primarily meant to help the parties perform their functions, but it is generally also considered to decrease the opportunities for corruption, since, having some form of sustainable funding, parties are de-incentivised from succumbing to the interests of private donors in return for donations (UNODC, N.d.). However, a consequence of high disclosure transparency regulations appears to be that corporates and wealthy individuals become more reluctant to give to political parties where there are high disclosure requirements. In South Africa, with the introduction of the PPFA Act in 2019, parties have been crying foul of its unintended consequences, with them receiving fewer private donations. Donors have become apprehensive knowing that their donations would be open for public scrutiny, as it may lead to either reprisal or an impact on their reputation (Pasensie & Clarke, 2021). The fear of reprisal and/or reputational loss is two-directional. On the one hand, as deliberated before, private donations to governing parties could be viewed as influence peddling, whilst donors may also be fearful of disclosing donations to opposition parties, for fear of the government blocking them from tenders (Pasensie & Clarke, 2021). And as discussed in the introduction of this study, it has, in South Africa, had a devastating impact on the parties’ ability to properly fund their operations. It should, therefore, be recognised that the probability is high that elevated transparency rules aimed at combatting corruption, will negatively impact the political parties’ ability to solicit donations from private funders. It is with this in mind that regulators promote state funding as a means to mitigate against the losses parties may incur as a result of high disclosure regimes. But, as illustrated, should the state funding not be set at an appropriate level, it could have the opposite effect of weakening the parties’ operational performance. In determining the appropriate level, governments will have to accept that democracy, and for that matter the fight against corruption, comes at a price and that, accordingly, the fiscus will have to provide the necessary resources. What that appropriate level is, is an open question, and will be for each country to make its own determination. But a 2021 study into money and politics did give some indication. It was found that in countries where high levels of spending had become an equilibrium outcome due to corruption and the influence of special interests, the setting of a spending limit may increase political competition and allow for new entrants into politics. In countries where political elites come disproportionately from more affluent and well-resourced echelons of society, it may also reduce the concentration of political power in the hands of the better off. These effects might have direct and indirect consequences for a country’s policy outcomes and, might I add, the depth of democracy in the medium to long term (Avis, Ferraz, Finan & Varjão, 2021). 2.6 The different forms of state funding for political parties A complementary approach to regulating donations is to give political parties access to public funding. The purpose of providing political parties with public funding is to: Promote pluralism and to stimulate the battle of ideas – that is, providing the electorate with a wider choice of policies – by ensuring that all the “relevant political forces” are sufficiently resourced. By giving all parties access to funds for campaigning, it also serves to equal the playing field by limiting the advantage that contenders with access to significant resources have. The levelling of the playing field will, however, only be achieved if the gap between the rich and the poor is addressed by complementing public funding with spending caps. Providing the extent of state funding is significant enough, it serves to incentivise obeyance to the election rules. This is because political parties will fear losing access to public funding should they not obey the rules. (International IDEA, 2014) The International Democracy and Electoral Assistance Institute (International IDEA, 2014), in their handbook on political finance, identify two types of state funding for political parties: Direct funding, that is, providing money Whilst it may seem fair that all registered political parties should receive state funding, such an approach opens up the danger of the system being abused, where parties with little or no support are formed just to collect the funding. Therefore, in most countries, a threshold is applied for parties to gain access to the state funding. This could, in a proportional representation system, be a minimum share of the vote obtained, or in a constituency system, a minimum number of seats. Different countries also follow different allocation criteria. Here too, whilst it may seem that the most democratic way is to give all parties the same amount – national election campaigns after all could cost as much for a smaller party as for a larger party – such an approach, it could be argued, goes against the will of the people. It could also be argued that it is a waste of taxpayers’ money, in that a lot of money will be distributed to many parties who may not materially alter the shape of party politics in the country. The more common option preferred by most countries is to allocate the state funds in proportion to the votes obtained by the various parties. In some jurisdictions this is done purely proportionally, in others, a percentage is divided equally amongst qualifying parties, with the balance allocated proportionally. Then again, a different form is to match the funding that parties manage to raise out of their own initiatives from donors, with an equal amount from the fiscus. This is, for example, the position in the United States and Germany. But this too is open for criticism, with detractors arguing that it favours parties with strong business links. Thus, whilst the overarching objective remains the same for whichever system is adopted, it is for each country to decide which of the systems is most palatable for their particular circumstances and environment. Indirect funding, that is, providing goods and services Most countries also provide indirect funding to political parties. This too can take on various forms, the most common being the provision of free or subsidised access to the public media for campaign purposes. But there are other examples as well, such as tax relief for parties/candidates and their donors, access to public buildings for campaign events and subsidised postage (International IDEA, 2014). Table 2.1. below captures the rationale and considerations regarding direct public funding as developed by International IDEA. Table 2.1.: The rationale and considerations regarding financial reporting requirements (Source: International IDEA, 2014) In addition to direct and indirect funding, in its broader interpretation, alternative state assistance that can help parties develop and improve their standing in society and within the array of parties, can also include measures other than funding. It can, for example, take the form of: Legislation placing spending caps on election campaigns In many jurisdictions, there are limits as to how much parties and/or candidates are allowed to spend on their election campaigns. The purpose is not to regulate the influence of money, but to reduce the advantages that political parties and candidates with access to large amounts of money have over those that are less resourced. Whilst this does not equate to income for the party and/or candidate, it does help level the playing field so that the different parties/candidates have a more equitable chance of selling their message. It also brings less pressure to bear on party treasurers, since it reduces the overall spending on election campaigns. In the South African context, as has already been highlighted in this study, where parties are finding it difficult to stay afloat, this can play an important role in stabilising the financial fortunes of parties and contribute to their sustainability and longevity (International IDEA, 2014). Funding of politically aligned foundations In many European countries there are political foundations that receive funding from the state. Whilst each foundation is close to, and ideologically aligned with a particular party, they are autonomous and legally independent. In Germany, for example, the Friedrich Ebert Foundation is associated with the Social Democrats (SPD), and Konrad Adenauer Foundation with the Christian Democrats (CDU). In fact, foundations can be formed and funded by the state for each political party that has been elected to the Bundestag for at least a second term (Unmüssig, 2017). They receive their funding from a number of ministries, such as the Federal Foreign Office, and the Federal Ministries of Education and Research and of Economic Cooperation and Development, who set and adopt the level of funding as part of the federal budget negotiations process (Unmüssig, 2017). There are similar arrangements in other European countries such as Austria, the Netherlands, Hungary, Finland, Greece and Spain, amongst others, as well as at the European level (Bértoa & Teruel, N.d.). As previously stated, they do work, amongst others, in the field of civic, democratic and socio-political education, as well as policy analysis and empirical research (Unmüssig, 2017). Whilst they are legally independent, determine their own programmes and are in no way accountable to political parties, they do do their work through the ideological lens of their associated parties. In so doing, individual political parties benefit immensely, since foundations underpin and complement the objectives of the party they are associated with (European Parliament, N.d.). As such, they should be viewed as part and parcel of the political party funding regime, in that their output motivates policy in favour of the particular party they are associated with, and they provide empirical evidence on which parties can develop policy and base their arguments on. In the absence of such foundations, such research and other activities would fall wholly to the political parties themselves. From the aforementioned, it is evident that a determination as to whether the democratic dispensation is adequately funded rests on more than just the financial income of parties, but so too the broader architecture of the particular dispensation. 2.7 The relationship between private donations, disclosure regulations, state funding and the viability of political parties Evidence suggests that many businesses and other clandestine interests support the bigger political parties with a view to influence public policy, and therefore the legitimate calls for greater transparency within the party funding regime. The public have a right to know who is funding the various parties, so that they can assess whether the donations play a role in influencing policy positions. Regulation is needed to prevent policy capture (Terracino & Hamada, 2014). However, as has already been pointed out in this review, an undeniable consequence of greater transparency is that donors become reluctant to donate to political parties. This is due to a fear of being victimised or penalised if their contributions were to be disclosed (Maphunye & Motubatse, 2017). And what the review has simultaneously revealed, is that well-functioning political parties are crucial for representative democracy. Thus, since “public funding is generally tied to stronger rules and controls”, it is argued that where disclosure regulation has been introduced, it needs to be complemented by state funding, lest the lack of sufficient funding becomes counterproductive by rendering the political parties ineffective due to them not being able to financially sustain themselves. In the process of reducing reliance on private funding to support themselves, public funding to political parties becomes necessary to sustain the institutionalisation of political parties in democracies (Terracino & Hamada, 2014). The literature implies, therefore, that there is a direct correlation between the flow of private money to political parties and disclosure regulation. The higher the regulation, the less private money will flow to political parties. The lower the regulation, the higher the prospect of parties receiving private donations. Consequently, a fair deduction would be that where the disclosure regulations of private donations to political parties are low, the necessity for public funding is reduced, whereas when the disclosure requirements are high, the need for public funding is increased. To illustrate: In a 2013 study by the International Institute for Democracy and Electoral Assistance (International IDEA) and the Netherlands Institute for Multiparty Democracy (NIMD), it was found that political parties in Ghana successfully managed to develop and assert themselves without any public funding. In fact, the study suggests that “Ghana is one of the most competitive and relatively stable democracies with a vibrant party system in sub-Saharan Africa”. Parties are free, without limitation, to raise funds through donations. There are also no requirements for parties to disclose the identities of their donors (Magolowondo, Falguera & Matsimbe, 2013). On the other hand, political parties in Mozambique are required to annually declare their donors and the extent of each donation. In this instance they receive regular contributions from the state for both their overall functioning and for election campaigning. But the study says that the Mozambique case shows that when funds are not disbursed timeously, it has a negative impact on the competitiveness of political parties (Magolowondo, Falguera & Matsimbe, 2013). To further illustrate: Prior to the passing of the Political Parties Funding Act in South Africa, similar to Ghana, there were no funding restrictions on parties, nor any disclosure requirements. But since the inception of the Act, donors have become reluctant to donate (Letshwiti-Jones, 2022) and parties are finding it difficult to keep afloat (Moichela, 2022). Parties are now crying foul. The ruling African National Congress’ Treasurer General has, for example, bemoaned the disclosure requirements, saying that it is causing donors to steer away from contributing to the party. He has called for a greater degree of public funding to fill the gap (Friedman, 2020). The South African experience underscores the argument that the higher the disclosure requirements, the greater the need for public funding, lest the parties are neutered from effectively fulfilling their constitutional and democratic roles. 2.8 The post-1994 history of party-political funding in South Africa When ushering in the new democratic dispensation in 1994, no laws, rules and regulations were in place, nor introduced, to regulate private donations to political parties. Parties were free to solicit donations from any source and of any amount, be it local or international, and in most any form. Of course, whilst laws did not prohibit private donations, the receipt of such donations would still be subject to the normal laws of the country. It did not mean that criminal activity would be condoned. Following a number of funding scandals – which involved parties from across the political spectrum – public and civil society opinion started to form in favour of some form of regulation to be introduced. It came in the wake of allegations of corruption levied against the French arms company Thales, and various ruling party heavyweights, dominating the media headlines. It was alleged that the then Deputy President and later President, Jacob Zuma, received large sums of money as a bribe in exchange for him protecting Thales from investigations into a multi-billion rand deal for supplying weapons to South Africa (Reuters, 2021). In the early 2000’s allegations of corruption started to emerge against leaders of other political parties as well. In 2004, for example, charges were laid against New National Party leaders, who then governed the Western Cape province, for planning permission irregularities in exchange for bribes (M&G, 2004). The official opposition, the Democratic Alliance, also did not escape scrutiny. In 2002 they were accused of corruption after a German businessman, Jürgen Harksen, told an official commission that he paid more than one million rand to the then Democratic Alliance mayor of Cape Town for both his party's and his own benefit (McGreal, 2002). In 2004 the first shots were fired, when the Institute for Democratic Alternatives in South Africa (Idasa) filed papers in the Western Cape High Court, seeking an order that legislation should be introduced that would compel political parties to disclose the details of all funding they received (M&G, 2017). They failed, but in subsequent court challenges, the Western Cape High Court ruled in favour of a motion brought by “My Vote Counts”, who challenged the constitutionality of the Promotion of Access to Information Act (PAIA) “insofar as it did not allow for the disclosure of information on private funding to political parties”. Parliament was given eighteen months to “remedy the defect in the PAIA to allow for disclosure of private funding for political parties” (Parliament, 2017). The Political Party Funding Act was introduced into Parliament in 2018. It was subsequently passed by Parliament and assented to by the President on 23 January 2019 (RSA, 2019a). Since the implementation of the Act, it has been a struggle for South African parties to survive financially. Bloomberg, in 2021, already reported that they are “in dire straits”. Most were unable to raise enough money to cover their operational costs (Cele, 2021). In a report released by the Independent Electoral Commission, it was reported that the ruling party, whose monthly wage bill amounted to R18 million, managed to only raise R10,7 million in the three months through to July 2012 (Cele, 2021). They were not alone. Of the country’s other 503 registered parties, it was only the ruling African National Congress, the Official Opposition Democratic Alliance, and ActionSA that received donations exceeding R100,000 (Cele, 2021). While the measure is aimed at curbing corruption, politicians have been complaining that corporates have been deterred from donating (Cele, 2021). The problem is that prior to the enactment of the PPFA, like other political parties, the ANC generated its revenue primarily from private donations. It has been reported that “between 2013 and 2017, the ANC collected R2.6-billion in donations” (Mahlaka, 2021). And as alluded to in the preceding paragraphs, these private donations have all but dried up. The drying up of private donations to the parties is in itself not a bad thing, for all the reasons elaborated on in the previous sections of this review. It is the fact that the public funding to political parties has not been materially adjusted pre- versus post-PPFA. Private funding has been cut off without the compensatory upward adjustment of the allocation to the Represented Political Parties’ Fund (RPPF), that is, the fund managed by the Independent Electoral Commission, out of which the public funding is paid over to the political parties. In Treasury’s Estimates of National Expenditure for the 2019/20 financial year (pre-PPFA), an amount of R157,8 million was allocated to the RPPF (Treasury, 2019:74). This rose marginally to R171,1 million for the 2022/23 financial year (post-PPFA) (Treasury, 2019:xiii), a mere R13,3 million per annum more three years on, amounting to no more than an inflationary adjustment. It seems, however, that some relief has been given in the 2022/23 Estimates of National Expenditure, which indicates an increase of around thirty percent on the previous year, to R342 million. In addition, the defunding has been exacerbated by the fact that funding to political parties by provincial legislatures needed to be cancelled as a consequence of the introduction of the PPFA. Some provinces, such as Gauteng Provincial Legislature, had such arrangements, but the legislation had to be repealed once the PPFA came into operation (Gauteng Provincial Legislature, 2021). 2.9 Conclusion This literature review gives rise to the question: Is South Africa’s democracy properly funded? It seems that whilst great strides have been made in improving the transparency regime, it has not gone hand-in-hand with the necessary concomitant increase in public funding. The improvement on the one hand, and not on the other, amounts to a defunding of the party-political environment, which may very well have damaged the democratic dispensation more than the transparency advancements might suggest. This requires serious and urgent contemplation, to which this study hopes to contribute. Chapter 3: The legislative review It is evident from the literature covered in the preceding Chapter that scholars, democrats, political analysts and experts consistently argue that the provision of public funds to political parties is a necessary part of a free and fair democratic dispensation. This matter has also been settled in South African law, which makes it clear that the provision of public funds to political parties for purposes of executing their constitutional and democratic responsibilities is not open for consideration and/or interpretation. Neither should it be considered a benevolent act of the Executive and/or Treasury. It is compulsory. In this legislative review, the two principal pieces of legislation reviewed are the Constitution of the Republic of South Africa and the Political Party Funding Act. The review will also examine the public funding afforded to the parties via the Appropriation Bill and the Parliament’s Annual Performance Plan 2022 – 2025. 3.1 The Constitution of the Republic of South Africa, Act 108 of 1996 3.1.1 Section 19(2) Section 19(2) of the Constitution asserts: “Every citizen has the right to free, fair and regular elections for any legislative body established in terms of the Constitution” (RSA, 1996). In this regard the emphasis is placed on the right of every citizen to a fair election. Law Insider defines fair elections to mean: “electoral processes that are conducted in conformity with established rules and regulations, managed by an impartial, non-partisan professional and competent Electoral Management Body (EMB); in an atmosphere characterised by respect for the Rule of Law; guaranteed rights of protection for citizens through the electoral law and constitution and reasonable opportunities for voters to transmit and receive voter information; defined by equitable access to financial and material resources for all political parties and independent candidates in accordance with the national laws; and where there is no violence, intimidation or discrimination based on race, gender, ethnicity, religious or other considerations” (Law Insider, N.d.). In terms of this definition, the delivery of a fair election is therefore considerably more than just the technical delivery of the election. It also envisages an environment in which ideas, policies and programmes are effectively communicated to the electorate, and that sufficient opportunities are created for them and parties to connect and communicate with each other. It also pre-supposes that sufficient finances and resources will be in place for parties to carry out their functions. And that the parties have an equitable access to such financial and material resources. It cannot be, therefore, that some parties, merely as a consequence of their incumbency or policies favoured by the business community and/or the wealthy, are advantaged. Such advantage can come in the form of using the parties’ incumbency to reach out and communicate with the electorate or relying on the favour of private funders. Thus, public funding: To level the playing field and to ensure that all participants in the election have a fair chance at putting their case forward. 3.1.2 Section 57(2)(c) Section 57(2)(c) of the Constitution says: “The rules and orders of the National Assembly must provide for … financial and administrative assistance to each party represented in the Assembly in proportion to its representation, to enable the party and its leader to perform their functions in the Assembly effectively” (RSA, 1996). In this regard, the emphasis is placed on the enabling of parties represented in Parliament to perform their functions. Parliament of South Africa’s Policy on Political Parties Allowances is meant to give effect to section 57(2) of the Constitution. The policy’s objective is to, amongst others, assist parties represented in Parliament to perform their parliamentary duties, and to enable the parties to establish and maintain infrastructure that enables them to serve the interests of their constituents, as well as to service them (Parliament, 2005). The allowances are meant to cover the parties’ expenditure in relation to their parliamentary functioning, and include: Party leader allowances Political party administration allowances, which are based on a determination of staff and other entitlements made by the Secretary to Parliament on an annual basis. Party constituency allowances, which are paid to the parties and not the individual members of Parliament. The Presiding Officers annually determine an amount per member. Parties receive a constituency allowance equal to the annually determined amount multiplied by the number of their representatives in Parliament. 3.1.3 Section 59(1)(a) Section 57(1)(a) of the Constitution states: “The National Assembly must facilitate public involvement in the legislative and other processes or the Assembly and its committees” (RSA, 1996). To this end, parliamentary and Provincial Legislature portfolios and select committees provide opportunities for public participation in debating the proposed policy or law (ETU, N.d.). Apart from political parties participating in the legislatures through their public representatives, they are principally civil society organisations that encapsulate the interests, views and ideas of a certain group (or groups) within society. They articulate and represent these groups by participating in democratic elections, but they also, as a civil society contestant, sometimes independently and sometimes in collaboration with other civil society organisations, present these interests to formal political representatives and institutions (Mexhuani & Rrahmani, 2017). This is necessary to ensure the timely exchange of information between the legislators, the government and the public about problems and their solutions. And for civil society to take part in the country’s public affairs, to contribute to the development of the government policy- and law-creating procedures and to exert influence on the decision-making that will affect them and broader society (Aitken, 2013:19). Given the constitutional weight afforded to public participation in the legislative and other processes of Parliament, it is fair to deduce that meaningful (as opposed to superficial) contributions are expected from the public (and civil society). The development of their contributions requires from them well-developed, consulted, and empirically researched proposals to present to the Legislatures (and might I add, Executive, who themselves follow similar consultative processes when developing policy and legislation). Well-researched legislation and policy requires accuracy (Aitken, 2013:5), certainty, predictability (Aitken, 2013:7) and detailed analysis as to the likely impact of the legislation/policy, and its ability to achieve the desired regulatory results (Aitken, 2013:6), which requires considerable participatory and transparent policy processes and (Aitken, 2013:7), might I add, research by well-qualified experts. Proper participatory processes comprise the holding of discussions, open dialogue participation, consultations, workshops and seminars, with input from government officials and agencies, parliamentarians, civil society, international advisers, independent experts, the private sector, academics and the public (Aitken, 2013:19). All of which require political parties to have adequate funding or networked collaboration, which collaborators, in turn, will require funding. 3.1.4 Section 236 Section 236 of the Constitution says: “To enhance multi-party democracy, national legislation must provide for the funding of political parties participating in national and provincial legislatures on an equitable and proportional basis” (RSA, 1996). The legislation envisaged by this section of the Constitution is the Political Party Funding Act, Act 6 of 2018, the details of which is deliberated on in paragraph 3.2 hereunder. 3.2 Political Party Funding Act, Act 6 of 2018 The Political Party Funding Act, Act 6 of 2018 (PPFA), was assented to by the President of the Republic of South Africa on 21 January 2021 (RSA, 2021). With its introduction, the political party funding environment was completely changed. It introduced a new era of transparency in terms of who is funding the political parties. It will also help guard against corruption and the misuse of state resources. All of which needs to be applauded in an open and free democratic society. What was not envisaged was the spectacular collapse of private funding to political parties. This has all but dried up to the extent, as has been discussed, that the official opposition has, for example, had to retrench a significant portion of its staff, and the ruling party has run up huge debts and is not able to regularly pay its staff; indeed, its operations have been hamstrung. The celebration with regard to the ushering in of transparency, now needs to be balanced against the danger to the country of a weakening democratic dispensation due to neutering of the parties’ ability to effectively carry out the work, due to a lack of financial and other resources. What does the Act say? For purposes of this review the focus is on the three areas in the Act that impact party funding, namely, the direct funding to parties and the imposition of prohibitions, the establishment of the Represented Political Party Fund, and the establishment of the Multi-Party Democracy Fund. 3.2.1 Direct funding of political parties 3.2.1.1 Prohibited donations Political parties may no longer receive donations from foreign sources, be they foreign governments and/or agencies, foreign persons or entities. There is one exception, namely that they may accept grants for the purposes of training and skills development, and/or policy development. But this is subject to an annual cap that an entity may contribute, which currently stands at R5 million (RSA, 2021). The parties may also not receive funding from any organ of state or state-owned enterprise, albeit that this was the case prior to the introduction of this legislation as well (RSA, 2021). They may also not receive any donations that they know, ought to have known, or suspect, originated from sources of crime (RSA, 2021). 3.2.1.2 Donations from juristic persons A political party must disclose any donation it receives from a natural or juristic person that exceeds the threshold. The current threshold is R100,000 received from any single entity within a financial year (RSA, 2021). Furthermore, no entity may donate more than R15 million to a political party within a financial year (RSA, 2021). 3.2.2 Represented Political Party Fund Section 2 of the PPFA provides for the establishment of a Represented Political Party Fund (RPPF). Its purpose is to promote multi-party democracy through the provision of public funding to those parties that are represented in Parliament (RSA, 2021). Money is appropriated annually by an Act of Parliament and is distributed to the parties by means of a prescribed formula that, in part, provides for a weighted equitable distribution to parties represented in the national parliament and provincial legislatures. The second part provides for a distribution to the parties represented in the National Assembly and provincial legislatures based on their proportional strength in terms of the numbers of members represented in both the National Assembly and provincial legislatures. Currently, one-third is distributed equitably to all parties that hold seats in the National Assembly or any provincial legislature; and two-thirds is distributed in proportion to seats held by a political party in the National Assembly or provincial legislatures (IEC, N.d.). Section 7 of the PPFA spells out what parties may and may not use the monies received form the RPPF for (RSA, 2021). They may use it for: Activities aimed at developing the political will of the people Shaping public opinion Political education Promoting the active participation of citizens in political life Influencing political trends Ensuring connectivity between the citizenry and organs of state Expenditure aimed at ensuring compliance with the PPFA They may not use it for: Remunerating any person that represents the party in any legislature or municipal council, or who receives remuneration for any appointment or service rendered to the state The financing of or contributing to anything that is in contravention of any code of ethics aimed at binding members of Parliament or members of a provincial legislature Establishing a business of any kind, or to acquire or maintain a financial interest therein, except where it is for the purposes of acquiring property to be used solely by the party and for party political purposes Defraying legal costs that relate to internal political party disputes 3.2.3 Multi-Party Democracy Fund Section 3 of the PPFA provides for the establishment of a Multi-Party Democracy Fund, the proceeds of which are to be distributed to represented political parties for purposes of promoting democracy (RSA, 2021). The fund may receive contributions in any amount from any private source within or outside of the country. It may, however, not receive any money from an organ of state, state-owned enterprise, foreign government or foreign government agency. In addition, interest earned by the fund and irregular donations made to political parties which are recovered, are also distributable to the represented parties (RSA, 2021). Donors making contributions to the Multi-Party Democracy Fund may request the regulator not to disclose their identity (RSA, 2021). The funds are allocated to the parties using the same formula as that of the RPPF. Similarly, the rules in terms of what the monies can and cannot be spent on are the same as those of the RPPF (RSA, 2021). 3.3 Appropriation Bill B7-2022 and Parliament’s Annual Performance Plan 2022–2025 The purpose of this section is to ascertain the degree of public funding given to the political parties in a financial year. It examines the Appropriation Bill B7-2022 and Parliament’s Annual Performance Plan 2022–2025, with specific reference to the amounts allocated to political parties. Direct public funding is channelled to parties through these two avenues only. 3.3.1 Appropriation Bill B7-2022 In the Appropriation Bill B7-2022 (RSA, 2022), there are two allocations that bear reference to the question posed in this study. Firstly, the Bill provides an allocation to Parliament, and secondly, it provides an allocation to the Independent Electoral Commission. It is these two institutions that transfer monies to the political parties. The following allocations were made in the Appropriation Bill: For the purposes of providing support services required by Parliament to fulfil its constitutional functions, and to assist the political parties represented in Parliament with facilities and administrative support, and to service their constituents, Parliament was allocated an amount of R2,212,234,000 (two billion two hundred and twelve million two hundred and thirty-four thousand rand). For purposes of providing institutional support and transfer funds to the Electoral Commission, the Represented Political Parties' Fund and the Border Management Authority, an amount of R2,762,584,000 (two billion seven hundred and sixty-two million five hundred and eighty-four thousand rand) was allocated. Of this, R342,077,000 (three hundred and forty-two million and seventy-seven thousand rand) was allocated to the Representative Political Parties’ Fund. 3.3.2 Parliament’s Annual Performance Plan 2022–2025 Programme 3 of Parliament’s Annual Performance Plan 2022/23 to 2024/25 provides for the transfer in the amount of R518,572,000 (five hundred and eighteen million five hundred and seventy-two thousand rand) during the 2022/23 financial year, the application of which has been spelt out in paragraph 3.1.2. of this review. The actual net amount transferred to parties in the 2022/23 financial year amounted to R511,869,648 (five hundred and eleven million eight hundred and sixty-nine thousand six hundred and forty eight rand) (Parliament, 2022). 3.4 Conclusion Direct public funding in South Africa is allocated to political parties via three avenues: the RPPF, Multi-Party Democracy Fund (of which there has been no distribution to date) and Parliament, the quantum of which is indicated in Table 3.1. below. The number of eligible and soon-to-be eligible voters – that is, citizens over the age of 15 – number around 43,587,000 according to Statista (2022a), whereas the number of registered voters number 26,046,612 (IEC, N.d.). This means than an amount of R19,59 per annum per citizen over 15, or R32,78 per annum per registered voter, is set aside from public funds to support political parties.   Table 3.1.: Transfer of public funds to political parties per citizen over 15 and registered voter *Note: These figures are in relation to the national sphere of government. See study limitation in Chapter 4. Chapter 4: Research design and methodology As already stated, the introduction of the new party-political funding regime seems to have negatively impacted the political parties’ ability to raise funding from private sources. This has made them far more dependent on state funding, which, according to reports, seems not to be adequate, in that parties are not being able to meet their financial obligations. Consequently, they are not empowered to carry out their democratic and constitutionally imposed responsibilities and obligations properly and effectively. The introduction of regulations with regard to the private funding of political parties may have improved transparency, but at the same time it may also very well prove to disable parties from carrying out their functions effectively. In order for parties to effectively represent the constituents in Parliament, they need to have the organisational infrastructure to regularly interact with the electorate, and the capacity to do research, policy development and the marketing of their policy positions. All of which requires money. This is deployed to, for example: Develop the political will of the people Bring the party's influence to bear on the shaping of public opinion Inspire and further political education Promote active participation by individual citizens in political life Exercise an influence on political trends Ensure continuous and vital links between the people and organs of state (IEC, N.d.) 4.1 Research objective The objective of this research is to examine the South African party-funding environment in comparison to a selected group of parties from the European Union. The purpose is to ascertain how the South African political party funding regime compares to these international jurisdictions. The purpose is to provide public policymakers with benchmark information to enable them to consider the appropriateness of the current funding regime and to motivate for adjustments thereto, should it be found that the current model is wanting. 4.2 Research question Primary research question What comprises South Africa’s party-political funding regime and how does it compare with the party-funding regimes of Germany, Sweden and the Netherlands? Secondary research question Compared with the public funding regimes of the other countries of this study, are the South African political parties sufficiently funded to effectively carry out their democratic and constitutional obligations? 4.3 Research design The research takes a pragmatic approach in which both qualitative and quantitative methods were deployed during the course of the research. Qualitative research – “that is, non-numerical examination and interpretation of observations” (Babbie & Mouton, 2017:646) – was, for example, deployed to discover and understand the elements and extent of state funding of the political parties in both the European dispensations chosen for the benchmarking, as well as that of South Africa. Quantitative research – that is, the numerical representation and manipulation (Babbie & Mouton, 2017:646) – was, for example, used to measure the financial variances between the different state funding models and to convert the various financial quanta to equivalent purchasing power parity (PPP) in order to equalise the purchasing power of different currencies, by eliminating the differences in price levels between the foreign countries and South Africa. It was also needed to determine the per capita cost of state funding in each of the jurisdictions. 4.4 Research subjects The research subjects were the political parties of the countries that formed part of this study. The objective was to obtain data as to all the funding streams for funding the activities of the parties, and the extent thereof. The countries were selected using matching selection – that is, by comparing the similarities between the subjects to be selected (Babbie & Mouton, 2017:213). In this study the similarities were the electoral system – proportional representation. Whilst it is also important to consider the bearing of the different socio-economic conditions between that of South Africa and the developed world, the overriding consideration was that the quality of democracy should not be undermined based purely on affordability, since such considerations could potentially undermine the democratic ethos in the country. Costs were, however, as mentioned, converted to equalise the buying power differences between the countries. 4.5 Measurement The study required three measurements. The first was to measure the extent of party funding in each of the jurisdictions. This was to ascertain all the types of funding and the financial extent of that funding in each of the jurisdictions. This called for qualitative data, given the descriptive nature of the data (OSU, N.d.). It was obtained directly from the political parties, foundations and electoral commissions interviewed. The second measurement was to determine what the differences were between the jurisdictions in terms of the various sources of funding. This too was qualitative in nature. The third measurement was to determine the comparative cost per citizen (15+) to fund the parties. This was quantitative in nature, since it required measurable numeric information (OSU, N.d.). There were two dimensions to this measurement: (i) the conversion of the quantum in each jurisdiction in terms of purchasing power parity (PPP) in order to ensure that an apples-for-apples comparison between the jurisdictions would be achieved, and (ii) to determine the per capita percentage differentiation between the various jurisdictions. This enabled an interpretation as to the adequacy of the South African funding regime compared with the practices in the benchmarked countries. 4.6 Data collection In-person expert interviews were undertaken in each of the benchmarking countries with the treasurers (or their delegated representatives) of a major political party in the particular country, and/or the electoral commission in the country. The purpose was to get a holistic understanding of the funding regimes in each country. It also served to identify all the elements of funding for parties in the particular country and the quantum thereof. To this end, both the qualitative and quantitative data were secured through open-ended questions, in order to allow for a holistic and comprehensive look at the issues being studied, since open-ended questions allowed for the respondents to provide all options and opinions related to the topic, thereby ensuring more diversity and elaboration than would be possible with a closed-question or forced-choice survey format (Allen, 2017). The questionnaire used in this regard is shown hereunder: 1) Questions to be posed to interviewees a) Are there restrictions of private donations to political parties, and if so: b) What are the laws governing those restrictions? 2) What do the restrictions entail? a) What are the various forms of public funding that parties are entitled to? b) Directly to the party c) Directly to elected representatives d) To the groups within Parliament e) Reimbursement for election expenses f) Any other 3) What is the monetary value of each of the aforementioned funding contributions? 4) How is the funding divided and distributed to the parties and/or elected representatives? 5) Are there any election campaign spending caps, and if so, what? 6) Are there any incentives in place to encourage individuals/corporates to make donations to political parties, such as, for example, tax incentives? 7) Is there any indirect funding in place, such as, for example, free media slots, and if so: a) What are the rules? b) What is the value? c) How is it divided and distributed to the parties? 8) Are there any public funds made available to institutions, foundations, etcetera, which stand independent from the political parties, but which are ideologically aligned with parties, such as the political foundations in Germany and other European countries who stimulate the public policy dialogue, democracy and human rights through the lens of the ideological orientation, and if so: a) What is the rationale behind those contributions? b) How does it work? c) From which government departments and/or institutions are the funds dispersed? d) How are the contributions divided/distributed to the various institutions, foundations, etcetera? e) What is the monetary value of the contributions from each department and/or institution? 9) In terms of private versus public funding of political parties, what is, in your estimation, the ratio between the two? Indicate by marking the correct statement: Note: Private finding includes membership fees and contributions by trade unions. (10) Are there any other factors that you believe should be taken into account? 4.7 Analysis Various multivariate tables were constructed, which comprised a number of independent variables (the different jurisdictions) and a range of dependent variables (the funding streams available in each jurisdiction) (Babbie & Mouton:435). This enabled the researcher to do a comparative analysis on the similarities and differences between the various systems. In some instances, the tables were simultaneously multiple in nature, since they, in addition to the qualitative data mentioned above, also provided for quantitative data – that is, the quantum of the various funding streams available in each jurisdiction. In the final instance, the researcher interpreted the table in terms of: the elements of state funding that are available in each of the benchmarking countries, including those elements that are not available in South Africa, together with an analysis of the amounts provided by the state to fund each of the elements the per capita cost of party funding by the state, based on PPP, for each of the countries whereafter: in that the researcher had been exposed to the implicit and explicit facts related to the various funding regimes (Babbie & Mouton, 2017:641), the researcher was able to make a determination through deduction reasoning as to the adequacy of the South African funding dispensation in comparison to the benchmarked countries the researcher developed recommendations for public policymakers to ponder. 4.8 Ethics Whereas the data, such as the types and quantum of state funding, are available in the public domain, formal ethics clearance was not required. However, since some financial information, especially that which relates to private funding or commercial activities, was confidential, the financial analysis was restricted to public funding only. 4.9 Limitation of the study This study has only examined the public funding of political parties at the national level. It has not ventured into public fund transfers to political parties at the provincial and/or municipal level of government. The assessment therefore relates to public funds transfers to the parties at the national and the national parliamentary levels only. That said, in the comparative analysis, all jurisdictions were treated in similar fashion, resulting in a like-for-like comparison. The author is therefore confident that the conclusions reached will be valid for the purposes of the study, that is, to draw conclusions as to how South Africa’s public funding of political parties compares with those of the other international jurisdictions against which it was assessed. Click here to continue

Updated results from the Inclusive Society’s 2022 GovDem survey Copyright © 2023 Inclusive Society Institute PO Box 12609 Mill Street Cape Town, 8010 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 its Board or Council members. A P R I L 2 0 2 3 Author: Daryl Swanepoel Content Chapter 1: Introduction, background on social cohesion and motivation for survey 1.1. What is social cohesion and why it matters 1.2. What are the elements of social cohesion? 1.3. What drives social cohesion? 1.4. Obstacles to social cohesion 1.5. Systems to achieve social cohesion 1.6. Conclusion and motivation for study Chapter 2: Survey methodology 2.1. Desktop review 2.2. Survey 2.3. Assessment tools 2.4. Limitations of the study Chapter 3: Findings 3.1. South Africans remain committed to ‘unity in diversity’ 3.2. South Africa has worrying trust issues 3.3. Emigration could reduce South Africa’s skilled workers by 9 percent 3.4. South Africans don’t sufficiently trust immigrants 3.5. South Africans deeply distrust their compatriots from other parties 3.6. Sense of community a solid foundation on which to build social cohesion Chapter 4: Further discussion, assessment, and conclusions References List of tables Table 3.1.: Reconciliation moving in the right or wrong direction indicated by race Table 3.2.: Level of everyday life integration indicated by race Table 3.3.: Trust differentiation between persons known and met for the 1st time Table 3.4.: Top five emigration destinations Table 3.5.: Trust in people from other parties – based on gender Table 3.6.: Comparative chart on giving patterns of the different race groups Table 4.1.: Assessment of conditions that promote social cohesion Table 4.2.: Evaluating social cohesion in terms of demographic integration, connectedness, and community List of figures Figure 1.1.: Social Cohesion Triangle Figure 3.1.: Percentage of South Africans who are doubtful one nation can emerge Figure 3.2: South Africans’ beliefs about race relations Figure 3.3.: Percentage wanting South Africa to unite Figure 3.4.: Percentage against association with other racial groups Figure 3.5.: Differentiation based on gender, education, or income considerations Figure 3.6.: Trust of neighbours based on race, age, education and income Figure 3.7.: Trusting those from other religions Figure 3.8.: Trust for black South Africans Figure 3.9.: Trust for white South Africans Figure 3.10.: Comparison with regard to in-group trust Figure 3.11.: Percentage of population considering emigration – by race Figure 3.12.: Top 5 reasons for emigrating Figure 3.13.: Percentage of population considering emigrating – by age Figure 3.14.: Percentage of South Africans not trusting African immigrants – based on gender Figure 3.15.: Percentage of South Africans not trusting African immigrants – based on party affiliation Figure 3.16.: Percentage of South Africans not trusting immigrants – based on provinces Figure 3.17.: Percentage of South Africans not trusting immigrants from outside of Africa – based on earnings Figure 3.18.: Percentage of South Africans not trusting non-African immigrants – based on party Figure 3.19.: Percentage of South Africans not trusting non-African immigrants – based on provinces Figure 3.20.: Percentage of people willing to trust compatriots from other parties – based on age Figure 3.21.: Percentage of people willing to trust compatriots from other parties – based on education Figure 3.22.: Percentage of people willing to trust compatriots from other parties – based on race Figure 3.23.: Percentage of people trusting supporters of the same party Figure 3.24.: Percentage of South Africans willing to trust those from other parties Figure 3.25.: Percentage of South Africans getting involved in the community – based on age Figure 3.26.: Percentage of South Africans getting involved in the community – based on education Figure 3.27.: Percentage of South Africans getting involved in the community – based on income Figure 3.28.: Percentage of South Africans getting involved in the community – based on race Figure 3.29.: Percentage of South Africans getting involved in the community – based on party support Chapter 1 Introduction, background on social cohesion and motivation for survey The struggle for economic, social, and political freedom has reached a defining moment in South Africa. Many who fought for and established a constitutional people’s democracy in 1994 are today, twenty-eight years after the end of apartheid, witnessing a nation that remains largely divided, with a contaminated moral environment. Racial, social and gender discrimination continue to fester and bedevil efforts towards creating ‘unity in diversity’ and a better life for all – the mantra of our current government. That is not to say there hasn’t been progress post 1994; there is plenty to be hopeful about. To date, approximately 2-3 million government-subsidised homes have been built (CAHF, 2021), 93% of the population has access to water supply services and 76% have access to basic sanitation (Bazaanah & Mothapo, 2023), the once racially segregated schooling system has been dismantled, to name a few. But from a broader perspective, overall welfare and progressive reform is lagging, with fragmenting social cohesion the consequence. This is of grave concern, as social cohesion is deemed to be a critical ingredient not only for people to co-exist harmoniously and for their personal social progress and well-being; it is also important for the economic growth and stability of a country. In the last ten years or so there has also been growing recognition globally and in South Africa that social cohesion in communities, and regions, can rebuild people’s trust in their political leaders. As it stands, South African communities are floundering and being driven apart under the pressure of continued inequality, corruption, and poor service delivery. There is still substantial social conflict, in terms of wealth, ethnicity, race, and gender. According to the World Bank, South Africa – the so-called rainbow nation – is still the most unequal country in the world (Warah, 2021). More than 50 percent (30 million people) of the population are living in poverty and 25 percent are experiencing food poverty (World Bank, 2020), whilst the richest 10% of the population gobble up more than 85% of the wealth (Al Jazeera, 2022). There is also the racial tension that continues to brew, as in the recent rioting and looting in KwaZulu-Natal between the Indian and black communities in Phoenix (Naidoo & Nkosi, 2021), and regular xenophobic incidents, such as the murder of more than 200 foreign truck drivers in recent years (Ryan, 2021). And there has been a significant rise in gender-based violence (Bosch, 2021). Over the years, many have attempted to measure the socio-economic conditions within the country, but deficient historical data sets that often excluded black South Africans who were severely impoverished and often unemployed, skewed results. More recent attempts, however admirable, evidence a dearth of measuring instruments, bringing all the elements together with specific intent to promote social cohesion, reconciliation, and nation-building. As discussed in the sections that follow, social cohesion depends on a holistic approach, dealing with all the above factors simultaneously. With this front of mind, the Inclusive Society Institute has committed to generate an extensive Social Cohesion Index or Radar, as a social cohesion progress tracker for policymakers. This annual GovDem report is a prelude to such an index. The struggle for economic, social and political freedom has reached a defining moment in South Africa. Many South Africans fought for and established a constitutional people’s democracy, but today, we live in a contaminated moral environment. Nevertheless, the struggle for socio-economic and political freedom pursued by the ANC is enshrined in the Constitution and should continue to drive transformation (Fubbs, 2020). 1.1. What is social cohesion and why it matters “At [the] heart [of social cohesion] is the notion that relationships among members and groups in society are sufficiently good and that all feel a sense of belonging, that they perceive the whole society as greater than the parts, and when differences develop, they can be dealt with peacefully” (Langer et al., 2017). In socially cohesive societies there is generally an “absence of latent social conflict”, for example conflict based on wealth, ethnicity, race, and gender; and “presence of strong social bonds”, for example civic society, responsive democracy, and impartial law enforcement (SFRI, N.d.). “Social cohesion involves building shared values and communities of interpretation, reducing disparities in wealth and income, and generally enabling people to have a sense that they are engaged in a common enterprise, facing shared challenges, and that they are members of the same community” (Maxwell in SFRI, N.d.). The OECD defines a cohesive society as one that works towards the well-being of all in society, “fights [all forms] of exclusion and marginalisation, creates a sense of belonging, promotes trust, and offers its people the opportunity of upward mobility” (SFRI, N.d.). Thus, social cohesion drives long-term prosperity and competitiveness because cohesive societies are politically stable and focus on economic growth. It allows everybody in society to share equitably in its prosperity (Bris, 2014). 1.2. What are the elements of social cohesion? There are a number of dimensions to social cohesion, namely inequality, trust, and identity. Inequality – that is the extent of perceived inequalities within and across groups, which can manifest itself in various forms, such as economic, social, political, or cultural disparities. Social cohesion is threatened when there are high levels of inequalities within a society, because it erodes the relationships within that society, which, in turn, may cause conflict. Trust in others – societal trust is the “glue” that holds societies together. When trust is missing between members of society, it weakens the ability of individuals and groups to cooperate peacefully and to collaborate in order to achieve inclusive economic growth. Mistrust towards state institutions may, for example, fuel violent protests, and similarly, mistrust between individuals and/or groups may cause aggressive behaviour towards each other. Identity – this relates to whether people have a stronger adherence to their national identity vis-à-vis their group or ethnic identity. This is particularly applicable in multi-ethnic communities, more so in countries with a colonial history, such as South Africa. (Langer et al., 2017). Figure 1.1.: Social Cohesion Triangle (Source: Langer et al., 2017) 1.3. What drives social cohesion? The main determinants that drive social cohesion in society are racial diversity, economic inequality, education, historical events, GDP, subjective well-being, and health. 1.3.1. Racial diversity Racial diversity offers a very strong group demarcation. Divisions across ethnic and racial lines is often considered as the main obstacle to social cohesion, as it offers a very strong group demarcation, even more so than gender and/or age. It has a tendency of categorising people into groups, to identify with one group and to draw comparisons across groups (Tänzler & Grimalda, 2018). 1.3.2. Economic inequality Economic inequality generally has the negative impact of income inequality and horizontal trust. This is due to lack of confidence that one will profit from societal progress. As a side note, given the South African environment, there is evidence that immigration has a negative effect on social cohesion in countries with high levels of economic inequality (Tänzler & Grimalda, 2018). 1.3.3. Education It has been found that there is a positive correlation between education and social cohesion. This is because mutual identity and societal cooperation is one of the principle purposes of public education (Tänzler & Grimalda, 2018). 1.3.4. Historical events In line with the idea that cultural values may be lasting, there is evidence that historical events have a long-term impact on social cohesion. Trust is, for example, still lower amongst ethnic groups in Africa which were most affected by slave trade and colonialism in the past (Tänzler & Grimalda, 2018). The lasting legacy of apartheid being particularly relevant to South Africa and this study. 1.3.5. GDP Social cohesion has both a direct positive effect on GDP, as well an indirect effect, through the facilitation of better institutions, systems, or the ability to express and live out one’s freedoms. One may consider huge economic costs of inter-racial conflict and war. Similarly, countries whose GDP was more strongly affected during economic crises, typically do not have cohesive societies (Tänzler & Grimalda, 2018). 1.3.6. Subjective well-being There exists a positive connection between well-being and overall social cohesion. Increased trust has, for example, the same impact on life satisfaction as a two-thirds increase in household income (Hellwell & Wang, 2011 in Tänzler & Grimalda, 2018). 1.3.7. Health To illustrate the correlation between social cohesion and health, data from 39 US states show that social cohesion fosters both mental and physical health. It has also been demonstrated that a disinvestment in social capital leads to the rise of mortality rates (Kawachi & Berkman, 2001 in Tänzler & Grimalda, 2018). 1.3.8. Religion On the one hand there is evidence that religious groups and institutions build social cohesion within communities by fostering integration and societal interaction. On the other hand, religious denominations often differ greatly in terms of doctrine, and come into conflict with those in the community beyond their own belief. Often, bonding efforts may have “the opposite effect by increasing group insularity and, in turn, social fragmentation” (Andrews, 2011). 1.3.9. Culture Here too there are two sides to the coin. On the one hand, “acceptance of diversity and the interaction between cultures foster harmonious relations between people [and] enrich their lives. It is not the denial, but rather, the recognition of differences that keeps a community together”. On the other hand, there needs to be mutual respect for the differences, because without such, “communities may turn in on themselves, ultimately leading to their disintegration, decline or disappearance” (Jensen, 2002). 1.4. Obstacles to social cohesion In a study of twenty disadvantaged neighbourhoods in London, the researchers found that, across all the areas studied, “lack of community” emerged as a strong theme. A number of key barriers to building communities emerged from the study. Young people. The participants expressed strong anxieties about young people in their communities, many of whom seemed attracted to gangsterism, disrespect for and destructive crevices between them and older persons. The behaviour was driven by young people that “had nothing to do”, that were bored, and who lacked self-respect, needed self-protection, and did not have sufficient community activities to participate in. The breakdown of the family unit was also problematic in that they wanted to feel connected, which need was not satisfied within the family, driving many to gangsterism and untoward behaviour. Lack of safety. Crime emerged as a strong barrier to the development of solid communities. This is because when crime is rampant in society, people are afraid to go out and interact with one another. High levels of transience. Participants identified the high level of community turnover as a barrier, in that people found it difficult to “get to know their neighbours”. In turn, this affects safety and security, as the ability and willingness to “look out for one another” is diminished. So too, as neighbourhoods became increasingly ethnically and culturally diverse, and in areas of high numbers of immigrants, sensitivity as to the safeguarding of their rights emerged. Racism. Tension between ‘cultures’ is a strong force to divide the community along ethnic lines, which often results in racist incidents and behaviour that contributes to ethnic segregation. Language. Being unable to communicate with one another was felt to be a significant barrier to achieving more cohesive communities, since it contributed to mutual suspicion, feelings of isolation, and lack of interaction between different groups. Lack of activities and information about activities. Activities and events are opportunities to get out of the house and interact with one’s local community. The lack of such activities weakens opportunities to build community spirit. Provision of accessible and affordable/free community spaces. Easily accessible and affordable, even free, community spaces are important for promoting community cohesion and inter-cultural communication. In providing these spaces it is important to ensure that they are not hogged by one ethnic or age group to the exclusion of others. Empowerment and community capacity. Community apathy and over-consultation, with no results, leads many to avoid community consultation or engagement. When people feel that they have no influence over the processes, they feel disempowered and then don’t get involved. Efforts therefore need to be made to build local capacity and devolve power to the community to make decisions about their neighbourhood. Similarly, volunteering is important for the development of communities, but a lack of encouragement, resources, and capacity weakens the ability of local organisations to participate in activities that promote community cohesion. (Bertotti, Adams-Eaton, Sheridan & Renton, 2016). 1.5. Systems to achieve social cohesion According to the Australian Human Rights Commission there are five elements for achieving social cohesion within a country. 1.5.1. Government needs to be ready A socially cohesive society is not achieved overnight. It takes time, and therefore requires from government a long-term commitment to build social cohesion and then to sustain its implementation. Key steps include: Establishing a measure or benchmark capable of measuring progress towards social cohesion on a regular basis. Placing social cohesion at the forefront of government priorities by using strategic planning to align the country’s policies and actions therewith. Assessing the country’s readiness and capacity to build social cohesion. Embedding social cohesion objectives in all policies and processes. (Australian Human Rights Commission, 2015). 1.5.2. Communities need to be regularly engaged in order to understand the issues Government needs to understand their communities and where there is potential for tensions to arise between different groups. They need to: Know their community in order to understand the characteristics of society and how it may change over time. Engage the community in order to identify the existing or potential areas that can strengthen and build social cohesion. Ensure that all voices are heard. Continually identify issues and tensions that could undermine social cohesion. (Australian Human Rights Commission, 2015). 1.5.3. Long-term partnerships need to be established Building social cohesion requires strong partnerships with business, community groups, the police, all spheres of government, and agencies, such as the Constitution’s Chapter 9 institutions. In doing this, government needs to: Identify and understand which partners, across the range of sectors, could help build social cohesion. Develop strategies to make contact and build and engage with the broadest possible range of social cohesion partners. Work collaboratively with partners to identify issues of concern that need to be responded to and demonstrate that they are willing to lead and take action. Ensure sustainable partnerships capable of existing for the long term by keeping in contact with the social cohesion partners and nurturing those relationships. (Australian Human Rights Commission, 2015). 1.5.4. Take place-based, targeted action Building social cohesion requires actions that meet the specific needs of the community. This means that: Communities need to be empowered and capacitated to meaningfully participate in both the planning and implementation activities. Government and their partners need to be prepared and ready to respond quickly to situations as they develop. They need to target programmes that meet specific needs. They need to engage and provide safe spaces for young people in order for them to feel connected to their community. They need to support bystanders to effectively respond to racism. Government needs to develop an effective media and communications strategy, with targeted messages to build social cohesion. (Australian Human Rights Commission, 2015). 1.5.5. Evaluate and share outcomes Government needs to continually evaluate their social cohesion efforts so as to ensure that resources are allocated efficiently and effectively, and that sufficient progress is being made in their social cohesion-building efforts. This requires them to: Work with the community to develop an evaluation framework to measure the effectiveness and efficiency of their actions. Collect appropriate data that will support the evaluation. Regularly review the outcomes achieved in order to draw conclusions as to whether, and how, social cohesion has been influenced through their efforts. Constantly share experiences so as to help others and to learn from the outcomes and processes deployed to achieve their results. (Australian Human Rights Commission, 2015). 1.6. Conclusion and motivation for study Measured against the backdrop of the aforementioned desktop review, it is manifestly clear that there is still a material social cohesion deficit in South Africa, and that the country’s reconciliation and nation-building aspirations remain unfulfilled. 1.6.1. In terms of definition of social cohesion In terms of the definition, there is still substantial social conflict, in terms of wealth, ethnicity, race, and gender. For example, in the recent rioting and looting in KwaZulu-Natal, racial tension between the Indian and black communities in Phoenix raised its ugly head (Naidoo & Nkosi, 2021). There are also regular xenophobic incidents, such as the murder of more than 200 foreign truck drivers in recent years (Ryan, 2021). And there has been a significant rise in gender-based violence (Bosch, 2021). 1.6.2. In terms of the elements of social cohesion With regard to the elements of social cohesion – inequality, trust, and identity: With a Gini coefficient of 63, according to the World Bank, South Africa is the most unequal country in the world (Warah, 2021). A 2019 South African Reserve Bank report suggests “South Africans have relatively low levels of trust in the state” (Moosa, N.d.). The dominance of a racial identity has prevented the forging of a truly common identity (Allie, 2021). 1.6.3. In terms of the determinants for social cohesion South African society is negatively driven by all the determinants required for social cohesion: Racial diversity: The racial segregation caused by apartheid is well-documented. Economic inequality: As previously mentioned, the World Bank has found South Africa to be the most unequal in terms of income inequality. Education: The school drop-out rate is between 37 and 42 percent (BusinessTech, 2020). Historical events: Once again, the history of apartheid and colonialism and its devastating impact on South African society, is well-documented. GDP: The South African economy has been stagnating for a prolonged period, and fails to deliver jobs (RSA, N.d.). Subjective well-being: There is a stark contrast in the subjective well-being of the minority communities, especially the white and Indian communities, versus the black majority. There are also deep intra-community well-being outcomes (Neff, 2005). Health: The disparity in health cover between the various race groups has already been alluded to. 1.6.4. In terms of the obstacles to social cohesion All the defined obstacles to social cohesion remain in present-day South Africa: Lack of community: A relatively recent study into community participation in Khayelitsha, found a lack of community participation due to impediments such as poverty amongst the community residents, and ineffective police response to crimes (Manaliyo, 2016). Young people: Youth unemployment currently stands at 61 percent (Trading Economics, N.d.). Lack of safety: Crime in South Africa remains at very high levels, with crime statistics showing that South Africa remains a “very violent country” (Gifford, 2021). High levels of transience: Informal settlements have increased from around 300 in 2002 to 3200 in 2020 (Mbanga, 2020) and there are around four million migrant workers in South Africa (Stats SA, 2021). Racism: For example, more than a quarter of a century into the new South Africa and the country has still not been able to shed race-based politics (Cilliers, 2021). Language barriers: Since the post-apartheid desegregation of schools, for example, language continues to create learning challenges in the classroom. Many scholars now struggle with language as a learning barrier in the classroom (Friedman, 2019). Lack of activities and information about activities: The South African president has himself lamented that poor communication between government and communities prevails. Using local government as an example, he said that the refraining complaint from citizens was their inability to make contact with their councillors (Ramaphosa, 2021). Under-utilisation of community space : Shackleton and Gwedla (2021), attached to the Department of Environmental Science at Rhodes University, in their analysis of public green spaces in South Africa, found marked inequalities in its distribution and quality between neighbourhoods designated for different race groups during the colonial and apartheid periods, and that it “continues to be reproduced by the post-colonial (and post-apartheid) state”. Empowerment and community capacity: One point to illustrate this is youth empowerment, which “has long been identified as a catalytic tool for tackling youth unemployment and other youth challenges”. But many factors hinder the expansion of such empowerment (DBSA, 2022). This is further illustrated in a master’s thesis by Phendu (2019), where he assessed the state of public participation in the Western Cape. He found, for example, that most ward committee members do not understand their roles and responsibilities. He proposed that the municipalities facilitated regular capacity building programmes with the view to increase ward committee awareness and understanding of municipal functions, systems, and procedures. 1.6.5. Motivation for undertaking the survey To this end, the Inclusive Society Institute has embarked on the project to develop the Social Cohesion Index or Radar for South Africa, as previously mentioned. The previous 2021 and this 2022 GovDem survey covered in this report is a precursor to that index/radar, which will be designed around three main themes: - Demographic integration Questions in the survey were designed to test the various demographic groups’ (race, religion, political party support, education, income, gender, and age) attitudes towards integration and trust in their fellow South Africans. For all the reasons highlighted in the desktop review above, and given the historical context of the demographic segregation actively pursued by apartheid, to build a cohesive nation, the Inclusive Society Institute is of the opinion that breaking down the ‘silo effect’ is important for social cohesion. - Level of connectedness to the country This part of the survey aimed at testing various demographic groups’ attitudes towards emigration. South Africa has a severe shortage of skills and expertise. The economy can simply not afford to lose such skills and expertise on a large scale. In order to understand what social cohesion determinants are at play within the South African environment, the Inclusive Society Institute would like to establish the level of such risk and the drivers behind it. - Sense of community This part of the survey aimed at testing various demographic groups’ attitudes towards socialising and working with their fellow citizens from within their communities and from across a range of demographic groups. The Inclusive Society Institute is of the view that a sense of community is important, not only to bring about reconciliation and to promote nation-building, but equally so for purposes of security, safety, and to counteract destructive damage to community assets during times of protest and unrest. 1.6.6. Parting shot It is hoped that this updated report will serve to further motivate public policymakers and civil society leaders to promote the building of social cohesion in South Africa to a greater extent, and that they move it up on their lists of priorities. This is equally important for purposes of promoting human fraternity, as it is for the sake of rejuvenating the country’s lagging economy. Chapter 2 Methodology The research was undertaken in three parts. The research takes a pragmatic view; a concurrent mixed methods research design is employed in this study. This is an approach that involves the use of quantitative and qualitative methods within a single phase of data collection and analysis. This allows both sets of results to be interpreted together to provide a richer and more comprehensive response to the research questions (Saunders, Lewis & Thornhill, 2016). Similarly, Creswell & Creswell (2018) argue that mixed methods research design yields additional insight beyond the information provided by either the quantitative or qualitative data alone. The mixed-method also counterbalances the weaknesses associated with quantitative and qualitative approaches when used separately (Creswell & Creswell, 2018; Johnson & Onwuegbuzie, 2004; Saunders et al., 2016) and leads to greater confidence in the findings. 2.1. Desktop review The first part involved a desktop review aimed at building an understanding of social cohesion: To develop a framework as to what it is, why it matters, and what the elements, determinants of obstacles are. Parallel to this, the author attempted to position the current-day South African social cohesion experience within this framework. 2.2. Survey The second part involved an extensive survey, the Inclusive Society Institute annual GovDem Poll, which is undertaken on behalf of the Institute by IPSOS. 2.2.1. Questionnaire The questionnaire for this study focused on the three elements of Demographic Integration, Level of Connectedness in the Country, and the Sense of Community. Questions on these three elements were developed by Ipsos and submitted to the Inclusive Society Institute for approval. 2.2.2. The Ipsos Khayabus The questionnaire was included in the Ipsos Khayabus questionnaire in 2022. The Khayabus is a syndicated study, undertaken twice a year by Ipsos to provide clients with the ability to pose questions to a large sample of South Africans, without carrying all the daunting fieldwork costs themselves. Whilst each participating client pays for the administering of their own questions and receives their own results and the results of the included demographic questions, results are not shared freely, and the findings are treated confidentially to the client and belong to the client. This process can be summarised graphically as follows: 2.2.3. Sampling Stratified random sampling is designed by the Marketing Science team at Ipsos – the sample is firstly stratified by province and then within province by various sizes and types of settlements. Sampling points are chosen at random, and six interviews are conducted in the vicinity of each sampling point, following the random selection rules as determined by the process of random sampling. On each plot/erf/farm, the household to be included is chosen by applying a prescribed random process and within the selected household the individual to be interviewed is also chosen by applying a random process. This process is well-documented and conforms to the ISO standards, which are followed at Ipsos and regularly audited. The stringent rules are designed to ensure that all interviewers follow the same process and that interviewers do not have any influence on the eventual choice of respondent. Marketing Science also produces the maps to enable interviewers to work in the chosen areas. The next graph is a summary of this process: 2.2.4. Interviewing All interviews for the Ipsos Khayabus are conducted by trained and experienced interviewers. Interviews are conducted face-to-face in the homes and home languages of respondents. As a result of COVID-19, interviewers have to adhere to certain procedures: This process ensures that results are representative of the views of adult South Africans and the results are projected to this universe/population. 2.3. Assessment tools To enable an assessment as to the state of social cohesion in South Africa, two tables were developed from the information gathered in the desktop review. The first table allows for a somewhat subjective but informed assessment as to the state of social cohesion in South Africa, as tested against the elements, determinants of, and obstacles to social cohesion within society. The second table draws from the empirical data gathered from a set of questions in the GovDem Poll survey that were designed to test respondent perceptions with regard to the extent of demographic integration (to what extent do South Africans socialise across racial lines), their level of connectedness (their commitment to South Africa as opposed to seeking a future outside of the country), and sense of community (an important element to ensure social stability and order). 2.4. Limitations of the study In terms of the elements and determinants of, and obstacles to, social cohesion, whilst in some respects credible secondary data, such as GDP and unemployment, are readily available and adequate for drawing conclusions, in other respects the data are not. Especially as it relates to the obstacles to social cohesion, empirical data collected via the survey would have been more conclusive than having to rely on a subjective conclusion to been drawn from a desktop study. To this end, however, questions were not included in the survey. This can be corrected in future surveys. Chapter 3 Findings 3.1. South Africans remain committed to ‘unity in diversity’ Almost 50 percent of the South African population harbour doubts about the feasibility of various groups within the country coming together to form a cohesive nation. However, they expressed a strong desire for a unified South Africa where everyone can join forces and coexist as equal fellow citizens. This was the first principal finding of the Inclusive Society Institute’s GovDem survey. 3.1.1. Doubt as to whether one nation can be formed from amongst the different groups 47,18 percent (previous poll: 47,96 percent) of adult South Africans either agreed or strongly agreed with the notion that it is not possible to form one nation out of all the different groups in the country. This finding held true across all race groups, with Indians now being slightly more inclined to believe it possible and coloureds being the most doubtful. 35,86 percent (previous poll: 54,55 percent) of Indians thought it is not possible to form one nation, as opposed to 42,55 percent (previous poll: 42,7 percent) of whites, who were the most positive in the last poll. 43,63 percent (previous poll: 47,45 percent) of blacks and 51,48 percent (previous poll: 55,77 percent) of coloureds also thought so. The change in Indian sentiment may be explained by a lapse in time since the July riots in KwaZulu-Natal in 2021 (during which period the first GovDem Poll was carried out), where the Indian community proved exceptionally vulnerable. On the opposite side of the divide, 20,11 percent (previous poll: 31,44 percent) of adult South Africans disagreed with the notion that it is impossible to form one nation out of the different groups in the country. Stated otherwise: these respondents, therefore, believed that it is possible to form one nation in South Africa. 17,13 percent (previous poll: 15,36 percent) of the surveyed South Africans did not express an opinion either way. Overall, therefore, there is a marginally more positive sentiment than reflected in the previous poll. Figure 3.1.: Percentage of South Africans who are doubtful one nation can emerge Based on the level of South Africans' education, there was little differentiation to be made. 46,64 percent (previous poll: 40,45 percent) of those South Africans with higher education are of the opinion that it is impossible to form one nation, whilst this hovered at around 50 percent for less educated South Africans – no schooling: 45,45 percent (previous poll: 49,85 percent), some high schooling: 49,62 percent (previous poll: 50,95 percent), and those with Matric: 46,21 percent (previous poll: 51,09 percent). Similarly, there was little differentiation between gender and age groups. However, this does not mean that various race groups were not willing or did not want to come together within a diverse but unified country. Indeed, a minority of South Africans were of the view that race relations in the country were getting worse. Only 28,07 percent (previous poll: 29,63 percent) of South Africans were of the view that the relationships between the different races in the country were getting worse. 71,93 percent (previous poll: 70,37 percent) of South Africans were of the view that the relationships either remained the same (48,87 percent – previously 47,64 percent) or were improving (23,06 percent – previously 22,37 percent). In this regard, 72,64 percent (previous poll: 73,55 percent) of whites believed that the relationships either remained the same (46,73 percent – previously 47,04 percent) or were improving (25,91 percent – previously 26,51 percent). 71,46 percent (previous poll: 70,57 percent) of black South Africans believed that the relationships either remained the same (49 percent – previously 47,76 percent) or were improving (22,46 percent – previously 22,81 percent). And amongst Indians, it was 77,11 percent (previous poll: 67,66 percent) of the view that relationships were either remaining the same (50,54 percent – previously 50,77 percent) or improving (26,57 percent – previously 16,89 percent). 73,77 percent (previous poll: 66,11 percent) of coloured South Africans said that relationships either remained the same (49,51 percent – previously 46,38 percent) or were improving (24,26 percent – previously 19,73 percent). Here too, it appears that the previous poll’s more negative Indian community sentiment has recovered to be more or less in line with the other communities. Figure 3.2.: South Africans’ beliefs about race relations Therefore, the survey seems to suggest that whilst across all races two-thirds or more of South Africans did not suggest a regression in race relations, they were also not convinced that race relations were improving. 3.1.2. But most agree South Africa must unite Most were of the opinion that it was important for all South Africans to unite. 65,76 percent (previous poll: 70,53 percent) of South Africans either agreed or strongly agreed with this notion, whilst only 12,69 percent (previous poll: 13,15 percent) of South Africans either disagreed or strongly disagreed. 4,94 percent (previous poll: 2,75 percent) did not know how they felt. In this regard it was the Indian (75,74 percent – previous poll: 80,75 percent) and coloured (74,80 percent – previous poll: 80,76 percent) South Africans that, in terms of agreeing or strongly agreeing, registered the highest need therefore, followed by whites at 69,76 percent (previous poll: 75,65 percent) and trailed by blacks at 63,91 percent (previous poll: 68,24 percent). Figure 3.3.: Percentage wanting South Africa to unite 3.1.3. More agree than disagree that reconciliation is moving in the right direction Whilst the majority of South Africans do not yet believe that reconciliation is moving in the right direction, it is encouraging that those that do agree do outnumber those that don’t by a significant margin. 43,47 percent (previous poll: 44,97 percent) of South Africans agree or strongly agree that it is moving in the right direction, as opposed to 22,57 percent (previous poll: 27,54 percent) that disagree or strongly disagree. 24,31 percent (previous poll: 21,27 percent) neither agreed nor disagreed, and 9,65 percent (previous poll: 6,22 percent) did not know how they felt about it. In terms of racial breakdown of the responses, 43,35 percent (previous poll: 43,39 percent) of whites felt positive about the direction, 43,31 percent (previous poll: 46,06 percent) of blacks felt positive, and 46,41 percent (previous poll: 40,51 percent) of coloureds felt that reconciliation was moving in the right direction. At 38,37 percent (previous poll: 35,62 percent), Indian South Africans trailed somewhat in this regard. Apropos reconciliation moving in the wrong direction, at 18,54 percent (previous poll: 27,48 percent) and 22,94 percent (previous poll: 26,92 percent) for white and black South Africans, respectively, there was not much between them. Indian and coloured South Africans, who in the previous poll were slightly more negative, were now more or less in line with their white and black compatriots. They registered 22,53 percent (previous poll: 33,05 percent) and 23,63 percent (previous poll: 31,00 percent), respectively. Table 3.1.: Reconciliation moving in the right or wrong direction indicated by race 3.1.4. High level of racial integration in everyday life The survey suggests that there is a relatively high level of integration between the various race groups in the country when it comes to everyday life activities. Moreover, the integration appears not to be forced integration but rather of a voluntary nature, as can be deduced from the table below, where there was a high level of enjoyment flowing from such integration and friendships being formed. Table 3.2.: Level of everyday life integration indicated by race The table shows that across the various activities, the majority of the population is starting to integrate as it relates to everyday life activities. Even more encouraging is the trend that largely replicates itself across all racial groups. It tells us that the majority of South Africans have commenced the journey towards reconciliation, nation-building and social cohesion, even though there is still a long way to go. 3.1.5. But, whilst on the decline, racial bias is still alive and kicking Nearly a third (33,12 percent – previous poll: 33,44 percent) of all South Africans still do not like associating themselves with people from other population groups. This would suggest that the country still has some way to go before it can consider itself to be fully reconciled. It is a high percentage that cannot be left unchecked, lest it festers to the detriment of the vast majority that the survey statistics suggest are committed to building a united, non-racial South Africa. 30, 99 percent (previous poll: 28,3 percent) of whites indicated that they do not like associating with people from other population groups. Similarly, 33,44 percent (previous poll: 33,88 percent) of blacks, 24,01 percent (previous poll: 41,73 percent) of Indians and 35,22 percent (previous poll: 33,05 percent) of coloureds indicated that they do not like to associate with people from other population groups. The softening of attitudes amongst the Indian community is probably the result of a recovery of relationships in KwaZulu-Natal in the wake of the July 2021 riots in the province. Figure 3.4.: Percentage against association with other racial groups 3.1.6. Conclusion South Africa still has a long way to go on its journey towards full reconciliation. The result from this survey, in line with the previous survey, shows, however, that much progress has been made, with more in the country committed to uniting the country, as opposed to dividing it. There has, however, been a slight hardening of attitudes amongst people from different population groups since the last survey. Most striking is the disconnect between the general negative political racial narrative which drives division, and the realities of everyday South Africans going about their daily business. Whilst many in the political establishment seem to be fuelling division to some effect, citizens, in turn, are finding each other at the human level. Politicians would be well advised to focus equal energy on a narrative that aims to build the nation. What still appears unresolved is a national understanding as to the concept of Unity in Diversity and how it relates to the nation we wish to build. Can one nation with undefined racial identity be formed out of the different population groups, or will it be a nation of cultural cooperation? This question is central to understanding the dichotomy of the survey results, which point to both doubt that one nation can be formed out of different groups and the overwhelming desire to unite the nation. This is a concept worthy of finding national consensus in order to develop a unified path for all in the country. 3.2. South Africa has worrying trust issues The trust needed to underpin social cohesion in South Africa is largely absent. Among South Africans, there is a notable lack of trust in their fellow citizens that spans various dimensions such as race, gender, age, education, and income. The only exception seems to be the family unit, which appears to maintain a high sense of trust. This was found in an extensive poll commissioned by the Inclusive Society Institute late last year. 3.2.1. High trust in family It is safe to say that South Africans trust their families. 86,18 percent of South Africans (slightly down from 87,42 percent last year) trust other members of their family. This holds true across all racial groups, with more than 85 percent of respondents of all racial groups indicating that they completely trust or somewhat trust members of their family. There is little differentiation to be made between the various race groups: 87,78 percent (previous poll: 85,47 percent) of coloured respondents, 86,52 percent (previous poll: 90,68 percent) of white respondents, 85,64 percent (previous poll: 88,19 percent of Indian respondents and 85,98 percent (previous poll: 87,21 percent) of black respondents indicated that they either completely of some what trusted their family members. There was little differentiation based on gender, education or income considerations. 85,68 percent (previous poll: 87,82 percent) of men completely or somewhat trust their family members, whereas 86,64 percent (previous poll: 87,04 percent) of women do. 87,22 percent (previous poll: 83,14 percent) of those with no schooling, 86,04 percent (previous poll: 83,97 percent); 85,28 percent (previous poll: 89.93 percent) of those with matric and 88,76 percent (previous poll: 85,55 percent) completely trusted or somewhat trusted their family. Those respondents with no income were slightly less trusting of their family than those with income. 74,89 percent (previous poll: 82,54 percent) of those respondents with no income indicated that they completely or somewhat trusted their family members, 86,64 percent (previous poll: 86,89 percent) of respondents in the lowest income band indicated that they completely trusted or somewhat trusted their family, for the mid-income group it was 88,66 percent (previous poll: 87,75 percent), and for the highest income group 88,53 percent (previous poll: 86,73 percent). Figure 3.5.: Differentiation based on gender, education, or income considerations 3.2.2. Reasonable trust in neighbours From the results of the survey, it is apparent that people have a reasonable level of trust in people within their own neighbourhoods. Overall 65,89 percent (previous poll: 62,27 percent) of respondents indicated that they either completely or somewhat trusted their neighbours. However, there were sharp differences amongst the various demographic groups. Racial demographics Whites have a higher level of trust in their neighbours as measured against their black, Indian and coloured compatriots. In this regard 83,96 percent (previous poll: 72,95 percent) of white respondents indicated that they completely trusted or somewhat trusted their neighbours. This against 65,39 percent (previous poll: 60,6 percent) of black respondents, 63,31 percent (previous poll: 77,54 percent) of Indians and 71,06 percent (previous poll: 60,1 percent) of coloureds indicated such. Age demographics The older people get, the more they trust their neighbours. Whereas 61,79 percent (previous poll: 58,33 percent) of those respondents in the age group 18 - 24 indicated that they completely or somewhat trusted the people in their neighbourhoods, this rose sharply to 70,05 percent (previous poll: 67,74 percent) for those respondents in over fifty years of age. For the respondents within the age groups 25 - 34 and 35 - 49, the percentages came in at 62,95 percent and 66,01 percent (previous poll: 59,84 percent and 63,44 percent) respectively. Education demographics In general, there is little difference in the level of trust of neighbours whether the respondents are educated or not. For those respondents with no schooling 73,19 percent (previous poll: 64,63 percent) indicated that they either completely or somewhat trusted their neighbours. Whilst for those with some high schooling it came down quite sharply to 63,56 percent (previous poll: 56,75 percent), it again rose to 65,10 percent (previous poll: 63,6 percent) amongst those respondents with matric and 66,74 percent (previous poll: 63,56 percent) amongst those respondents with a higher education. Income demographics 68,57 percent (previous poll: 59,5 percent) of lower income earners trust their neighbours somewhat or completely. For those in the middle-income and higher income groupings, it was 67,73 (previous poll: 61,48 percent) and 69,48 percent (previous poll: 65,58 percent) respectively. The outliers were those in the low-income group where only 51,25 percent (previous poll: 55,17 percent) of respondents indicated that they either completely or somewhat trusted their neighbours. Figure 3.6.: Trust of neighbours based on race, age, education, and income 3.2.3. Trust improves as people get to know each other From the results of the survey indicated in the table below, it is apparent that South Africans do not trust people at first sight. It is only after relationships are built, and people have gotten to know one another, that trust develops. There is little differentiation to be made amongst the gender and education demographic groups, but there is quite a stark difference based on race and income. Younger people also take somewhat longer to trust their fellow compatriots than do older people. Table 3.3.: Trust differentiation between persons known and met for the 1st time 3.2.4. Distrust high amongst religious groups Less than half of the respondents continued to indicate that they completely or somewhat trusted people from religious groups other than their own. Overall, only 46,65 percent (previous poll: 47,1 percent) indicated that they did – 46,63 percent of males (previous poll: 48,68 percent) and 46,66 percent of female (previous poll: 45,70%). Figure 3.7.: Trusting those from other religions 3.2.5. Distrust between races still worryingly high Just over 50 percent of those respondents from the minority communities indicated that they completely or somewhat trusted people from the black community. For those from the white and coloured communities trust in their black compatriots was 54,53 percent (previous poll: 50,69%) and 53,03 (previous poll: 51,21% ) respectively. The distrust was alarmingly higher amongst the Indian respondents, where only 23,83 percent (previous poll: 43,92 percent) indicated that they completely or somewhat trusted black South Africans. It should be noted that the tensions between the Indian and black communities in Kwazulu-Natal could still be lingering post the looting and rioting in 2021. This stark differences may require some deeper investigation. More alarmingly was the high level of distrust that the black respondents have for their compatriots from the minority communities. In this instance, only 39,74 percent (previous poll: 41,07 percent) of the black respondents completely or somewhat trusted their white compatriots, which deepened to only 38,37 percent (previous poll: 38,93 percent) completely or somewhat trusting their coloured compatriots, and a mere 35,51 percent (previous poll: 34,84 percent) their fellow Indian South Africans. Complete or somewhat trust for black South Africans from: Figure 3.8.: Trust for black South Africans Complete or somewhat trust for white South Africans from: Figure 3.9.: Trust for white South Africans It is worth noting that the trust-deficit between the minority communities are also not at an optimal level. Similarly, it is worth mentioning that the in-group level of trust is not at optimum levels either. For example, black respondents, when asked to what extent they trust their fellow black South Africans, only 55,50 percent (previous poll: 54,46 percent) indicated that they completely or somewhat trusted their fellow black compatriots. Indian and coloured respondents were somewhat more trusting of people from their group. In this regard 55,07 percent (previous poll: 59,97 percent) of the Indian respondents indicated that they completely or somewhat trusted their fellow Indian compatriots, whilst this grew to 64,46 percent (previous poll: 62,97 percent) within the coloured group. The biggest change since the previous poll was registered within the white community, since only 57,92 percent (previous poll: 74,51 percent) of white respondents indicated that they completely or somewhat trusted their fellow white South Africans. Click here to continue

Copyright © 2023 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: Percept Actuaries and Consultants Editor: Daryl Swanepoel MARCH 2023 This research has been enabled through the generous support of the Embassy of Denmark in Pretoria, South Africa Content Executive summary Introduction Focusing on families and the caregiving role Gender-equity policy context Global gender-equality policies South African gender-equality policy South African families Family composition The role of labour migration in family composition Culture, tradition and changes in marriage trends and women-headed households Social grants as a major source of household income Women as caregivers and care receivers Unpaid care work and its relationship to gainful employment The type of paid work performed by women The mental, physical, and emotional toll of unpaid care work amid paid work Men as caregivers and care receivers Men’s employment in the care sector Loss of ‘breadwinner’ status Male-headed households, social grants and extended family forms Perceptions of gender and gender-based violence The road to a more gender-equal South Africa List of Tables Table 1: Household types with children List of Figures Figure 1: Framing care and caring Figure 2: Structure of report Figure 3: World Economic Forum gender gap indicators Figure 4: Number of civil marriages by year 2011-2020 Figure 5: Household head by household size Figure 6: Women’s employment in post-apartheid South Africa (total and as a share of total) Figure 7: Employment absorption by gender Figure 8: Labour force participation rate by sex and presence of children 2022 Figure 9: Employment absorption by gender and education status Figure 10: Unemployment rate by gender and education status Figure 11: Gender representations by industry Figure 12: Female domestic workers in South Africa Figure 13: Infographic of the ‘glass elevator’ in men’s occupation of female caring jobs Figure 14: Unemployment rate by sex Figure 15: SASOF 2021 survey participants’ perceptions of fatherhood and employment Figure 16: Household heads by income proxy Figure 17: Attrition of rape cases in South Africa Figure 18: Recommendations arising from this research report List of Boxes Box 1: Sustainable Development Goal 5: Goals Definition of Terms Family Following Hall and Richter[6] we argue that “families are not just about biological relationships, and parenting is not simply about reproduction: the family serves a social function as ‘one of the great, enduring institutions of organised human life’”. Hence we refer to families as a network of kin relationships that might reside within a single or multiple households. A family might be tied together through blood, marriage or co-residence, and the organisation of families and households might change according to social, economic and political factors. Gender Gender is the socially determined rather than biologically determined notion of ‘femininity’ (what it means to be a woman) and ‘masculinity’ (what it means to be a man). Gender is an identity that is leant through socialisation and changes across time and place and in different cultures. Although it is a social construct, it has real-life consequences as it is lived as real. Gender is relational, and in a patriarchal society this relationship is unequal. Gender is based on a complementary and hierarchical relationship of patriarchal domination and subordination; thus it delineates power and influence. “In personal or individual terms, gender refers to the specific roles, personality traits, attitudes, behaviours and dress that individuals use to express their personal gender identity, and this is influenced both by social ideas of gender, and personal feelings about oneself and how one wants to be and be seen in the world. For this reason, even though society tells us that there are only two genders, there are in fact many different ways to express one’s gender that fall between or outside of man/boy and woman/girl”.[7] Cisgender This term refers to people whose gender expressions and gender identities fits the sex they were assigned at birth. Transgender “This term can refer to trans men and trans women specifically. It can also be an umbrella term for all people whose gender identity or gender expression differs from the social expectations for the sex they were born with”.[8] Non-binary People whose gender identity is neither male nor female and do not confirm to the ascribed gender binary. Also known as gender queer folks who use they/them as pronouns. Executive Summary South Africa is the most unequal country on Earth.[1] Its inequality is profoundly gendered. Women represent slightly more than half (51%) of the South African population,[2] and more than 40% of the country’s homes are headed by women.[3] Still, their share in household income and expenditure is significantly lower than that of men. Although women’s participation in labour has expanded since 1994, they continue to fair poorer than men in employment, earnings, and job security. In 2022, women were 18% less likely to participate in the labour market, and 9% more likely to be unemployed (see Figure 7). This is exacerbated by the concentration of women in informal, precarious labour, that presents limited opportunity for social and economic mobility. Women represent most of the workforce in only two industries: private households and community and social services (see Figure 11). The undervaluing of care work – often understood as ‘women’s work’ – pervades both private domestic spaces and the public care economy. South African women spend eight times the amount of time on unpaid domestic and care work than men.[4] Because of women’s disproportionate caregiving role in families, and their impact in safeguarding household wellbeing, women’s poorer labour market outcomes have extraordinary ripple effects. Affecting the nation, the future chances of children, and intergenerational cycles of poverty. Underlying gender inequality are complex dynamics around family formation, childcare and financial responsibility, as well as questions surrounding women’s wider participation in education and labour markets. This transdisciplinary report explores the roots and effects of South Africa’s gender inequality, with a particular focus on care and families. The report discusses changes in South African household structure over time, including declining marriage rates, and rising numbers of women-headed households. These changes have increased the number of impoverished homes in South Africa and forced women to juggle their unpaid care work with paid work to make ends meet – reducing their ability to give freely and fully to both. The role of caregiving and care receiving for men and women is different, yet it is precisely that difference, which indicates gendered inequalities in paid care work and the undervaluing and lack of recognition of unpaid care work. For example, as industries which traditionally employ men have downsized resulting in greater rates of male unemployment and a narrowing gender gap in unemployment, there has been an increase of jobs in feminised care roles. Where men take up these new work opportunities, they experience a ‘glass escalator’ in their advancement to senior and more managerial roles. Thus, unequal outcomes result from men and women’s participation in care work, with patriarchy, the underlying system that privileges men, remaining in place. During the HIV/Aids epidemic and Covid-19 pandemic, men’s relationship to caregiving and care receiving changed. This suggests that gender arrangements during times of crisis might encourage more fluid, flexible gendered care regimes. The recommendations stemming from this report (see Figure 15) are neither new nor novel, but they accurately display where South Africa sits in its trajectory toward a gender-equal society. The foundational recommendations relate to the value and visibility of care work specifically and the care economy more generally It also suggests increased accountability for South Africa’s poor policing of gender-based violence, and an introduction of a rebate or financial incentive for businesses and industries that employ more women, while providing appropriate childcare and parental leave policies. Despite the well-researched and thought-through National Strategic Plan on Gender-Based Violence & Femicide: 2020-2030,[5] much more needs to be done. This report recognises the structural inequities, discrimination, and targeted violence borne by trans, non-binary and gender non-conforming South Africans, but limitations of scope and data have meant that this report focuses largely on the experiences of cisgender women and men. Introduction Prior reports published by the Inclusive Society Institute (ISI) have revealed the profoundly gendered nature of South Africa’s inequality. To further explore this, we have drawn on a framework of care used to discuss ‘The State of South African Fathers’,[9] ‘Children, Families and the State’,[10] and gendered perspectives of ‘Care in Context’.[11] In this way we situate our discussion of gender inequality in relation to families. We link the unpaid care work that ensures the wellbeing of families, to continuing forms of gender discrimination inside and outside the home, with the undervaluing of both care and those most closely associated with it. In this report, we use Tronto’s “interconnected caring phases” to discuss different aspects of the work involved in caring processes (Figure 1).[12] While seemingly interchangeable, the terms and definitions described help to separate out the different phases and forms of caring and we use this language throughout for clarity. Figure 1: Framing care and caring[13] The gendered nature of care and caring work makes women disproportionately responsible for care, an association that diminishes their social power given the undervaluing of care work generally. For example, by June 2020, two months into the Covid-19 lockdown, women were more than twice as likely as men to be taking care of children, preventing them from going to, or looking for, work.[14] Gendered and unequal patterns of giving, receiving, and seeking household care are significant features of South Africa’s inequality, both reflecting and reproducing larger structural inequities. Understanding care as a lever that drives and entrenches gender inequality helps illuminate women, girls, and other marginalised identities’ systematic disadvantage, from a transdisciplinary perspective. Focusing on families and the caregiving role One of the core intuitions of feminist theory has been to argue that what happens in the private sphere of the home has public and political implications, and vice versa. In this report, which aims to unpack the gender dimensions of inequality in South Africa, we have chosen to focus specifically on the roles that women and men play in families – whether their own or others. Because families remain the primary providers of care in society, caring patterns within the home have profound effects on the education, health, and economic participation of their members. In other words, structural gender inequality lands heavily on families, and can also be reproduced there. At the same time, more just, equitable caring relations are central to redressing inequality and furthering human flourishing. Care is central to maintaining, repairing, and ensuring the wellbeing of all who live in our country. Care is also central to social and economic development and yet the cost of caregiving is largely invisible to policymakers and planners, and unaccounted for in measures of GDP.[15] Because women are more likely to invest higher shares of their income in the wellbeing of their families, and because of their caregiving roles, investing in women’s empowerment and increasing their labour force participation is also an investment in the next generation and in today’s economy. It is for this reason that care ethics is increasingly being used to speak about and action our moral and political obligation to reduce gender inequality in our homes, communities and socio-political contexts. “Care is a way of framing political issues that makes their impact and concern with human lives direct and immediate. Within the care framework political issues can make sense and connect to each other. Under these conditions political involvement increases dramatically”. Tronto (1993: 177) By placing care within the family at the centre of experiences of gender injustice and inequality, we also shine a light on intimate, interpersonal relations. While South African households are by no means homogenous, in many we find men and women along with children and older people. High levels of violence, crime and victimisation within families require further examination of where the care and caregiving systems in families have become dysfunctional. Caring processes also show up the uneven way financial and decision-making powers are spread across families and between men and women. Power at the level of the family influences: Who or what is cared about, and how caring needs are met Where the resources for care are procured and how they are shared What support for care exists and who is responsible for care This report begins with the foundational policy context. It is meant to provide orientation to where gender inequality sits within the policy environment but we focus much more on the lived experience and reality of gender inequality in this report (rather than stated policy intentions). We then describe how South African families are composed, and how historical and current changes in the political environment have changed family power dynamics. Next, we explore care and caring in South Africa, followed by two sections that focus on women’s and men’s caregiving roles and responsibilities in their families, respectively. The following section pulls together how this nexus of gender and family contribute to South Africa’s high gender-based violence and violence against women and children (VAWC), proposing that care, or the lack thereof, has a material influence on gender-based violence and experiences of masculinity and femininity. We conclude with a section that focuses on pragmatic and achievable recommendations for South Africa as it tries to shift itself to a more gender equal world. Figure 2 shows the structure of this report. Figure 2: Structure of report Gender-equity policy context Given the global impetus to improve gender equity, there are hundreds, if not thousands, of gender-related policies in place from a global, country, funder and local perspective. This section provides a brief overview of the material - global and South Africanspecific policy environment - which we use to guide our analysis of how South Africa is performing against its own, and the global, gender-equity targets. Global gender-equality policies The 1948 Universal Declaration of Human Rights (UDHR) stipulates that there can be no discrimination on the basis of gender, including that there should be equality in how men and women are paid for the same job.[16] Although a milestone for the human race, in 1948 there were still many countries (across the high- and low-income spectrum) which did not afford women the right to vote - a most basic of human rights. South Africa was one of the last to introduce full voting rights for all women, which only happened at the dawn of its democracy in 1994. In 2000, the Millennium Development Goals (MDGs) were introduced, which provided eight goals for which the 189 United Nations (UN) member states would work towards achieving by 2015.[17] Goal 3 was to ‘empower women and promote gender equality’. At the end of the MDG period, research found that many low-income countries (LICs) and middle-income countries (MICs) had achieved the goals focused on improving access to education for girls.[18] Women’s participation in the labour force (excluding the agricultural economy) also showed growth from 35% in 1990 to 41% in 2015. Furthermore, the proportion of women who were working in vulnerable employment decreased by 13% between 1990 and 2015. Politically, women also saw progress in their representation in parliament/government- but despite a doubling, women still only made up one in five members of government.[19] Despite this progress, there was still more to be done and the Sustainable Development Goals (SDGs) replaced the MDGs from 2016.[20] The SDGs timeframe for achievement was 2016-2030, and there are 17 goals - more than double those in the MDGs. Goal 5 is the achievement of gender equality and the empowerment of all girls and women. There are nine goals under Goal 5, shown in Box 1. We have emboldened the goals to which this report speaks directly. Box 1: SDG 5: Goals 5.1 End all forms of discrimination against all women and girls everywhere 5.2 Eliminate all forms of violence against all women and girls in the public and private spheres, including trafficking and sexual and other types of exploitation 5.3 Eliminate all harmful practices, such as child, early and forced marriage and female genital mutilation 5.4 Recognize and value unpaid care and domestic work through the provision of public services, infrastructure and social protection policies and the promotion of shared responsibility within the household and the family as nationally appropriate 5.5 Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision-making in political, economic, and public life 5.6 Ensure universal access to sexual and reproductive health and reproductive rights as agreed in accordance with the Programme of Action of the International Conference on Population and Development and the Beijing Platform for Action and the outcome documents of their review conferences 5.7 Undertake reforms to give women equal rights to economic resources, as well as access to ownership and control over land and other forms of property , financial services, inheritance and natural resources, in accordance with national laws 5.8 Enhance the use of enabling technology, in particular information and communications technology, to promote the empowerment of women 5.9 Adopt and strengthen sound policies and enforceable legislation for the promotion of gender equality and the empowerment of all women and girls at all levels Lastly, since 2006, the World Economic Forum (WEF) put indicators in place to measure progress towards closing the gender gap (Figure 3).[21] This index tracks global progress towards gender equity and is the longest- standing of its kind. The indicators are tracked annually, and the latest report (July 2022) states that at the current pace of change, it will take another 132 years to reach gender parity.[22] The top 10 countries with the best performance feature two sub-Saharan African countries – Rwanda, an LIC at sixth place, and Namibia, an upper middle-income country (UMIC), in eighth place. This provides evidence that a country’s economic status should not be an inhibiter for progress on gender. Figure 3: World Economic Forum gender gap indicators Source: World Economic Forum[23] South African gender-equality policy South Africa subscribes to the above WEF global policies, and as such has created local policies to support implementation and achievement of the policy goals. South Africa’s own constitution upholds the right to equality for all persons, irrespective of gender, race, religion or sexual orientation. This has created a human-rights-based legal system that is able to redress and act on gender inequality in the country. In 2020, the National Strategic Plan (NSP) on Gender-Based Violence and Femicide was launched. In the foreword by President Cyril Ramaphosa, it states that South Africa is one of the most dangerous places in the world to be as a woman.[24] This was further exacerbated by the Covid-19 pandemic, with both services for those affected by GBV curtailed by the lockdown restrictions and an increase in GBV incidents as a result of the ‘stay-in-place’ orders that kept women in unsafe homes.[25] The NSP mentions a long list of national policies that are all related to gender equality in some way[26]: National Development Plan (NDP) Vision 2030; National Gender Policy Framework; National Sexual Assault Policy (Department of Health); National Contraception Policy; Guidelines Within a Reproductive Health Framework Strategy (2001); White Paper on Population Policy 1998; A Comprehensive Primary Health Care Package for South Africa (2001); National Youth Policy; National Strategic Plan for HIV, STIs and TB for South Africa (2012-2016); White Paper on Social Welfare Services; Strategy for the Engagement of Men and Boys in Prevention of Gender-Based Violence (2009); Department of Social Development, Policy on Funding Non-Governmental Organisations for the Provision of Welfare and Community Development Services (2013); White Paper on Families in South Africa (2012); Social Development Guidelines on Services for Victims of Domestic Violence (2010); Guidelines on Services for Victims of Sexual Offences (2010); Integrated Social Crime Prevention Strategy (ISCPS): White Paper on Safety and Security (WPSS, 2016). Without going into each one, it is clear that gender has been top of South Africa’s agenda, and at the same time, progress has been undeniably slow. The sheer number of policies, now culminating in the 2020 NSP showcase South Africa’s ability to write excellent policy, while simultaneously being unable to implement or execute these policies effectively. Therefore, as we delve into the literature, we are mindful of the strong legal and policy environment in South Africa and how that might be leveraged to effect change – it is the ‘wicked problem’ South Africa has been struggling with for decades. South African Families In this section, we outline some of the major trends in the composition and functioning of South African families. The intention of this section is to orient the reader to how the nature of families has changed, providing some background to how gender norms are seeded within the family. At their best and with sufficient support, families can be adaptive, responding to changing needs and finding creative ways to best care for their members. Under enduring and prolonged conditions of hardship, and without sufficient support, the positive caregiving functions of families can be eroded, showing up care deficits in the form of malnourishment, violence, and entrenched inequalities. Families are also ideological spaces in which there is contestation and negotiation around gender and age hierarchies, roles and responsibilities, social and cultural norms and practices that inform ideas about marriage and procreation. Families are a primary means of socialising youth into what is ‘right’ and ‘acceptable’ - and for the purposes of this report, are a key site where gender-related norms are learned. Therefore, where families are the main providers of care, they should be the key target of gender-related interventions. Family composition In South Africa, families do not always live in the same household. The definition of families offered in the revised White Paper on Families is inclusive of multiple family forms and defines a family as: “a societal group that is related by blood (kinship); adoption; foster care; or the ties of marriage (civil, customary or religious), civil union or cohabitation; and goes beyond a particular physical residence”.[27] Families are not homogenous, nor are they necessarily ‘nuclear’. This is particularly true in South Africa, with its history of forced migration, which meant that families were spread across diverse geographical areas. The disruption of family life has been identified as the most enduring consequence of colonial and apartheid policies and strategies.[28] As such, movement to and from urban areas has continued post-apartheid, both for labour migration and job-seeking, with grandparents (mostly grandmothers) remaining important sources of childcare support for working-age adults. A third of South African households are extended beyond biological parents and their children (the so-called nuclear family) and might include aunts, uncles, cousins, in-laws and grandparents.[29] Table 1 shows the variety of household types in which children reside. Distinct racial patterns make clear the legacy of apartheid on family and household dynamics. Nuclear families are most common among White and Indian/Asian families. African and Coloured children are more likely to reside in extended households. Table 1: Household types with children[30] Source: Hall and Posel (2019) The role of labour migration in family composition Under apartheid legislation, access to White urban areas was restricted for Black South Africans who were instead removed to ‘reserves’ or apartheid ‘homelands’, which functioned as labour reservoirs for the White-ruled state. Apartheid laws limiting Black mobility and related flows of migrant workers and job-seekers, have contributed to a long history of separation between parents and their children, producing many severed and stretched households across South Africa.[31] Black men travelled from the country’s ‘homelands’ to work in urban areas and were mandated to leave their families behind.[32] These migrant men were not only wage labourers for a racist capitalist system; they were also often patriarchs and proprietors of rural homesteads, and involved, through remittances and trips home, in maintaining rural homes in partnership with wives and relatives.[33] Political turbulence and high rates of mobility affected women as well, with many moving between rural areas where pre-existing gender norms meant women were solely responsible for childrearing,[34] to urban areas in search of remittances, where laws prevented them from settling.[35] In the post-apartheid period, women-centred homes have been further entrenched.[36] This has put survival of households with children under threat, given that women-headed homes tend to be more impoverished (see Figure 5). Poverty and hardships are disproportionately spread across geographical areas: there are more female headed-households, who are most vulnerable to poverty, located in rural areas. Large-scale migration to urban areas in search of work has forced mothers to separate from their children. Grandmothers have become the primary caregivers for children remaining in rural areas.[37] These mothers were often employed (formally or informally) in domestic service, looking after other people’s homes and children.[38] This further cemented the perception of women as carers. Culture, tradition and changes in marriage trends and women-headed households In many south African cultures and customs, cultural norms and practices require the payment of ‘lobola’ (or a ‘bride price’) to get married.[39] The practice entails the giving of gifts (usually money or livestock) by the groom’s family to the parents of a bride-to-be.[40] Lobola has been thought of as a way to ensure patrilineal (fatherly) ties and allow formal recognition and provision of intergenerational care and support. It is worthwhile to mention that the concept of lobola has come under criticism.[41] Many scholars have questioned its relationship to gender-based violence because of its (incorrect) perception as an exchange of ‘ownership’ of a woman, from her family to her husband.[42] This misinterpretation of having ‘paid for’ ownership has led to men believing they may do as they please to that which they own.[43] Even more worrying is the normalisation of abuse during marriage by women themselves who believe it acceptable for a man to beat his wife if he has paid lobola.[44] The reality of South Africa’s unemployment rate, coupled with the financial implications of lobola (where it is more recently being commercialised resulting in higher associated costs)[45] has contributed to the sharp decline in marriage (Figure 4).[46] However, this trend is not entirely new, and as early as the late 1930s, marriage rates in urban Black communities had started to decline in South Africa.[47] Without the formal process of marriage and/or lobola, the responsibility for caregiving and providing for children often fall to women (who become de facto single parents). This has contributed to the high number of women-headed households (WHH) in South Africa.[48] Figure 4: Number of civil marriages by year 2011-2020[49] Source: Marriages and divorces (2020). Statistics South Africa The rate of WHH has been increasing since 1995.[50] WHH in South Africa have been shown to be more impoverished than maleheaded households (MHH),[51] with some statistics showing that WHH are up to 40% more impoverished than their male-headed counterparts.[52] This is related to two main factors: firstly WHH often have more dependents, requiring whatever income there is to go further (Figure 6).[53] MHH are in the majority for household sizes of one to six people, but if the household size is greater than six, it is more likely to be women-headed.[54] Secondly, in WHH, women tend to be the only source of income – creating an imbalance between income and expenditure. Figure 5: Household head by household size Source: Own analysis of StatsSA General Household Survey 2021 data As women have become more responsible for financial provision due to this decline in marriage and increased dependents, their entry into the labour force has begun to climb. Figure 7 shows how the decline in marriage rate from 2011 dovetails with the increasing share of women as a proportion of the labour force in South Africa and how, between 1995-2015, the number of employed women continued to rise.[55] Figure 6: Women’s employment in post-apartheid South Africa (total and as a share of total)[56] Source: Msomi (2019). “Distributional changes in the gender wage gap in the post-apartheid South African labour market” However, unemployment across genders remains unacceptably high in South Africa. Despite this, the unemployed have – until very recently – received almost no support, from the Government nor private schemes. Social grants as a major source of household income The final trend related to the composition and dynamics within families relates to the introduction and expansion of South Africa’s social grant system. Half of South African households depend primarily on their social grant-recipients.[57] Whether it be the older person’s grant (because women live longer) or child support grant (because of women’s caregiving responsibilities), women tend to be the primary grant beneficiaries.[58] The post-apartheid shift in household income, away from migrant remittances towards social grants, has translated into a shift in many South African homes, in which women – as recipients of child support grants and pensions[59] – are increasingly central to domestic economies.[60] In some households, grandmothers have replaced wage-earning men as economic lynchpins. These ‘granny-focal’ domestic arrangements are further necessitated by a frequently missing middle generation, some of whom have been lost to AIDS and others to the perpetual search for work in cities and neighbouring countries.[61] In South Africa, nearly 5% of homes are skipgeneration homes, where grandparents (and mostly grandmothers) care for grandchildren. The South African social grants system has supported women in their care for families but has further entrenched gendered norms that associate women with care.[62] While elderly women receiving the older person’s grant have some ‘bargaining power’,[63] there are also strong intergenerational tensions in families with young under or unemployed persons which keep these women, whether as mothers or grandmothers, in a subservient role.[64] In Bangladesh, an LMIC, studies conducted on farmworkers have shown that women with a higher education status or who brought in higher income had more decision-making power.[65] However, in South Africa, where the increased income is coming from grants rather than educational attainment or gainful employment, these same changes in decision-making power are not evident. In South Africa, women’s primary grant status coupled with advances in women’s socio-economic, political representation and educational status have not impacted entrenched gender norms or high rates of gender-based violence in ways one might have expected.[66] Part of this story, relates to the caregiver roles women have been thrust into, and that men in particular, have sought to maintain. This combination of declining marriage rates, rising unemployment and mass distribution of social grants, have meant that men are increasingly peripheral to the South African family.[67] Women as caregivers and care receivers In this section, we unpack women’s caregiving roles in families. The systemic undervaluing of caregiving (whether paid or unpaid) is a global phenomenon, and the impact is seen in employment opportunities and associated pay. The position of women as caregivers who do the physical labour of caring – including washing, dressing, lifting, carrying, feeding – and the emotional labour of caring about and taking care of others, has commanded the most attention.[68] The road to becoming a caregiver within the family often starts in girlhood, where girls are more likely to be asked to assist their mothers or female relatives with household tasks, even if that requires missing or dropping out of school.[69] Unpaid care work and its relationship to gainful employment Unpaid care work refers to all unpaid services provided within a household for its members, including care of persons, housework, and voluntary community work.[70] These activities are considered work, because theoretically one could pay a third person to perform them. Care work (whether paid or unpaid) has been shown to improve wellbeing and contribute to economic growth in a country.[71] The answer is not to rid the world of unpaid care work but rather to democratise responsibility for it; unpaid work plays an instrumental role in family wellbeing and social and economic development.[72] It is sometimes termed ‘social reproduction’ because this care has such a profound impact on emotional, psychosocial and cognitive development of the population.[73] Globally, research has shown that women are responsible for 2-10 times more unpaid care work than men. [74] This has been given as a primary driver for women’s suboptimal access to, and participation in, the labour force.[75] It is most often referred to as the ‘care economy’, but some also refer to it as the ‘core economy’ or the ‘reproductive economy’. Whichever name, the purpose is to illustrate that whether this work is unpaid or not, it is still work.[76] Despite this unpaid care work burden, there have been significant gains in growing women’s education and labour participation since the early 1990s. But, women continue to fare worse than men in the South African labour market. Figure 7 shows the employment absorption rate by gender, which represents the number of people employed divided by the total population. It is a good measure because it shows movement in the labour market adjusted for population growth. Female employment absorption is consistently 10% lower than male employment absorption. Not only this, but in periods of negative economic shocks, females are more likely to lose jobs than males. Female employment decreased 14.7% in Wave 1 (April-June 2020) of Covid-19 compared to a 12.7% decrease for males.[77] Figure 7: Employment absorption by gender Source: Own analysis of StatsSA QLFS data 2017 Q1-2022 Q2 This can be partially explained by maternity, domestic, and childcare responsibilities (i.e. unpaid care work) forcing women to opt out of the workforce. For example, several American studies showed that there was an inverse relationship between the care economy and labour workforce participation for women (i.e. if women were performing unpaid care work, they were less likely to be in the paid economy), but this did not hold true for men. Looking at the South African case, we see in Figure 8 that labour force participation decreases as the number of children in the household increases. It also shows the disproportionate burden of childcare carried by women compared to men. Figure 8: Labour force participation rate by sex and presence of children 2022[78] Source: Statistics South Africa (2022) This effect is despite women being more educationally qualified than men. In the second quarter of 2022, 13.2% of women had tertiary qualifications compared to 11.2% of men, and 46.7% had completed secondary education compared to 43.5%.[79] Yet despite being more qualified, women fare worse than men in the labour market as shown by the persistent gaps in absorption rate between genders even when accounting for education status (Figure 9). Figure 9: Employment absorption by gender and education status Source: Own analysis of StatsSA QLFS data 2017 Q1-2022 Q2 While these effects are certainly present, even for women who opt into the workforce and are actively seeking work, women experience worse employment outcomes than men with the same qualification.[80] This is evidenced in Figure 10 where the rate of unemployment by gender and education status on a quarterly basis is more pronounced in women, showing the precarity of the work women are more likely to be employed in. Figure 10: Unemployment rate by gender and education status Source: Own analysis of StatsSA QLFS data 2017 Q1-2022 Q2 The type of paid work performed by women Women are not only less likely to be employed than men, they are also concentrated in low-skilled and less secure positions.[81] Drawing on 2012-2019 data, South African research suggests that women earn between 18% and 23% less than men, controlling for key explanatory factors such as age, experience, province, occupation, education level, degree of employment formality, type of contract and employer type, and accounting for maternity leave.[82] The gender pay gap is estimated to have widened from 29% before March 2020 to 43% in June 2020. [83] This gap is largely constant across incomes but widened substantially for quintiles one and two during the early months of the pandemic. This could potentially be explained by the higher burden of childcare for women, resulting in fewer working hours than for men. Gender norms link ideas of womanhood to caregiving and hence, women are disproportionately represented in caring professions in the labour market, which continue to be poorly paid. This is exacerbated by the concentration of women in informal, precarious labour, that often demands limited formal qualifications and, as such, presents limited opportunity for social and economic mobility. Women are only overrepresented in two industries: private households, and community social and personal services (Figure 11).[84] On the other hand, men are overrepresented in occupations such as mining, transport, and construction that often require extensive periods of absence from family life. Figure 11: Gender representations by industry Source: Own analysis of StatsSA General Household Survey 2021 data One of the more researched areas is on domestic workers, who often perform more than just cleaning roles. They are surrogate parents and carers to unwell children or adults in the home. The fairly recent shift has been to talk about decent work and a living wage, recognising that this work done by domestic workers supports the broader economy in a range of direct and indirect ways.[85] By remunerating this work better, it also supports the acknowledgement of the unpaid care economy as valuable and economically important. As seen in Figure 12, female domestic workers account for almost one million jobs and approximately one in seven employed women is a domestic worker.[86] Figure 12: Female domestic workers in South Africa Source: Own analysis of StatsSA QLFS data 2017 Q1-2022 Q2 The mental, physical, and emotional toll of unpaid care work amid paid work In discussions of the unequal, gendered distribution of caregiving, the additional burdens and occupational stresses endured by women is often emphasised.[87] The disproportionate expectation placed on women to conduct unpaid care work has been shown to have a negative impact on mental health and quality of life, evidenced through measuring cortisol (the primary stress hormone) levels.[88] The socioeconomic position of carers has warranted particular attention, with numerous authors citing the compounding pressures falling on poor women, who are often not only caregivers in their own homes, but in the homes of others too.[89] Research has shown that women suffer emotional, physical and financial burdens as a consequence of caregiving. Carers endure stress and stigma, poor health, a crippling lack of support, and desperate poverty. Gender norms are inherent to the reason women are unable to access the labour market; it is women’s caring labour that goes unpaid and unrecognised that hinders women’s economic participation.[90] Termed ‘the second shift’ (and more recently ‘the third shift’) women’s unpaid care labour is performed in addition to their paid labour, often taking place outside employment hours on week days and weekends.[91] The care work itself, and the expectation that this will be fulfilled by women, prevents them from working as long hours, or taking full-time roles, often in such a way that supports men to do exactly that which illustrates that unpaid care work is critical to family flourishing.[92] Because the caregiving burden is large, to achieve gender justice it must be shared. However, the paid labour market often rewards those who negate their caregiving responsibilities, hindering equal distribution.[93] The Covid-19 pandemic has offered an opportunity to again bring to the light the disparities in expectations. Research shows that it was women who bore the brunt of childcare and job losses, during the lockdowns.[94] Despite faring worse in the labour market, women were less likely than men to benefit from the Covid-19 Social Relief of Distress (SRD) grant or the Temporary Employee Relief Scheme (TERS), designed as a safety net for unemployed and furloughed workers.[95] Far more women than men in the NIDSCRAM surveys cited childcare responsibilities as a barrier to participating in the labour market.[96] There is urgent pressure from global bodies such as the United Nations for immediate action to prevent the fall-out from unequal caregiving responsibilities from becoming embedded, ‘post-pandemic’.[97] A common solution presented to the issue of invisible care work is for this work to be made visible in a way that shows the direct link between unpaid care work and a growing economy.[98] However, there are no countries in the world where this has been implemented, highlighting both the difficulties of measuring and quantifying this labour, but also the degree to which care and the labour it entails is part and parcel of human flourishing. Men as caregivers and care receivers In this section, we unpack disputes around men’s caregiving roles in families and employment. Can men care? We also discuss the way an undermining of care affects men’s work opportunities, gender stereotypes and family-life. Gender is relational, and care is relational, meaning that women’s strong association with caring is inversely related to men’s association with care. In times of crisis, for example during the HIV/Aids epidemic and Covid-19 pandemic, men’s relationship to caregiving and care receiving changed. Men’s willingness to engage in care work could be parcelled with broader movements to increase the value and visibility of care that could in turn, potentially improve the status of women and feminised care work. However, there must be a simultaneous willingness to address the link between gender and care so that binary positions are not merely repackaged, as the ‘glass escalator’ for men and ‘glass ceiling’ for women examples illustrate poignantly below and in Figure 13. Men’s employment in the care sector The gendering of care work means that where men do participate in paid care work, they are more likely to do higher-order care; the work of ‘caring about’ and ‘taking care of’, as opposed to caregiving and care receiving (see Figure 1).[99] This more abstract talking about and planning for care is associated with men as a socially determined rather than biologically determined construction of masculinity that aligns to gendered notions of power, strength, and male breadwinning status.[100] Few men work in the care professions as nurses, counsellors and therapists, nannies, or social workers, where women are overrepresented (Figure 11). However, the international literature shows that in cases where they do, they earn more than women, and are often promoted at a faster pace and placed more frequently in senior and managerial roles - a phenomenon known as the ‘glass escalator’ .[101] Figure 13 presents this phenomenon graphically showing the upward job mobility of men in industries and roles traditionally dominated by women. In theory, increasing the number of men in industries and professions traditionally dominated by women should be a tool to reduce inequality. However, when men enter these fields, they are often promoted significantly faster than women. Rather than reducing gender inequality, it increases it.[102] This is because the structural inequalities that favour men are merely reproduced and not transformed through men’s role in caring professions. Thus, while women are understood to reach a ‘glass ceiling’ that prevents their upward job mobility, where the opposite phenomenon is associated with men’s employment in fields traditionally dominated by women, it is the unequal basis of the gender order that promotes men at a faster rate than women. Masculine identities or the norms associated with what it means to be a man are at stake when men participate in feminised work, so despite their structural advantage, few men enter these professions.[103] Figure 13: Infographic of the ‘glass escalator’ in men’s occupation of female caring jobs Information Source: Hultin, Mia. “Some take the glass escalator, some hit the glass ceiling? Career consequences of occupational sex segregation.” Work and occupations 30.1 (2003): 30-61 Source: Own representation based on Hultin (2003) Loss of ‘breadwinner’ status Earlier, we described a new domestic terrain in South Africa: the role of adult men in domestic life has declined and marriage has rapidly disintegrated. Under apartheid migrant labour, absent men were still able to appropriate women-headed households under their name through the circulation of bride wealth.[104] The more recent decline of wage labour has meant that many men can no longer afford bride price, nor can they contribute wages to build the family homestead. As a result, many men no longer have access to the means they had historically, to be incorporated into such kinship arrangements. Figure 14: Unemployment rate by sex[105] Source: Statistics South Africa (2012) As shown in Figure 14, in the period from the first quarter of 2008 to the first quarter of 2012, female unemployment rates were, on average, 24% higher than male unemployment rates. However, in the period starting 2017 Q1 and ending 2022 Q2, female unemployment rates were 13.5% higher than male on average (own analysis, based on StatsSA QLFS 2017 Q1-2022 Q2). Over the same comparison period, male unemployment rates increased from, on average, 22% to 28%. Overall, this means that the shape of unemployment has changed and the gender gap in unemployment is narrowing, with more men unemployed now than in the past. Where men’s contribution to care is through the provision of wage labour, then we can deduce a renegotiation of breadwinner status. The erosion of this status has important socio-economic and political consequences, and could potentially allow for renegotiation of male gender norms. Figure 15: SASOF 2021 survey participants’ perceptions of fatherhood and employment[106] Source: State of South African Fathers Report (2021: 113) Figure 15 shows ambivalence amongst the 1377 survey respondents regarding the idea that you need to be employed to be a good father. 55% neither agreed nor disagreed or somewhat agreed and somewhat disagreed, suggesting that gendered norms might be changing given the reality of low employment chances. Persistent and deepening unemployment since democracy, combined with an absence of social security for the jobless, has further eroded possibilities for the archetypal male breadwinner. While democracy has legally and politically incorporated Black South Africans into the economy, jobs have become scarcer. Plummeting employment opportunities, particularly in the industrial economy, have made it increasingly difficult for men to fulfil their gender-normative role of ‘breadwinner’, one such manifestation being the ability to pay lobola.[107] Male-headed households, social grants and extended family forms Constructions of masculinity mean that men are seldom associated with the hands-on caring work of caregivers, and because of the associations of powerlessness with care receivers, they are also seldom the receivers of care, either in the form of social grants or as healthcare recipients. [108] Male-headed households make up 54% of the total households as compared to 46% in WHH. If you control for income, using the proxy of whether someone in those households is receiving any kind of social grant from the Government, the picture shifts (Figure 16). Households where no social grants are received were predominantly MHH (74%), whereas 56% of the households where at least one social grant is received, are WHH.[109] Figure 16: Household heads by income proxy Source: Own analysis of StatsSA General Household Survey 2021 data The trend of women being primary recipients of social grants shifted during the Covid-19 pandemic. Income support in the form of both the Social Relief of Distress Grant (SRDG) and the Unemployment Insurance Fund - Temporary Employer/Employee Relief Scheme (UIF-TERS) went primarily to men.[110] The SRD Grant was implemented in response to the loss of jobs and income for millions of South Africans during lockdown. To be eligible, one needed to be unemployed and not in receipt of other social grants. This meant that women (who are the principal receivers of the child support grant (CSG) on behalf of their children) were denied this type of state support.[111] Entrenched gender norms further penalise women for their role in direct care through government provision of the CSG as a grant for children that is only meant to be administered by the grant recipient. Thus, it makes invisible caregivers’ needs, and the work it takes to do care for young children by making zero provisions for the caregiver themselves. Hence during Covid-19 women were triply denied available forms of support because women’s receipt of this grant on behalf of their children made them ineligible to receive the covid relief grants. On top of which, because women sustained the greatest job losses during covid, this unequal pattern reinforced the gender-differentiated effects of the pandemic and increased overall gender inequality in South Africa.[112] A rapid assessment of the Covid-19 SRD Grant found that almost all male survey respondents used the grant to purchase food, which was unsurprising given that many households ran out of food. 53% stated that whatever was bought went toward household consumption.[113] This alerts us to the fact that men can and do perform caregiving roles in households. However, given that 39% of men were not living with children during Covid-19, the potential reach of this grant was limited by men’s primary receipt of it.[114] Studies of caregiving and care receiving in the context of HIV/Aids in South Africa have critiqued the sexgender binary by foregrounding the “relationality of care and the inevitability and value of human interdependencies”.[115] These studies have shown that in the face of immense needs for care within communities, family boundaries and parenting practices were redrawn, as seen in the phenomenon of child-headed households, and grandmother-headed households.[116] Furthermore, studies found that voluntary caregiving was performed by men, who understood and explained their caregiving practices as mothering.[117] This idea was upheld by caregivers without biological ties to the care receivers.[118] This is significant given the importance of and reliance on informal means of community-based caregiving in meeting the caring burden generated by HIV/Aids.[119] Gender fluidity encourages the adoption of more permissible and flexible caring arrangements. Overall, complex arrangements of gender and care require that we pay careful attention to the gendered norms and behaviours that are determining who cares for whom, in what ways, and the resultant economies of care. As important are those social determinants of care, which challenge and destabilise gender associations, especially in the case of gender nonbinary, trans and queer folks. Additionally, as shown in the section above, healthcare crises may force a reappraising of gendered norms and caring roles, but whether long-term positive shifts in men’s relationships elevate the status of care, is yet to be shown. Perceptions of gender and gender-based violence Gender-based violence (GBV) is rooted in patriarchal power imbalances and carried out with the intention to humiliate and make a person or group of people feel inferior and/or subordinate because of their gender.[120] Normative role expectations associated with each gender, as well as the unequal power relationships between genders, mean that gender inequalities underlie GBV. [121] Also, because GBV intersects with norms governing sexuality, other marginalised populations such as sex workers, gender minorities and queer communities are also targets of GBV. “GBV cannot be attributed to a single factor, but an interplay of … gender inequalities between men and women, social constructions of hegemonic masculinities, social perceptions of what it means to be a man, normalisation of violence, and cultural practices”. Centre for the Study of Violence and Reconciliation CSVR (2016: 2) This type of violence, which is influenced by social structures, cultural practices and the norms and values that govern society, mean that local inflections of this global phenomena give rise to situated forms of GBV.[122] In South Africa, for example, ongoing legacies of racism, dispossession, and enduring structural and interpersonal violence, have resulted in rates of femicide (which is the intentional murder of women because they are women) being five times higher than the global average. [123] The various forms of GBV most often noted in South Africa include: femicide, domestic violence, sexual violence, physical violence, emotional violence, and economic violence.[124] Examples of this violence include human trafficking, mutilation, rape, forced or child marriages, and even accepted customary practices like the bride abduction practice of ukuthwala,[125] and medicalised forms of obstetric violence during labour and delivery.[126] Violence against women occurs in critical sexual and reproductive healthcare services, and includes psychological dimensions of violence, for example the threat of violence, reproductive coercion and the denial of freedom and autonomy.[127] This means that GBV is not only rooted in gender inequality, but is also a driver of gender inequality as it targets women (and minorities) because they are women (and minorities). Not only does GBV have negative health effects, but even the institutions women approach for sexual and reproductive healthcare are implicated in its continuation. More than a third of women and girls experience intimate-partner physical or sexual violence in their lifetime.[128] It is often in their homes, and within their families. This is in stark contrast to the situation for men, who in general, are more likely to be attacked by a stranger or acquaintance.[129] GBV poses an enormous obstacle to the eradication of all forms of discrimination against women and girls and gender non-conforming persons. GBV undermines the health, dignity, security, and wellbeing of its victims, and is perpetuated within a culture of silence and denial. Less than 10% of rape cases opened in South Africa land in a guilty verdict (Figure 14). This is not due to untruthful accusations, but rather as a result of the severely underperforming police sector and how gender norms imbued the policing sector.[130] Figure 17: Attrition of rape cases in South Africa[131] Source: RAPSSA study, National Strategic Plan on gender-based violence & femicide (2020) The road to a more gender-equal South Africa Families are recognised by human rights agencies and watchdogs as key partners in realising the sustainable development goals.[132] The family is the primary level of socialisation where children learn the norms and standards of society. As such they are key to ensuring and promoting human rights, equality and dignity. “… the stability and cohesiveness of communities and societies largely rest on the strength of the family … the very achievement of development goals depends on how well families are empowered to contribute to the achievement of those goals. Thus, policies focusing on improving the wellbeing of families are certain to benefit development.” Richardson (2018: 5) In a recent publication, Cecile Jackson (2014) explores the feminisation of kinship under modernity.[133] She emphasises that one should not assume that gender equality is a linear binary and that each move shifts a country or policy to either a more or less gender-equal pole. Instead, she implores people to understand that gender roles and norms are constantly reformed and reconfigured, over generations, and are influenced by who holds power in these generational moments.[134] So it is important to consider power in its societal and individual manifestation when reviewing progress towards gender equality. In Figure 18 below, we list some key pragmatic recommendations that the findings in this report support. Please note the following: Recommendations in red focus on the sections on men and women as caregivers and care receivers. Recommendations in dark red focus on the interrelatedness of care and gender where care is an axis of gender inequality. Recommendations in grey focus on government and community interventions to decrease gender inequality and violence against women and children. Recommendations in light grey focus on overarching, systemic approaches to dismantling gender inequality. There are many other recommendations cited in South Africa’s National Strategic Plan (NSP) on Gender-Based Violence & Femicide. Figure 18: Recommendations arising from this research report We recognise that recommendations are often insufficient unless they are paired with real-life examples of how to implement these on the ground. As such, we offer suggestions for how to fulfil these recommendations according to the colour coded key provided above. References [1] Oxfam, “Inequality Kills: The Unparalleled Action Needed to Combat Inequality in the Wake of Covid-19,” 2022, https://oxfamilibrary.openrepository.com/bitstreamhandle/10546/621341/bp-inequality-kills-170122-summ-en.pdf. [2] Statistics South Africa, “Mid-Year Population Estimates,” 2021, https://www.gov.za/about-sa/south-africas-people. [3] StatsSA, “General Household Survey,” 2021, https://www.statssa.gov.za/?p=15482. [4] Wessel Van Den Berg, “South African Men’s Engagement in a Feminist Ethic of Care: An Extended Case Study” (Thesis, Stellenbosch : Stellenbosch University, 2022), https://scholar.sun.ac.za:443/handle/10019.1/125005. [5] South African Government, “National Strategic Plan on Gender-Based Violence & Femicide” (Pretoria: Department of Women, Youth and Persons with Disabilities, May 2020), https://www.justice.gov.za/vg/gbv/nsp-gbvf-final-doc-04-05.pdf. [6] Katharine Hall and Linda Richter, “Introduction: Children, Families and the State,” in South African Child Gauge 2018., Hall K, Richter L, Mokomane Z & Lake L (Eds) (Cape Town: Children’s Institute, University of Cape Town, 2018), 22–32, http://www.ci.uct.ac.za/sites/default/files/image_tool/images/367/Child_Gauge/South_African_Child_Gauge_2018/Chapters/introduction%20-%20children%2C%20families%20and%20the%20state.pdf. [7] Talia Meer, All the (Tricky) Words: A Glossary of Terms on Sex, Gender and Violence (Gender, Health and Justice Research Unit. University of Cape Town, 2014), https:/open.uct.ac.za/handle/11427/8921. [8] Meer, 2014. [9] “State of South African Fathers Report” (Cape Town/Stellenbosch: Sonke Gender Justice, Human Sciences Research Council, & Stellenbosch University., 2021), https://www0.sun.ac.za/psychology/wp-content/uploads/2021/11/STATE-OF-SOUTH-AFRICAS-FATHERS-SOSAF-2021-REPORT.pdf. [10] Katharine Hall, Z Mokomane, and L Lake, “Child Gage 2018: Children, Families and the State | Children’s Institute,” Childrens Institute, 2018, http://www.ci.uct.ac.zaci/child-gauge/2018. [11] V Reddy et al., eds., Care in Context: Transnational Gender Perspectives – The Human Sciences Research Council (HSRC) (Cape Town: HSRC Press, 2014), https:/www.hsrcpress.ac.za/books/care-in-context. [12] Joan Tronto, Moral Boundaries: A Political Argument for an Ethic of Care, 1st edition (London: Routledge, 1993), https://www.taylorfrancis.com/booksmono/10.4324/9781003070672/moral-boundaries-joan-tronto. [13] Tronto. [14] Nic Spaull et al., “NIDS-CRAM Synthesis Report Wave,” Working Paper Series, 2020, 17. [15] Leila Patel et al., “The Gender Dynamics of the Child Support Grant in Doornkop, Soweto,” CSDA Research Report (University of Johannesburg: CSDA, 2012), http:/www.childwatch.uio.no/publications/research-reports/gender dynamics and child support.pdf. [16] United Nations General Assembly, “Universal Declaration of Human Rights” (Paris: United Nations, 1948), https://www.un.org/en/about-us/universal-declaration-of-human-rights. [17] United Nations, “The Millennium Development Goals Report: 2015” (Geneva: Department of Economic and Social Affairs, May 15, 2017), https://www.mdgmonitor.org/millennium-development-goals/. [18] United Nations. [19] United Nations. [20] “United Nations Sustainable Development Agenda,” United Nations Sustainable Development Goals, accessed February 17, 2023, https://www.un.org/sustainabledevelopment/development-agenda-retired/. [21] World Economic Forum, “Global Gender Gap Report: 2022,” Insight Report (Geneva: World Economic Forum, July 2022), https://www3.weforum.org/docs/WEF_GGGR_2022.pdf. [22] World Economic Forum. [23] World Economic Forum. [24] South African Government, “National Strategic Plan on Gender-Based Violence & Femicide.” [25] Kate Power, “The COVID-19 Pandemic Has Increased the Care Burden of Women and Families,” Sustainability: Science, Practice and Policy 17, no. S1 (December 31, 2020): 67–73, https://doi.org/10.1080/15487733.2020.1776561. [26] South African Government, “National Strategic Plan on Gender-Based Violence & Femicide.” [27] Department of Social Development, “Revised White Paper on Families in South Africa,” 2021. [28] Debbie Budlender and Francie Lund, “South Africa: A Legacy of Family Disruption,” Development and Change 42, no. 4 (2011): 925–46. [29] Statistics South Africa, “General Household Survey: 2021.” [30] Hall and Posel, “Fragmenting the Family? The Complexity of Household Migration Strategies in Post-Apartheid South Africa.” [31] R Bray, “Predicting the Social Consequences of Orphanhood in South Africa,” African Journal of AIDS Research 2, no. 1 (2003): 39–55; P Henderson, “AIDS, Metaphor and Ritual: The Crafting of Care in Rural South African Childhoods,” Childhood 20, no. 1 (2012): 9–12. [32] L Richter and R Morrel, Baba: Men and Fatherhood in South Africa (Human Sciences Research Council, 2006). [33] TD Moodie and V Ndashe, Going for Gold: Men, Mines, and Migration, (Berkeley: University of California Press, 1994). [34] Richter and Morrel, Baba: Men and Fatherhood in South Africa. [35] Deborah Posel, “State, Power and Gender: Conflict over the Registration of African Customary Marriage in South Africa c. 1910–1970,” Journal of Historical Sociology 8, no. 3 (1995): 223–56, https://doi.org/10.1111/j.1467-6443.1995.tb00088.x. [36] C Walker, “Conceptualising Motherhood in Twentieth Century South Africa,” Journal of Southern African Studies 21, no. 3 (1995): 414–37. [37] Elena Moore, “Transmission and Change in South African Motherhood: Black Mothers in Three-Generational Cape Town Families,” Journal of Southern African Studies 39, no. 1 (March 1, 2013): 151–70, https://doi.org/10.1080/03057070.2013.76471 [38] International Labour Organization, “Rural-Urban Migrants Employed in Domestic Work: Issues and Challenges” (Briefing note 5, Tanzania, May 2013), https://www.ilo.org/wcmsp5/groups/public/---africa/---ro-abidjan/documents/meetingdocument/wcms_214732.pdf. [39] Christie Sennott, Sangeetha Madhavan, and Youngeun Nam, “Modernizing Marriage: Balancing the Benefits and Liabilities of Bridewealth in Rural South Africa,” Qualitative Sociology 44, no. 1 (March 1, 2021): 55–75, https://doi.org/10.1007/s11133-020-09457-w. [40] The Centre for the Study of Violence and Reconciliation, “Gender Based Violence in South Africa - A Brief Review” (CSVR, April 2016), https://www.csvr.org.za/pdf/Gender%20Based%20Violence%20in%20South%20Africa%20-%20A%20Brief%20Review.pdf. [41] John Chitakure, “Bride Wealth in Southern Africa: Origin, Functions, Rights, and Gender-Based Violence,” in Lobola (Bridewealth) in Contemporary Southern Africa: Implications for Gender Equality, ed. Lovemore Togarasei and Ezra Chitando (Cham: Springer International Publishing, 2021), 45–62, https://doi.org/10.1007/978-3-030-59523-4_4. [42] Malesela Edward Montle and Heritage Moleke, “Exploring the Commercialisation of Lobola in South Africa,” Journal of Archaeology of Egypt / Egyptology 18, no. 17 (October 20, 2021): 587–606; Sennott, Madhavan, and Nam, “Modernizing Marriage.” [43] Chitakure, “Bride Wealth in Southern Africa.” [44] The Centre for the Study of Violence and Reconciliation, “Gender Based Violence in South Africa - A Brief Review.Pdf.” [45] Montle and Moleke, “Exploring the Commercialisation of Lobola in South Africa.” [46] J Ferguson, “Declarations of Dependence: Labour, Personhood and Welfare in Southern Africa,” Journal of the Royal Anthropological Institute 19, no. 2 (2013): 223–42. [47] Posel, “State, Power and Gender.” [48] Chijioke Nwosu and Catherine Ndinda, “Female Household Headship and Poverty in South Africa: An Employment-Based Analysis,” Working paper (Economic Research South Africa, August 1, 2018). [49] Statistics South Africa, “Marriages and Divorce,” Statistical release (Pretoria: Statistics South Africa, 2020). [50] Nwosu and Ndinda, “Female Household Headship and Poverty in South Africa.” [51] Nwosu and Ndinda. [52] Nikayla Naidu, “Resonance FM: Poverty and the Dire State of Women in South Africa,” SPII, September 10, 2021, https://spii.org.za/poverty-and-the-dire-state-of-women-in-south-africa/. [53] Nwosu and Ndinda, “Female Household Headship and Poverty in South Africa.” [54] Statistics South Africa, “General Household Survey: 2021.” [55] Jacqueline Mosomi, “Distributional Changes in the Gender Wage Gap in the Post-Apartheid South African Labour Market” (UNU-WIDER, 2019), https://doi.org/10.35188/UNU-WIDER/2019/651-7. [56] Mosomi. [57] Statistics South Africa, “General Household Survey: 2021.” [58] Kate Ambler, “Bargaining with Grandma: The Impact of the South African Pension on Household Decision-Making,” Journal of Human Resources 51, no. 4 (October 2, 2016): 900–932, https://doi.org/10.3368/jhr.51.4.0314-6265R1. [59] Patel et al., “The Gender Dynamics of the Child Support Grant in Doornkop, Soweto.” [60] L Bank, “Living Together, Moving Apart: Home-Made Agendas, Identity Politics and Urban-Rural Linkages in the Eastern Cape, South Africa,” African Studies 19, no. 1 (2001). [61] E Schatz and C Ogunmefun, “Caring and Contributing: The Role of Older Women in Rural South African Multi-Generational Households in the HIV/AIDS Era,” World Development 35, no. 8 (2007): 1390–1403. [62] Kirsty Button and Thobani Ncapai, “Conflict and Negotiation in Intergenerational Care: Older Women’s Experiences of Caring with the Old Age Grant in South Africa,” Critical Social Policy 39, no. 4 (November 1, 2019): 560–81, https://doi.org/10.1177/0261018319867594. [63] Ambler, “Bargaining with Grandma.” [64] Button and Ncapai, “Conflict and Negotiation in Intergenerational Care.” [65] P. K. Roy et al., “Contribution of Women to Household Income and Decision Making in Some Selected Areas of Mymensingh in Bangladesh,” Progressive Agriculture 28, no. 2 (August 9, 2017): 120–29, https://doi.org/10.3329/pa.v28i2.33473. [66] Sarah Mosoetsa, Eating from One Pot: The Dynamics of Survival in Poor South African Households (Wits University Press, 2011), https://doi.org/10.18772/12011045331. The Dynamics of Survival in Poor South African Households. Wits University Press, 2011. https://doi.org/10.18772/12011045331. [67] H White, “A Post-Fordist Ethnicity: Insecurity, Authority, and Identity in South Africa,” Anthropological Quarterly 85, no. 2 (2012): 397–427. [68] Tronto, Moral Boundaries: A Political Argument for an Ethic of Care. [69] Akanksha A. Marphatia and Rachel Moussié, “A Question of Gender Justice: Exploring the Linkages between Women’s Unpaid Care Work, Education, and Gender Equality,” International Journal of Educational Development, Gender Justice, Education and International Development: Theory, Policy and Practice, 33, no. 6 (November 1, 2013): 585–94, https://doi.org/10.1016/j.ijedudev.2013.05.005; Nwosu and Ndinda, “Female Household Headship and Poverty in South Africa.” [70] Diane Elson, “Recognize, Reduce, and Redistribute Unpaid Care Work: How to Close the Gender Gap,” New Labor Forum 26, no. 2 (May 1, 2017): 52–61, https://doi.org/10.1177/1095796017700135. [71] UNRISD, “Why Care Matters for Social Development,” Policy brief, UNRISD Research and Policy Brief (UNRISD), accessed February 8, 2023, https://www.files.ethz.ch/isn/113201/RPB9e.pdf. [72] Joseph E. Stigletz, Amartya Sen, and Jean-Paul Fitoussi, “Report by the Commission on the Measurement of Economic Performance and Social Progress,” n.d., https://ec.europa.eu/eurostat/documents/8131721/8131772/Stiglitz-Sen-Fitoussi-Commission-report.pdf. [73] Marphatia and Moussié, “A Question of Gender Justice.” [74] Gaëlle Ferrant, Luca Maria Pesando, and Keiko Nowacka, “Unpaid Care Work: The Missing Link in the Analysis of Gender Gaps in Labour Outcomes,” Issue Paper (OECD Development, December 2014), https://www.fearlessgirl.us/wp-content/uploads/Unpaid_care_work.pdf. [75] Gaëlle Ferrant, Luca Maria Pesando, and Keiko Nowacka. [76] Power, “The COVID-19 Pandemic Has Increased the Care Burden of Women and Families.” [77] Statistics South Africa, “Quarterly Labour Force Survey 2022 Q2,” 2022, https://www.statssa.gov.za/publications/P0211/P02112ndQuarter2022.pdf. [78] Risenga Maluleke, “Gender Series Volume IX: Women Empowerment, 2017-2022” (Pretoria, 2022), https://www.statssa.gov.za/publications/Report-03-10-26/WE_Gender%20Presentation%2018-10_22_%20Final%20for%20SG%20.pdf. [79] Statistics South Africa, “Quarterly Labour Force Survey 2022 Q2.” [80] Statistics South Africa. [81] Statistics South Africa. [82] Statistics South Africa. [83] Statistics South Africa, “Media Release QLFS Q4 2022,” accessed March 11, 2023, https://www.statssa.gov.za/publications/P0211/Media%20release%20QLFS%2Q4%202022.pdf [84] Statistics South Africa, “General Household Survey: 2021.” [85] Maybud, Susan, “Women and the Future of Work – Taking Care of the Caregivers,” Gender, Equality and Diversity Branch (International Labour Organization, 2015), http://oit.org/wcmsp5/groups/public/---ed_protect/---protrav/---travail/documents/publication/wcms_351297.pdf. [86] Statistics South Africa, “Quarterly Labour Force Survey 2022 Q2.” [87] Elson, “Recognize, Reduce, and Redistribute Unpaid Care Work”; Gaëlle Ferrant, Luca Maria Pesando, and Keiko Nowacka, “Unpaid Care Work: The Missing Link in the Analysis of Gender Gaps in Labour Outcomes.” [88] Soraya Seedat and Marta Rondon, “Women’s Wellbeing and the Burden of Unpaid Work,” BMJ 374 (August 31, 2021): n1972, https://doi.org/10.1136/bmj.n1972. [89] Marphatia and Moussié, “A Question of Gender Justice.” [90] Nancy Fraser, “Social Justice in the Age of Identity Politics: Redistribution, Recognition, Participation” (SSOAR, 1998), https://nbnresolving.org/urn:nbn:de:0168-ssoar-126247. [91] Arlie Hochschild and Anne Machung, The Second Shift: Working Families and the Revolution at Home (Penguin, 2012). [92] Elson, “Recognize, Reduce, and Redistribute Unpaid Care Work.” [93] Mandy Long, “Gender Justice and Fraser’s Universal Caregiver.” (Georgia State University, 2016), https://scholarworks.gsu.edu/cgi/viewcontent.cgi?article=1188&-context=philosophy_theses; Nancy Fraser, “Social Justice in the Age of Identity Politics: Redistribution, Recognition, Participation.” [94] Power, “The COVID-19 Pandemic Has Increased the Care Burden of Women and Families”; Seedat and Rondon, “Women’s Wellbeing and the Burden of Unpaid Work.” [95] N. Spaull et al., “Synthesis Report Wave 5” (NIDS-CRAM, 2021), https://cramsurvey.org/wp-content/uploads/2021/07/1.-Spaull-N.-Daniels-R.-C-et-al.-2021-NIDSCRAM-Wave-5-Synthesis-Report.pdf. [96] Spaull et al., “NIDS-CRAM Synthesis Report Wave.” [97] UN United Nations Women, “COVID-19 and the Care Economy: Immediate Action and Structural Transformation for a Gender-Responsive Recovery,” July 30, 2020, https://doi.org/10.18356/3bd8b996-en. [98] Rania Antonopoulos, “The Unpaid Care Work-Paid Work Connection,” SSRN Scholarly Paper (Rochester, NY, July 25, 2008), https://doi.org/10.2139/ssrn.1176661. [99] Tronto, Moral Boundaries: A Political Argument for an Ethic of Care. [100] Ana Jordan, “Masculinizing Care? Gender, Ethics of Care, and Fathers’ Rights Groups,” Men and Masculinities 23, no. 1 (April 1, 2020): 20–41, https://doi.org/10.1177/1097184X18776364. [101] MJanette S. Dill, Kim Price-Glynn, and Carter Rakovski, “Does the ‘Glass Escalator’ Compensate for the Devaluation of Care Work Occupations?: The Careers of Men in Low- and Middle-Skill Health Care Jobs,” Gender & Society 30, no. 2 (April 1, 2016): 334–60, https://doi.org/10.1177/0891243215624656. [102] Mia Hultin, “Some Take the Glass Escalator, Some Hit the Glass Ceiling?: Career Consequences of Occupational Sex Segregation,” Work and Occupations 30, no. 1 (February 1, 2003): 30–61, https://doi.org/10.1177/0730888402239326. [103] Jordan, “Masculinizing Care?” [104] White, “A Post-Fordist Ethnicity: Insecurity, Authority, and Identity in South Africa.” [105] Statistics South Africa, “Quarterly Labour Force Survey,” 2012, https://www.statssa.gov.za/publications/P0211/P02111stQuarter2012.pdf. [106] “State of South African Fathers Report.” [107] Ferguson, “Declarations of Dependence: Labour, Personhood and Welfare in Southern Africa.” [108] Will H Courtenay, “Constructions of Masculinity and Their Influence on Men’s Well-Being: A Theory of Gender and Health,” Social Science & Medicine 50, no. 10 (May 16, 2000): 1385–1401, https://doi.org/10.1016/S0277-9536(99)00390-1. [109] Statistics South Africa, “General Household Survey: 2021.” [110] Daniela Casale and Debra Shepherd, “The Gendered Effects of the COVID-19 Crisis and Ongoing Lockdown in South Africa: Evidence from NIDS-CRAM Waves 1 - 5,” National Income Dynamics Study (NIDS) – Coronavirus Rapid Mobile Survey (CRAM), National Income Dynamics Study (NIDS) – Coronavirus Rapid Mobile Survey (CRAM), July 8, 2021. [111] Nic Spaull Posel Daniela Casale and Dorrit, “Maverick Citizen: Op-Ed: Covid-19: Women Are Bearing More Costs and Receiving Fewer Benefits,” Daily Maverick, July 17, 2020, https://www.dailymaverick.co.za/article/2020-07-17-covid-19-women-are-bearing-more-costs-and-receiving-fewer-benefits/. [112] Casale and Shepherd, “The Gendered Effects of the COVID-19 Crisis and Ongoing Lockdown in South Africa: Evidence from NIDS-CRAM Waves 1 - 5.” [113] Department of Social Development, “THE RAPID ASSESSMENT OF THE IMPLEMENTATION AND UTILISATION OF THE SPECIAL COVID-19 SRD GRANT,” July 2021, https://www.dsd.gov.za/index.php/component/jdownloads/?task=download.send&id=316:the-rapid-assessment-of-the-implementation-and-utilisation-of-the-special-covid-19-srd-grant&catid=7&m=0&Itemid=101. [114] Spaull et al., “NIDS-CRAM Synthesis Report Wave.” [115] Reddy et al., Care in Context. P.100 [116] Henderson, “AIDS, Metaphor and Ritual: The Crafting of Care in Rural South African Childhoods.” [117] Thenjiwe Meyiwa, “Constructing an Alternative Family Unit: Families Living with HIV/AIDS Redefine African Traditional Parenting Patterns,” Social Dynamics 37, no. 1 (March 1, 2011): 165–77, https://doi.org/10.1080/02533952.2010.544119. [118] Meyiwa. [119] Reddy et al., Care in Context. [120] Abeda Sultana, “Patriarchy and Women’s Subordination: A Theoretical Analysis,” Arts Faculty Journal, 2010, 1–18, https://doi.org/10.3329/afj.v4i0.12929. [121] United Nations Population Fund, “Addressing Violence against Women and Girls in Sexual and Reproductive Health Services” (United nations Population Fund, January 1, 2010), https://www.unfpa.org/publications/addressing-violence-against-women-and-girls-sexual-and-reproductive-health-services. [122] The Centre for the Study of Violence and Reconciliation, “Gender Based Violence in South Africa - A Brief Review.Pdf.” [123] World Health Organization, Global and Regional Estimates of Violence against Women: Prevalence and Health Effects of Intimate Partner Violence and Non-Partner Sexual Violence (World Health Organization, 2013), https://apps.who.int/iris/handle/10665/85239. [124] South African Government, “National Strategic Plan on Gender-Based Violence & Femicide.” [125] Nyasha Karimakwenda, “Rethinking Ukuthwala, the South African ‘bride Abduction’ Custom,” The Conversation, September 12, 2021, http://theconversation.com rethinking-ukuthwala-the-south-african-bride-abduction-custom-165496. [126] Nonkululeko Mbuli Görgens Rumbi Goredema, “The Dark Side of Birth – Obstetric Violence Is a Form of GBV,” Health-e News, December 28, 2021, https://health-e.org.za/2021/12/28/the-dark-side-of-birth-obstetric-violence-is-a-form-of-gbv/. [127] United Nations Population Fund, “Addressing Violence against Women and Girls in Sexual and Reproductive Health Services.” [128] World Health Organization, “Violence against Women. Intimate Partner and Sexual Violence against Women,” 2014, https://www.who.int/news-room/fact-sheetsdetail/violence-against-women. [129 World Health Organization, Global and Regional Estimates of Violence against Women. [130] South African Government, “National Strategic Plan on Gender-Based Violence & Femicide.” [131] South African Government. [132] Dominic Richardson, “Key Findings on Families, Family Policy and the Sustainable Development Goals: Synthesis Report” (Florence: UNICEF Office of Research, 2018), https://www.unicef-irc.org/publications/pdf/Families_and_SDGs_Synthesis_Report.pdf. [133] Cecile Jackson, “Modernity and Matrifocality: The Feminization of Kinship?,” Development and Change 46 (December 1, 2014), https://doi.org/10.1111/dech.12141. [134] Jackson. [135] The Centre for the Study of Violence and Reconciliation, “Gender Based Violence in South Africa - A Brief Review.Pdf.”. [136] Van Den Berg, “South African Men’s Engagement in a Feminist Ethic of Care.” - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 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 © 2023 Inclusive Society Institute PO Box 12609 Mill Street Cape Town, 8010 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 its Board or Council members. June 2023 Author: Ilze-Marie le Roux Editor: Daryl Swanepoel Content Chapter 1: Introduction Chapter 2: Literature Review Introduction Electricity Usage Global EV Market vs South African Market Government Support SA’s Barriers to EV Uptake Climate Mitigation Foregoing the Valuable Fuel Levy SA’s Automotive Sector Conclusion Chapter 3: Methodology Introduction Source of Data Analysis Limitations Similar Forecasts Calculations and Results Eskom’s Conundrum Conclusion Chapter 4: Conclusion References List of tables Table 1: Charging Times of Different EVs Table 2: Region/Country EV target Table 3: Manufacturer EV target Table 4: EV Prices in South Africa Table 5: Eskom data List of figures Figure 1: Global sales and sales market share of electric cars, 2010-2021 Figure 2: EV Sales: SA vs China vs World Figure 3: EV Sales: SA vs Chile Figure 4: Sales of Battery Electric Vehicles Figure 8: Technology Cost Trends for Lithium-ion batteries Figure 9: Change in average price of new US electric vehicles and lithium-ion batteries since 2012 Figure 10: Effect of EV Charging on the National Grid in a 24-hour period Figure 11: Effect of all EV Charging during afternoon peak hour on the National Grid in a 24-hour period Figure 12: Effect of all EV Charging during off-peak hours on the National Grid in a 24-hour period Chapter 1: Introduction Since the arrival of the first combustion engine in South Africa in 1897, it has dictated the development of the country’s landscape: city planning, infrastructure locations and employment creation. Today, nearly 13 million vehicles are registered to operate on South Africa’s roads (Natis, 2022). This roughly equates to one vehicle for every five citizens. Moreover, the local automotive industry provides direct employment to 110 000 workers and supports an estimated 1,5 million indirect jobs, while contributing 6,4% to the country’s GDP (Del, 2019). Industry exports, mainly to Europe, totaled R175 billion in 2020. Now, the latest vehicle revolution is taking shape: electric vehicles (AIEC, 2021). There has been a global trend for greener sources, which has led to the rapid expansion in global usage of electric vehicles. The global electric passenger car stock boomed between 2015 and 2021 (IEA, 2021). In a move that could further bump electric vehicle (EV) sales, the European Union has tabled a proposal to ban the sale of new combustion engines by 2035 (Abnett, 2022). This holds significance for South Africa, as the European bloc receives most of the country’s vehicle exports. The National Association of Automobile Manufacturers of South Africa (Naamsa) has already expressed their concerns that other countries, like Egypt and Morocco, are gearing up to grab the country’s export market while government is dragging their feet in developing supportive EV policies (Barron, 2022). Worldwide governments are incentivizing consumers to purchase electric vehicles as they sprint to adhere to climate commitments. This, undoubtedly, will drive further expansion of the market in future, with some expecting that electric vehicles will account for 70% of all vehicle sales by 2040. South Africa lags far behind the global market trend. The slow growth has been attributed to, among others, high import duties – and therefore prices – lack of trust in electricity supply and inadequate infrastructure (GC, 2022). However, the market is set for an upswing. More and more vehicle manufacturers are announcing an end to combustion engine vehicles in their ranges, which will eventually leave consumers with little choice but to acquire an electric vehicle. Given the prominence of vehicles and the accompanying sector for South Africa, it is imperative for authorities, industry bodies and policymakers to ensure the country is fully prepared for the impending change. This includes ensuring sufficient electricity generation to support an electric vehicle market in South Africa. Chapter 2: Literature Review Introduction Countries worldwide are racing to combat climate change or at least slow down its effects. Strategies to limit carbon emissions are being implemented to limit the temperature increase to below two degrees Celsius, with 1,5 degrees Celsius as the ideal target (UN, 2015). Road transport contributes around 23% of all carbon emissions. An uptick in electric mobility, which includes electric vehicles, is therefore among the strategies being implemented. According to the International Energy Agency’s report, released in 2015, at least 20% of global road transportation must be electrically driven by 2030 to reach the world’s climate targets. This translates to 35% of all new vehicle sales in 2030 to be EV (UN, 2015). In 2020, a report by Climate Action Tracker, however, projects that to reach the 1,5 degrees target, fully electric vehicles will need to account for 75-95% of global annual passenger vehicle sales by 2030 and 100% by 2035 (CAT, 2020). Both reports set ambitious targets for the rapidly expanding EV market. Some experts have warned that EV adoption is currently not happening at a fast enough rate to meet these targets (Skibell, 2021; Econ, 2022). At the current adoption rate, the International Energy Agency (IEA) expects EV to represent only 30% of all new vehicles sold, which is well below the required target (IEA, 2022a). Electricity Usage Determining whether South Africa’s state-owned energy supplier, Eskom, is up to the task to support the impending market, we have to note the amount of charging EVs require. An electric source is needed to charge an EV battery. Standard home plugs are one option. This, however, provides Alternating Current (AC), while a battery requires Direct Current (DC) to charge (EVch, 2022). EVs are fitted with an internal switch that converts the current from AC to DC. A charging station can also be installed where the converter is located inside the charger, so the current is switched to DC before it enters the EV. These are also known as ‘superchargers’, as it cuts down significantly on charging time. There are currently three levels of chargers (EVch, 2022): Level 1 The charger can be plugged into a standard domestic socket and supply up to 3,7 kW of AC power. Although simple to use, it’s the slowest method of charging an EV. Level 2 A charger specially installed into an electric circuit by an electrician which can supply between an estimated 7 kW and 22 kW of AC power. This is the fastest source of at-home AC charging. Level 3 These superchargers can supply as much as 150 kW of DC power. They are mainly installed at charging facilities at public spaces, like malls. The time it takes to charge an EV from empty to full is dependent on the following aspects (Kia, 2022): Size of the battery: Charging takes longer for larger batteries Charging rate of the EV: There’s a cap on the amount of kW-rate an EV can accept. Charging Rate of Charger: The speed at which an EV can charge is also dependent on what type of charger is being used (Level 1, 2 or 3). Weather: Lower temperatures lead to longer charging times. PodPoint, an EV charging service, has compiled the charging times of different EVs from an empty to a full battery using one of the three levels of chargers. Charging Times of Different EVs *Not available in SA **Charging is measured up to 80%, as the charging time slows after reaching this point to protect the battery. Source: PodPoint, 2022 Global EV Market vs South African Market Since the launch of the first passenger electric vehicle in 2008, more than 10 million have since been sold (WRI, 2021). There has been an accelerated uptake of EVs from 2010, with a 43% growth in sales year-on-year between 2019 and 2020 alone (IEA, 2021). EVs now constitute 4,6% of all new global vehicle sales. Global sales and sales market share of electric cars, 2010-2021 Source: IEA, 2022 The EV market’s exponential growth is expected to continue as countries attempt to reach their individual targets. Europe, China and the USA have among the most aggressive EV targets, as they already enjoy the largest market share (IEA, 2021). Region/Country EV target Sources: Abnett, 2022; GSEP, 2021; UK, 2022; Wayland, 2021a In their attempt to align themselves with the abovementioned policy goals, vehicle manufacturers themselves have set some bold EV targets. Manufacturer EV target Sources: Wayland, 2021b; Fingas, 2021; Vol, 2021; BBC, 2021; Eisenstein, 2021 EV sales are expected to grow by between 24% and 29% over the next 10 years (Del, 2020; FBI, 2020). According to the 2020 Deloitte report, EV sales will reach 31,3 million by 2030 and constitute 32% of the total market share for new car sales. The EV market in South Africa is lagging far behind global trends. In 2021, two hundred and seventy-one EVs were sold in the country, of which 220 were PEV and 51 were HEV (IEA, 2022b). This is compared to 6,6 million EVs sold worldwide in the same year, with 3,3 million being sold in China alone (the biggest EV market worldwide) (IEA, 2022b). Source: IEA, 2022b Data represents combined sales of PEV and HEV. Even for a developing country and economy, South Africa is behind the EV curve. The developing Chile in South America has seen a steady increase in EV sales since 2013 (apart from a slowdown in 2020 due to the Covid-19 pandemic). In South Africa, EV sales went up by 697% between 2013 and 2021 (34 in 2013 to 217 in 2021). Compared to an 11 300% increase in Chile over the same period (5 in 2013 to 570 in 2021) (IEA, 2022b). Although sales in both countries pale in comparison to the markets in more developed countries, it is still indicative of the rapid rate at which EVs are expanding. Source: IEA, 2022b Data represents combined sales of PEV and HEV. Government Support The main reason for the rapid uptake in developed countries boils down to government support measures. Various governments have implemented one or a mix of interventions to boost support for EV growth as part of their strategies to meet their respective climate goals. Examples of these measures include: Zero Emission Vehicle (ZEV) Mandates Legislative requirements placed on vehicle manufacturers to reach a mandatory number of ZEV credits. These targets are met upon the delivery of a ZEV for sale. The number of ZEV credits varies between manufacturers based mainly on their respective total vehicles produced (ICC, 2019). The State of California, in the USA, has successfully implemented ZEV mandates since 1990. Although the program has been adapted many times over the years, with additional changes earmarked for the future, it seems to have at the very least contributed to California’s uptick in EV sales. In 2011, EV sales constituted 0,15% of all vehicle sales across the USA, reaching 2,1% in 2018. Over the same period, EV sales grew from 0,6% to 7,9% of all vehicle sales in the state. EVs therefore represent a much larger share of vehicles sold in California compared to the rest of the country (ICC, 2019). Sales of Battery Electric Vehicles Source: ICC, 2019 Other US states have adopted similar programs, as well as China and Canada. Purchase Incentives To promote the sale of EVs, some authorities have provided purchase incentives to EV customers, ranging from subsidies and tax savings to bureaucratic advantages. In Norway, EVs are exempt of import duties and value added tax. This in turn makes EVs more affordable, with prices on par with their combustion engine counterparts (Volk, 2022a). Norway is a leading EV market, with nearly every second vehicle registered in 2019 being electric. French authorities have placed a hefty surcharge on vehicles with the highest carbon dioxide emissions, with the aim to incentivize consumers to rather opt for an EV (Volk, 2022a). An ecobonus of up to €6 000 can also be claimed for purchasing an EV. In Germany, EVs are exempt from vehicle tax for up to 10 years while in the Netherlands, EV owners don’t have to pay registration taxes on pure electric cars (Volk, 2022a). In the US, a Federal Tax credit of US$7 500 is granted upon the purchase of an EV. Various studies have proven the direct positive result between fiscal incentives and the adoption of EVs (Alali et al, 2022). One European analysis states incentives may lead to a 5-7% relative sales share increase (Gnann et al, 2019). An American-focused study suggests an individual monetary incentive can lead to an average 2,6% increase in EV registrations per US$1 000 offered (Gopal, 2018). In 2020, governments spent US$14 billion on direct purchase incentives and tax deductions for electric cars – 25% more than the previous year (IEA, 2021). Other EV supportive initiatives Some cities have created zero-emission zones (ZEZ) allowing only EV (given they do not produce tailpipe pollutant emissions) to drive in the area and/or granting access to other vehicles at a prescribed fee. London, Rotterdam, Shenzhen and Oslo are among the metros with ZEZ (ICC, 2021). Other cities, like Dubai and London, opted for free parking spaces dedicated to EV drivers only (GoD, 2022). To appease consumers with charging-related concerns, policy-focus has been placed on developing charging infrastructure, which in some cases may even be provided free of charge. The EU has proposed legislation which, if adopted, would obligate new buildings and those undergoing renovations, to either install charging stations or provide the required infrastructure in parking spaces (Virta, 2022). Germany is on an ambitious drive to install one million charging stations across the country by 2030 (Volk, 2022b). Some countries have developed other measures, like charging station subsidies for companies and tax reductions on the electricity used to power commercial electric vehicle charging infrastructure (EVB, 2020). In the leading EV regions, mainly China, EU and the USA, a mixture of these measures in some format has contributed to the advancing market share of electric cars. SA’s Barriers to EV Uptake There may be various reasons for the slow pace of EV adoption in South Africa. In March 2022, then Transport Minister Fikile Mbalula pointed out that range anxiety (the fear that an EV won’t have sufficient electricity to complete the trip), a constrained power grid and EV’s high prices are the main reasons for the low EV numbers (BT, 2022a). Some of his assertions are corroborated by AutoTrader’s 2021 Electric Vehicle Buyers Survey report (AT, 2021). Respondents perceived the following to be the biggest drawbacks when owning an EV: Lack of National Charging Infrastructure (59%) Charging Time (57,8%) Initial Cost of Purchase (54,6%) Impact of Loadshedding (37,9%) Inconvenient Charging Options (34%) Range Anxiety (25,7%) Battery Life Deterioration (21,3%) Lack of Knowledge with Roadside Assistance Crews (9,6%) A Gauteng-focused study found the high price of an EV and battery to be the biggest constraints to EV market expansion in South Africa (Moeletsi, 2021a). Majority of the respondents in this study were not too phased by the range limits (although the author points out that this may be due to most travelling less than 100 km per day) or by a perceived lack of charging facilities. A study conducted in 2019 similarly found the high cost of an EV along with a concern about the inaccessibility of charging infrastructure among the top reasons why more electric cars aren’t being sold in South Africa (Manu, 2019). It further found a lack of public education on EVs as well as low levels of government support policies to also have had a significant role in the low uptake. The three common reasons cited in the literature for the low number of EVs on South African roads are the following: High Price tag of an EV relative to a combustion engine vehicle Real or Perceived lack of charging infrastructure Concerns about insufficient electricity supply 1. The High Price tag of an EV New Electric vehicles in South Africa continue to be on the high end of the price scale. EV Prices in South Africa *Not available in SA **Does not include import duties or any other South African taxes Sources: Tesla, 2022; Mini, 2022; Cars, 2022; BMW, 2022; Jag, 2022 Taking into consideration that the monthly earnings of a South African employee working in the formal non-agricultural sector amounts to R23 502 per month, it’s clear that at these prices the cars remain out of reach for most (Stats, 2022). Even the few available on the secondhand market retail at a relatively high price. A secondhand 2021 Mini Cooper SE sells for R688 000 and a used 2022 BMW iX3 Sport sells for R1 359 000 (AT, 2022). On average, the market price of an EV is more expensive than a comparable internal combustion engine vehicle (Moeletsi, 2021a). One report found a typical price differential between EVs and their respective ICE equivalent models to be 36% in high-income markets (Tips, 2022). The price difference is largely due to the high manufacturing cost of an EV battery pack. The technology costs for a lithium-ion battery (the battery technology used in most EVs), however, have declined significantly between 2015 and 2021 (IEA, 2022c). Technology Cost Trends for Lithium-ion batteries Source: IEA, 2022c Despite this decline, a report by the World Economic Forum found EV prices did not decline at the same rate (WEF, 2022). According to their data, the average cost of an EV battery declined by 80% between 2012 and 2021. Meanwhile, the average market price of an EV increased by more than 80%. The reason cited for this is the fact that EV manufacturers are developing luxury models before expanding into cheaper versions intended for the mass market. Change in average price of new US electric vehicles and lithium-ion batteries since 2012 Source: WEF, 2022 Global market forecasts before 2022 envisioned that the price of EVs would decline to such an extent that electric cars will be able to compete with the prices of their ICE counterparts in the near future (Del, 2020). While some expect the EV manufacturing costs to be cheaper than ICE vehicles before 2030, others found that EVs will only reach parity after 2030 (Partridge, 2021; Miller, 2020). In 2022, however, challenges linked to battery production may put a damper on these future EV predictions. Most EVs use Lithium-ion batteries, with Lithium as the main mineral component. The price of Lithium has reached record levels over the past year, with a 330% increase in August 2022 year-on-year (TE, 2022). The spike is largely due to a higher EV demand, mainly from China (Kurmelovs, 2022). Other factors include supply chain constraints due to the Covid-19 pandemic. The IEA estimates that the demand for Lithium will increase 900% by 2030 and 4 000% by 2040, as the various countries try and reach their climate policy goals (Blackmon, 2022). Locally, South Africa further pumps up the EV price by adding on a 25% Customs Excise Import duty as well as an Ad Valorem tax (calculated based on the EV price), which can range up to a maximum of 30% (GC, 2022). That’s compared to the 18% import duties paid on ICE vehicles coming into the country. A report commissioned by the Western Cape Government found the average Ad Valorem tax on the current EV products to work out at around 17%. Altogether, this then translates to an added average 42% in total taxes paid on an EV (GC, 2022). In its draft Green Paper 2021 on the advancement of new energy vehicles in South Africa, the Department of Trade, Industry and Competition (dtic) has suggested reducing or scrapping the Ad Valorem tax on EV to stimulate demand for EVs in the country (dtic, 2021). The Department proposed a standard rate per kWh using US$137/kWh as one example. The document further suggests lower- or zero-rated import duties on some specified EV components. Should these measures be implemented, it will only be valid for a specified number of years. The Green Paper is yet to be finalized. A study conducted by the Trade and Industrial Policy Strategies recommends a ‘temporary cash grant or innovative financial arrangement’ to stimulate demand. The data found R80 000 for PEVs and R20 000 for HEVs to be the most optimal amounts through which to reach this goal (Tips, 2022). The research further suggests complementary or extremely low interest loans to support EV uptake. Another proposed support measure is to introduce policies to assist in the development of locally produced EVs destined for both the local and export markets. A form of localization allowance credits, for example, can be used to support local manufacturers, which in turn can drive down EV prices on the South African market. The South African government has little fiscal room, as finances are constrained. Careful consideration will have to be given to where the funds will come from to support such an EV strategy. 2. Real or Perceived lack of charging infrastructure South African cities seem to be well serviced by charging infrastructure. According to the search tool, PlugShare, which assists users in locating public EV charging stations, there are currently 273 stations mapped across South Africa (PS, 2022). In its research, the IEA ranked the country as fourth globally when it comes to the ratio of public EV chargers to electric vehicles, at 6 EVs per public charging station (IEA, 2021). Most of the charging stations are located in major cities, with strategically placed stations along the N1 and N3 highways to connect Johannesburg with Cape Town and Durban. Other charging stations are provided by shopping malls, specific car dealerships or local municipalities. Charging stations outside city boundaries, however, are limited and motorists will struggle to keep their vehicles charged through publicly available infrastructure. The dtic’s draft Green Paper, recognizes a lack of charging infrastructure as a hurdle to the adoption of EVs in the country (dtic, 2021). It has called on the private sector to play a key role in such a development. If international trends are considered, which shows that the vast majority (80%) of EV owners charge their vehicles at home, then perhaps public charging spaces should not be the main focus of such an infrastructure rollout (Badik et al, 2017). 3. Concerns about insufficient electricity supply South Africans cannot be blamed for doubting Eskom’s ability to constantly provide sufficient electricity to meet EV charging requirements. Mismanagement and corruption have led to bouts of rolling blackouts sometimes leaving consumers without power for hours on end. The state-owned utility has struggled for more than a decade to keep its ageing coal fleet from total collapse, while the new built projects are delayed due to corrupt activities and shoddy construction. Meanwhile, South Africa’s renowned renewable energy program was also delayed, adding further pressure to the already constrained power grid. The Department of Mineral Resources and Energy (DMRE) released the latest Integrated Resources Plan in 2019 (DMRE, 2019). The document sets out the course for the country’s energy plans up until 2030, with cautionary scenarios provided for 2040 and 2050. According to these projections, Eskom should have installed a capacity of 44 GW in 2022 and projected capacity of 78 GW by 2030 and 120 GW by 2040. Although this may be South Africa’s best estimated roadmap, the document contains flaws and therefore these projections may vary from reality on the ground. The Medupi power plant is one such example. It is the fourth-largest coal-fired plant in the world and has an installed capacity of 4,8 GW (Eskom, 2022). It was scheduled to be fully operational by 2019. Various delays as well as an explosion at Unit 4 has left the plant unable to provide the total amount of electricity as anticipated in the IRP 2019 (Labuschagne, 2022). To address the crisis at hand, more renewable energy is being procured from private entities than initially planned (Omarjee, 2022). It is therefore expected that South Africa’s energy landscape may look vastly different than what is forecast in the IRP 2019. Climate Mitigation The drive for an increased EV-use compared to ICE vehicles stems from countries racing to meet their respective climate commitments to slow climate change. While the carbon emissions during manufacturing were addressed earlier in this paper, another related problem is the source of energy used to charge an EV. More than 90% of South Africa’s electricity is produced from coal (DoE, 2015). Should EV owners then largely rely on Eskom-supplied electricity to charge their vehicles, it would negate the reasons related to carbon emissions of owning an EV in the first place. A 2021 study found that charging from South Africa’s current electricity grid is more carbon intensive than driving a new ICE vehicle (Moeletsi et al, 2021b). Moeletsi et al further found that the carbon emissions mitigation impact of EV will increase from 2040 as the power grid becomes less reliant on fossil fuels and more decarbonized. EVs are projected to reduce baseline emissions of cars by 19% in 2050. Using embedded energy from solar plants to charge an EV could be an alternative to Eskom’s coal power. Charging stations powered by solar is already in use, like the one provided by the City of Cape Town (BT, 2020). Car dealer, Audi, is also now selling a solar home charging kit, along with full installation, to its e-tron electric vehicles customers (Du Toit, 2022). The installation of solar panels at home and small to medium businesses is also gaining in popularity as a way to mitigate against Eskom’s rolling power cuts. The regulations have been amended to ease this process further. Consumers now only require a license from the National Energy Regulator if they intend on generating more than 100 MW from their installed solar panels (Stoddard, 2022). This then also creates an alternative for home charging an EV, which, as opposed to using power from the grid, will assist in climate change mitigation. Foregoing the Valuable Fuel Levy South Africans pay both a general fuel levy (GFL) as well as a Road Accident Fund (RAF) levy per liter of fuel purchased. These serve as valuable income streams for the National Government. In December 2021, the GFL stood at R3,93 and the RAF levy at R2,18 per liter of petrol respectively (Stats, 2021). The GFL generated R80 billion in revenue in 2019/2020, accounting for about 6% of total tax revenue. The RAF levy generated R41,2 billion over the same period. This represents 99,8% of their total income and 93% of these funds were used to pay claims submitted to the Road Accident Fund. Thus, a decline in ICE vehicle sales due to an increased uptake of EVs will lead to a decline in tax income and RAF revenues. Other funding models will need to be developed to replenish the lost income. Some of the lost income may be offset by a balance of trade saving from reduced oil imports as the total ICE vehicles decline. A Green Cape report found that the introduction of one million EVs that drive 20 000km per year in South Africa, would collectively reduce oil importations by 58PJ/a (Petajoules per annum) (GC, 2022). This represents a potential R8,1 billion balance of trade saving for the economy. The savings from reduced oil imports is thus far less than the income generated by the fuel levy. It’s not a uniquely South African problem. Other countries face similar losses through their various tax structures. As motorists in the UK shift towards EV purchases, the government will lose out on the fuel duty and vehicle excise duty, which in 2019/2020 amounted to £37 billion and is equivalent to 1,7% of the UK’s GDP (UK, 2021). In the US, $36 billion was collected in federal fuel taxation in 2018 (Morris, 2020). This income will continue to decline as the EV market expands at the cost of ICE vehicles in that country. In his article, Morris argues that a global shift in car taxation is inevitable as the landscape continues to change at a rapid pace. In 2021, the South Australian government adopted legislation to tax EV owners 2,5 Australian cents per kilometer travelled, from July 2027. The law was passed while the Liberal Party was in power. The Labour Party has since taken over and the new government is attempting to repeal the measure (Sky, 2022). A report commissioned by the California legislature and released by the Institute of Transportation Studies at the University of California made a similar finding. It found a distance-based road user charge to be the most efficient way to recoup the funds lost on vehicle-related taxes that are not applicable to EV owners (Jenn, 2018). The South African government may consider a similar structure to supplement its income in the short to medium term as the country transitions and to ultimately replace the fuel levy in the long run. SA’s Automotive Sector South Africa’s vehicle and automotive component manufacturing is the largest manufacturing sector in the country (dtic, 2020). It accounted for 18,7% of manufacturing output in 2020. The sector contributes around 5% to the South African economy. Of all the vehicles locally manufactured, just over 60% is destined for the export market, with the European Union receiving the largest shipment. The EU alone receives three out of every four vehicles exported from South Africa. Any changes to the automotive legislation or policy by EU authorities therefore has a significant impact on South African operations. This was already evident in 2020. Due to stricter emissions legislation in the EU at the start of 2020, South Africa recorded record exports of automotive components due to the spike in demand for catalytic converters. (Catalytic converters fit into the exhaust system of a vehicle to reduce emission of gaseous pollutants (Milton, 1998).) Naamsa expects 40% of all European vehicle sales to be EVs by 2030 (BT, 2022b). If South Africa cannot meet their export vehicle requirements, the country could forego R201 billion in export earnings per year. Based on its draft Green Paper, government is aware of the implications of the changing automotive market, both locally and internationally. The document underscores the importance of a ‘just transition’ from manufacturing ICE vehicles to EVs. Among the proposals are the following: Transition the current ICE vehicle manufacturing infrastructure to incorporate EV production. Support local EV adoption, perhaps providing incentives for a specified period, expanding charging infrastructure and scrapping or reducing Ad Valorem on imported EVs. Increase international EV investment in South Africa to fund a transition to EVs. Stimulate local EV manufacturing from the required raw materials to possible battery production through EV supportive policies. Ensure the required skills development is being undertaken to support the transition. It is unclear what the status of the draft Green Paper is after it was released for public comment in 2021. The automotive industry is busy shaping up for the incoming EV future. Toyota invested R2,6 billion to develop the Corolla Cross – South Africa’s first locally produced HEV (Malinga, 2021). The vehicle has been available since 2021. According to an industry body’s sales report, the Corolla Cross has been doing well among South Africans, even outselling the local favorites, Polo Vivo and VW Polo (TA, 2022). The 2022 Green Cape report on EVs has found there is a lack of skills to drive EV development in South Africa (GC, 2022). It states the following insufficiencies relating to the EV value chain: Electrical engineering and mechatronics skills Regulatory compliance knowledge Advanced materials engineering Advanced ICT skills Research and development capabilities Robotics Vehicle maintenance and repair skills A few training programs have been launched to add the required EV skills. The Porsche Aftersales Vocational Education Training Centre, Retail Motor Industry Organisation, Automotive Remanufacturers’ Association and the Vehicle Testing Association are among those who have launched EV training programs (Malinga, 2022). Audi became the first Original Equipment Manufacturer in South Africa to train first responders on how to handle EV incidents (Audi, 2022). Utilizing a R30 million pledge by the UK government, the South African government launched the Yakh’iFuture. The program is aimed at upskilling engineering students to assist in the transition to new electric vehicle manufacturing in the country (BT, 2022b). Jobs at refineries and service stations will also be impacted by the shift to EVs (Tips, 2019). If service stations don’t pivot to support electric cars, thousands of jobs in the industry may be lost. These include petrol attendants, service kiosk workers and marketers. It again highlights the widespread impact that EVs will have throughout the value chain. Conclusion The changes brought about by EV expansion have many avenues. Manufacturing will have to adapt, future energy plans will be influenced by EV developments, the planning of cities and buildings will have to incorporate the technology at a rapid rate and eventually, EV charging may even influence how people structure their day. It is a technology tsunami that will wipe the automotive landscape as we know it, but with it comes a myriad of opportunities to boost jobs and the South African economy. Understanding the rapid EV development, how it operates, and the extensive influence thereof is also important for creating the context for the situation in which Eskom finds itself. Policies, together with technology and skills development, will impact both the local and international demand for EVs, which in turn holds significance for the country’s energy supply and demand. As South Africa’s main supplier of electricity, this will invariably affect Eskom’s future operations. Chapter 3: Methodology Introduction To establish whether South Africa’s current energy supplier will be able to generate sufficient electricity to support an EV market reliably, secondary quantitative data was used. The information was obtained from Eskom and includes both demand and supply scenarios for the three-year points: 2022, 2030 and 2040. Data on the EV’s future market penetration at three different levels (low, medium and high) was also supplied by Eskom (Eskom, 2019). The information was reworked by an electric vehicle and solar energy advisor to establish whether or not there will be enough electricity available to charge all the electric cars on South Africa’s roads in future. Source of Data The data was sourced from a 2019 Eskom presentation as well as the latest forecasts obtained from the utility in 2023 (the data provided is not publicly available yet) on the future of electric transportation in South Africa. The state-owned entity continues to generate the majority of the country’s electricity requirements. Eskom is therefore the best current source of information about future energy demand projections. It also has an in-house e-mobility research program and has been focusing on the development of the local EV market since the early 1990s. The electric vehicle and solar energy advisor used for this study was the Transport Energy Consultant at Eskom between 1992 and 2002, after which he continued exploring the e-mobility sector in South Africa through research and consulting work. Analysis The advisor provided data on the average amount of electricity required to sufficiently sustain an EV for one year of road travel. The data was then merged with Eskom’s projections on different EV market penetration levels at three-year points, to calculate the total energy demand stemming from EVs alone per year. These figures were then compared to Eskom’s future energy projections over the same period to establish whether sufficient supply will be available. Limitations Although Eskom may be best placed to provide details on South Africa’s energy needs and demands, there are limitations to their information. Seeing as the projections are for a long period into the future, slight changes in either the energy supply or demand side may have significant impacts on the results. These changes may include a different reality to the previous assumptions made by Eskom when calculating energy supply. This flaw is evident in the country’s Integrated Resources Plan 2019, where the forecasted electricity supply by the state-owned entity is yet to be realized as projected. This is largely due to faulty power generators and a delay in its renewable energy program. The economic growth assumptions the forecast is based on also never realized due to the Covid-19 pandemic and other factors. It also doesn’t consider how many EV owners may end up charging their EV using private renewable energy sources, whether at home, office, or a shopping mall (for example). The uptake of EVs may also evolve differently due to external factors. Some examples may include a rapidly increasing fuel price (as seen in 2022), which could prompt more motorists to buy EVs, expanding the market at a quicker rate than would have been otherwise anticipated. The implementation of government support policies to promote EV adoption could also spur market growth quicker than originally envisaged. On the opposite end, a continued economic slump may limit EV market growth. Despite these concerns, Eskom has been in existence for nearly 100 years. It is therefore the best possible source of information when it comes to South Africa’s electricity analysis. Similar Forecasts A study conducted by the American Government, examined similar forecasts to Eskom. Based on EV sales, future energy demand was modelled based on low, medium or high EV market penetration between 2020 and 2050 (USD, 2019). This was done to establish whether there will be sufficient electricity generation to support the increased demand brought by EV expansion. The document cites technological developments as one of the future uncertainties that could impact the end result of the study. Improved energy efficiency is one example. It further highlights the importance of off-peak charging as to not overpower the grid. The study therefore went further than Eskom’s data by providing different charging strategies. Another study about the impact of various projected levels of EV market penetrations on the electrical grid was conducted by the European Commission (EC, 2018). It considered the uptick in electricity demand by EV charging and whether sufficient electricity is expected to be generated to support the market. Like the US study, it too went further, taking the impact of the anticipated increase in demand per various charging strategies into account. The study recognizes that EV won’t just change the overall electricity demand, it may also change the shape of the hourly load curve of the power system. Calculations and Results The data provided by Eskom and the energy analyst have been assembled and calculated in the following Excel spreadsheet: Calculations Energy Potential Hours = Electricity (hrs/yr) x Projected Installed Capacity (GW) Total Energy Demand Hours = Electricity (hrs/yr) x Energy Demand (GW) Electricity need (GWh) = {[ average energy (kWh) required to travel 100km x average distance (km) travelled in one calendar year ] /100 } x (total registered EV/1000000) Percentage of Potential available electricity = Electricity need (GWh) / Energy Potential Hours Percentage of Demand = Electricity need (GWh) / Energy Demand Hours Findings Scenario 1 A Low EV market penetration in 2022 sees an energy demand of 0,44GW per year. This is equivalent to 0,0001% of the total energy potential and 0,0001% of total energy demand in 2022. The Projected Energy Demand for 2022 is 30GW, while the Projected Capacity is 44GW. Therefore, sufficient energy on average will be available to support the added EV demand in a low market penetration scenario. Scenario 2 A Medium EV market penetration in 2022 sees an energy demand of 1,324GW per year. This is equivalent to 0,0003% of the total energy potential and 0,0005% of total energy demand in 2022. The Projected Energy Demand for 2022 is 30GW, while the Projected Capacity is 44GW. Therefore, sufficient energy on average will be available to support the added EV demand in a medium market penetration scenario. Scenario 3 A High EV market penetration in 2022 sees an energy demand of 4,9GW per year. This is equivalent to 0,3% of the total energy potential and 0,002% of total energy demand in 2022. The Projected Energy Demand for 2022 is 30GW, while the Projected Capacity is 44GW. Therefore, sufficient energy on average will be available to support the added EV demand in a high market penetration scenario. Scenario 4 A Low EV market penetration in 2030 sees an energy demand of 325,94GW per year. This is equivalent to 0,048% of the total energy potential and 0,078% of total energy demand in 2030. The Projected Energy Demand for 2030 is 48GW, while the Projected Capacity is 78GW. Therefore, sufficient energy on average will be available to support the added EV demand in a low market penetration scenario. Scenario 5 A Medium EV market penetration in 2030 sees an energy demand of 371,3GW per year. This is equivalent to 0,054% of the total energy potential and 0,088% of total energy demand in 2030. The Projected Energy Demand for 2030 is 48GW, while the Projected Capacity is 78GW. Therefore, sufficient energy on average will be available to support the added EV demand in a medium market penetration scenario. Scenario 6 A High EV market penetration in 2030 sees an energy demand of 416,656GW per year. This is equivalent to 0,061% of the total energy potential and 0,099% of total energy demand in 2030. The Projected Energy Demand for 2030 is 48GW while the Projected Capacity is 78GW. Therefore, sufficient energy on average will be available to support the added EV demand in a high market penetration scenario. Scenario 7 A Low EV market penetration in 2040 sees an energy demand of 668,904GW per year. This is equivalent to 0,064% of the total energy potential and 0,141% of total energy demand in 2040. The Projected Energy Demand for 2040 is 54GW, while the Projected Capacity is 120GW. Therefore, sufficient energy on average will be available to support the added EV demand in a low market penetration scenario. Scenario 8 A Medium EV market penetration in 2040 sees an energy demand of 1971,624GW per year. This is equivalent to 0,188% of the total energy potential and 0,417% of total energy demand in 2040. The Projected Energy Demand for 2040 is 54GW, while the Projected Capacity is 120GW. Therefore, sufficient energy on average will be available to support the added EV demand in a medium market penetration scenario. Scenario 9 A High EV market penetration in 2040 sees an energy demand of 3274,344GW per year. This is equivalent to 0,311% of the total energy potential and 0,692% of total energy demand in 2040. The Projected Energy Demand for 2040 is 54GW, while the Projected Capacity is 120GW. Therefore, sufficient energy on average will be available to support the added EV demand in a high market penetration scenario. Eskom’s Conundrum The calculations are based on an increase in energy demand due to EV adoption spread evenly across the energy supply spectrum. Energy demand, however, is not a constant throughout a 24-hr period. Peak hours see a noticeable spike in demand. In its own research, Eskom raises its concerns about the impact of simultaneous EV charging during peak hours, as this may pose supply challenges. Concerns also exist about whether local infrastructure will be able to accommodate the influx of energy demand, especially during peak hours. The following Eskom graphs represent the electricity demand (MW) spread across a 24-hour period as indicated by the blue area. It assumes 3,2% of all registered passenger vehicles are EV (at 2019 passenger car figures) and the added demand, stemming from charging at different times throughout the day, is then added in red. In the first instance, the demand from EV charging is represented as being spread evenly throughout the day. Effect of EV Charging on the National Grid in a 24-hour period Source: Eskom, 2019 This, however, does not represent a realistic scenario. The second graph takes a look at the demand spike when all EV owners charge their vehicles during peak hour. This is considered a dangerous scenario, as it could easily overpower the infrastructure and out-demand supply at that current point in time. Effect of all EV Charging during afternoon peak hour on the National Grid in a 24-hour period Source: Eskom, 2019 To avoid this, EV drivers will have to be incentivized to charge at non-peak hours. As seen in both the European and US studies, an optimized charging strategy will have to be implemented to avoid demand outstripping supply during peak hours. The last graph is an indication of how little impact there would be on the grid should EV owners only charge during off-peak hours. Effect of all EV Charging during off-peak hours on the National Grid in a 24-hour period Source: Eskom, 2019 Conclusion In the scenarios explored, energy demand, including the added EV requirements, is spread evenly over the time period of a year. Based on the assumptions made by Eskom, the state-owned entity is expected to have sufficient energy-generating capacity to support a projected EV market over the next 20 years. There are, however, potential realistic factors that may derail Eskom’s support of South Africa’s EV market. The early establishment of an optimized charging strategy will be a key factor in avoiding a negative impact on the country’s electrical grid. A special thank you to EV and renewable energy expert, Carel Snyman, for his invaluable input and assistance in compiling the methodology. Chapter 4: Conclusion The global EV market is gaining traction at an accelerated pace. Unfortunately, South Africa is lagging the required development in the EV space (apart from some limited pockets of progress). The country currently does not have the skills or policy to ensure we limit fiscal and job losses that will accompany the incoming transformation from ICE to EV. At least, if current projections materialize, the state utility, Eskom will be able to provide sufficient electricity to support the added demand stemming from the uptake of EV by local consumers. Without meaningful change to the grid, however, increasing EV in South Africa will do little to mitigate against climate change in the short to medium term. The expansion of the Electric Vehicle market in South Africa will happen. It’s just unclear how long exactly it’s going to take to reach a significant level. What is certain is that the switch from ICE vehicles to EVs is happening at a much faster rate in developed countries, many of them being South Africa’s trading partners. This alone should incentivize government to actively drive EV expansion to avoid job, income and economic losses. It will further ensure the country can capitalize on EV opportunities, like battery development, while mitigating the possible damage brought about by the transition. Authorities will also have to work together with stakeholders in establishing a tax system that doesn’t kill EV adoption, while supporting the industry through a subsidy measure. Eskom is also changing, and chances are that South Africa’s energy landscape will look vastly different in 20 years’ time to what may be envisioned today. It’s understood that part of this change will be the incorporation of more green energy sources. More people are further expected to be capable of generating some solar power at home in future, which could decrease pressure on Eskom while providing cleaner charging. Electric Vehicles in South Africa is not a question of if, but when. It’s vital for the South African government, together with the private sector, to ensure every link in the EV chain is prepped for this tech take-over. It’s crucial for the country to stop limping behind the curve, to avoid financial and job losses but also to use this as an opportunity to tap into a market that holds countless benefits in economic potential. References Abnett, K., 2022. EU legislators back ban on new fossil-fuel cars from 2035 [Online] Available at: https://www.businesslive.co.za/bd/life/motoring/2022-06-09-eu-legislators-back-ban-on-new-fossil-fuel-cars-from-2035/ [Accessed: 20 June 2022] Alali, L., Gagliardi, D., Niesten, E., 2022. The impact of UK financial incentives on the adoption of electric fleets: The moderation effect of GDP change [Online] Available at: https://www.sciencedirect.com/science/article/pii/S0965856422000994 [Accessed: 25 June 2022] Audi, 2022. Audi progresses electric vehicle safety training for South African First Responders [Online] Available at: https://www.audi.co.za/za/web/en/keep-up-to-date/audi-news/local-news/audi-progresses-electric-vehicle-safety-training-for-south-afric.html [Accessed: 20 August 2022] Automotive Industry Export Council (AIEC), 2021. Automotive Export Manual 2021 [Online] Available at: https://naacam.org.za/wp-content/uploads/2021/04/AutomotiveExportManual2021.pdf [Accessed: 20 August 2022] Auto Trader (AT), 2021. Electric Vehicle Buyers Survey 2021 [Online] Available at: https://reports.autotrader.co.za/industry/2021-electric-vehicle-buyers-survey/ [Accessed: 2 August 2022] Auto Trader (AT), 2022. New & Used Mini Cars for Sale [Online] Available at: https://www.autotrader.co.za/cars-for-sale/mini?fueltype=Electric&priceoption=RetailPrice [Accessed: 25 August 2022] Badik, P., Fishbone, A., Shahan, Z., 2017. Electric Vehicle Charging Infrastructure: Guidelines for Cities [Online] Available at: https://nj.gov/dep/drivegreen/GuidelinesforCities.pdf [Accessed: 25 August 2022] Barron, C., 2022. State policy stalling SA EV plans [Online] Available at: https://www.timeslive.co.za/sunday-times/business/business/2022-09-11-state-policy-stalling-sa-ev-plans/[Accessed: 20 September 2022] BBC, 2021. Jaguar car brand to be all-electric by 2025 [Online] Available at: https://www.bbc.com/news/business-56072019 [Accessed: 12 June 2022] Blackmon, D., 2022. Skyrocketing Lithium Prices Highlight Need For New Technologies [Online] Available at: https://www.forbes.com/sites/davidblackmon/2022/05/02/skyrocketing-lithium-prices-highlight-need-for-new-technologies/?sh=a4de6e1b2732 [Accessed: 4 August 2022] BMW, 2022. The iX3 [Online] Available at: https://www.bmw.co.za/en/all-models/x-series/iX3/showroom/bmw-ix3-highlights.html [Accessed: 20 August 2022] Business Tech (BT), 2020. Cape Town launches free electric car charging station [Online] Available at: https://businesstech.co.za/news/motoring/454080/cape-town-launches-free-electric-car-charging-station/ [Accessed: 12 August 2022] Business Tech (BT), 2022a. Electric cars seen as risky in South Africa because of load shedding: minister [Online] Available at: https://businesstech.co.za/news/motoring/571838/electric-cars-seen-as-risky-in-south-africa-because-of-load-shedding-minister/ [Accessed: 29 June 2022] Business Tech (BT), 2022b. Big boost for electric vehicles in South Africa [Online] Available at: https://businesstech.co.za/news/ [Accessed: 23 September 2022] Cars.co.za (Cars), 2022. New Porsche Taycan Specs & Prices in South Africa [Online] Available at: https://www.cars.co.za/newcars/Porsche/Taycan/ [Accessed: 20 August 2022] Chewpreecha, U., Hanssen, S., Huijbregts,M., Knobloch, F., Lam, A., Mercure, J., Pollitt, H., Salas, P., 2020. Net emission reductions from electric cars and heat pumps in 59 world regions over time [Online] Available at: https://www.nature.com/articles/s41893-020-0488-7 [Accessed: 12 May 2022] Climate Action Tracker (CAT), 2020. Paris Agreement Compatible Sectoral Benchmarks [Online] Available at: https://climateactiontracker.org/documents/753/CAT_2020-07-10_ParisAgreementBenchmarks_FullReport.pdf [Accessed: 4 May 2022] Deloitte (Del), 2019. Rooting SA: Strengthening the local automotive industry [Online] Available at: https://www2.deloitte.com/za/en/pages/consumer-industrial-products/articles/rooting-sa.html [Accessed: 20 August 2022] Deloitte (Del), 2020. Electric vehicles: Setting a course for 2030 [Online] Available at: https://www2.deloitte.com/us/en/insights/focus/future-of-mobility/electric-vehicle-trends-2030.html [Accessed: 10 May 2022] Department of Mineral Resources and Energy (DMRE), 2019. Integrated Resources Plan [Online] Available at: http://www.energy.gov.za/IRP/2019/IRP-2019.pdf [Accessed: 29 June 2022] Department of Trade, Industry and Competition (dtic), 2021. Auto Green Paper on the Advancement of New Energy vehicles in South Africa [Online] Available at: https://www.gov.za/sites/default/files/gcis_document/202105/44606gen308.pdf [Accessed: 29 June 2022] Du Toit, A., 2022. Audi electric car customers in South Africa can now get a “world-first” solar-powered home charger [Online] Available at: https://topauto.co.za/news/55103/audi-electric-car-customers-in-south-africa-can-now-get-a-world-first-solar-powered-home-charger/ [Accessed: 25 August 2022] Eisenstein, P., 2021. Mercedes-Benz Goes All-Electric By 2030 [Online] Available at: https://www.forbes.com/wheels/news/mercedes-benz-all-electric-2030/ [Accessed: 12 June 2022] Electric Vehicle Database (EVD), 2022. Energy consumption of full electric vehicles [Online] Available at: https://ev-database.org/cheatsheet/energy-consumption-electric-car [Accessed: 18 May 2022] Eskom, 2019. Eskom’s perspective on electric transportation [Online] Available at: https://www.esi-africa.com/wp-content/uploads/2019/05/PowerPoint-AUW-2019-Eskom-e-Mobility-Derryl.pdf [Accessed: 12 May 2022] Eskom, 2022. Medupi Projects [Online] Available at: https://www.eskom.co.za/eskom-divisions/gx/coal-fired-power-stations/medupi-projects/ [Accessed: 4 August 2022] European Commission (EC), 2018. Effect of electromobility on the power system and the integration of RES [Online] Available at: https://ec.europa.eu/energy/sites/ener/files/documents/metis_s13_final_report_electromobility_201806.pdf [Accessed: 21 September 2022] EV Box (EVB), 2020. EV charging infrastructure incentives in Europe 2022 [Online] Available at: https://blog.evbox.com/ev-charging-infrastructure-incentives-eu [Accessed: 29 June 2022] EV Charge (EVch), 2022. Charging Levels [Online] Available at: https://evcharge.co.za/learn-electric-vehicle-charging-south-africa/ [Accessed: 25 June 2022] Fingas, J., 2021. VW expects EVs to represent half of its vehicle sales by 2030 [Online] Available at: https://www.engadget.com/vw-ev-sales-2030-target-153212862.html?guccounter=1 [Accessed: 6 June 2022] Fortune Business Insights (FBI), 2020. Electric Vehicle Market [Online] Available at: ttps://www.fortunebusinessinsights.com/industry-reports/electric-vehicle-market-101678 [Accessed: 10 May 2022] Global Sustainable Electricity Partnership (GSEP), 2021. EVs in China Will Account for 40% of Sales, 50 Million Vehicles and 200 TWh Demand in 2030 [Online] Available at: https://globalelectricity.org/case-studies/development-of-ev-in-china-40-of-sales-in-2030-50-million-vehicles-200-twh-demand/ [Accessed: 12 May 2022] Gnann, T., Münzel, C., Plöts, P., Sprei, F., 2019. How large is the effect of financial incentives on electric vehicle sales? – A global review and European analysis [Online] Available at: https://www.researchgate.net/publication/335324217_How_large_is_the_effect_of_financial_incentives_on_electric_vehicle_sales_-_A_global_review_and_European_analysis [Accessed: 25 June 2022] Gopal, A., Jenn, A., Springel, K., 2018. Effectiveness of electric vehicle incentives in the United States [Online] Available at: https://www.sciencedirect.com/science/article/abs/pii/S0301421518302891 [Accessed: 25 June 2022] Government of Dubai (GoD), 2022. Own an electric vehicle and avail these benefits [Online] Available at: https://www.rta.ae/wps/portal/rta/ae/home/promotion/electric-cars [Accessed: 29 June 2022] Green Cape (GC), 2022. Electric Vehicles Market Intelligence Report [Online] Available at: https://www.westerncape.gov.za/110green/files/atoms/files/EV_MIR_29_3_22_FINAL.pdf [Accessed: 4 August 2022] Hausfather, Z., 2019. Factcheck: How electric vehicles help to tackle climate change [Online] Available at: https://www.carbonbrief.org/factcheck-how-electric-vehicles-help-to-tackle-climate-change/ [Accessed: 14 May 2022] IFO Institute (IFO), 2019. Electric Vehicles are not a Panacea for Climate Change [Online] Available at: https://www.ifo.de/en/node/37982 [Accessed: 10 May 2022] International Energy Agency (IEA), 2021. Trends and developments in electric vehicle markets [Online] Available at: https://www.iea.org/reports/global-ev-outlook-2021/trends-and-developments-in-electric-vehicle-markets [Accessed: 14 May 2022] International Energy Agency (IEA), 2022a. Electric car sales continue to break records, but mineral supply constraints are looming [Online] Available at: https://www.iea.org/reports/global-ev-outlook-2022/executive-summary [Accessed: 17 September 2022] International Energy Agency (IEA), 2022b. Global EV Data Explorer [Online] Available at: https://www.iea.org/articles/global-ev-data-explorer [Accessed: 29 June 2022] International Energy Agency (IEA), 2022c. Critical minerals threaten a decades-long trend of cost declines for clean energy technologies [Online] Available at: https://www.iea.org/commentaries/critical-minerals-threaten-a-decades-long-trend-of-cost-declines-for-clean-energy-technologies [Accessed: 29 June 2022] Jaguar (Jag), 2022. Jaguar announced pricing for all-electric i-Pace in South Africa [Online] Available at: https://www.jaguar.co.za/news/jaguar-announces-pricing-for-all-electric-i-pace-suv-in-sa.html [Accessed: 22 August 2022] Jenn, A., 2018b. Assessing Alternatives to California's Electric Vehicle Registration Fee [Online] Available at: https://escholarship.org/uc/item/62f72449[Accessed: 20 August 2022] Kia, 2022. How long does it take to charge an electric car? [Online] Available at: https://www.kia.com/dm/discover-kia/ask/how-long-does-it-take-to-charge-an-electric-car.html [Accessed: 25 June 2022] Kurmelovs, R., 2022. ‘Gone ballistic’: lithium price rockets nearly 500% in a year amid electric vehicle rush [Online] Available at: https://www.theguardian.com/australia-news/2022/feb/09/gone-ballistic-lithium-price-rockets-nearly-500-in-a-year-amid-electric-vehicle-rush [Accessed: 4 August 2022] Labuschagne, H., 2022. Eskom’s costly Medupi disaster — damage report after generator explodes [Online] Available at: https://mybroadband.co.za/news/energy/443528-eskoms-costly-medupi-disaster-damage-report-after-generator-explodes.html [Accessed: 4 August 2022] Li, C., Li, Z., Sun, X., Wang, X., 2019. Technology Development of Electric Vehicles: A Review [Online] Available at: https://www.mdpi.com/1996-1073/13/1/90/htm [Accessed: 13 May 2022] Malinga, S., 2021. Toyota unveils Corolla Cross, SA’s first locally-produced hybrid vehicle [Online] Available at: https://www.itweb.co.za/content/JBwEr7nBOBX76Db2 [Accessed: 20 August 2022] Malinga, S., 2022. Skills pivotal to transition towards electric mobility [Online] Available at: https://www.itweb.co.za/content/mYZRX79gJZJqOgA8 [Accessed: 20 August 2022] Manu, B., 2019. Unpacking the Technical and Perception barriers to electric vehicle uptake in South Africa [Online] Available at: http://scholar.sun.ac.za/handle/10019.1/107248 [Accessed: 4 August 2022] Miller, J., 2020. Electric car costs to remain higher than traditional engines [Online] Available at: https://www.ft.com/content/a7e58ce7-4fab-424a-b1fa-f833ce948cb7 [Accessed: 5 August 2022] Milton, B., 1998. Control Technologies in Spark-Ignition Engines [Online] Available at: https://www.sciencedirect.com/topics/earth-and-planetary-sciences/catalytic-converter [Accessed: 20 August 2022] Mini, 2022. Electric [Online] Available at: https://www.mini.co.za/en_ZA/home/range/electric.html?gclid=EAIaIQobChMI45be15_x-QIVie_tCh3U-A3KEAAYASAAEgLNrfD_BwE&gclsrc=aw.ds [Accessed: 20 August 2022] Moeletsi, M, 2021a. Socio-Economic Barriers to Adoption of Electric Vehicles in South Africa: Case Study of the Gauteng Province [Online] Available at: https://www.mdpi.com/2032-6653/12/4/167#framed_div_cited_count [Accessed: 2 August 2022] Moeletsi, M., Tongwane, M., 2021b. Status of electric vehicles in South Africa and their carbon mitigation potential [Online] Available at: https://www.sciencedirect.com/science/article/pii/S2468227621003033 [Accessed: 12 August 2022] Morris, J., 2020. Get Ready For Heavy Taxes On Electric Vehicles [Online] Available at: https://www.forbes.com/sites/jamesmorris/2020/11/21/get-ready-for-heavy-taxes-on-evs/?sh=34a0064b4407 [Accessed: 20 August 2022] National Traffic Information System (Natis), 2022. Live Vehicle Population 2022 [Online] Available at: https://www.natis.gov.za/index.php/statistics/live-vehicle-population/live-vehicle-population-2022 [Accessed: 25 August 2022] Omarjee, L., 2022. Renewables bid window extended as energy crisis prompts govt to double procurement capacity [Online] Available at: https://www.news24.com/fin24/economy/renewables-bid-window-extended-as-energy-crisis-prompts-govt-to-double-procurement-capacity-20220803 [Accessed: 4 August 2022] Partridge, J., 2021. Electric cars ‘will be cheaper to produce than fossil fuel vehicles by 2027’ [Online] Available at: https://www.theguardian.com/business/2021/may/09/electric-cars-will-be-cheaper-to-produce-than-fossil-fuel-vehicles-by-2027 [Accessed: 2 August 2022] PlugShare (PS), 2022. PlugShare [Online] Available at: https://www.plugshare.com [Accessed: 2 August 2022] PodPoint (PP), 2022. Electric Vehicle Guides [Online] Available at: https://pod-point.com/guides/vehicles? [Accessed: 20 May 2022] Skibell, A., 2021. Electric Vehicle Adoption Not Happening Fast Enough to Meet Climate Goals [Online] Available at: https://www.scientificamerican.com/article/electric-vehicle-adoption-not-happening-fast-enough-to-meet-climate-goals/ [Accessed: 17 September 2022] Sky News (Sky), 2022. South Australia close to dumping EV tax [Online] Available at: https://www.skynews.com.au/australia-news/politics/south-australia-close-to-dumping-ev-tax/video/3028c4a0411236aef66f2141d1c1ab46 [Accessed: 21 August 2022] Stats SA (Stats), 2021. A deep dive into the price of fuel [Online] Available at: https://www.statssa.gov.za/?p=14933 [Accessed: 12 August 2022] Stats SA (Stats), 2022. Quarterly Labour Force Survey Q1: 2022 [Online] Available at: https://www.statssa.gov.za/publications/P0211/Presentation%20QLFS%20Q1%202022.pdf [Accessed: 4 August 2022] Stoddard, E., 2022. It’s 100MW or bust: Power to the people after embedded generation threshold set in stone [Online] Available at: https://www.dailymaverick.co.za/article/2021-08-12-its-100mw-or-bust-power-to-the-people-after-embedded-generation-threshold-set-in-stone/ [Accessed: 8 October 2022] Tesla, 2022. Model 3 [Online] Available at: https://www.tesla.com/model3 [Accessed: 20 August 2022] The Economist (Econ), 2022. The electric-vehicle revolution is not happening fast enough [Online] Available at: https://www.economist.com/graphic-detail/2022/06/02/the-electric-vehicle-revolution-is-not-happening-fast-enough [Accessed: 17 September 2022] The International Council on Clean Transportation (ICC), 2019. Overview of global zero-emission vehicle mandate programs [Online] Available at: https://theicct.org/wp-content/uploads/2021/06/Zero-Emission-Vehicle-Mandate-Briefing-v2.pdf [Accessed: 5 May 2022] The International Council on Clean Transportation (ICC), 2021. A global overview of zero-emission zones in cities and their development progress [Online] Available at: https://theicct.org/sites/default/files/publications/global-cities-zez-dev-EN-aug21.pdf [Accessed: 29 June 2022] TopAuto (TA), 2022. Impressive Toyota Corolla Cross sales – More popular than the VW Polo [Online] Available at: https://topauto.co.za/news/41480/impressive-toyota-corolla-cross-sales-more-popular-than-the-vw-polo/ [Accessed: 20 August 2022] Trade & Industrial Policy Strategies (Tips), 2019. Exploring the Policy Impacts of a Transition to electric vehicles in South Africa [Online] Available at: https://www.tips.org.za/research-archive/sustainable-growth/green-economy/item/3646-exploring-the-policy-impacts-of-a-transition-to-electric-vehicles-in-south-africa [Accessed 5 August 2022] Trade & Industrial Policy Strategies (Tips), 2022. Towards an inclusive rollout of electric vehicles in South Africa [Online] Available at: https://www.tips.org.za/policy-briefs/item/4323-towards-an-inclusive-rollout-of-electric-vehicles-in-south-africa [Accessed: 5 August 2022] Trading Economics (TE), 2022. Lithium [Online] Available at: https://tradingeconomics.com/commodity/lithium [Accessed: 5 August 2022] Transport and Environment (TaE), 2019. Electric car ‘hatchet job’ debunked [Online] Available at: https://www.transportenvironment.org/discover/electric-car-hatchet-job-debunked/ [Accessed: 10 May 2020] UK Government (UK), 2021. Net Zero Review Final Report [Online] Available at: https://www.gov.uk/government/publications/net-zero-review-final-report [Accessed: 20 August 2022] UK Government (UK), 2022. COP26 declaration on accelerating the transition to 100% zero emission cars and vans [Online] Available at: https://www.gov.uk/government/publications/cop26-declaration-zero-emission-cars-and-vans/cop26-declaration-on-accelerating-the-transition-to-1IEA00-zero-emission-cars-and-vans [Accessed: 12 May 2022] United Nations (UN), 2015. Paris Declaration on Electro-Mobility and Climate Change & Call to Action [Online] Available at: https://unfccc.int/media/521376/paris-electro-mobility-declaration.pdf [Accessed: 4 May 2022] US Drive (USD), 2019. Summary report on EVs at scale and the U.S electric power system [Online] Available at: https://www.energy.gov/sites/prod/files/2019/12/f69/GITT%20ISATT%20EVs%20at%20Scale%20Grid%20Summary%20Report%20FINAL%20Nov2019.pdf [Accessed: 20 September 2022] Virta, 2022. Here's how EU legislation accelerates the EV revolution [Online] Available at: https://www.virta.global/blog/this-is-how-eu-regulation-accelerates-the-electric-vehicle-revolution [Accessed: 29 June 2022] Voelcker, J., 2021. EVs explained: Battery Capacity, Gross versus Net [Online] Available at: https://www.caranddriver.com/features/a36051980/evs-explained-battery-capacity-gross-versus-net/ [Accessed: 25 June 2022] Volkswagen (Volk), 2022a. How electric car incentives around the world work [Online] Available at: https://www.volkswagenag.com/en/news/stories/2019/05/how-electric-car-incentives-around-the-world-work.html# [Accessed: 20 June 2022] Volkswagen (Volk), 2022b. Electric Vehicles Only! [Online] Available at: https://www.volkswagenag.com/en/news/fleet-customer/2021/04/e-parking.html# [Accessed: 25 June 2022] Volvo (Vol), 2021. Volvo plans to be fully electric by 2030 [Online] Available at: https://www.volvocars.com/intl/news/electrification/volvo-plans-to-be-fully-electric-by-2030/?navFromLatest=false [Accessed: 12 June 2022] Wayland, M., 2021a. Auto executives say more than half of U.S. car sales will be EVs by 2030, KPMG survey shows [Online] Available at: https://www.cnbc.com/2021/11/30/auto-executives-say-more-than-half-of-us-car-sales-will-be-evs-by-2030-kpmg-survey-shows.html [Accessed: 12 May 2022] Wayland, M., 2021b. Ford ups EV investments, targets 40% electric car sales by 2030 under latest turnaround plan [Online] Available at: https://www.cnbc.com/2021/05/26/ford-ups-ev-investments-targets-40percent-electric-car-sales-by-2030-under-latest-turnaround-plan.html [Accessed: 6 June 2022] World Economic Forum (WEF), 2022. Why electric cars are getting pricier even as batteries get cheaper [Online] Available at: https://www.weforum.org/agenda/2022/05/why-electric-cars-are-getting-pricier-even-as-batteries-get-cheaper/ [Accessed: 25 June 2022] World Resources Institute (WRI), 2021. Are We on the Brink of an Electric Vehicle Boom? Only with More Action [Online] Available at: https://www.wri.org/insights/what-projected-growth-electric-vehicles-adoption [Accessed: 13 May 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

A Report by the Global South Perspectives Network Contributing authors from the Inclusive Society Institute: Daryl Swanepoel & Dr Klaus Kotzé

Copyright © 2023 Inclusive Society Institute 50 Long Street Cape Town, 8001 South Africa Registration: 235-515 NPO All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without 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. 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 This report has been enabled through the generous support of ASLA Contents 1. Abbreviations & acronyms 2. Introduction 3. Market dynamics and trends 4. Mechanisms to support infrastructure investment 5. Challenges in infrastructure investment 5.1 Ineffective State institutions 5.2 Failure to implement programmes 5.3 SoE financial constraints 5.4 Budget underspending 5.5 Inappropriate SCM and procurement practices 5.6 Tardy tender processes 5.7 Delivery performance deficiencies 5.8 Construction mafia 6. Recommendations 6.1 Support rebuilding State capacity 6.2 Professionalise the public service 6.3 Elevate project leadership 6.4 Transform supply chain management 6.5 Reimagine procurement 6.6 Establish effective delivery management systems 6.7 Prioritise value for money 6.8 Delegate essential functions 6.9 Leverage the private sector 6.10 Boost construction confidence 6.11 Tackle the construction mafia 7. Conclusion 8. References 1. Abbreviations & acronyms GDP gross domestic product GFCF gross-fixed capital formation IRC Infrastructure Report Card ISI Inclusive Society Institute JSE Johannesburg Stock Exchange MFMA Municipal Finance Management Act MTEF medium-term expenditure framework NDP National Development Plan PFMA Public Finance Management Act PPP public-private partnership Sanral South African National Roads Agency Limited SCM supply chain management SoE State-owned enterprise 2. Introduction South African economic growth has languished in the aftermath of the 2008 global economic crisis, persisting in a state of fragility, owing to a combination of global and domestic factors. Globally, the past 15 years has seen long periods of low commodity prices and devastating shocks including the Covid pandemic and the war in Ukraine. Domestically, challenges such as chronic power shortages, a faltering transportation infrastructure, particularly within the freight logistics system, and alarmingly elevated crime rates, have collectively imposed substantial impediments to the investment necessary for sustainable economic growth. The construction industry ought to be a cornerstone upon which the foundation of the economy is laid. However, the current state of the sector in South Africa falls short of the vigour and vitality it has historically possessed. The contribution of industry – comprising mining, manufacturing and construction – to gross domestic product (GDP) has been declining steadily in the last three decades, from 31.2% in 1994 to 24.4% in 2022 (World Bank, 2023). The prolonged underperformance can be traced back to a range of factors, including subdued investment levels, diminished confidence, unsustainable undercutting on tender prices and a surge in organised crime activities (Treasury, 2023). As part of its economic research, the Inclusive Society Institute (ISI) has undertaken an extensive series of dialogues with various sectors of the economy, which reveal the need for attention to three areas to propel the nation towards economic prosperity. These areas are electricity; economic infrastructure; and the troubling issue of youth unemployment. Addressing these three components should act as a catalyst, setting in motion a chain reaction to rebuild the economy. Recognising the need for innovative solutions, the Institute is actively engaged in economic modelling to assess macroeconomic proposals for financing infrastructure development. South Africa’s current economic model falls short of delivering the quantum leap required to revitalise and upgrade infrastructure, especially in a country with a growing population, high unemployment and sluggish economic growth. The unemployment rate was recorded at 32.6% (narrow definition) in the second quarter of 2023, with 7.92-million people unemployed. According to an expanded definition of unemployment that includes those discouraged from seeking work, 42.1% of the labour force was jobless in April to June 2023. In a reflection of how the past decade’s anaemic growth has affected joblessness, nearly three-million more people have become unemployed since the second quarter of 2013 (Statistics South Africa, 2023a). Economic growth is hovering below 2%, a pace insufficient to make significant strides towards achieving economic objectives. Despite reaching a peak of R4.6-trillion in 2022, the economy has only managed 0.3% growth since the prepandemic figure of R4.58-trillion. This growth lags the 3.5% rise in the country’s population over the same period (Statistics South Africa, 2023b). According to Statistics South Africa, six industries are still struggling to regain their prepandemic production levels. Among them, the construction sector finds itself in the most dire situation, remaining 23.1% smaller than what it was before the pandemic. To compound its woes, the construction industry’s decline predates the onset of Covid-19. Indeed, 2022 marked the sixth consecutive year of economic contraction for the sector, rendering it a mere shadow of its former self (Statistics South Africa, 2023b). The persistent economic stagnation in South Africa is significantly exacerbated by infrastructural challenges, most notably within the beleaguered rail sector. Chronic underinvestment and mismanagement have contributed to a dramatic collapse in services. Statistics reveal the severity of the situation, with the volume of freight transported by rail plummeting by 31% since 2017. Inefficiencies stemming from these rail woes are estimated to have imposed a cost of R250-billion on the economy in 2022 alone. Passenger rail services have not been immune to the challenges plaguing the rail system. In 2015, there were about 500-million Metrorail passenger trips, a figure that had plummeted to a mere 8.56-million in 2021 (Swanepoel, 2023). The ISI’s research underscores a critical imperative: for South Africa’s economy to achieve meaningful progress, it must aspire to growth rates of at least 4% to 5%. The current status quo is untenable and simply relying solely on anti-corruption measures and basic reforms will not suffice to attain higher economic growth. The Institute is conducting dialogues with diverse sectors to glean insights and perspectives aimed at accelerating economic growth. During its recent summit with the construction industry, the ISI delved into the development requirements for both social and economic infrastructure, which are pivotal in reshaping the trajectory of the South African economy. Additionally, the summit explored strategies for positioning the construction industry optimally to meet the demands and deliver the urgency needed. 3. Market dynamics and trends The construction industry in South Africa has undergone a dramatic change in the past 15 years, transitioning from a powerhouse to a struggling industry. In the early 2000s, blue-chip construction companies were among the top performers on the Johannesburg Stock Exchange (JSE), raking in significant profits. However, the once-thriving sector has seen its fortunes decline sharply. Some companies have collapsed, while others exited the industry altogether. Basil Read and Group Five, once prominent names, have faced financial crises and eventually collapsed. Murray & Roberts shifted its focus away from construction and entered the oil and gas engineering services sector, while Aveng narrowly survived a financial crisis. Today, WBHO is the biggest construction company on the JSE. The sector’s downturn can be attributed in part to the government’s failure to deliver on promised infrastructure projects. WBHO says in its 2022 Annual Report that the rollout of the R800-billion infrastructure development plan announced in the 2021 Budget had gained little traction, particularly following the cancellation of major projects by the South African National Roads Agency Limited (Sanral) during that year. Sanral in May 2022 cancelled and ordered the retendering of construction projects worth R17.4-billion, owing to what it claimed was a material irregularity in the tender process. By November, four of the five tenders had been re-awarded, with tenders worth R6.65-billion going to joint ventures led by foreign contractors. Despite facing fiscal constraints, South Africa continues to increase the budget allocation for infrastructure every year in a bid to direct public spending towards productive capital investment. In the 2023 Budget, the Finance Minister detailed a R903-billion infrastructure plan for the medium term, of which R351-billion will be spent on transport and logistics infrastructure, including roads, and R133-billion on water infrastructure. High levels of capital investment, or gross fixed capital formation (GFCF), typically indicate a positive outlook for future economic growth, while low levels of investment can be seen as a sign of stagnation or declining confidence. Low levels of economic growth have dampened both public and private-sector fixed capital investment, including investments in the construction industry. Although GFCF recovered to 14% of GDP in 2022, from a low of 13% in 2021, investment remains well below the National Development Plan: Vision 2030 (NDP) target of 30% by 2030 (Masondo, 2023). Investment in infrastructure has a high output multiplier effect, or significant impact on the overall economy. The construction industry, in particular, has a strong ability to create additional economic output and jobs, especially for unskilled workers. Public and private sector capital investment as a share of GDP falls below NDP target Source: 2023 Budget Review Achieving the NDP objective hinges significantly on investments made by the public sector, including State-owned enterprises (SoEs). However, public sector spending has experienced a notable decline, plummeting from 7.3% of GDP in 2015, to a mere 5.4% of GDP in 2019 (Masondo, 2023). Beyond statistics, the gradual decline in GFCF, especially in public sector investments, has tangible repercussions. It is felt in a lack of investment in crucial areas, such as rail, ports, water infrastructure, sanitation, public transport, electricity and housing. This deficiency disrupts the synergy between public and private capital formation. An increase in public infrastructure raises the productivity of private capital, as public capital is a complement to private capital. Higher private capital increases the productivity of labour and leads to higher wages, which encourages more work and incentivise higher investment in private capital. ​ State of Public Infrastructure in South Africa: A Declining Trend The condition of public infrastructure in South Africa has seen significant decline over the years, as reported in the South African Institute of Civil Engineering’s (SAICE’s) Infrastructure Report Card (IRC). Sixteen years ago, the original IRC assessment graded the country’s infrastructure at a D+. Following heavy investments in new infrastructure for the 2010 FIFA World Cup, the grade improved to a C– in 2011. Subsequent years revealed a persistent neglect of maintenance, resulting in a decline to a D+ grade in 2017. In 2022, the IRC paints an even bleaker picture, awarding South Africa’s public infrastructure the lowest-ever grade recorded by SAICE, a D. In the current assessment, only three subsectors exhibit improvement, while a worrying 12 subsectors have witnessed deterioration. Of the 13 subsectors in which grades remained unchanged, ten were already at risk of failure or worse. When assessed collectively, it becomes evident that a significant portion of South Africa’s infrastructure is nearing a state of potential failure. While there are isolated instances of well-managed and excellent infrastructure, these have become the exception rather than the norm. The SAICE scorecard highlights that while economic infrastructure, with the exception of energy generation, generally maintains a satisfactory condition, social infrastructure presents a grim picture. The further degradation of social infrastructure, including access to basic services like water, sanitation, health, education, public transport and electricity underscores the challenges ordinary citizens face daily. Source: SAICE 2022 Infrastructure Report Card for South Africa The contraction in investment can be attributed to a range of factors, encompassing a general shortage of fiscal capacity within the government, underspending of allocated budgets for infrastructure projects, protracted delays in the awarding and completion of infrastructure contracts and the acute financial constraints confronting SoEs, such as power utility Eskom and freight logistics group Transnet. 4. Mechanisms to support infrastructure investment The statistics concerning gross-fixed capital formation (GCCF) present a sobering outlook for South Africa. Nevertheless, there are grounds for optimism regarding the potential resurgence of investment in the coming years. Deputy Finance Minister David Masondo has identified several mechanisms that could serve as catalysts for this revitalisation. Infrastructure Fund: With large-scale investment touted as the tried and tested way to boost economies in the short term, the Infrastructure Fund was created in 2019 to address the need for blended finance to enable the efficient execution of infrastructure programmes and projects in South Africa. Currently housed in the Development Bank of Southern Africa, the Infrastructure Fund’s aim is to transform public infrastructure through blended financing solutions by sourcing and blending capital from the private sector, institutional investors, development finance institutions and multilateral development banks. Pension investments: Regulation 28 of the Pension Fund Act has been amended to allow institutional fund managers to invest more in assets such as infrastructure. The aim of the amendment is to explicitly enable pension funds to invest in infrastructure such as roads, renewable energy and ports. To this extent, the amendments introduce a definition of infrastructure as an asset class and set a limit of 45% exposure in South African infrastructure investment. The setting of such a maximum limit was regarded as a more ‘market-friendly’ response to calls for the introduction of ‘prescribed asset requirements’, which would have set a minimum level for pension fund investment in infrastructure projects. Division of Revenue Amendments Act: Through the 2022 Division of Revenue Amendments Act, government has enabled provincial governments to pledge their infrastructure grants to leverage more financing to fast-track the rollout of infrastructure. Pledging effectively is a means by which a province secures a loan through borrowing with a view of using or issuing a guarantee, indemnity or security as the conditional grant for the repayment of that loan. The conditional grant or portion of the conditional grant for the current financial year’s allocation and future financial years’ indicative allocations for the province are committed towards the repayment of the loan taken. Public-private partnerships (PPPs): Following a slowdown of PPPs, government has initiated a review to consider lessons learned from the application of the current PPP framework over the past eight years. The review found that there are too many steps and multiple approval bottlenecks. A lack of capacity, especially at the municipal level, led to reduced uptake for PPP projects. PPP regulations also applied to all projects, regardless of size. At national level, an incongruency between budget cycle and the PPP planning time has been highlighted. Masondo has said that a uniform planning tool for all infrastructure will be implemented and that this will mainstream the PPP cycle to link up with the Budget process. Further, while the review found that there is no need for a complete overhaul of the PPP legal and regulatory framework, some lengthy approval processes will be changed to speed up project implementation. Budget allocation: Government uses Budget allocations to support fixed capital formation. Overall, R903-billion will be spent on infrastructure projects over the medium-term expenditure framework. 5. Challenges in infrastructure investment 5.1 Ineffective State institutions Despite substantial allocations, executing infrastructure programmes often have poor outcomes, owing to ineffective State institutions. Given the substantial mandate and resources at its disposal, the State’s underperformance raises serious concerns. The capacity and credibility of South Africa’s institutions were significantly undermined during the tenure of the Jacob Zuma administration. While the Cyril Ramaphosa administration is making concerted efforts to enhance various aspects of the State, the process of recovery is anticipated to be protracted. One of the detrimental outcomes of State capture is nepotism, resulting in the appointment of unqualified individuals, especially at municipal level. 5.2 Failure to implement programmes The government’s inability to effectively implement its own programmes, as is evident in the National Development Plan: Vision 2030 (NDP), is akin to a corporate CEO failing to execute any part of a strategic vision, a situation that typically results in career repercussions. The Public Sector seems immune from such repercussions. The NDP seeks to address the triple challenges of poverty, unemployment and inequality. A recent ten-year review of the progress made since the adoption of the NDP in 2012 indicates that the vision for the future expressed in the plan has not materialised over the past decade. Significant strides were made in poverty reduction between 2006 and 2011, with the poverty rate declining from 51% to 36.4%, but subsequent years have witnessed a troubling reversal of the trend, with income poverty resurging to 40% by 2016 (National Planning Commission, 2023). South Africa is also falling short of its targets for reducing inequality targets as outlined in the NDP. The NDP’s aim is to achieve greater income equality by decreasing the Gini coefficient (measured by income) from 0.69 in 2010 to 0.60 by 2030. Inequality rose substantially between 1994 and 2006, with the Gini coefficient expanding by about 0.05 points. Although millions were lifted out of abject poverty between 2006 and 2015, more substantial benefits skewed towards higher income groups. While there was a brief reduction in inequality between 2006 and 2009, no substantial progress has been made since then (National Planning Commission, 2023). Meeting the NDP’s unemployment reduction targets appears increasingly unlikely, mainly owing to persistently low and sluggish economic growth. The NDP originally aimed to slash unemployment from 35.4% in 2010, to 20% by 2015, 14% by 2020, and 6% by 2030. The initial goal for 2015 necessitated the creation of 2.2-million jobs between 2010 and 2015, equating to an average of 436 000 jobs a year. Achieving this would have relied on an average gross domestic product (GDP) growth rate of 4.6% a year. The rate of job creation between 2010 and 2015 was robust and created the required jobs. However, as GDP growth slowed, job creation dwindled, with only 364 000 jobs created between 2015 and 2017. The interim milestone would have required employment to reach 16.8-million, but instead, it only reached 16.2-million (National Planning Commission, 2023H). The challenges in meeting the NDP unemployment reduction targets are closely linked to the broader economic landscape in South Africa, including the construction industry’s employment-creation role. The industry is historically known for being a major employer, especially for low-skilled and semi-skilled workers. However, the prevailing sluggish economic growth in South Africa has had a detrimental impact. It has caused delays in construction projects or a reduction in scale, limiting the number of job opportunities available within the industry. Budget constraints in public infrastructure spending have further hampered industry’s ability to serve as a substantial source of employment. According to Statistics South Africa, there were 118 000 construction job losses between June 2017 and June 2020. The total number of persons employed at the end of June 2020 amounted to 473 000 – a 20% decrease when compared with the workforce tally at the end of June 2017, which stood at 592 000. Notably, substantial declines were observed in both the civil engineering structures and buildings segments of the industry (Statistics South Africa, 2022). In 2023, investment in renewable energy projects has begun to show signs of the situation beginning to turn around for the South African construction sector. 5.3 SoE financial constraints The financial constraints facing State-owned enterprises (SoEs) have a detrimental impact on infrastructure development in the country. These constraints limit the government’s ability to allocate funds to critical projects and maintenance, hindering the overall effectiveness of infrastructure development initiatives. While the recapitalisation of SoEs is a positive development, the efficacy of these institutions relies heavily on the appointment of competent board members and the establishment of clear roles and responsibilities. Failing to differentiate between the roles of board and Ministerial functions lead to confusion and overlap in decision-making. 5.4 Budget underspending Government has repeatedly expressed its commitment to expanding infrastructure delivery. In the 2023 Budget, it has increased expenditure across various facets of public infrastructure. A significant portion is allocated to national roads, amounting to R48-billion a year over the 2019 to 2024 medium-term expenditure framework (MTEF). Additionally, provisions for the maintenance of provincial roads amount to another R12-billion a year. It is important to note that this budgetary growth lags the inflation rate. The budget for local and regional water infrastructure has grown rapidly, increasing from R8-billion in 2019 to a planned R17.1-billion in 2025. Spending on national water infrastructure is smaller at around R3.5-billion a year on average over the MTEF. In ontrast, spending on human settlements infrastructure is stagnant. Provinces spent R20-billion on housing in 2017, yet by 2025, the Budget plans only R20.5-billion (Sachs et al, 2023). Despite increased allocations, SoEs and public entities consistently fall short of effectively using their budget. Although not a phenomenon unique to South Africa, as literature shows that other countries also struggle with the same issue, chronic budget underspending has far-reaching implications, contributing to project delays, stunted economic growth and diminished opportunities for the construction industry. Between 2015/16 and 2017/18, SoEs and public entities spent less than 75% and 65% of their infrastructure budgets, respectively. The State as a whole spent less than 85% of its available infrastructure budget (Altman, 2023). The core of the underspending issue lies in complex procurement processes, notably relating to noncompliance with supply chain management (SCM) policy and regulations, alongside insufficient monitoring and evaluation of SCM policy adherence (Jantjies, 2023). 5.5 Inappropriate SCM and procurement practices The challenges associated with SCM and procurement within the public sector have been widely documented, underscoring the urgency of addressing this issue. One of the biggest problems of procurement is its design. Under the Public Finance Management Act (PFMA) and the Municipal Finance Management Act (MFMA), an accounting officer or accounting authority is mandated to establish a SCM unit within the office of an institution’s chief financial officer for SCM implementation. The current system places a disproportionate emphasis on financial management, neglecting the critical aspect of efficient project delivery. It has downgraded procurement into an administrative function. The PFMA and MFMA view procurement solely as part of SCM. The current public procurement system emphasises compliance checklists. The focus should include delivering value for money, a strategy that inherently reduces the scope for corruption. This reframing of the procurement processes is important for building trust with suppliers. The current SCM system constrains procuring institutions from effectively managing the interdependencies between contracts. The lack of control over the procurement process, including appointments, creates challenges. This misalignment with the PFMA and the MFMA further exacerbates the issue. Additionally, the system separates institutional decision-making from specialised professionals, such as built environment professionals, allowing individuals with clerical roles to manipulate the entire process. A shift towards value for money and integrating professional expertise could significantly change the current circumstances. 5.6 Tardy tender processes Most of the public sector tenders issued are not being awarded, leaving them in a state of pending or cancelled. National Treasury’s database shows that between September 2022 and September 2023, 64 091 tenders have been published across all spheres of government and that 16 253 have been awarded (Treasury, 2023b). What compounds the issue is the prolonged period it takes for these tenders to be awarded, which poses significant challenges for resource planning. 5.7 Delivery performance deficiencies Alongside underspending, numerous instances of cost overruns, delayed delivery and subpar value for money have been observed. Examples of overbudget projects are well documented and include the Gautrain Rapid Rail System (original budget: R6.8-billion, final cost: R25.2-billion), Transnet’s New Multi-Product Pipeline (original budget: R12.7-billion, final cost: R30.4-billion) and the Medupi and Kusile power stations, among others. 5.8 Construction mafia The construction mafia, or so-called ‘business forums’, first reared its head in KwaZulu-Natal in 2014 and 2015, invading construction sites to demand a share of projects, or that companies employ specific people or subcontractors. By 2018 and 2019, the practice also emerged in other provinces, with these forums often touting heavy-calibre weapons as they made their demands. A similar model of extortion has since spread to other industries, most notably mining. Much of the violence has subsided in KwaZulu-Natal, but it does not mean that illegal activities have stopped. Rather, extortion has become normalised and yet another cost of doing business in South Africa (Venter, 2023). Different interpretations of laws and regulations regarding localisation have created room for this criminal element to develop. Business forums are demanding 30% of the contract value be allocated to forum members, or directly to the forum itself. This figure appears to be derived from the National Treasury’s Preferential Procurement Policy Framework Act. The Act states that 30% of public procurement contracts should be contracted to designated groups, as provided for in the Preferential Procurement Regulations. National Treasury has condemned this practice as illegal (Venter, 2023). While law enforcement undoubtedly plays a role in addressing the problem, it is equally imperative to acknowledge that the rise of these mafias can be attributed to the inadequacy of effectively empowering local communities. The situation has been exacerbated by the lack of robust local government institutions equipped to handle conflict resolution, compounded by the opportunistic actions of certain local political leaders. This complex dynamic mirrors the fragmented state of politics in South Africa, where not only is the ruling party, the African National Congress, facing internal challenges, but fragmentation is also prevalent among opposition parties. 6. Recommendations 6.1 Support rebuilding State capacity The construction industry must maintain its commitment to supporting government to enhance capacity and ensure its specialised involvement in initiatives such as certification requirements and institutional strengthening. The construction industry must actively participate in national drives, such as the CEOs Pledge, to help improve State capacity. It is a collective decision to make a difference and to focus on actions that can bring about change. Industry leaders are encouraged to actively engage, to adopt a positive mindset and to refrain from mere criticism. For those with extensive experience, it is an opportune time to lend a hand and assist in execution, provided such support is welcomed. Robust executive management and technical proficiency within the State and its entities will foster stability and empower them to lead and execute with confidence. A particular emphasis must be given to developing state capacity for project design and execution. 6.2 Professionalise the public service Professionalise the public sector by investing in skilled and experienced public servants to enhance delivery outcomes. Employ professionals registered with built-environment bodies and councils. A professional public service cohort will ensure projects are managed more efficiently, transparently and comply with best practices. Addressing the issue of unqualified employees, especially at municipal level, requires an independent forensic audit of CVs to ensure qualifications and experience are accurate. Swift action, such as immediate dismissal for falsified credentials, can remedy the problem and allow for the recruitment of qualified personnel. While skills shortages exist in many municipalities, this issue is fixable. 6.3 Elevate project leadership Client delivery managers, possessing the requisite certifications and expertise, should spearhead infrastructure projects. This will ensure not only streamlined execution, but also establish a single point of accountability. 6.4 Transform supply chain management Transform infrastructure supply chain management (SCM) into a strategic function, shifting its role from being merely a clerical back office or financial/administrative task. By recognising SCM as a strategic driver, it becomes a crucial element in project planning, execution and success. 6.5 Reimagine procurement Infrastructure procurement should be decoupled from centralised purchasing systems. Instead, it should be overseen by a dedicated chief procurement officer or a high-level office specifically designated and equipped with a team of built environment professionals. This approach ensures that procurement processes are tailored to the unique demands of infrastructure projects, fostering efficiency, transparency and optimal project outcomes. 6.6 Establish effective delivery management systems To effectively implement the National Infrastructure Plan 2050, clients must put in place procurement and delivery management systems that provide governance processes. Establish clear delegations of authority to enable timeous decision-making and individual or organisational accountability for infrastructure delivery. Provide for the assignment of single-point accountability to a suitably qualified and experienced built environment practitioner to provide executive level leadership in the planning, specifying, procuring and overseeing functions. Recognise that infrastructure procurement is a central competency of those responsible for delivering infrastructure. 6.7 Prioritise value for money Prioritise ‘value for money’ over ‘least-cost’ considerations throughout the project lifecycle, recognising that a strategic approach not only enhances the project’s immediate performance, but also ensures long-term sustainability and benefits for all stakeholders. This shift in focus allows for comprehensive planning, robust risk management and the creation of infrastructure that truly serves the country’s needs. 6.8 Delegate essential functions Government entities incapable of efficiently spending their budgets should be mandated to delegate essential functions to other capable organs of State. This approach is particularly relevant in instances such as municipal water management, where a monopoly function exists, but the existing State entity struggles to fulfil its responsibilities. 6.9 Leverage the private sector In a shift from outdated government infrastructure ideologies, it is suggested that private sector efficiencies should be leveraged. Although it may challenge prevailing government norms, privatising key infrastructure assets, such as the coal line from Mpumalanga to Richards Bay, KwaZulu-Natal, has the potential to accelerate much-needed improvements, potentially addressing issues within a shorter time frame. A framework should also be developed to facilitate large-scale private sector investment in the country’s electricity transmission grid. The public-private partnership model must be streamlined for improved feasibility and user-friendliness. 6.10 Boost construction confidence While government-led infrastructure projects play a pivotal role in stimulating the construction industry, the contribution of private sector capital formation is equally indispensable. Rebuilding confidence in South Africa, its leadership, and its economic prospects is imperative to catalyse growth in the commercial and residential building and construction sectors. 6.11 Tackle the construction mafia Differentiate between genuine community concerns and criminals involved in extortion for their own gain. While law enforcement must be mandated to deal effectively with criminal elements, it is essential that local government institutions step up to the plate and take responsibility for negotiating mutually beneficial solutions. 7. Conclusion The decline of the South African construction sector is symptomatic of broader economic stagnation, characterised by inadequate investment levels, dwindling confidence and a surge in organised crime activities. To move forward, a multifaceted approach is needed. Policy changes must prioritise development of State capacity, professionalisation of the public service and transformation of supply chain management and procurement practices. These changes will create an environment for efficient project design and execution. Further, addressing the challenges posed by the construction mafia demands urgent attention. Collaborative efforts between government, industry and community stakeholders, as well as law enforcement, are necessary to combat the problem. Efforts should also be directed towards enhancing economic infrastructure, particularly railway infrastructure, and effectively addressing the prevailing energy crisis. Embracing opportunities presented by ongoing large-scale investments in renewable energy projects can be a cornerstone for industry revival. The removal of the 100 MW cap on private energy generation has resulted in a strong uptick in construction activity, as would planned investment in the country’s national electricity transmission grid. Given that economic growth is stifled due to the lack of funding, creative and innovative funding mechanisms need to be developed to fast-track economic infrastructure development. Public Private Partnerships (PPPs) and Build Operate Transfer (BOT) need to be deployed at a far larger scale. The government should revisit its public debt to GDP policy, by being more flexible with regard to higher debt levels attached to infrastructure investment. Given the economic urgency, special legislation similar to that during the 2010 Soccer World Cup ought to be considered to fast-track a major overhaul of the country’s economic infrastructure. Further research and economic modelling in this regard is recommended. 8. References Altman, M. 2023. The infrastructure drive in SA and the potential for greater construction sector dynamism, August 5, 2023. Cape Town. Jantjies, D. 2023. Government underspending analysis 2011/12 to 2022/21: The case studies of the Departments of Health and Social Development, March 2023. [Online]. Available at: https://static.pmg.org.za/2300308March_2023_Government_underspending_analysis_2011_-_2021_the_case_studies_of_the_Departments_of_Health_and_Social_Development.pdf [accessed September 9, 2023]. Masondo, D. 2023. Remarks by Deputy Minister of Finance David Masondo at the Inclusive Society Institute Construction Summit, August 8, 2023. Cape Town. National Planning Commission. 2023. A review of the National Development Plan 2030: Advancing implementation towards a more capable nation, August, 2023. [Online]. Available at: www.nationalplanningcommission.org.za/assets/Documents/NDP%20REVIEW.pdf [accessed September 11, 2023]. National Treasury. 2023. Budget Review, 2023. [Online]. Available at: https://www.treasury.gov.za/documents/national%20budget/2023/review/FullBR.pdf [accessed September 7, 2023]. National Treasury. 2023. eTender, September 9, 2023. [Online]. Available at: https://data.etenders.gov.za [accessed September 9, 2023]. South African Institution of Civil Engineering, 2022. SAICE 2022 Infrastructure Report Card for South Africa, November 2022. [Online]. https://saice.org.za/downloads/SAICE-2022-Infrastructure-Report-Card.pdf [accessed September 10, 2023]. Statistics South Africa. 2022. Construction industry, 2020, June 27, 2020.[Online]. Available at: https://www.statssa.gov.za/?p=1548 [accessed September 7, 2023]. Statistics South Africa. 2023. Quarterly Labour Force Survey, Q2:2023, August 15, 2023. [Online]. Available at: https://www.statssa.gov.za/publications/P0211/P02112ndQuarter2023.pdf[accessed September 7, 2023]. Swanepoel, D. 2023. South Africa country brief: A socio-economic and political prognosis, September 25, 2023. Stockholm. Venter, I. 2023. Is SA Inc fighting the construction mafia, or adapting to incorporate it?,Engineering News, June 27, 2023. [Online]. Available at: https://www.engineeringnews.co.za/article/is-sa-inc-fighting-the-construction-mafia-or-adapting-to-incorporate-it-2023-06-27#:~:text=The%20construction%20mafia%2C%20or%20so,employ%20specific%20people%20or%20subcontractors [accessed September 11, 2023]. World Bank. 2023. National Accounts Data, and OECD National Accounts data files. [Online]. Available at: https://data.worldbank.org/indicator/NV.IND.TOTL.ZS [accessed September 7, 2023]. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 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 Chief Executive Officer of the Inclusive Society Institute, Mr Daryl Swanepoel, represented the Institute at the Commemorative plaque unveiling ceremony and the Martti Ahtisaari legacy seminar 2025, which was held at Freedom Park in Pretoria on Thursday, 6 March 2025.   The event was held in two parts: The inscribing of the names of seven Finnish anti-apartheid actors on the Wall of Names at Freedom Park, and the Martti Ahtisaari legacy seminar.   The seminar comprised an opening address by H.E. Nkosazana Dlamini-Zuma, former Foreign Minister of South Africa; and two panel discussion:   A high level panel discussion on Martti Ahtisaari’s legacy, South Africa’s past lesson learned, the role of mediation & dialogue in the broader anti-Apartheid struggle. An expert panel discussion on the future of mediation – what challenges do mediators face now, and, in the future, what can be drawn from South African lessons and experience, what requires novel approaches and what kind of alliances need building?   The event was hosted by H.E. Mr Pekka Metso, Finland’s Ambassador to South Africa. Co-hosts were Freedom Park, Martti Ahtisaari Peace Foundation and ACCORD.

Copyright © 2023 Inclusive Society Institute PO Box 12609 Mill Street Cape Town, 8010 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 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. 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 December 2023 Author: Mariaan Webb, Creamer Media Writer Editor: Daryl Swanepoel Content Abbreviations & acronyms Overview Construction mafia tactics Root causes & perspectives Law enforcement initiatives Recommended interventions & actions Conclusion References Abbreviations & acronyms DPP : Director of Public Prosecutions HDI : historically disadvantaged person ISI : Inclusive Society Institute PPPFA : Preferential Procurement Policy Framework Act SAPS : South African Police Services Overview South Africa’s construction industry, traditionally a key driver of economic growth and development, has been grappling with a significant challenge in recent years – the encroachment of criminal elements. Known as construction mafias, these illicit networks initially surfaced in KwaZulu-Natal about a decade ago. Their influence has since expanded across all provinces, resulting in significant losses to the economy. Construction sites, ranging from small-business driven to large-scale projects, serve as prime targets for these decentralised syndicates. Leveraging local connections, they employ tactics such as extortion, violence, intimidation and disruption to advance their objectives. Extortion has seeped into the fabric of the business landscape and is now considered an unfortunate cost of doing business (Venter, 2023). This report encapsulates key insights from a seminar conducted by Inclusive Society Institute (ISI), centred on the repercussions of construction mafias on the construction industry. The seminar served as a follow-up to a previous construction summit, during which the profound impact of these illegal activities on the industry was highlighted as a major concern. Addressing the challenges posed by construction mafias is imperative to revitalise this vital sector of the economy. Over the past 15 years, the once-thriving construction industry has experienced a sharp decline, in large part owing to the government’s failure to deliver on promised infrastructure projects. Re-establishing the industry on a solid foundation is crucial, given the powerful role that construction can play in poverty reduction. Construction has an inherent capacity to generate additional economic output and jobs, particularly for low-skilled and semi-skilled workers. Construction mafia tactics Construction mafias, often labelled ‘business forums’, are networks that employ violence and other illegal means of controlling access to public sector procurement opportunities. These groups typically invade construction sites, demanding money or a stake in development projects. In 2019, at least 183 infrastructure and construction projects worth more than R63-billion had been affected by the construction mafia. Since then, invasions have continued at construction sites across South Africa (Organised Crime and Corruption Reporting Project, 2022). The interpretation of the Preferential Procurement Policy Framework Act (PPPFA) plays a key role in the activities of construction mafias. The PPPFA, aimed at promoting economic transformation and empowering historically disadvantaged individuals (HDIs), designates that 30% of public procurement contracts should be allocated to designated groups. Construction mafias misuse this provision, demanding that 30% share of the contract value accrue directly to forum members or the forum itself. Despite portraying their actions as aligned with transformation goals, the National Treasury condemned this practice as illegal. Such exploitation undermines the intended objectives of the PPPFA, hindering uplifting of HDIs and small businesses (National Treasury, 2018). Often intertwined with this deliberate misinterpretation of the PPPFA are other causes that escalate violence on construction sites, including unreasonable community expectations, gangsterism, and the exploitation of high unemployment levels during community protests against infrastructure projects. According to the South African Police Services (SAPS), construction mafias employ a range of tactics, including threatening projects with violence and heavy weaponry, demanding a share without genuine interest in the job itself. Their criminal activities extend to terrorising, intimidating, assaulting, and in some cases, even killing employees or managers on site. The use of such disruptive tactics aimed at hindering progress on construction projects is also often accompanied by theft. In gang-infested areas, like Cape Town, in the Western Cape, gang leaders go further by registering companies. If their demands for the 30% share are not met, they employ mafia tactics to intimidate construction projects. Additionally, they may coerce constructors into paying protection fees to avoid rival gang interference. This tactic further underscores the complex intertwining of criminal elements with legitimate business activities in these regions. The construction mafia has progressively established political connections, aligning with specific factions within the governing party. This association provides protection and facilitates access to state procurement opportunities. The external interference has led to increased uncertainty in fulfilling contract obligation. Contractors must now navigate not only legal and contractual requirements, but also an environment fraught with demands and threats imposed by criminal elements. This interference has created a challenging environment for contractors, impacting their ability to meet project milestones and completion deadlines. Moreover, the interest in heading off the activity of such mafias has seen the selection of subcontractors and suppliers becoming a precarious process, resulting in compromised quality and delayed project timelines. Contractors are caught between honouring legitimate contractual commitments and addressing illicit pressures from the construction mafia. The criminal justice cluster is tasked with addressing this issue as per the National Development Plan Vision 2030. Root causes & perspectives Keynote speakers at the ISI’s Construction Mafia Summit shared their insights on the factors contributing to the emergence of the construction mafia, shedding light on the dynamics that fuelled its rise. Construction sites as symbols of economic freedom The discussion highlighted the symbolic importance of construction sites as potential catalysts for economic freedom. Unemployed youth and disenfranchised communities see these sites as avenues for brighter prospects. Emphasising the democratic route, this discourse rejected violence as a means to attain economic freedom and stressed adherence to democratic principles. Blurring public and private project lines The conventional distinction between public and private projects based on where the funding for projects is coming from, was challenged. Participants highlighted a shift in perceiving both public and private endeavours as entities to further broader public interest. This departure from the traditional dichotomy necessitates a renewed emphasis on transparency and accountability within the private sector. Communities are expressing a growing demand for active involvement in decision-making processes related to construction projects. This involvement extends to critical aspects such as land acquisition and the issuance of development permits. The call for transparency and accountability resonated as a means to ensure that both public and private initiatives align with the needs and aspirations of the communities they impact. Addressing economic inequality Persistent economic inequality in South Africa took centre stage in the discussions. According to World Bank statistics, the top 10% in South Africa earn more than 65% of the total national income and the bottom 50% just 5.3% of the total (Chancer et al, 2022). Historical legacies and insufficient addressing of social justice were identified as root causes. Businesses, especially within the construction sector, have been urged to embrace transparency, accountability and inclusive practices as means to address the widening wealth gap. The construction industry is consequently perceived as a battleground for economic inclusion and the addressing of racial discrimination, amid what is felt, by many, historically, to be a corruption-prone sector. A unified stance against economic disenfranchisement is needed, emphasising the need for the private sector to recognise transparency and accountability principles. Organised crime on the rise Organised crime, specifically within the construction sector, has witnessed a noticeable upswing since 2014/15. The rise in crime in general is attributed to a broader decline in State capacity, notably during a period of State capture. This era witnessed compromised integrity and capabilities in key State-owned enterprises, fostering corruption and diminishing law enforcement effectiveness. The decline in State capacity and inefficiencies within the law enforcement sector created an environment conducive to the flourishing of organised crime. Weak governance structures, including oversight mechanisms, contribute to a lack of accountability within law enforcement agencies. Criminal networks exploit this vulnerability in accountability and law enforcement, strategically targeting construction sites for financial gain. This trend has permeated throughout the country, resulting in significant economic repercussions. Organised crime is now an existential threat to South Africa’s democratic institutions, states the Global Initiative Against Transnational Organised Crime. It argues in a September 2022 report that a more strategic response is needed to organised crime to ensure a more stable future for South Africa. Left unchecked, organised crime and its associated illicit markets will continue to inflict serious harms (Global Initiative Against Transnational Organised Crime, 2022). Solutions to address the crisis in the SAPS, as identified in government policies and documents, are not being implemented, which cannot be blamed on a lack of resources as is often cited as the reason for the country’s crime crisis. The police budget has increased substantially over the last decade, yet its ability to solve crimes has significantly diminished. The Institute for Security Studies states that, over the last 11 years, the police budget has increased by 86%, but that its ability to solve murders has decreased by 55% and the ability to solve armed robbery has dropped by 53%. Addressing the crisis requires leadership reform within the police, reinforced governance structures, and the establishment of robust independent oversight mechanisms. A failure to share information and resources among government, civil society and the private sector also hinders efforts to combat organised crime. Law enforcement initiatives Law enforcement agencies have implemented targeted plans to combat the pervasive influence of the construction mafia. This operational approach is aligned with the national competence strategy, which is under the guidance of the national commissioner. This strategy is divided into two key components: the geographical approach and the organised crime approach. Under the geographical approach, intelligence operations are strategically positioned to gather information, identify hotspots and pinpoint problematic provinces. Police teams are deployed to these hotspots, with a clear mission to stabilise and normalise affected areas. Essential infrastructure teams are mobilised to address challenges in specific regions. The organised crime approach focuses on identifying individuals, syndicates and criminal entities involved in extortion within the construction mafia. Employing unconventional methods, law enforcement collaborates with the National Prosecuting Authority, engaging in prosecutor tutorial guided investigations. This collaborative effort extends to institutions like asset forfeiture and financial investigations, differentiating between major and project investigations. Cases are categorised as criminal groupings when individuals are not linked as syndicates. Since 2019, 712 cases have been reported, with 93 currently in court. A total of 722 suspects have been arrested and 96 cases are fully completed and referred to the Director of Public Prosecutions (DPP) for decision. The DPP has issued nonprosecution certificates in 34 cases. Moreover, 165 case dockets were closed due to a lack of further information. Of the completed cases, 50 were finalised after being received from court, leading to 52 convictions with a combined sentence of 89 years and seven months. The police’s multi-dimensional and multi-operational approach includes monthly stakeholder engagements in all provinces. These forums are co-chaired by the SAPS and the business sector. Recommended interventions & actions Promoting transparent project engagement Encourage transparent and inclusive engagement practices in both public and private construction projects. Emphasise the importance of involving communities in decision-making processes, particularly regarding land acquisition and development permits. Foster a culture of openness and collaboration to build trust between project developers and communities. Tackling economic inequality Implement policies that address economic inequality, drawing insights from the World Bank’s 2022 Inequality report. Advocate for businesses, especially in the construction sector, to adopt transparent, accountable and inclusive practices to bridge the wealth gap. Create initiatives that empower HDIs, ensuring equal access to economic opportunities. Addressing racial equality Develop a unified stance against economic disenfranchisement within the construction sector. Prioritise racial equality, diversity and inclusion initiatives to eradicate discrimination in workplaces. Rooting out corruption  Implement stringent measures against companies involved in corrupt practices, holding them accountable for unethical conduct. Task the Minister of Infrastructure and Public Works with leading a cleanup process and ensuring consequences for companies involved in corrupt practices, to the extent of suspending or blacklisting such companies from accessing public procurement. Tackling organised crime Advocate for the nonclassification of the national security strategy. This crucial document should be made public and updated every year to align efforts effectively across various sectors. Transparency is vital for informed collaboration between the government, civil society and the private sector, especially concerning public safety challenges associated with organised crime. Fix crime intelligence. Implementing police reforms Address the South African Police Service’s declining capabilities by eliminating automatic promotions without performance assessments, rectifying dysfunctional disciplinary systems, and curbing compromised officers collaborating with criminal networks. Advocate for recruitment, training, supervision and accountability reforms to empower law enforcement in the fight against organised crime. Emphasise the importance of accountability for officers involved in criminal activities, calling for the removal of compromised individuals who undermine public safety through corruption and brutality. Stress the importance of establishing an effective accountability system to counteract officers working against the public’s interests and to restore confidence in law enforcement. Government-led initiatives Initiate public hearings to address issues of racism, gender discrimination and bullying within the construction sector. Consider a firearms amnesty, in accordance with the Firearms Control Act, to reduce the proliferation of illicit guns contributing to site disruptions. Infrastructure development for inclusive growth Prioritise infrastructure development as a key strategy for poverty reduction. Recognise the critical role of engineering skills in economic recovery and competitiveness, emphasising the need to retain and develop these skills. Encourage collaborative efforts among social partners, including government, business, labour and communities, to ensure uninterrupted infrastructure delivery. Community and business forum collaboration Encourage construction contractors to cease paying bribes to business forums and instead focus on providing community members access to employment and local business opportunities. Implement a District Development System to ensure collaborative efforts between communities, businesses and government in the delivery of infrastructure. Foster constructive engagement between affected communities, business forums and construction companies to address concerns and ensure compliance with the rule of law. Leadership and accountability Promote leadership accountability at all levels, both in the public and private sectors, to foster an environment of responsible and ethical practices. Establish mechanisms to monitor and enforce adherence to principles of transparency and accountability within the construction industry. Address alleged police collaboration with criminal syndicates, ensuring serious consequences for those involved. Conclusion The challenges presented by construction mafias constitute a complex and multifaceted issue, carrying far-reaching implications for South Africa. The urgent task of dismantling the construction extortion economy, especially in regions where it has entrenched itself, is formidable. Yet, overlooking the issue will have repercussions for both the construction sector and the nation at large. The repercussions transcend projects delays and associated costs. The overall toll includes lost investment, as the high-risk environment acts as a deterrent for foreign companies considering large-scale projects in the country. This, in turn, hinders economic growth and development. The emigration of skilled technical personnel further exacerbates the issue, depleting the pool of expertise available for crucial infrastructure projects. The South African Forum of Civil Engineering Contractors of South Africa made a plea for urgent government action in 2019. Directed to then Finance Minister Tito Mboweni, the plea highlighted the urgency in addressing the construction mafia. It specifically noted that 110 engineers and other highly skilled technical personnel had either left the country, or were on the verge of doing so, owing to personal risk to their lives and the lack of work because of projects being disrupted at gunpoint (Mfebe, 2019). In summary, the construction mafia is not merely a challenge of criminality; it is a complex issue which increasingly overshadows legitimate concerns about inequality and significantly impacts on the country’s economic landscape. Urgent and comprehensive collaboration is imperative to mitigate the immediate and long-term consequences of this phenomenon, ensuring the stability and growth of the construction sector, and by extension, the economy. References Chancel et al. 2022. World Inequality Report 2022. [Online]. Available at: https://wir2022.wid.world/www-site/uploads/2021/12/WorldInequalityReport2022_Full_Report.pdf [accessed November 22, 2023]. Global Initiative Against Transnational Organised Crime. 2022. Strategic Organised Crime Risk Assessment: South Africa. [Online]. Available at: https://globalinitiative.net/wp-content/uploads/2022/09/GI-TOC-Strategic-Organized-Crime-Risk-Assessment-South-Africa.pdf [accessed November 22, 2023]. Mfebe W. 2019. Construction industry up in flames: Urgent action required. [Online]. Available at: https://cdn.ymaws.com/www.safcec.org.za/resource/resmgr/press_releases/SAFCEC_Letter_to_Minister_of.pdf [accessed November 22, 2023]. National Treasury. 2018. Media statement: Alleged abuse of the 30% subcontracting requirements provided for the Preferential Procurement Regulations, 2017. [Online]. Available at: https://www.treasury.gov.za/comm_media/press/2018/2018080701%20Alleged%20abuse%20of%20preferential%20procurement%20regulations.pdf [accessed November 22,2023]. Organised Crime and Corruption Reporting Project. 2022. Extortion or transformation: The construction mafia in South Africa. [Online]. Available at: https://globalinitiative.net/analysis/extortion-construction-mafia-south-africa/ [accessed November 22,2023]. Venter, I. 2023. Is SA Inc fighting the construction mafia, or adapting to incorporate it?, Engineering News, June 27, 2023. [Online]. Available at: https://www.engineeringnews.co.za/article/is-sa-inc-fighting-the-construction-mafia-or-adapting-to-incorporate-it-2023-06-27#:~:text=The%20construction%20mafia%2C%20or%20so,employ%20specific%20people%20or%20subcontractors [accessed November 22, 2023]. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 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 © 2024 Inclusive Society Institute PO Box 12609 Mill Street Cape Town, 8010 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. February 2024 Author: Olivia Main Editor: Daryl Swanepoel This report has been enabled through the generous support of the Embassy of Finland in Pretoria, South Africa Content Chapter 1: Setting the scene Introductory remarks by Ambassador Anne Lammila, Finnish Ambassador to South Africa Presentation by Daryl Swanepoel, CEO of the ISI, on the Institute’s latest poll on electoral support in South Africa Chapter 2: Input by Panellists Jenni Karimäki Professor Liisa Laakso Virva Viljanen Chapter 3: Discussion Chapter 4: Summary of Lessons to be learnt and gained from the Finnish Model Cover photo: istockphoto.com – Stock illustration ID: 1852275835 Chapter 1 Setting the scene   Coalitions is a hot topic in South Africa. With general elections looming in 2024, the ruling party’s power and support is ebbing, largely due to corruption and loadshedding. On the other hand, the opposition is gaining increasing support. It appears that the country is heading in the direction of a coalition government. In fact, a number of opposition political parties have already come together to sign the Multi-Party Charter 2024 – a landmark pre-election coalition agreement to share power if they cumulatively beat the ANC in the polls.   But some analysts have suggested that South Africa is not yet prepared for a coalition government. Its legislation is not ready, and it simply does not have that culture in place, with the parties’ tendencies towards stubbornly pushing party agendas and using bullying tactics in government negotiations. And with so many people still casting votes based on tradition, history and loyalty, rather than on the basis of informed, rational decisions. Also, polling in South Africa is often unreliable, which means much will come down to voter turnout. The bottom line is, trying to build democratic coalitions without the right attitude and political education is foolhardy and will not lead to stability.   In light of this, the Inclusive Society Institute (ISI), in conjunction with the Finnish Embassy in South Africa, hosted a high-level webinar on 8 October 2023 on lessons South Africa can draw from the Finnish experience on coalitions. Three expert panellists were invited to share their knowledge on the topic: Jenni Karimäki, University of Turku in Finland; Professor Liisa Laakso, Nordic Africa Institute; and Virva Viljanen, Demo Finland.   A key insight from the Finnish experience is that coalition governments are both a result and precondition of inclusive political systems and inclusive political institutions – which feeds the stability and legitimacy of the democratic system. In order to form a coalition government, and especially a majority coalition, a number of parties are required to cooperate. Even though it is a case of, the bigger the party, the more ministers and the more say they have in the government programme, it is still a negotiation, a coalition, and therefore, nobody gets all the power. And the discussions taking place within spending limits means parties cannot come with outrageous promises, they have to work within that framework.   The Finnish system of coalitions is very much reliant on the “rule-of-law” approach and mechanisms that sustain coalitions and make them viable, aspects that build trust between the political actors and among the civil society. This allows parties that have had very little trust in each other to make the necessary compromises in order to build healthy coalitions and move forward.   Finland also has long-held traditions regarding different types of civil society organisations, other than parties. In Finnish government negotiations, experts from various fields – from civil society to the ministries or administration and NGOs – are brought in to mediate, to help build common ground and level the playing field. Coalition is often thought of in terms of enabling a governing majority. However, coalitions might also be useful in diverse and fragmented societies, such as in South Africa, where it is not necessarily about forming a governing majority, but rather, it might be a way to increase social and political cohesiveness in the country – with the proviso of always guarding against the danger of co-option.   Introductory remarks by Ambassador Anne Lammila, Finnish Ambassador to South Africa    Finland achieved independence in 1917. In the beginning, the country’s parliamentary system was not ready for it, which resulted in often very short-lived governments, most of which were minority governments. The Social Democrats appeared in government for the first time in 1926, which also happened to be when Finland’s first female minister, Deputy Minister of Social Affairs Miina Sillanpää, was voted in.   In 1937, the Social Democratic Party (SDP) formed the first of the “Red-Earth coalitions” with the Agrarian League, bringing together the parties representing the two largest social groups. Then, in 1939, the Winter War between the Soviet Union and Finland broke out, which moved Finland towards building a firmer national government. Then came the Continuation War. This whole period marked the start of the coalitions. And since 1937, the country has had several of them.   First, there were two dominant parties, the Centre Party and the right-wing parties. However, since the Second World War, there have been many different kinds of coalitions in government – from the right, to the left and the far left parties. Nowadays, the Finnish people are so used to this tradition of coalitions that they sometimes forget it has not always been the case.   In terms of the current coalition, Finland had its elections on 2 April 2023. The Coalition Party – the conservative party – received most of the votes, winning 48 seats in the 200-seat Parliament. The party that came in second was the True Finns, a populist far-right party, with 46 seats. When the Chairperson of the Coalition Party started to build the government, the Social Democrats were omitted from the plans, even though they were also winners in the elections, with 43 seats.   It was one of the longest processes of building a government that Finland has experienced in its history. The process started in April, and the government was only finalised in Finland’s midsummer in mid-to-late June. The reason for this seemingly drawn-out process is that the government needed to negotiate its programme with four very different parties, and doing this effectively takes time.   The current government is going strong, and it has proved that the coalition mechanism works well. Those who win in the elections, get the chance to govern.   Presentation by Daryl Swanepoel, CEO of the ISI, on the Institute’s latest poll on electoral support in South Africa   This information is taken from a poll conducted by Ipsos – a global leader in market research that is known to deliver accurate polling in terms of how it matches up to the real world – on behalf of the Inclusive Society Institute. It is a very large poll of 3,600 participants, taken across all nine provinces in South Africa, and in their home languages.   In the poll taken in June of 2023, it was revealed that since 2015, the ruling party’s support has systematically been reduced from a high of 63% in 2015 to 33% in 2023. Whereas the opposition has been steadily growing to the point where the combined opposition has now overtaken the ruling party, coming in at 48%.   There are still the undecideds and don’t-knows of 19% to consider, therefore this does not reflect the full picture, however, it does show that the ruling party is systematically declining and the opposition party is systematically climbing. That said, the opposition is very fragmented, they do not conduct themselves as one cohesive instrument.   In the last year, the poll shows a big change in the ANC’s national position. The figure in the November 2022 poll was 39% support for the ANC, declining quite dramatically in the following six months to 33% in June 2023. The question is: Why the rapid decrease in support? In a previous poll, 65% of the respondents indicated that if loadshedding were to continue, it would impact their vote, and 45% said that they would not vote. It seems that if the government gets loadshedding under control, they could regain some support, but if it continues, they may lose even more support.   However, other factors also affect the numbers. There are three important words to consider: eligible, registered and turnout. Eligible voters are those citizens over 18 – in South Africa, anybody over the age of 18 has the right to vote. Then there is a separate registration that needs to take place for the voters’ roll. In other words, in order to vote, a person has to be eligible, they have to register, and then they have to turn out at the poll.   In South Africa, there are approximately 42.3 million people who are eligible to vote, but only 26.1 million are registered to vote. This means there is a huge gap between the number who are able to vote and those who are actually registered to vote. Applying the figure of 33% support for the ANC only to the registered voters, shows a very different picture. Support for the ANC then increases to around 43%, the DA to about 20%, and the EFF to about 18%. And this means the other smaller parties have to come into play, for example the IFP, which is an important player in KwaZulu-Natal.   There are different outcomes under various scenarios. A high voter turnout would mean that around 66% of the registered voters go to the polls. The last time those sorts of figures were seen was in the first and second elections, and that number has dwindled to approximately 55% in the later elections. On the opposite end of the scale is the low voter turnout scenario based on a dramatic drop in turnout, from 55% to 36%, which is also highly unlikely.   Realistically, what could be expected in the national election is a medium voter turnout. In such a scenario, the ANC will fall just below the 50% mark, which means that they will require a smaller party to help them form a governing majority. The opposition parties will battle to put a coalition government together, because that will only give them roughly 39% of the votes.   Although a lot can change before the elections in May 2024, from the above snapshot, and under the present circumstances, the ANC would most probably continue to be the leading party in government, albeit with the support of at least one smaller party. But there would certainly be coalition governments in many of the provinces.   In Gauteng, the ANC would only get about 36% of the support, the DA, 15%, Action SA, 12%, Freedom Front Plus and ACDP, 1% respectively. This would make it difficult for the opposition to form a coalition government on their own in Gauteng without the support of the EFF. The ANC will have the difficult choice of deciding between a number of smaller parties to form a coalition with them in Gauteng, or they will have to either take the EFF on as a coalition partner or at least have the support of the EFF to form a coalition in Gauteng. That is a worrying scenario.   In the Western Cape, it is believed that the DA will not win an outright majority. They will have to go into coalition with a number of other parties. They have already formed an agreement – the Multi-Party Charter – with the opposition parties Action SA, Freedom Front Plus and the ACDP and a number of other smaller parties. This seems to confirm suspicions that there will be a DA-led coalition in the Western Cape.   The scenario in KwaZulu-Natal is a particularly challenging one, because the ANC only have 22% of the support, whereas the DA have 13%, the IFP, 17%, and the EFF, 13%. It is too early to say what configuration will come into play, but it appears that, once again, the EFF will be the kingmaker in KwaZulu-Natal, either by siding with the ANC or by at least giving support to the combined opposition. That is not to say the combined opposition at the moment – being the DA, the IFP and Action SA – cannot still garner a majority in KwaZulu-Natal, it is a developing picture.   In conclusion, if an election were held tomorrow in South Africa, the outcome would most probably be a coalition government at the national level, one that is easy to form. And certainly, there would be coalition governments in a number of provinces, some coming together more easily than others. The EFF could play quite a kingmaker role in many of those provinces.   However, for coalitions to succeed, and to simply function, South Africa needs policy cohesiveness in setting up these coalitions, and there must be an acceptable culture of cooperation, etc. This is certainly new terrain for the country, and it will need to rely heavily on the advice of those who have gone before, such as Finland.   Chapter 2 Input by Panellists   Jenni Karimäki Finnish traditions regarding building and maintaining coalition government    Jenni Karimäki is a contemporary historian, currently working at the University of Helsinki, and is also a fellow at the University of Turku. Karimäki’s research expertise is in parties, ideologies, political culture, political systems and party systems.   This is a short historically and empirically inspired presentation on what the key elements and trajectories of the Finnish multi-party system are in order to understand the foundations on which the long tradition of Finnish coalition governments is built.   There are currently nine different parties in the Finnish Parliament, with altogether 200 seats. The biggest party, the National Coalition Party, has 48 of those seats. In order to form a coalition government, and especially a majority coalition, to which Finland is accustomed, a number of parties are required to cooperate. The current coalition government consists of four parties: the National Coalition Party, Finns Party, Swedish People’s Party and Christian Democratic Party. These four parties have altogether 109 seats in the Parliament.   In terms of elections, Finland has a proportional representation. It uses the D'Hondt method to calculate and count the votes. There are no electoral thresholds in Finland – if a party gets enough votes to gain a seat in an election district, then it gets the seat. In other words, there is no percentage of votes that a party has to win in order to get seats.   The Finnish party system has evolved from the late 19th century until the 21st century. Several parties that were established over 100 years ago are currently represented in the Finnish Parliament, and they still occupy over half of the seats in the Parliament. These long-held traditions not only reflect stability, but they also reinforce stability. The Finnish multiparty system has been able to endure over time and also over considerable turmoil, including crises like the Civil War, the radical right activism of the interwar period, and the Second World War.   However, the power dynamics between the parties have changed over time. Only once, in 1916, has one party, the Social Democratic Party, had a majority in the Parliament. Since then, it has been either the Social Democratic Party, the Centre Party or the National Coalition Party that has formed the biggest parliamentary group. In over 100 years, none of those parties have come even close to securing a majority of the seats in the Parliament.   This stability is in part due to the party system being born to accommodate several different societal conflicts, some of them present already before the unicameral Parliament that is in place today. And that has been the case since 1907 – Finland has had a unicameral Parliament for well over 100 years.   Conflicts between labour and capital, between urban and rural areas and between different languages – there are three native languages in Finland: Finnish, Swedish and Sami – are still relevant and they are still represented across the political spectrum, despite the fact that they have been present from the beginning.   This relatively unchanged party system is also a testament of the parties’ and voters’ willingness and ability to commit to the pluralist multiparty structure and its preconditions. In this regard, the Civil War has served as an example of the worst-case scenario of an extreme conflict that polarises a nation. It left deep divisions in society but also an understanding of never wanting to experience that again.   Even though during the interwar period, from the 1920s-1930s, Finland did not have one majority government or majority coalition, it still had coalitions. It was in 1937 that the first majority coalition was built in Finland.   The stability and legitimacy of the democratic system has also been, in part, guaranteed by including all parties in government coalitions. Radical ideas and those parties or actors willing to destabilise the status quo have been tamed through offering responsibility, and at the same time, willingness to take responsibility has been expected of them. And this has thus far worked quite well.   But it also means that the parties have been able to evolve over time, and with time. This is the third observation. From the 19th century onwards, Finland has evolved from an agrarian country into a post-industrial consumer economy, known for advanced technology and high levels of expertise. The parties have not only been able to sustain their original mobilising of societal conflicts and constituencies but have also been able to attract new audiences among upcoming generations and new professions.   The changes affecting the current politics and political situation the most have occurred during the 1990s and 2010s, when first the Green Party, in the 1990s, and then the Finns Party, in the 2010s, established their strong positions within the Finnish party system. This has caused the party system to fracture, but when it comes to coalition governments, both parties have adapted to the Finnish system and taken part in the executive.   The work of Professor James A Robinson, who has, together with Professor Daron Acemoglu, written books such as Why Nations Fail and The Narrow Corridor, focusses on, among other things, examining inclusive and extractive elements in societies, and how these elements contribute to economic and social welfare and practices of democracy. It can be deduced from their work that coalition governments are both a result and precondition of inclusive political systems and inclusive political institutions, at least from the Finnish perspective.   The strong legalistic tradition in Finland descends from the 19th century, when Finland, as an autonomous grand duchy of Russia, was born first as a nation, and subsequently, as a state. This created the foundation for the strong Finnish state. And this is how, alongside the strong state, the pluralist multiparty system created a basis for inclusive political institutions, among many other things.   The strong state and inclusive political system in some sense incarnated from the 1960s onwards in aspirations to develop Finland into a Nordic welfare state and enhance and strengthen the liberal democratic features. These aspirations and ideals were then embraced throughout the party system, resulting in a consensus and compromise-seeking political culture.   Even if the economic and social welfare of the Finnish state and nation has been a driving force behind the consensus on compromise-prone political culture, it is important to remember the geopolitical setting that has always had a significant impact on Finland and had an impact on why there have been strong aspirations for national unity. Being a neighbour to Russia and, during the Cold War, the Soviet Union, has been a key element contributing to the understanding that a small nation must be internally united in order to survive externally.   Regarding the institutional framework that has contributed to the long tradition of coalition politics in Finland, it is important to look at local democracy and local democratic practices. During the 19th century, Finnish citizens were united in the face of the common external adversary, which was then the Russian Empire. But after the Civil War, they came together in the newly independent Finland under the lowest common denominator: the rule of law.   After the war, previous bitter enemies had to cooperate, first and foremost, at the municipal level. In order to do that, the one thing they could all agree on was abiding by the law. Up to and during the 1990s, as an example, the law stipulated that decisions regarding especially important financial decisions had to be made with two-thirds majority in the municipal councils. In most councils, this meant that cooperation and coalitions were unavoidable.   This was one institutional key element contributing to coalition tradition being strengthened in Finland. Most politicians began, and still begin their careers, from the local level. Thus, the experiences gained there have an impact on how they relate to cooperation and coalitions in their later careers.   Nowadays, the so-called council agreements, based on coalitions, consensus and compromise, are negotiated after the municipal elections, and these agreements outline those actors participating in the agreement as well as the policies promoted during the term.   The last point is to outline very briefly, the constitutional framework and to elaborate a little on the coalition government negotiation process.   Before the promulgation of the current Constitution in 2000, government formation was a process led by the President of the Republic, who had significant power to influence the composition of the government as well as the content of the government programme. Even if the parliamentary groups took part in the negotiations, the President still had a lot of say in the process and the outcome.   This semi-presidential system and its presidential prerogatives began to dismantle at the same time as the Cold War came to an end. Presidents from the early 1980s onwards chose to encourage a more parliamentarian system. Even though they still could have resorted to their prerogatives, they instead wished to encourage broader distribution of power.   From the 1980s onwards, the negotiation process itself began more and more to resemble the current procedure, with the parties and parliamentary groups in charge of the process and outcomes. These developments towards a parliamentary system were then, in the year 2000, codified in the new Constitution.   Today, the process adheres to the election outcome, with the party chairperson of the biggest party leading the negotiations. The composition and the power dynamics of the government also resemble the election outcome in two ways: The bigger a party’s parliamentary group, the more the party has the ability to influence the contents of the government programme, and the bigger the share of the cabinet ministers they have. Simply put, the bigger the party, the more ministers and the more say they have on the government programme. Bearing in mind that it is still a negotiation to form a coalition, and therefore no party gets all the power. That is the key finding.   The negotiations have no time limit, and there is substantial variation as to how long the negotiations take. After the last elections, the negotiations took 46 days, whereas the previous negotiations of the Antti Rinne and, subsequently, Sanna Marin government took only 24 days.    Should the negotiations result in a stalemate, the party chairperson of the second biggest party is given a chance to attempt to form a government, and so forth. Only if there is no prospect of the parliamentary groups being able to form any kind of a coalition, be it minority or majority, are new elections arranged. However, this has never happened in the history of Finnish independence.   During the semi-presidential era, stalemate-like situations did occur, but they were resolved either by forming a caretaker government or with the then President Urho Kekkonen, using his leverage to persuade parties to cooperate, usually by appealing to Finland’s precarious geopolitical situation and the risks of not having a democratically responsible government.   In conclusion, the Finnish pluralist multiparty system as well as political system have a long legacy, with parties and voters committed to preserving the stability and legitimacy of the democratic system. And much of this has come as a result of the long history of Finnish independence putting substantial emphasis on these inclusive political and economical institutions.   Geopolitical position and pressures have, in good and bad ways, contributed to aspirations of unity. But all in all, internal and external factors, institutional arrangements and historical traditions have generated a political culture where ideological differences are, for the most part, deliberated through the political process. As a result, as well as a precondition, this tradition of coalition governments can be considered a key element.   Professor Liisa Laakso Multi-party government: sharing power or building coalition?    Prof Liisa Laakso is a Finnish researcher working at the Nordic Africa Institute, a 60-year-old institute based in Uppsala, Sweden, partly supported by the government of Finland. As a political scientist, Prof Laakso has also done empirical research on democracy and elections in Africa and on conflict resolution.   This presentation reflects on the topic of coalition governments from a comparative point of view and also from the point of view of the experiences on the African continent. The focus is on multiparty government. Is it about sharing power or building a coalition, and what is the difference between these two patterns?   First, is the question of power sharing as a solution for political divisions in divided societies. A map from Andreas Mehler’s book about power-sharing agreements in Africa, between 1990 and 2009, shows that this experience of bringing together different political sections from the society to share political power is common in Africa. And power sharing, usually, is the kind of arrangement through which peace can be reached.   Not all of these conflicts have been actual civil wars, but they have involved violence, for instance, in the case of Zimbabwe, where a coalition government emerged in 2008. A general observation of this arrangement is that there are short-term merits. The violent conflict can be solved. But what about the long-term prospects? Very often, that kind of power sharing does not, or has not, led to stable political cooperation.   Arend Lijphart, who has also written about South African political divisions, believes that the democratic future in South Africa should be based on consociational democracy, which, according to his theory, creates the possibility for fragmented societies to reach stable political systems. Lijphart’s theories are based on the experiences of the Netherlands, Belgium and Luxembourg – states which are all ethnically divided, and with linguistic and, in the case of the Netherlands, also religious divisions. Lijphart’s theory is that this kind of subcultural segmentation is neutralised by consensus mechanisms.   The experience of African states with fragmented societies in terms of ethnic, linguistic and religious divisions, has been an experience of one-party states soon after independence, the years of African countries becoming independent being in the early 1960s, and also of dominant party legacy, strong presidents and presidential systems. And all of this has made the distinction between the ruling party – or the dominant party – and the state a difficult one.   Within that setting, what power sharing in practice has often turned out to be, is co-option, if not direct repression, of the opposition. Nowadays, it is referred to as dominant party systems, because most African states – discounting those currently under military rule, or eSwatini, which is a monarchy, or Eritrea, which is a non-party system – are implementing multiparty systems.   The factions within that dominant party are quite remarkable. There are also the much discussed issues or patterns of patrimonialism or clientelism which, in one way or another, could also be linked to corruption. Currently, the biggest threat to democracy and democratic competence in Africa, and elsewhere in the world, is corruption.   In terms of the South African experience, immediately after the political transition, the Government of National Unity (GNU) was an example of power sharing. At that time, the strong parties were also very strongly ethnically divided, therefore being a case of what Lijphart would have called consociational arrangement. But the GNU did not last very long, and the National Party disappeared from the political map in 2005.   The critique of power sharing and consociational democracy or consociational models has been that it is very elitist and that it also, in a way, freezes the differences, ethnic differences in this case, in the political structures, which then also means that political competition is taking place inside of the party. Consequently, it can cause deep factionalism inside the parties instead of becoming a competition between different kinds of political programmes, which would attract different kinds of interest groups in the society. In that kind of setting, for a political party to participate in power sharing could damage its support among voters.   The threat of being co-opted is a real one. The critique, in a way, also shows the importance of strong opposition in a stable democracy. The Finnish experience of coalition governments and government-building is that there has always been an opposition playing a role. In addition, this opposition has been one which has had the possibility of becoming a partner in the coalition after the next elections. In other words, the opposition has always had the prospect of being able to form a government or being part of the government in the next round. This is why the role of presenting criticism to the current government and being active in policy formulation is so important for the opposition.   The opposition also has an important role in civic education, or political education, among its supporters and the wider public, and in the provision of information to its supporters. Therefore, one important element is that the opposition must be strongly institutionalised and must remain active between the elections.   Regarding political pluralism, some of the parties in the Finnish system have a long history, and their support base has been very stable in reflecting the divisions between urban and rural Finland and also the linguistic divisions. The country has one more or less ethnically-based party – the Swedish People’s Party – which represents the interests of the 6% of the population who speak Swedish.   Although Finland does have the kind of party system that is based on long-term loyalties, the idea of voluntary association and the ability of the citizens to form political parties and other interest groups freely is still an important component of political mobilisation. Sartori’s claim is very clear, that the mere existence of different groups in a society is not indicative of pluralism. What does create political pluralism is when there are cross-cutting cleavages, where people can be members of different groups and, in that way, learn how to find compromises and perhaps also learn what other people are thinking and what their interests are. This idea of adjusting different interests to changing coalitions is important in the political culture.   It is useful to highlight that, after Finland’s independence, the Civil War that the country fought in was a particularly bloody one – in fact, it is still regarded as one of the bloodiest in European history, relatively speaking. It was a war where, literally, brothers were fighting against each other. It was a very traumatic experience for a newly independent country.   Another highlight is that the presidential, or semi-presidential, system was exceptionally strong for a lengthy period of time. One element in Urho Kekkonen’s – who was president from 1956-1982 – position was, at least rhetorically, that he presented his leadership as one that was necessary for Finland to keep good relations with the Soviet Union. Some years during his rule were not ones in which Finland could celebrate democracy. Kekkonen even continued in the position of president without elections in the 1970s, as the majority of political parties in the Parliament at the time decided that there was no need to arrange presidential elections in Finland.   Other aspects that have been very important in Finland’s political stability include the consensus culture between employers, employees and government – they have negotiated and collaborated when agreeing on increase of salaries, on tax levels and social policies. The country also has a strong tradition of agreeing on the basic elements of the welfare system.   In addition, the state committees were very strong institutions, particularly previously. Nowadays, there are many arguing that Finland should go back to those kinds of strong committees, which do not exist in many sectors anymore. These were committees for the preparation of laws, where the government was involving different kinds of stakeholders and experts to discuss, openly and informally, different kinds of policy issues before the preparation and actual writing of the laws took place. This committee system – which Finland inherited from the Swedish system, and which has long historical origins – was in fact pushing civil society to get organised, which meant the skills and knowledge of citizens, through different kinds of interest groups and civil society groups, was also enhanced. That has supported political participation in the country and also the legitimacy of the political system.   To conclude, Finland’s parties are more or less medium-sized, and they are not dominant parties. It is not clear before the elections which party will be the biggest one. Particularly during the last few years, the elections in that sense have been quite exciting. And although there are party loyalties among the supporters, there are also swing voters, so the parties are actually competing with their programmes.   Finland has had a large variety of government coalitions. Despite operating within different coalitions and having to cooperate with very different parties, the parties have been able to exist. Sometimes, the coalition experience has led to parties losing their support. For example, the previous government experience of the Centre Party in Finland, which is the old Agrarian Party, was one which was regarded very negatively among its supporters.   Currently, on the political fora, the country has a relatively new populist party, the Finns Party. It is new in the sense that, although it is strong and big, this party is not as experienced and institutionalised as far as its programme and its working structures are concerned. But perhaps now, when the party is in the government, Finland will also see institutionalisation on its part.   Lastly, a few words on the minority right’s Swedish People’s Party. In the Finnish system, this is the party that has most often been in the government coalitions – both in the leftist and rightist coalitions. This is the party that during the latest government negotiation was called the kingmaker. Some of the politically heated discussions within the current government coalition have taken place between the Swedish People’s Party and the nationalist Finns Party.           Virva Viljanen Legal framework and best practices of coalition government in Finland    Virva Viljanen is the Dialogue Advisor for Demo Finland, a cooperative organisation of all nine Finnish parliamentary parties. She leads the programme working with Finnish politicians to facilitate dialogue between the political parties, and also organises training for the politicians.   Demo Finland enhances democracy by strengthening the political participation of women, youth and persons with disabilities, in particular, and supports dialogue between political parties. Demo Finland works not only in Finland but also in eight countries internationally – Ethiopia, Kenya, Mozambique, Myanmar, Somalia, Sri Lanka, Tunisia and Zambia in cooperation with local partner organisations – to implement Finland’s democracy support.   This presentation looks at examples of formal and non-formal practices of coalition governments and multiparty collaboration in Finland, as these two link to each other. Finland relies heavily both on legalist tradition, in other words, laws, and also the somewhat trust-based culture of working together between political parties.   The legal framework of forming a coalition government in Finland is based on the Constitution of Finland, which states that before the Prime Minister is elected, the groups represented in the Parliament must negotiate on the political programme and composition of the government. This means that all of the parties that are elected to the Parliament take part in the preliminary negotiations or formation talks. And then, usually, the winner of the elections and the biggest party will invite a group of political parties to the actual negotiations.   The parties then draft a government programme, and equally important is the central government spending limits, which is the ceiling budget expenditure for the four-year election term. There is the temptation to create several different policies, but these central government spending limits tie them to the actual decision-making. This means that what political parties promise has to be linked to the budget.   At the end of the negotiations, each political party represented in the government chooses its ministers – the biggest parties get more cabinet ministers than the smaller parties in the coalition government. The government needs the confidence, or the majority of votes cast in Parliament, and this is why Finland usually has a majority government, so more than half of the seats in the Parliament.   In Finland’s latest parliamentary elections, the government negotiations between the four political parties took over a month. There was a long list of party representatives and invited experts in different thematic groups negotiating during the discussions. This resulted in a government programme which was over 200-pages long, including central government spending limits.   The coalition governments are also based on the multiparty collaboration in the Parliament. There is also institutionalised dialogue between the government and opposition that is based on law. Both the Constitution of Finland and, under that, the Rules of Procedure of the Parliament ensure this kind of institutionalised dialogue between political parties in the Parliament.   The laws state that reports must be submitted to the Parliament. In other words, the government is obliged to hand over reports on its activities and policies to the Parliament. The Parliament also has the right to receive information, and this is especially intended for the opposition groups having access to information about what government is doing.   There is parliamentary question time every Thursday. There are also interpellations to the government or an individual minister and then several non-formal procedures. It is not stated in the law that shadow budgets need to be discussed in the Parliament, but this is something that is repeated every year. Opposition groups will present their shadow budgets, and then they are addressed in the Parliament discussions.   There are two of these law-based institutionalised dialogue methods in the Parliament that are worth highlighting. First is the parliamentary question hour: every Thursday, the government ministers will reply, unrehearsed, to the questions of members of Parliament, and especially opposition representatives.   The second one is also mentioned in the law, that the government must reply to an interpellation – this is a formal question presented by a group of MPs – in a plenary session within 15 days of being given the question. After receiving the reply to the interpellation, Parliament then debates on the matter and proceeds to vote on whether the government or this particular minister in question enjoys the confidence of the Parliament.   This is also an important way for the opposition to raise questions and issues on policy matters and then test the confidence of the government. Most of the time, the members of the Parliament that represent government political parties will then vote on the confidence, and the Parliament, the government, can continue its operations.   One key element that is also based on the Constitution and the Rules of the Procedure Law in the Parliament is parliament committees. The Parliament of Finland has 17 permanent committees, with a proportional representation of parliamentary parties. This means that all the committees have members from both government and opposition groups. These are thematic committees which work on legislation and committee reports. There are, for instance, finance, education and culture, social and health affairs committees. One worth mentioning here is the Committee for the Future, which is a 17-member committee that works on future-related questions. The aim is to rise above the day-to-day politics and talk about future issues that need to be resolved within the democratic process.   One aspect that the Finnish members of Parliament appreciate greatly is that meetings are confidential. The agenda is published, but all the discussions are private. This allows the members of Parliament to have discussions without heated debates that are shared by the media. The committees routinely hear from experts – the committee discusses which experts they want to hear on the policy matters. These experts can be representatives of the administration, for instance, ministries, or NGOs, researchers and so on.   One key element of coalition governments in Finland is that political parties also collaborate on the local level. Often, these are the same political parties that then operate on the national level, and frequently, the same representatives work on the local level as well as in the Parliament. In fact, most members of the Parliament begin their careers on the local level, meaning they already have experience of working together at that level. Finland has more than 300 municipalities and 21 regions. This local government is based on the Constitution and then on the Local Government Act, which states how municipalities must organise their administration. Basically, municipal councils choose the members of their municipality boards, which is the executive body, proportionally reflecting the election result and the number of seats each party holds in the council. The result is that there is no government and opposition on the local councils, because most of the biggest political parties do have representation in the executive party. Therefore, there is no need for opposition leaders.   In terms of non-formal best practices of political parties working together and forming coalitions: first, there is the matter of using parliamentary working groups on issues that require long-term decision-making. In Finland, if there is a difficult policy issue that requires long-term decision-making – for instance, election laws – then, often, all the parties represented in the Parliament are invited to a joint working group aimed at unanimous decision-making. The goal is to ensure that when the power changes between elections, there are no hesitant policy changes. For example, the new group in power would not change election laws, and they would have more legitimacy when they are passed into Parliament.   Another Finnish example of non-formal collaboration is campaigning during elections, side by side. It is customary in Finland for political parties to share, for instance, marketplace meetings and campaign side by side at marketplaces and other events. They also have election panel discussions and public debates together.   The third example, as with Demo Finland, is where there are other cooperative organisations for political parties. One influential example is the Coalition of Finnish Women’s Associations (NYTKIS), which is an umbrella organisation consisting of the women’s organisations of the parties represented in the Parliament, working together, especially on gender equality. In these organisations, such as Demo Finland and NYTKIS, there is often a common denominator bringing them together – for example, gender equality or, in Demo Finland’s case, democracy.   Briefly, in Finland, Demo Finland closely collaborates with the Parliament, with committees, with political parties and their suborganisations, such as political youth and women’s organisations. It organises seminars and training events, inviting all the political parties and representatives. And its work is based on the understanding that all political parties commit to the laws and culture of inclusive democracy.   Chapter 3 Discussion   Who sets the government spending limits during the negotiations in Parliament? The Treasury? The previous government?   The Finance Ministry prepares a budget, and then the government discusses the political aspects. There has been a very different approach to the spending limits in this government versus the previous one. This government is downsizing the budget, whereas the former government wanted to include more initiatives within the spending limits. Although the ministries prepare the spending limits, they are not set in stone.   - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -   Is it correct to say they can downsize, but they can also shift monies between various programmes?   Yes, exactly. And this is something that is under a lot of heated political debate. Where does Finland invest, and where does it downsize? This is the question.   - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -   What advice does Finland have for South Africa, where coalitions at local government level have been very unstable? The country is expecting coalitions in certainly some of its provinces and maybe even at the national level. What advice would Finland give to a country that is finding these arrangements very new and very unstable?   Looking at how it was possible that after the Civil War in Finland, when it is safe to say that the different political parties and different aspects of society were very much against each other and were very suspicious of each other, then, in fact, it was the minimum denominator that everyone agreed to. They believed that the law would protect them against each other. The “rule-of-law” approach has been central in Finland in how these parties that have had very little trust in each other have been able to build that trust and build coalitions and compromise moving forward. This has been one of the key elements. But, if the legislature and the laws do not promote these kinds of procedures or trust being built, it becomes highly problematic, when the law cannot be instrumentalised in this way.   What is very important is that the parties formulate political programmes, that they discuss with the members and activists and clearly write down what their main objectives are, and that the programmes are also, in economic terms, somehow feasible. If the parties have programmes, they can participate in the negotiations, and the coalition can also make compromises and develop a programme that makes the parties and politicians accountable. If the parties are institutionally weak, they could become very elitist and all about their leaders. And that is the most dangerous setting for co-optation – the parties losing support among voters if they are then not able to fulfil a very populist programme of the political campaigning, for instance. That kind of professionalisation of the political parties is very important, at the local level too.   Political parties need to have their own programmes and need to be democratic within the political party. For instance, local government coalitions need to write a joint programme that everyone is committed to. In Finland, the programme is usually very detailed, because then nothing is left unsaid or unsettled, which builds trust. An important part of the negotiation is what is left out of the programme. The programme is very detailed on policies that are going to be implemented, but the political parties can also agree on issues that they want to advance during the next four years, if they are very much in disagreement on certain policy issues.   Sometimes it helps to start the collaboration between political parties on some subtheme. For example, in Finland, women’s organisations from the political parties working together. This makes it somewhat easier, because these women’s organisations and women politicians often share the same problems, despite which political party they come from. There have been some similar issues raised by the youth representatives from different political parties, that they all, for instance, can collaborate on youth participation in politics. So, perhaps beginning from somewhere that is shared common ground would be helpful.   - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -   The first question is: In South Africa, where there are 400-plus parties, how possible is it in as far as coalition is concerned, as compared to Finland, which has nine parties?   The second is: Except where there are elections, or at the polling booth, where civic society comes to vote, as they continue with their programmes and engagement, how far do these parties go to continue to ensure that civic society is involved?   Thirdly, on the economic front, given the type of coalition pattern in Finland, how is the country doing in terms of its GDP and economically? In South Africa, there are issues of unemployment, low levels of poverty, and so on to contend with.   And lastly, a very interesting point was made that there is a collaborative aspect during election campaigns, meaning that these parties come together to do campaigning for the elections. How possible, different as the parties are, is it for them to go together into the civic society, even to the communities, and do “a common electioneering campaign”?    How to combine the civil society aspect into the coalition government and the trust building, is very important. The Finnish system and the Finnish tradition of coalitions and coalition building is very much reliant on trust. All these methods and mechanisms on how to sustain coalitions or make them better or make them viable, all are aspects that are building trust between the political actors and among the civil society. Finland has long-held traditions regarding different types of civil society organisations, other than parties. That is something to build on. The parties themselves have been built on this from-the-ground-up mobilisation in many cases, which also builds trust in society.   Continuing on the subject of civil society, the labour unions are very important, as are the employer organisations and interest groups from the various economic sectors, agriculture, forestry, etc. They have a strong say in the preparatory work for laws. And although the level of the organisation of labour has decreased, it is still very high, at least when compared to other European countries. But the tradition, the culture, is that unions and economic interest groups are very strong. The Social Democratic Party or the Left Alliance, are closer to the labour unions. The more right-wing parties are closer to the employers’ unions. And the Centre Party, which very much represents the rural areas, is close to the interest groups from the agricultural sector.   In terms of the Finnish GDP, Finland is a rich country. It is currently about US$50,000 per capita. When it comes to the spending limits for the government negotiations, what allows room to manoeuvre and what is a political issue is the ability of the government to take on loans. And this is something that is very much debated in Finland: What is the level of its debt? In that regard, Finland is not doing as well as its neighbouring Nordic countries.   Finally, about collaboration in elections. There are indeed electoral alliances, particularly for the smaller parties in the regional setting. It is sometimes critical that they build alliances with other parties. This can be a way for them to get representation to the municipalities, for instance.   This is a good question, how complex is the South African situation compared to Finland? Finland has a population of 5.5 million people and has only nine political parties represented in the Parliament. The total number of political parties is currently approximately 20. To address the question of civic society, it is true that in Finland, the political parties are losing membership – they really have issues engaging people in party activities. There is an increasing need in Finland to know, how does one engage people, citizens, civil society between elections and outside of the representative democracy or, for instance, the Parliament and local governments?   This is done in several ways. The government has a very strong mandate or role for civil society organisations. Firstly, the Finnish state funds several civic society organisations. For example, Demo Finland gets its funding from the government of Finland or the Foreign Ministry. Then, the government also has, for instance, working groups, where there are experts from the civil society as well as politicians and government officials.   There is also the question of how to engage the ordinary citizens. For instance, on a local level, there have been several attempts at participatory budgeting, in other words, giving citizens the right to say where the budget is spent. An example would be giving them an amount of €3 million and then asking them to vote on what they want the local government to spend it on. In addition, for instance, youth councils on a local level could be brought in, to hear the voice of the local young people, and so on.   In terms of electoral alliances, political parties work together to campaign for the votes. But they also try to gain the same votes, campaigning side by side in order to engage more people. They invite people to these election debates or marketplace events to meet them and then compete for the votes by offering them their own policies. This is a very interesting example of how Finnish political parties are able to collaborate in this kind of competing situation.   Finland also has its own policy issues currently, as was raised, the debt issue. Another is the question of the war in Ukraine, and security policies in Finland, which have been a huge public debate in Finland. It changes, depending which policy issues are the most influential in which elections. A quick comment about the elections and how the parties collaborate. The parties do campaign side by side, but the rivalry is often more intense within the party than between parties, in a sense, because the Finnish electoral system is such that the vote is cast for a person. The person represents a party list, but it is not a list vote, it is a personal vote that is being cast. Therefore, the politicians on the party lists are often competing against each other more fiercely than the party lists are competing against another party list. This is something that is debated or discussed in Finland, whether this is the most effective or the best way. For example, in Sweden, they have the list vote, and that results in a less competitive campaign atmosphere among the party members, and the campaign is more driven between the parties than inside the parties.   - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -   This phenomenon of coalitions is very new in South Africa and in South African politics. To understand the unique and complex scenario in South Africa leading up to the elections in 2024, what is bound to be seen and experienced, the following must be considered. South Africa comes to this position from the fragmented past of apartheid, versus Finland, which adopted this approach primarily as a result of World Wars. The country has a population of over 60 million, versus Finland, which has a population of roughly 5 million. Finland has three official languages, whereas South Africa has 12 official languages. Hence, South Africa is trying to solicit as much expert knowledge as possible in order to make sure that there is a transition that is smooth, and also a quick understanding of each and every political party involved in those coalition discussions and agreements, ultimately.   The idea of a government programme vis-à-vis the party programme or the party manifesto, is a good one. What ordinarily happens in South Africa, is that as the election approaches, each political party will come up with its own manifesto – a programme of action that expresses what the party’s priorities and implementation strategy will be once they are in power. The parties then sell that to the masses, the electorate, to secure their votes. The voters choose the one party that resonates with them, the one that represents their interests more than the others.   In South Africa, there are currently three predominant political parties right at the top, with 406 parties in total, and 14 political parties in its national government, in Parliament. And there are bound to be more than that, come 2024, after elections, because of the many new parties that have been formed recently, which of course brings a huge debate, or rather, a huge headache. The smaller the number of parties, the better – having too many parties causes confusion, especially among the voters.   Of the 14 political parties in the national Parliament, there are three big parties: the ANC, DA and EFF. Each one of them stands for something totally different; they are extremes, to a certain extent. And voters have to find themselves in these three. Come the 2024 elections, the likelihood is that none of them are going to have 50% plus 1%, which guarantees their creating a government, meaning that none of them will have a majority and they are bound to reach out to smaller parties, some of which represent a totally different view point, especially on policy formulation, because that is what drives the programme of action of every political party. Of course, South Africa is also dealing with three main challenges from its historical background: poverty, unemployment and inequality. In the current experience of the coalitions at a local government level, these three dominant parties have a tendency towards a bullying attitude. If that attitude persists, leading up to the 2024 elections, and permeates the process of forming a government – they are to a certain extent in the driver’s seat – and calling upon the smaller minority political parties, how will they understand that even though they have a higher percentage of votes than others, when it comes to sitting around a negotiation table, they are in fact equals with everyone? That kind of attitude will assist parties in being sober minded in their approach in negotiations and in how they agree upon a government programme of action vis-à-vis their own manifesto. With a bullying attitude, none of the parties will allow themselves to be imposed upon by another party’s manifesto. Therefore, there needs to be a new programme of action crafted as a coalition government.   The question is: How does South Africa deal with the bullying attitude of these parties, where they want to impose their policies, principles and standpoint on certain issues? How does South Africa get them to reach a particular compromise on very key, fundamental issues that must drive the coalition and, ultimately, succeed?   Is there not a delay in decision-making in Finland with regard to policy or even issues that deal with service delivery? Are coalitions not delaying decision-making because of too many protected negotiations of one kind or another? Secondly, what are the values that can hold the opposing parties together to the extent that they can work together? Looking at other old democracies, many have two dominant parties, and they name these parties on their value system – for example, in America, one is Democratic, the other is Republican, defining what participation is all about. In smaller democracies like South Africa, is the issue of coalition not one that is going to delay decision-making, leading to various challenges? What can be done about this? This could be a serious fallback issue, so it must be defined.   The third issue is that the level of literacy in the country, which is one that is fuelled by populism, does not allow for people to make informed decisions on matters that affect them going forward. Democracy, in essence, without political education, does not guarantee stability at all, because people must make choices on the basis of informed, rational decisions. And in most cases, that does not happen. What assistance can be forwarded in terms of assisting this conversation?   And finally, what are the levels of inequality, both social and economic, in Finland? South Africans are looking for a party that can deliver and close the gap between the rich and the poor, the haves and the have-nots, and access the economy and participation in the economy. All of these things are an amalgam of the challenges that the country faces.   In terms of the problem in negotiations where it is probable or expected that some of the negotiating parties might have somewhat of an aggressive tactic, and how the other parties could counteract that, in Finnish government negotiations they bring in many experts from various fields, from civil society to the ministries or administration and NGOs. This could be one way to mediate the negotiations or help the parties to build on common ground. That was analysed in Finland recently during the very long government negotiations, with one party that technically had not participated in government ever before. One explanation of why the negotiations took so long and why they invited several hundred experts to take part in the negotiations, is that because this one party had very limited experience in the negotiations, the use of experts and advice was a way to get all the parties onto a more level playing field, so that everyone had the same level of knowledge and the same picture of what was being discussed. That could be one way of pointing the negotiations in a more amicable direction.   With regards the delay in decision-making, in Finland, the main goal of the government programme is that what is negotiated must be executed during the four-year term. However, if there is a particular subject that is difficult and causes some disruption or disagreement between the government parties, then these are the issues that are often delayed. Despite having these very particular, meticulous programmes, there are issues that get pushed to the sidelines and that are delayed beyond the government term.   The values that all Finnish political parties share includes rule of law – meaning trust and relying on the Constitution of Finland – and the principle of democracy. But there are other policy issues that the political parties disagree on.   With regards the delaying of decision-making, this is certainly true, that in terms of more inclusive politics, it always takes more time. However, one trust-based practice that is in use in Finland is that each political party holds a cabinet minister seat, and the cabinet ministers or the government ministers have the right to prepare their own laws and policy proposals based on the government programme. They have the right to prepare, with their ministries and administration, these laws. Then, when these laws or policy proposals are brought to the Parliament, the government, the members of Parliament who represent government political parties, will vote for them. It is customary that then the government will not vote against its own laws. This is something that helps with the delaying of decision-making, that each cabinet minister has the right to prepare laws, and other political parties will not delay those if they are based on the government programme.   However, usually, when the elections come closer, the political parties tend to skip this rule, which means that at the end of the election term, often more laws are not being passed in the Parliament, especially the kind of controversial laws that have been delayed until the end of the term.   Then, the very difficult question of how to bring members of Parliament together, especially after heated discussions in elections. It is also the case in Finland, especially in social media, that the representatives might use, for instance, language that is hurtful. And the basis for collaboration is then quite difficult. In the Parliament, for instance, the Chairperson of the Parliament usually has authority over the rules for constructive dialogue, or a code of conduct in the Parliament. The kind of speech allowed in the Parliament is regulated by these non-formal rules. Also, new members of Parliament are trained by legal advisors on how to work in the Parliament. This training is organised by the clerks of the Parliament, so non-partisan workers in the Parliament.   Lastly, what Demo Finland works on is to bring the political parties to the same table, not to try and work on policies but just to understand each other better, which is also a good result in these kinds of situations. But this is a very complex situation, and the Finnish model does not apply in all circumstances.   What about making compromises or being in a coalition if the values of the parties are very different? In the Finnish political culture, because of this coalition-building, in addition to ideological commitments and strong political beliefs and values, there is also a certain kind of pragmatism. In the current government coalition, looking at the values of the parties and based on the views of the members of Parliament, for instance, the Swedish People’s Party and the populist nationalist Finns Party are very far from each other. It is a miracle, from the perspective of political values, that they can be in the same government. However, they have calculated it in a very pragmatic way, that for the smaller Swedish People’s Party, it would perhaps be more challenging to be outside of the government if, in the government, there is a strong party pushing for nationalist Finns Party’s values, which, for instance, include abandoning the status of the Swedish minority language in Finland’s schools. Consequently, perhaps the Swedish People’s Party calculates that it is better for them to be in the government coalition in spite of all the difficulties. And for the government coalition, it is an important member, because with that party, they get the majority in the Parliament. This kind of pragmatism is what then creates the compromises that make cooperation possible.   The issue of delays in decision-making is also a very important one. For instance, Finland has extremely expensive and important reform of the social and health services system. This is the third, if not the fourth, government that is dealing with the reform, because it has been so difficult. And now, this government, representing different parties than the previous government, has to implement what was decided before it. It is challenging, as this reform programme is vital for the whole society.   On the issue of political education, it is also so important in Finland, because of, for instance, the rapidly changing media environment. The country used to have a system where there was leading national media and big newspapers and a relatively homogeneous education system and population. But now, Finland is becoming more multicultural. There are more immigrants. There is much more media, social media, for instance. It is not known exactly what the most used sources of information for the young people are. During the last elections, TikTok was a key platform for political mobilisation. Some parties or candidates were very active on that medium, whereas other parties or candidates were not. The landscape is changing so quickly that this issue of political education or civic education is something that has to be thought about and worked very hard at. And indeed, in South Africa, where the challenges of literacy, for instance, are also huge, the issues of giving information and building trust are even more critical.   Chapter 4 Summary of Lessons to be learnt and gained from the Finnish Model    by Erwin Schwella    Prof Erwin Schwella is currently working comparatively with a host of politicians in South Africa on co-creating a Leadership for Coalition Government course, through Free State University.    On contextual sensitivity and comparability for relevance, reliability, and validity in comparative analysis and action    Drawing comparative insights, applications and lessons when comparing political governance and public administration systems requires awareness of and relevantly allowing for contextual sensitivity.   Contextual sensitivity is the awareness and appreciation of the different historical, cultural, social, economic, and political factors that shape and influence the political, governance and public administration systems of different countries. It is important to consider such contextual sensitivity sensibly when comparing political and governance systems such as coalitions across nation states, because it helps to avoid oversimplification, generalisation, and ethnocentrism.    For relevance, validity and reliability when drawing out and learning the lessons there is an imperative to recognise the diversity, complexity, and uniqueness of each case.   Some  aspects that need to be considered as contextual sensitivity when comparing political and governance systems are:   The historical background and trajectory of the countries, such as their colonial and post-colonial experiences, their state formation and nation building processes, their regime changes and transitions, their conflicts and wars, and their regional and international relations. The cultural and social characteristics of the countries, such as their: ethnic, linguistic, religious, ideological, and demographic diversity, values and norms, their identities, and cleavages, levels and depth of social cohesion, levels in breadth and width of cross-cutting trust in societal institutions and each other, civil society and social movements, and their media and public opinion. The economic and developmental conditions of the countries, such as their: Income levels, inequality, poverty, and unemployment, growth and stability, their structure and diversification, trade and integration, innovation and competitiveness, and welfare and redistribution. The political and institutional features of the countries, such as their: constitutional and legal framework, electoral and party system, executive and legislative branches, legislative, judicial, executive, and public administration institutions , decentralised and devolution spheres of governance such as federal and local units, and oversight, responsibility, and accountability checks and balances, the incidence of bad governance and leadership, and prevalence, and prevalence and incidence of corruption and maladministration.   These matters matter as they will and should have different impacts on the formation, functioning, and performance of coalitions across nation states, depending on the context of each country.   As in the comparative  example in focus here, mature democracies such as Finland may have more stable and effective coalitions than less mature, or maturing  democracies such as South Africa, because they have more:   consolidated and coherent party systems, consensual and proportional electoral systems, transparent and accountable institutions, and more developed and inclusive societies.   This, however, does not mean that coalitions are always better or worse in one context than in another, as there may be trade-offs, variations, and exceptions in each case.   Therefore, contextual sensitivity requires a careful and nuanced analysis of the similarities and differences, the strengths and weaknesses, and the opportunities and challenges of coalitions across nation states cases.    On lessons to be shared and learnt   A first key insight from the Finnish experience is that coalition governments are both a result of as well as a  precondition for inclusive political systems and inclusive political institutions – which feeds the stability and legitimacy of the democratic system. In order to form a coalition government and especially a majority coalition, a number of parties are required to cooperate.   Secondly, even though it is a case of, the bigger the party, the more ministers and the more say they have in the government programme, it is still a negotiation, a coalition, so nobody gets to have it all. And the discussions taking place within spending limits means parties cannot come with outrageous promises, they have to work within that framework.   Thirdly, from the Finnish example it was also concluded that the Finnish system of coalitions is very much reliant on the “rule-of-law” approach and mechanisms that sustain coalitions and make them viable, aspects that build trust between the political actors and among the civil society. This allows parties that have had very little trust in each other to make the necessary compromises in order to build healthy coalitions and move forward.   Fourthly, Finland also has long-held traditions regarding different types of civil society organisations, other than parties. In Finnish government negotiations, experts from various fields – from civil society to the ministries or administration and NGOs – are brought in to mediate, to help build common ground and level the playing field.   Coalitions are often thought of in terms of enabling a governing majority.   However, coalitions might also be useful in diverse and fragmented societies, such as in South Africa, where it is not necessarily about forming a governing majority, but rather, it might be a way to increase social and political cohesiveness in the country – of course, always guarding against the danger of co-option.    The Context, realities and lessons related to coalition success in Finland    Finland for more than 100 years has had relatively successful coalition governments, as during these 100 years no party has ever been even close to securing a majority of the seats in the Parliament. This stability is in part due to the party system being able to accommodate several different societal conflicts. Radical ideas and those parties or actors willing to destabilise the status quo have been tamed through offering responsibility, and at the same time, willingness to take responsibility has been expected of them. Thus far this has worked quite well.   In Finnish history the Finnish people also had to build a strong state to:   Counter the consistent threat to their national state of the ever-looming expansionist Russian empire and its modern-day successors, and Build and sustain a successful welfare state to nurture the Finnish citizens.   This combination of a serious external force challenge and the need to improve the lives of Finnish citizens increased Finnish cohesion and the Finnish sense of national sovereignty and unity. These combined dynamics also made it necessary to internally form successful coalitions in the face of threats as well as for good governance in the interests of the welfare of the Finnish population and their democratic state and governance system.   The Finnish state was formed after a very divisive civil war, and in order to provide a strong institutional base for future stability and success the Finnish institutions are committed to the institutions of constitutional democracy based on the non- negotiable rule of law in central and local government spheres.   There are also statutory requirements to enhance coalition cooperation in all spheres  of governance such as a majority requirement of 66 % of the vote to pass these budgets. The culture of compliance with the institution of the rule of law and the dynamics of legal requirements for compliance towards consensus combined strengthens incentives for responsible coalition governance by all parties concerned.   In conclusion,  the Finnish pluralist multiparty system as well as political system have a long legacy, with parties and voters committed to preserving the stability and legitimacy of the democratic system. And a lot of this has to do with the fact that the long history of Finnish independence has put substantial emphasis on these inclusive political and economic institutions.    Lessons for South African coalitions in the context of comparability for relevance    A further set of lessons from a comparative context is to consider the contextual sensitivity and comparability for relevance, reliability `and validity in comparison sensibly and sensitively. The African context  is significantly different from the Finnish context. South Africa selected to not accept the consociationalism states of Arend Lijphart in crafting its Constitution to enhance the probability for fragmented societies to reach stable political systems.   This then makes the experience of African states also the South African reality.  In the African context with fragmented societies in terms of ethnic, linguistic, and religious divisions, African experience therefore often is one of one-party states after independence, and also of a dominant one or one strong party legacy, strong presidents and presidential systems. This has made the distinction between the ruling party, or the dominant party, and the state a difficult one.   Within this contextual setting,  power sharing in practice has often turned out to be at best co-option, if not direct repression, of the opposition. Nowadays, it is referred to as dominant party systems because most African states are now somewhat nominally, professing to be implementing multiparty systems.   The factions and their behaviours within most of these dominant parties and state party systems are quite remarkably similar.  This similarity includes patterns of patrimonialism or clientelism which, in one way or another, can also be linked to corruption. Currently, the biggest threat to democracy and democratic competence in Africa, and also elsewhere in the world, is corruption. The lesson is then that coalitions are not useful for the corruption appetites of dominant parties in Africa, as they may put brakes on the corruption possibilities for those parties.   In the Finland case parties are more or less medium-sized, and they are not dominant parties. It is seldom clear before the elections which party will be the biggest one. And although there are party loyalties among the supporters, there are also swing voters, so the parties are actually competing for power  with their policy  programmes rather than identity loyalty political choices. The lesson is that voter behaviour in South Africa, and South Africa not being a mature plural democracy (yet) make South African coalition success based on the competition for ideas less probable than in Finland. Coalitions will more likely be formed based on the necessity to achieve a working majority in Parliament.   Finally, the success of coalitions in Finland is grounded in formal and non-formal practices of coalition governments and multiparty collaboration in Finland, as these two link to each other. Finland relies heavily both on legalist tradition, in other words, laws, and also a trust-based culture of working together between political parties. Examples of the way in which this combination supports successful Finnish coalitions are:   Formally, the Constitution of Finland requires parliamentary stakeholder groups including the political parties to negotiate the government programme and composition before electing the Prime Minister. All parties in the Parliament join the initial talks, but the election winner and biggest party invites some parties to the final talks. The parties also choose their ministers, with more seats for bigger parties.   The government must have the  majority support of Parliament, which is why Finland usually has a majority government. Of equal importance is central government spending limits, which is the ceiling budget expenditure for the four-year election term. Obviously, there is an impulse to create several different policies, but these central government spending limits then tie them to the actual decision-making. What political parties promise has to be linked to the budget.  In all of the above dynamics is the result of  negotiation, and as  it is a coalition, as well as negotiated coalition  compromises result into the reality nobody gets everything.   The more informal dynamics that support coalition success in Finland are:   Many of the politicians start their political and governance careers in local government, where they mutually experience and learn about the value of cooperation and consensus based on an increasing resultant trust relationships even under conditions of contestation. This is valuable learning for future success. When complex and contested legislation is prepared and implemented for success in Parliament parliamentary committees work together over party borders to find sufficient consensus. This creates opportunities to learn from the proves when there are successes, and the third alternative thinking and action creates trust and consensus spilling over into future work for success. During election campaigns there is non-formal collaboration between contesting political parties where national consensus and cohesion in the interest of Finland is necessary. This sets a foundation for consensus in later complex issues where the interests of the Finnish people prevail over narrow self-interest-based party political and personal political interests. Finally, the success of Finnish coalitions is enhanced by continuous deep learning, through in-practice and in-conversation learning experiences, which is also enhanced by continuous research and learning through real world experience as well as research and education for the whole society, including all political and governance stakeholders and the electorate as citizens.    The last and very significant lesson directly above is of great importance to societal, educational institutions including the formal education system, as well as in this context of professional learning institutes such as the Inclusive Society Institute and CiviNovus as two  of many other role-players in this space in South Africa.   - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 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