An inclusive economy in South Africa is repeatedly being called for as the public debate for greater equality in our system gains traction. I believe this is driven by a growing awareness that we cannot continue to see poverty as a simplistic financial indicator, measured in a household income gap between rich and poor. Recognising what poverty is (or is not) is at the heart of shifting our economic thinking, and the work that is being done to develop a social economy policy in South Africa shows that we may be closer to this goal than we realise.
Poverty is complex, and instinctively we try to make it simple by relying on big indicators like the GINI, Global Competitiveness or Human Development Index to understand it. These are useful tools to track where we are, but they seldom give us the nuanced understanding we need to understand the dimensions of social change. As our non-profits and government struggle to meet the needs of our society to progress, and as we all battle with our ingrained stereotypes of what poverty looks like, it becomes imperative that we shift to a more nuanced understanding of inequality and the poverty it causes.
Poverty in South Africa manifests not as a financial indicator (this is a consequence) but instead, as a lack of opportunity, where the system determines the life that people are to lead, denying citizens the choice to navigate their worlds. There is an excellent report, published by the British Council in 2018 which talks to young people in rural and urban areas across South Africa, asking how they see their future. The divides are clear: that South Africans born in rural areas are prejudiced from birth: the school they attend dictates the quality of their education and their future work; the friends they make informs the jobs they are to be offered as they grow up, their ability to travel influences how they see the world, and their position in it. This is South Africa’s poverty, where the system, not the individual determines the life you lead. As important as it is to attack the consequences – our unemployment rate, the movement of people from rural to urban areas – it is equally important to address the cause.
In April 2017 an agreement was signed that kick-started an important process in South Africa – the development of a Social Economy policy, designed to create an enabling environment for those organisations that deliver social change whilst earning an income.
This is the world of the co-operative, mutual societies, associations and social enterprises, which operate outside of the spotlight of stock exchange indices and GDP measures of economic success and societal wellbeing.
It is these organisations that if supported, have the potential to connect our growing divides. This is because they are rooted in their communities, set up to respond to the issues around them, strengthening systemic voids.
What is exciting is that they are not charities: they earn an income and are able to act independently of donors. They are also not pure-for-profits - their success benefits the communities they serve. They operate on an entrepreneurial frontier, building market activity where commercial businesses typically see a barren wasteland. And in charging for their services they challenge our deeply ingrained perception that poor people don’t have money, that poverty means you have nothing.
They are social enterprises like Spark Schools set up by Stacey Brewer in response to the lack of high quality, affordable schooling in South Africa; GreenAble an environmental recycling organisation that connects disabled people to employment opportunities; and Dr Dulcy Rakumakoe’s U-Care clinics, which are affordable and just down your street.
In 2018, the Gordon Institute of Business Science published a study to understand what these organisations looked like: did they exist? If so, where were they based? How did they fund their work? How many people did they employ? The results show how they work across sectors from health, to education, housing and social justice. They are employers, with 83% having between 1 to 50 staff, and they are doing well. Fifty-five percent have been in existence for more than five years, and 13% for more than three years, showing that they have overcome that initial start-up phase where most businesses fail. Seventy-three percent ranked earning an income as very important to their work, and 65% report growth ahead of inflation. These are small, optimistic organisations with 80% having an income below R500,000 per annum; and 67% expected to “grow fast” over the next 12 months.
We are only now starting to understand the impact and potential of our social economy organisations, as they deliver essential goods and services to citizens, whilst opening up opportunities for employment, skills development and trade. And it is our Social Economy Policy process that will bring these organisations from the shadows of the economic stage and into the spotlight.
The consultation process that informs any policy is as important as the Green and White Papers that result, and we have an opportunity over the next three years to shift not just our understanding of poverty in South Africa but critically, how we respond to it. To take meaningful steps to build an inclusive society, where citizens have choice.
Kerryn Krige is Chief Technical Adviser with the International Labour Organisation, working on its SA Social Economy Policy Project. She is the co-author of the bestselling The Disruptors – social entrepreneurs reinventing business and society. She has worked in collaboration with Nation Builder to inspire and equip businesses to lead social change. www.proudnationbuilder.co.za