Shared Interest News

During my last trip to South Africa, I visited Mashishing, a township near Lydenberg in Mpumalanga where Beehive Financial Services runs a micro-enterprise program benefitting from a Shared Interest guarantee. The experience was both hopeful and sobering. Hopeful because I again saw how resourceful people can be in difficult circumstances, and how modest help from strong development finance organizations can make a real difference. Sobering because there are still so many who are trapped in poverty in the second decade of a free South Africa.

Sonto Mkhonza, one of the group I met in Mashishing, expressed her frustration, citing a long period of searching unsuccessfully for work.”You’ve got a brain. You’ve got hands. You’ve got to do something!” she told me she said to herself. What she did was to join a saving and borrowing group of five women, under the supervision of Beehive Financial Services (BFS). Three months ago she borrowed R2,000 to boost her second-hand clothing business, which she operates by purchasing used clothes in Durban and Johannesburg, for her neighbors in Mashishing. (Mashishing’s answer to “personal shoppers” in a township with no clothing stores.) She has successfully repaid her first loan, and is now preparing to apply for a second.

Around South Africa, there are millions like Sonto Mkhonza. Shared Interest, through its partnerships with South African institutions, is reaching ever larger numbers, using guarantees to leverage additional financial resources. But it is also essential for us to understand the broader context of our work and the debates in South Africa over national strategies to achieve the rights for all South Africans to which the country is committed.

The article below presents an overview of this context. Those of you who are already Shared Interest donors and investors know that achieving the rights to which we are committed requires action at many different levels, from the broadest level of political debate to the micro level of individuals who need help to improve their chances of making a better life.

You can find more details on what we at Shared Interest are doing in our newsletters and annual reports.

Best wishes for the holiday season, and a new year of health and human rights.

Donna Katzin
Executive Director, Shared Interest

Social and economic rights are embedded in the founding documents of the new South Africa. Fifty years ago, the visionary Freedom Charter laid out goals such as free education and health care, the right to work and full employment, social security, and decent housing for all. The South African Constitution provides legal guarantees for these as well as political rights in its bill of rights.

(On the right to housing, for example, see Shared Interest’s newsletter for Summer 2005)

In the second decade after South Africa’s first democratic non-racial elections, however, there are widely divergent perspectives about how and when these rights can be achieved, how much has already been accomplished, what policies have the best chance of success, and to what extent there is political will to achieve these goals for the millions of South Africans who still live in poverty.

In October, South African Finance Minister Trevor Manuel introduced the government’s Medium-Term Budget Policy Statement, projecting increased government revenue and a reduction of the budget deficit to only 1 percent of GDP for the fiscal year 2005-06. This will allow greater spending on such priorities as education, health, and social welfare - continuing a more “expansionary” approach that is less constrained by the perceived need to demonstrate conservative fiscal policies to domestic and foreign investors.

Critics of government policy, however, such as the People’s Budget Campaign sponsored by trade unions, churches, and other civil society groups, say that budget policies need far more substantial changes in order to have any chance of meeting the needs of the majority of South Africans. And several recent studies have documented the reality that despite significant government achievements in areas such as housing, social security, household services, and sanitation, in many areas backlogs among the dispossessed may even be growing faster than new deliveries of services.

For example, a chapter in the just released State of the Nation 2005-2006 (published by the Human Sciences Research Council and available for free download on http://www.hsrcpress.ac.za), focuses on “putting numbers on the scorecard.” It systematically looks at the changing goals and the state of delivery of services for the poor, including housing, water and sanitation, social security, health, and education

The researchers, David Hemson and Michael O’Donovan, chart the evolution of goals and policies from the ambitious 1994 Reconstruction and Development Programme (RDP) through the Growth Employment and Redistribution Strategy (GEAR) that instead prioritized financial stability to the shift in recent years towards a middle ground again emphasizing more money for services delivery. They note the sensitivity of government officials to critiques and statistics that put in question their commitment to the poor.

The statistics for unemployment are controversial. For example,according to official statistics, the unemployment rate - including “discouraged job seekers” - rose from 31.5 percent in 1994 to 41 percent in 2004 before dropping slightly to 40.5 percent in early 2005. But Finance Minister Trevor Manuel was quoted in February this year as saying such high rates could not be true.

Achievements and Backlogs

The demands on government have been enormous, taking on the massive legacy of apartheid inequalities in an era during which economic choices are seriously restricted by both market realities and a global shift to the right. The results vary widely from sector to sector. The most blatant short-coming of national leadership, highlighted by AIDS activists, has been its still hesitant and ambivalent reaction to the devastating AIDS crisis. Among the most substantial successes has been the expansion of social grants for social security and child support payments, with steady extension of eligibility requirements and budgets. Reaching more than nine million South Africans, these programs constitute the government’s largest and most successful poverty reduction program. Studies show that the grants not only relieve immediate poverty, but increase the chances of children staying in school and of household members finding employment.

The records of other programs, such as housing and the provision of municipal services such as water and sanitation, are more mixed and complicated . Even as officials justifiably celebrate achievements such as delivering safe drinking water to ten million people in ten years, backlogs fell much more slowly. One study showed that while some 12 million people were without basic access to safe drinking water in 1994; the number was about 11.5 million in 2004

In housing, despite the delivery of more than 1.8 million government- subsidized low-cost houses, the backlog of families living in slum shacks is projected to increase to 2.4 million by the year 2008. This is a substantial increase in comparison to 1.8 million in 2001, despite the fact that in percentage terms it will be a smaller proportion of total households

The seeming contradiction of increased delivery, accompanied by continuing or even growing backlogs, comes not only from population growth but also the fact that the average size of households is decreasing. Between 1996 and 2001, the average size of families among African households dropped from 4.8 to 3.9. With increased migration into urban areas, the trend is expected to continue. Moreover, migration into South Africa’s cities comes not only from South Africa’s rural areas but increasingly from neighboring countries and even distant African countries

The bottom line is this. In the new South Africa, despite the end of political apartheid and the national commitment to bring fundamental economic and social rights to all, the prospects of Sonto Mkhonza and millions like her still depend on many factors.

These include the macroeconomic policies of government, the size of government budgets to fight poverty, and the skill and commitment with which large programs are implemented. The prospects for large-scale success also depend on global economic trends and threats such as AIDS. But what happens also depends on the creativity of ordinary people in South Africa, and on how creatively we are able to mobilize financial resources to improve their chances of helping themselves. We all must take responsibility for “doing something” to achieve the rights to which all are entitled. That is both a common responsibility and a shared interest.