Paul Janisch

What was apartheid?

We are now 13 odd years into our new South Africa.  And we are making progress, although at times I find myself frustrated with the government and where South Africa is going.  I was doing some research into a gender empowerment article and I came across a website that listed some of the legislation passed between 1949 and 1970 designed to bolster and sustain apartheid.  Looking at this legislation and the patent denial of rights that the Nats attempted to enforce, it's almost shocking that anything like that could have ever existed at all.  Especially when you consider the South Africa we live in today.

I cannot for the briefest moment pretend I knew what it was like to be on the receiving end of the pass laws, job reservation, separate amenities and group areas (amongst others - take a look at the website to get an idea).  But I can be thankful for the constitution that we have at the moment, and the rights it bestows on all South African citizens.  My only memory of the Nationalist government was the Calvinist restrictions it placed on all South Africans and how we were so limited in what we could do, what we could read, what we could view on TV and who we could associate with.  In fact all I remember was a complete restriction of the freedoms that I hold very dear today.

One of the more humourous examples I can recall was in the mid 80s when I was doing my military service.  It was a Sunday and the regimental sergeant major (the unparalleled Braam Blom) was conducting church parade next to the squash courts.  A couple of mates and I decided we'd go and play squash at that particular time.  Our game was brought to a hurried halt when a corporal stormed in and informed us in the most descriptive army Afrikaans that we were to stop playing and meet him in 10 minutes with full kit on.  For those of you who don't understand the idea of full kit it really meant that it was now opfok time  (there is no better word in any other language).  The problem was that we were playing sport on the day of the Lord and this was a sin - one of those freedoms denied us by the Nationalist government.

We arrived in front of the corporal at the allotted time to discover him in a very confused state of mind.  You see it was Sunday and you weren't allowed to opfok troepe on that day.  So we were let off.

The country we live in has its problems but it has all the right intentions to fix it up.  And when you look at it in this light and consider the real damage done to the overwhelming majority of our population until the early 90s, then concepts like broad-based BEE tend to make sense.  It's an economic remedy to a social evil.

Take a look at that website one more time for a reality check.  And then think about we do have now.  I know that I never ever wish to return to those days.   

BIG hand-outs

John Kane-Berman provided an interesting statistic in his Business Day piece, on “discouraged workers” — those out of work and available for work, but making no effort to find work. Their number has grown from 2,2-million in 2000 to 3,7-million in 2006. 

All of these people will probably qualify for the basic income grant (BIG).  I would suggest that the implementation of a big will erode the incentive to find employment to almost nil.  Nazmeera Moola tackled the BIG in this week's FM.  Her biggest issue is how the government is going to foot this bill on a sustainable basis.  At the moment there is a budget surplus but what about the lean times?

Two solutions have been proposed:

1. Raise VAT by 7% - YOU'VE GOT BE KIDDING !!!!!!!!! (my emphasis).
2. Increase personal taxes by between 10 and 30%.  She speculates that this will have a detrimental effect on foreign investment. 

Moola writes very well, I recommend you read the article - A BIG question.

Govt being BIG about social welfare

Hilary Joffe wrote a very balanced opinion on Skweyiya's basic income grant (BIG) in today's Business Day. 

She offers a few interesting stats on welfare.

• 18% of total government spending is spent on welfare,
• Nearly 11-million South Africans now receive pensions, disability, child support or foster-care grants.
• The spend amounts to R62bn, representing more than 3,5% of gross domestic product (GDP): an extraordinary ratio, even next to countries such as Brazil, which has something like a BIG.

She first tackles the positive aspects of a BIG.

Evidence shows how successful grants have been in narrowing the poverty gap, reaching deep into the poorest rural areas, where their impact has been significant. As small is the BIG is it would narrow the poverty gap and improve people’s life chances.

Her next step is to consider whether the BIG will actually solve the government's broader goal to fight poverty.  She suggests that a BIG does not address the problem but works around it.  Joffe suggests that the government's greatest responsibility is the "social wage"; a concept that takes education, sanitation and transport (et al) into account.  The BIG might direct government's attention away from the social wage and not address the root of the poverty problem. 

The next question is how is this BIG going to be paid for.  BIG proponents want the tax payer to foot the bill, and this would only be collected by raising taxes.  Raising taxes is not a popular option seeing that the tax to GDP ratio has increased 4% in the last five years (now sitting at 28%).

There must be a CSI tie in here - by creating a facility for companies to direct their spend at the poorest of the poor we will be alleviating some of the government's responsibilities.  And the benefit to the economy - new markets and consumers.

Skweyiya calls for basic income grant for poor

Zola Skweyiya, social development minister, expressed support for the idea of a basic income grant to assist the estimated 23-million people living in desperate poverty in the country.  So the Business Day reported on Friday.  This comes on the back of government's forecasts of a budget surplus in coming years.  In other words, SARS continues to overreach its tax collection targets, and we now have more money.

Trevor Manuel has long been opposed the introduction of such a grant because he maintains the state cannot afford the R90billion/year bill.   His concerns extend to fostering a "culture of dependency".   Such a culture would have very negative repercussions if there was an economic downturn - how does the government extricate itself from such a programme?

When you remove the emotional aspects of BEE from the equation: - the usual suspects (now called the big six), entitlement etc, you'll find that there is a serious economic reason behind the policy.  Righting the wrongs of the past should elevate these 23-million people out of the poverty spiral.  And by doing this, the pressure on the government to deliver for these people is reduced substantially.

I am in no position to understand the plight of the poor in South Africa but I do agree with Manuel.  A population that can survive without too much government intervention is a huge asset to any country.

Back to the BBBEE scorecard.  There is no mysterious reason for the inclusion of enterprise development and CSI in the scorecard.  Simply put - the government recognises that it can't foot the social bill, and it needs help from the private sector.