|
Media release The actual transformation of the second economy should be a long-term goal, as the difficulty of undoing the legacy of the “two economies” has been underestimated. The immediate task is to intervene broadly and coherently in the second economy to assist and encourage as many people as possible to realise their economic potential. These are some of the issues raised in the 2005 Development Report, Overcoming underdevelopment in South Africa ’s second economy, which was released by the Development Bank of Southern Africa (DBSA), the Human Sciences Research Council (HSRC) and the United Nations Development Programme (UNDP). The editor of the Development Report, Marié Kirsten of the DBSA, emphasises that the purpose of the 2005 Report is not only to reach a better understanding of the dimensions of poverty and the current issues dominating the policy debate, but also, importantly, to reflect on a constructive way forward. “A key conclusion of the Report is that actual transformation of the second economy can only reasonably be understood as a long-term goal. The immediate task is to intervene broadly and coherently in the second economy in order to assist and encourage as many people as possible to realise their economic potential ”, Kirsten says. The report has tried to answer the following questions: Given South Africa ’s particular history and present circumstances, what should be done to reverse increasing poverty and inequality? What should interventions aimed at the second economy look like? What should government do or do differently? The 2005 Development Report considers the historical origins of underdevelopment in South Africa; the persistence of underdevelopment and poverty in the context of current policy; the current dimensions of underdevelopment and poverty; and selected government programmes aimed at addressing underdevelopment. The Report concludes with a synthesis of the issues and a plea for government to play an even more interventionist role in the second economy. Taking further the debate initiated by President Mbeki’s“ three pillar ”formulation of the struggle against poverty and underdevelopment, the Report seeks to explain why in South Africa, poverty persists and job opportunities decline, while at the same time the “first economy ” seems to flourish. The Report readily acknowledges the immense developmental initiatives government has instituted via its “third pillar ”–the wide social security net. Recent research indicates that grants do not induce dependency, and may have beneficial effects such as enabling more, and more effective, job search, promoting school attendance and shifting aggregate consumption in favour of goods with high domestic production content. However, between 1992/3 and 2004/5, welfare spending rose from 10% to 18% of government ’s non-interest budget, which is, by government ’s own acknowledgement, reason for concern. This brings us to the “second pillar”, or government’s programmes to deal directly with the challenges of those marginalised from the mainstream economy. The Report indicates that these second economy interventions are mostly aimed at productively engaging the poor and are key to bringing about broad-based prosperity in the country. However, a critical examination of a selection of these programmes reveals that many interventions are neither coherent nor scale based, and are often designed in isolation from the ordinary, poor person. The Report, to be launched at the DBSA head office in Midrand, concludes that strengthening this “middle pillar ”is doubly important, on the one hand because of the short-and medium-term limitations of what the first economy can offer, and on the other hand because of the large gaps in and the immense costs of the social security net. The Report will also be available on the websites of the DBSA, UNDP and HSRC.
|
