Over the past few years, South Africa has struggled under conditions of weak growth, rising unemployment and mounting public debt.
Even before the Covid-19 pandemic, recessionary pressures were acute, with the economy in a technical recession, given two consecutive quarters of negative growth in the latter half of 2019.
This has resulted in job losses, increased inequality, xenophobic violence, and many more South Africans choosing to leave the country altogether. South Africa’s economic and social imbalances can no longer be swept under the rug. The country has three choices: muddle through, endure another surge of ethnopopulism, or pursue inclusive development.
Ideally, ideas, institutions, and growth all reinforce one another in a virtuous developmental spiral. Ideas offer hope by encouraging cooperation and the pursuit of opportunities for win-win gains.
Institutions guarantee that the bargains underpinning cooperation will be monitored and enforced. Together, ideas and institutions provide credible commitment, which fuels economic growth.
However, such a benign scenario does not reckon with the ways in which persistent high inequality, accompanied by unresolved tensions between the distribution of economic and political power, can both put pressure on institutions and quickly change hope into anger. The result can be a cascading set of pressures and an accelerating downward spiral.
So What Then?
It seems clear to me that the answer lies in taking the boot off the necks of working and middle class households through a combination of policy initiatives and diverting government funding from public sector provision towards more efficient private sector provision.
There are 1.2 million domestic workers in South Africa. That is a sizable portion of the workforce that, if their income increased, would be a massive boon for consumption spending and perhaps even saving in the economy.
One way to do this is to make paying a domestic worker a tax-deductible expense. This is something that is already happening for people who work from home and employ a domestic worker – so why should it not be extended to all households who employ domestic workers?
It would relieve some of the financial pressure on employers and incentivise higher pay for domestic workers while formalising their profession so that they can access UIF and other benefits they could not get during the pandemic.
Another way to relieve the pressure on middle-income households especially is to introduce vouchers into the education system. I have written about this before in the Daily Friend but it is worth repeating, because South Africa’s middle class is double-taxed. Public schools are often of such poor quality that parents are willing to forgo disposable income to pay for low-fee private schools such as those operated by the Advtech and Curro groups.
The growth of these schools in townships in Gauteng is perhaps the most telling indicator. Releasing public funds which are egregiously wasted by public schools and bureaucracies into the hands of parents will have the benefit of releasing financial pressure from middle income parents, and also enable working-class and poor parents to purchase education for their kids which is just as good as that of the children of middle-income earners.
This is an underrated potential tool for nation-building and unity and not like the usual lip service after the Springboks win (as much as I love that bunch of winners).
The same could be done for healthcare, but would require some legal wrangling in order to tie healthcare vouchers to citizenship and residency (legal immigrants who pay into the system). I have written about this before but it bears mentioning again, considering the potential for nation-building, inclusivity and unity.
Ideally you would want three pillars: primary healthcare vouchers (GP, dental and optometry) and a hospital plan which could fit into current funding, and then a third central pillar for specialist care funded through levies on big business and every South African. The rationale is that many people already pay medical aid anyway, and the delivery of the care would still be private.
Somewhere around 40% of South Africans are mildly to severely food insecure even as South Africa is a net exporter of food. Also, around 45% of our food produced is ultimately wasted and ends up in landfills. Much of it is perfectly edible.
Advocates of the distribution of surplus food to the poor have been calling for the Consumer Protection Act to be changed to allow donors to feed more of the 14 million people who go hungry every day in South Africa. They say section 61 of the act, which could impose costly liabilities on participants in the food production, distribution and retailing chain, disheartens ‘good faith’ food donors.
Most food has a ‘sell-by’ date and a ‘use-by’ date and this is where the problem arises. Although retailers can donate food that is beyond its sell-by date, they could face legal action for donating it beyond the use-by date, even if the food is still edible.
Let’s Play a Game:
So while this list is by no means exhaustive, it does point to the potential for making a real material difference to the lives of South Africans across racial and class lines, and using the policy environment to build social cohesion and unity around a sense of what it means to be South African. If we all have the same skin in the game, we are more likely to work together to make sure things work.
So here let’s take a scenario of how this might work:
It is the year 2024, Zikhona is a domestic worker who lives near the train station in Philippi and who commutes to work in Lakeside via the recently devolved trains to Wynberg and then takes a short walk with her two sons to her employer’s house. This is Kirsty, a social worker with an office nearby. Zikhona earns R1 000 more per month than she used to because of the policy of her pay being tax-deductible for her employer. Zikhona’s and Kirsty’s sons go to the same school nearby, thanks to the school voucher system.
When any of their children get sick, Kirsty is able to use her car to take them to a doctor, thanks to the healthcare vouchers they now both enjoy. Kirsty, along with her husband Mark, who is a teacher at a high school nearby, enjoy the extra disposable income they have and have even gone on two family weekends away in the last 6 months, something they struggled to do because of money pressures.
Zikhona’s neighbor Odwa is still looking for work but can in the meantime utilize the local food bank to get food necessities, so she and her two children are not food insecure and her children can concentrate at school. Odwa’s children attend the recently opened Curro Digi-ed school and when they get sick, she can choose to use her vouchers to take them to a new hi-tech clinic opened up by Quali Health or the other one by Unjani Clinic group. Zikhona’s husband Mbuyiselo recently got promoted to manager of a supermarket nearby. They are quietly saving for a deposit to buy a house in an entry level suburb closer to Zikhona’s work and the boys’ school.
This is admittedly an optimistic scenario but it does show the potential, especially if at the macro level South Africa pursues pro-job growth policies. It would help if, for example, the City of Cape Town is successful at devolving both the trains and the police (through LEAP) and slowly continues to chip away at building a worthwhile and potentially world-class city.
The alternative to hope is simply to resign ourselves to the mire and to ugliness and division – and many people will, because there is a strain of pathological negativity in some South Africans which will not find a cure any time soon.
I choose hope. I choose sensible policies that can benefit working families. I choose this country against overwhelming odds.
[Image: https://www.curro.co.za/our-models/curro-select-schools/#modelSelected]
The views of the writer are not necessarily the views of the Daily Friend or the IRR
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