In order to effectively develop its 6,2-million-person-strong 'second economy', South Africa must draw up and implement a coherent, quantitative and centralised system of interventions.

This is the conclusion drawn by the latest development report by the Development Bank of Southern Africa (DBSA), in cooperation with the Human Sciences Research Council (HSRC) and the United Nations Development Programme (UNDP), to be launched to the public tomorrow.

The concept of the second economy was first launched into the macroeconomic debate sphere in 2003 by President Thabo Mbeki, as one half of South Africa's so-called 'dual economy'.

HSRC research director Dr Michael Aliber said that Mbeki has described the government's antipoverty drive as comprising three emphases. These are to strengthen the first economy, meet the challenges of the second economy and provide and refine the social security net.

The report, titled 'Overcoming Underdevelopment in South Africa's Second Economy' aims to shed light on the state of the second economy, as well as the efficacy and developments in government's intervention programmes directed at this sector of the population.

For the purposes of the report, participants in the second economy were limited to subsistence farmers, informal-sector workers, the discouraged unemployed and the working poor (earning less than $2 a day).

Editor Marie Kirsten said that 20% of South Africa's working-age population fell into these categories, aside from a further 30% who were officially unemployed.

The issue of development is particularly topical at the moment, as the ANC National General Council meets in Pretoria, to discuss, among other things, the question of 'development and underdevelopment'.

Newly-appointed deputy President Phumzile Mlambo-Ngcuka also has the second economy as one of her key responsibilities and has said that she will be promoting labour-intensive programmes.

The DBSA report looks at the way that colonialism and international colonialism resulted in the formation of two separate economies in South Africa, and poses the question: why, after over ten years of democracy, do poverty and inequality not only persist, but seem to be on the increase? Aliber said yesterday that, in answering this question it was necessary to examine the second economy for two reasons.

Firstly, it has become clear that the first economy will not solve the problem of poverty in the short or medium term, he said.

Further, the social security system, while necessary, has limitations, which will always prevent it from eradicating poverty.

The report mentions a number of government intervention programmes, which are aimed specifically at the second economy.

Of these, four were selected - the Department of Provincial and Local Government's rural and urban programme, the Expanded Public Works Programme (EPWP), and interventions into the agricultural and small business sectors - and analysed at length.

Several patterns emerged, from which conclusions were drawn.

The first of these was that there is a need to disaggregate and quantify the programmes.

In the small-business and agricultural sectors especially, the needs of participants are diverse and they should not be assisted as homogenous groups.

Secondly, Aliber said that government tends to seek to assist by introducing new economic activity, but that there is a need to support what is already in place.

Other observations are that there is a need, and failure, to understand the real constraints and problems, as well as to learn from the failures and successes of previous programmes.

Aliber said that the studies conducted in the report show that the scale of the existing interventions is far too small in comparison to the problems they seek to tackle.

Further, while the government is eager to invest in the poor, it is much easier to spend the money on grants that on developing the second economy, he said.

Existing intervention programmes also tend to be more concentrated on the upper end of the poor societies, with an overall concentration of benefits reaching smaller groups of people.