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The political economy of social unrest

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The political economy of social unrest

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29th September 2021

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The social unrest experienced in Gauteng and KwaZulu-Natal last month has created huge debates in society. There is no consensus, even amongst security cluster cabinet members, on the underlying causes. Yet, citizens have felt the socio-economic and political consequences of the social instability. Narrow security dimensions feature prominently in divergent explanations for the riots, with political insurrection and domestic terrorism topping the list. These perspectives provide a partial view on a ‘poly-crisis’, which we argue straddles the ‘socio-economic’,  political’ and  ‘national questions’. What is missing in the security dimensions of this narrative is a political economy analysis that explores long-standing socio-economic catalysts for social unrest. The first are the persistently skewed spatial development patterns in post-apartheid South Africa. Statistics South Africa’s (Stats SA) latest General Household Survey (GHS) indicates that access to basic public goods such as water has improved since 1994. However,  poverty, inequality, unemployment and poor basic service provision persist in low-income areas like townships or rural areas. The 2016 Community Survey, also published by Stats SA found that just under a quarter (23.3%)  of all households in KwaZulu-Natal, ‘ran out of money to buy food’, much higher than the national average of 19.9%.

These municipal-level socio-economic challenges are primarily caused by the minimal progress in building self-reliance and diversified local economies across South Africa. Townships and rural localities are either overly dependent on the public sector or a few large corporates in one industry. This, in turn, reproduces low labour absorption, minimal skills development and weak SMME growth in these areas. Society needs to strengthen coordination and interventions aimed at diversifying local economies. At a micro-economic level, retail property investments, while bringing basic foodstuffs and other consumer goods closer to consumer markets in the townships, also have implications (under their current configuration) on ‘crowding out’ alternative micro-economies in the township, critical to livelihoods and incomes in the township economy. As Eddie Rakabe suggests in a recent piece, while shopping malls have inserted themselves in the wallets of the township consumer, they maintain ‘an arms-length’ relationship with productive activities in the township economy. This moment is an opportunity to change this. This notwithstanding the important role that they play in the property-retail-finance nexus that spawns these large centres. For many of the investors who invest in these centres in township, they represent better than average trading densities and footfall due to the large consumer market drawn to them. However, they are also, as we have seen, a point of vulnerability, as the citizens of parts of Tembisa, who now find it difficult to find an ATM, realize. It is crucial, therefore, for policy to ensure that these real estate investments in the townships contribute to inclusive distribution of value rather than a model that many decry as ‘extractive’.

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How do we do this? The first element is to actively develop alternative marketplaces outside of these large retail centres, to broaden production, economic participation and market access for township-based producers. Ayabonga Cawe in his recently published book: The Economy on Your Doorstep suggests that malls can play a crucial role in local economies with multi-sector linkages and value chain co-ordination. Considering the food insecurity discussed above, one area of intervention involves securing the primordial food needs of households. Doing so in a way that de-links household nutritional needs from household cash balances. Put simply, disconnecting one’s ability to survive, from having access to wages. One way to do this, is to consider a cashless component to existing social grants, that would allow grant recipients to access locally produced foodstuffs and wares, from alternative township-based producers. As we consider the basic income grant, such a ‘cashless component’ of the social grant would also serve to incentive local production, whilst also providing such producers with a market, thus incentivising further re-investment in production and subsequently, the expansion of employment in these sites of production.

Similarly, there is a need, as we rebuild forward ‘better’, to ensure that the mainstream food system, its retail landlords and the financiers who underwrite these developments, consider the renegotiation of not only exclusive anchor tenant leases (as the Competition Authorities have advocated), but also commit to clear localisation plans that give stimulus to local enterprise development - at the level of suggesting practical plans around shelf space, the tenant mix of large retail centres and responsibilities around upstream sourcing from township-based enterprises. Further, as Yamkela Spengane suggests in MISTRA’s Beyond Tenderpreneurship: Rethinking Black Business and Economic Empowerment publication, the importance of reciprocity in guiding public investments in key sectors is critical. In the current moment, this means linking, as the Gauteng government has proposed, accelerated depreciation tax allowances or even loans for rebuilding, with commitments to diversifying the tenant mix, and the creation of alternative spaces within shopping mall precincts for township traders. Similarly, job retention in critical landscaping, security and cleaning parts of the real estate value chain could be part of the ‘conditionalities’ for such state support.

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It is unsettling that many of the landlords and their tenants had no localisation plans, benefitted from centralised distribution networks, whilst leaving very little upstream value in the communities they serve aside from cleaning and security contracts in some cases. It is this unresolved challenge of extractive retail growth in the ‘Native Reserve’, that then provides credible cover for opportunistic elements riding on justifiable concerns of local benefit. There is a responsibility on local government in not only the affected areas, but everywhere else where such retail growth has been experienced, to convene local social partners around clear frameworks that can guide such commitments.

Further, we also know that, through appropriate urban planning approaches that reduce land zoning obstacles in dense township high streets and transport nodes, the widening of the road reserve and the provision of shared basic infrastructure, as Charman, Petersen and Govender (2020) suggest, economic activity can be crowded into these nodes. Such infrastructure investments, in high streets and alongside key transport nodes, can incentivize real estate investment and township property improvement outside these malls. While some have essentialised malls in the broader defense of the ‘township economy’ under threat, we know that the township economy is more than just the retail malls. The restoration efforts must also consider township enterprise in its multiple and diverse forms, and the damage encountered in this moment by uninsured women informal traders. Conservative estimates suggest that over 3 million South Africans are employed in the informal economy. This figure continues to grow, and we know that many citizens engage in diverse informal economy entrepreneurial activities. The MISTRA Beyond Tenderpreneurship publication highlights interventions for supporting these businesses in retail, transportation, construction, hospitality and social service  sectors. Some core recommendations include public procurement reform, infrastructure support, removing regulatory barriers and technology upgrading, related to the reciprocity discussed earlier.

Lastly, the social unrest we now experience, is the outcome of the inability to wrestle with the restructuring of South Africa’s traditional finance-led Minerals Energy Complex.  In this regard, in the post-apartheid era we have failed to  resolve key  socio-economic problems. The plans underway to reorient this complex towards greener forms of energy generation, as a critical input into economic and social activity, also hold some potential in resolving the crisis of under-employment and weak economic participation outcomes.

Global shifts towards digitised and low carbon economy business models present opportunities for employment, innovation and SMME growth in a restructured economy. But South Africa lags behind its middle-income country counterparts in leveraging these shifts for greater economic inclusion. A transition towards a decentralised socially owned energy system could potentially add to localisation and building labour intensive manufacturing value chains. Our mineral and commodity production chains remain capital intensive, while the ‘service-fication’ of the South African economy has created the conditions for value creation and accumulation without the need for labour. Add to this, the ‘real’ supply and input constraints imposed by energy insecurity, weak educational outcomes and deep inequality. We need a labour-intensive value chains approach to economic restructuring, which is complemented by social protection floors proposed in the National Development Plan. Viewed in this way, the interface between social, industrial and energy policy areas may serve as the frontier to resolve the key political economy issue in South Africa, highlighted by this crisis – too few of us with anything to lose, and too much production and distribution, happening in too few places.

Written by Khwezi Mabasa and Ayabonga Cawe and co-editors of MISTRA’s Beyond Tenderpreneurship: Rethinking Black Business and Economic Empowerment publication

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