Address migrant issue to restore small black business
By reclaiming small business, poor communities could play a decisive role in curtailing the malice of crime and dependence on the state
In his maiden state of the nation address, President Cyril Ramaphosa acknowledged that for several years our economy has not grown at the pace needed to create sufficient jobs or lift poor South Africans out of poverty. Public finances have been constrained, limiting the ability of government to expand its investment in economic and social development.
At the same time, small black business has gone into decline, resulting in socio-political problems such as crime, strife and a drop in living standards. In every township and rural area, small businesses have fallen into the hands of new players predominantly from the Asian continent.
Previous owners of shops and small enterprises in these communities have been displaced, and in most instances now rely on renting out their premises to the new economic migrants.
This phenomenon is not unique to SA; it fits squarely in the ongoing convolutedness and difficulties around the politics of migration, as well as the increasing rejection of unfettered migration that has taken root not only in SA but in the EU, US and elsewhere.
In response, these countries have sought to reclaim control of their borders and economies in their bid to redefine for themselves how they will participate in the globalising world on their own terms.
In the case of SA, a major contributing factor to this fracas is a haphazard foreign policy on migration and reciprocal trade.
Since 1994, the influx of migrants from the greater continent has stiffened competition in the job market for South African citizens living in urban centres. Since its reintroduction to the international community, SA has rightfully obliged itself to play a leading role in advancing the pan-African agenda. Large numbers of illegal immigrants are increasingly presenting a problem for the country as they have squeezed citizens further down the spiral of the economy, which is a prospect that threatens the continent’s agenda as a whole.
In recent years, white monopoly capital has been fingered as a barrier that hinders black people from accessing the economy.
However, little attention has been paid to the displacement of black business that managed to service poor communities even during the apartheid era, when this sector got by without government programmes such as the Small Enterprise Development Agency, National Empowerment Fund and Small Enterprise Finance Agency under the Department of Trade and Industry.
The informal retail sector boasts about R46bn in annual sales, but rural communities are excluded from participating in the economy in general as a result of lack of access to internet services and the nonexistence of industry in comparison to their urban counterparts. For these people, white monopoly capital is nothing more than a phrase thrown around loosely by eloquent black city folk.
For them, solutions lie in reclaiming businesses that they previously owned without the stale embrace of the state or at the very least transforming this sector into joint ventures where locals can have tangible shareholding and beneficiation.
Government’s free basic services programme supports more than 3.5-million indigent households.
More than 17-million social grants are paid each month, benefiting nearly a third of the population as set out in the state of the nation address.
According to a survey published by the South African Institute of Race Relations, the number of people receiving grants has increased by 328% in 15 years‚ while those with jobs increased by only 24%.
In 2017, the institute’s analyst, Gerbrandt van Heerden, warned that the government would find it difficult to afford the cost of its social grants programme as demand is bound to increase in the years ahead.
Even more startling is that a sizeable chunk of these recipients are unemployed young people of productive age.
Essentially, these youths have been seen by the government as mouths to feed instead of numerous pairs of hands that could contribute to building the economy.
The president’s reaffirmation that government will honour its undertaking to set aside at least 30% of public procurement to SMMEs, co-operatives and township and rural enterprises is welcome, but this money will most certainly fall into the hands of foreign business operators, as locals are by and large absent from business activity and are simply not in a position to compete on an equal footing due to bureaucratic red tape, which is challenging to negotiate for funding and government support.
Due to poor government policy implementation, consumers in these areas are burdened with extra costs upon purchase of basic services such as airtime, data bundles and electricity, as well as charges for making electronic transactions. An explanation that often comes from the vendors is that they do not source from service providers such as MTN, Cell C, Vodacom and Eskom — this response comes only if the vendors do not suddenly forget how to speak English. An audit on these extra charges could reveal grand-scale extortion of the poorest of our society.
This deplorable state of affairs cannot be remedied solely by the government’s top down approach. As things stand, the little income in the form of government grants or remittances in black communities does not circulate among them. These monies are lost to well-coordinated foreign players. This phenomenon inhibits poor communities from retaining income and renders them consumers.
In his book entitled PowerNomics, Dr Claud Anderson submits that consumer power is really a myth and that real power lies in production and active participation in the economy, particularly in the black communities in the US.
Asian countries have also figured this out and have succeeded in creating human-centred markets by easing access for the poor, while putting in practice trade protectionist policies that are contrary to their calls for free trade at the World Trade Organisation.
To be sure, SA’s lax migration policy and poor regulation, among others, affects the poorest of its citizens. By reclaiming small business, poor communities could play a decisive role in curtailing the malice of crime and dependence on the state.
This should serve as a long-term strategy to encourage black people to participate in the economy from the bottom up.
• Makgetla is an analyst at Political Analysis SA.