Government’s poverty alleviation programmes fail to meet objectives

In February 2001 during the State of the Nation address, former President Thabo Mbeki announced a “sustained campaign against poverty and underdevelopment”. It took the form of urban renewal projects (URP) and integrated sustainable rural development programmes (ISRDP).

Implemented in 21 municipalities across the country, called development “nodes”, including Cape Town and belatedly Central Karoo District Municipality/Beaufort West (CKDM), selected on economic need and poverty, they were a mix of soft infrastructure, economic and community development and public works job creation projects. Municipalities managed the programmes under their integrated development plans (IDP) from funds provided and individual projects selected by national government agencies, with oversight by provincial political “champions”.

A 2004 high-level survey report, Baseline Survey of the 21 ISRDP and URP Nodes, by academic David Everatt et al (this followed Everatt’s et al Integrated Sustainable Rural Development Programme Phase 1 Evaluation: Nodal Review in 2004), commissioned by the Department of Social Development, found poverty had declined in nodes that hosted ISRDPs.  (A similar finding was made of URPs.)

However, sector assessments that supplemented and informed the completion report contradicted its rosy findings. Shortcomings of individual nodal projects included poor management and implementation, lack of capacity, resources and expertise, and unmet expectations of poverty reduction and economic development, i.e. to a greater or lesser degree individual programmes failed to meet their objectives.

The Everatt report’s basic flaw was it conflated and attributed poverty alleviating social transfers like free services and housing and bulk infrastructure projects to the ISRDP that were never part of the latter. But that oversight did not excuse the authors ignoring, or minimising, sector findings.

Included was CKDM’s ISRDP programme (my master’s degree research project), which at the time provincial progress reports said met objectives “fairly well”. In fact, it was evident even then little value was being obtained for the R132 million spent on it during 2003 and 2006, including on poverty alleviation and job creation projects. From 2006 to 2009 all but a few of the capital projects (arguably the multi-purpose community centre was the only success) had failed or fallen into disuse and disrepair, and a few were never implemented.

Beaufort West Hydroponics, initially a viable, if struggling, business, with Woolworths its main customer, was the last to go under about 2010. The last of the town’s functioning ISRDP job and micro-industry creation projects failed due to lack of political, financial, managerial and technical support (a theme among the national ISRDP), which it had requested since formation, and distance from its main market, Cape Town.

A significant feature of the ISRDP (probably URP too, but I have no direct knowledge about that) was that the majority to 100 per cent of initiation, planning and implementation was top-down, directed from Pretoria, including social development and Council for Scientific & industrial Research (CSIR). This was against constitutional, municipal legislation and integrated development planning and community development practices that there must – not optional – be meaningful local community consultation.

That there was little to no pre-planning consultation about local needs and priorities and no after-implementation support to mostly rural municipalities with their existing constraints, contributed to the problems and overall failure of CKDM’s, and probably national, programme meeting its objectives.

Sadly, it’s to be expected politicians, who are incapable of reporting failure because it badly reflects on them, and eager-to-please commissioned (paid) researchers and consultants, will fudge the facts about sustainable jobs, economic benefits and skills that allegedly are being created.

Expanded public work programmes (EPWP), under the jurisdiction of the Department of Public Works and Deputy Minister Jeremy Cronin, are another iteration of the alphabet soup that went from the RDP in 1995, URP/ISRDP in 2001 and EPWP in 2011 (these are a few of the ten or so programmes post-1994). These initiatives suffer a similar fate of exaggerated or unmet outcomes, tremendous political and self-congratulatory send-offs followed by almost immediate fading interest, and/or lack of commonsense economic policy implementation and programme management.

In a Moneyweb article, University of the Western Cape’s Derek Yu, Atoko Kasongo and Mariana Moses wrote a solution to SA’s high unemployment is the EPWP, which they claimed is essential to upgrading skills. However, they didn’t say how it should go about it (I asked in an email at the time, but they didn’t reply).

EPWPs are intended to create short-term “job opportunities” at low pay (currently at R79/day, it’s half the soon-to-be instituted national minimum wage of R3500/month and exempt from that provision), essentially subsistence, labourer jobs from which skill creation cannot flow. So Yu’s et al’s thesis is questionable; in fact, it’s without substance – confirmation bias among those who favour these types of programmes.

In January 2016 Cape Town Mayor Patricia de Lille stated the city’s EPWP created or enabled 160 000 “job opportunities”, including “permanent” and “sustainable” jobs, economic benefits and poverty reduction opportunities from the R555 million spent to date. She claimed to have “research” that proved this.

Note there’s no formal definition of “job opportunities”. But it’s a euphemism for short-term – less than six months – casual jobs, although De Lille claimed, without providing data, the city’s EPWP created “skills”, “poverty relief” and the creation of “local businesses [and] local economic development within communities”.

In a letter published in the Cape Argus I challenged her to produce the evidence. She responded with generalities and lack of specifics. Her statement read more as an election manifesto than proof. (I also requested her office but predictably they didn’t produce it. A while later I received an email basically repeating the official line.)

Last year Auditor-General (AG) Kimi Makwetu was unable to verify and substantiate the “reported performance of the [national expanded public works] programme. We were unable to obtain sufficient supporting documentation to substantiate the creation of work opportunities”.

The AG’s finding amounts to a disclaimer of opinion, one of the worse audit findings there are. If he cannot substantiate the number of jobs created, I'm wondering how researchers and job providers – government – can honestly state jobs, never mind skills, are being created. EPWPs are not making any impact on the about 36% real (26.5% official) unemployment rate, never mind the type of skills the country needs.  

In a Business Times report statistician-general Pali Lehohla stated government’s unemployment remedies are inadequate and backfire. “The EPWP, the R9-billion rand jobs fund established in 2011 has yet to fulfil its 150 000 jobs target, and the youth wage subsidy or tax incentive scheme established in 2014, have not affected unemployment.” He said they would have been better as pilot studies (rather than fully-fledged and funded programmes).

These findings question the alleged benefits of EPWP and similar job and poverty alleviation programmes. If we consider the stagnant economic growth (estimated 0.1% - 0.6%) and where unemployment is higher now than 20 years ago, where engineering, commerce, IT , etc graduates and experienced people are unemployed, claims the EPWP and youth wage subsidy programme produce skills, jobs and other benefits are not true.

To grow the economy and lower unemployment the entrenched, serious structural problems identified by ratings agencies, analysts and investors must be attacked, rather than the hit-and-miss approach adopted over the past 20 years. And the way the country does business – economic policies and operating environment – must profoundly change. But this will not happen under the current regime, which is obstinately clinging to outdated and nationalistic policies and Zupta-inspired political brinkmanship.

Under the Zuma administration since 2009 the rand lost about 50% of its value compared to the US dollar, SA lost its place as Africa’s premier investment destination to central and east Africa and has had to struggle to reclaim the top GDP spot in Africa after briefly being in third place after Nigeria and Egypt. And recently SA received two ratings downgrades, with a third predicted following Zuma’s disastrous cabinet reshuffle and firing of former finance minister Pravin Gordhan that plunged the country into another crisis.

The core function of government is to provide services and infrastructure and regulate the orderly development of the economic, urban and rural space and so on. Economic growth and development is a consequence of this function. It’s not their role to be an employment and dole agency, except to meet staffing requirements for its core duties and basic health and welfare provision.

While I understand the necessity for occasionally employing people for specific short-term projects, the scale of jobs entertained with EPWPs are beyond the scope of its core duties. It's also duplication of service, well within its existing capacity to do the work EPWPs beneficiaries perform and an inefficient and wasteful use of resources.

In SA, poverty alleviation and job creation programmes (lately, aka, “radical economic transformation”) are ever topical and popular as the purported antidotes to counter social and economic failures wrought by political, policy and business near-sightedness. But as proved with numerous A-to-Z programmes over the past 20 years, poverty and job programmes yield few lasting benefits for either beneficiaries or country in terms of overall poverty reduction, job creation and skills development against the billions spent, money that could have been better invested. In fact, these programmes are really social transfers.

Poverty is multidimensional. But while grants, free housing and basic services have reduced absolute deprivation in places, income poverty, caused by the lack of economic growth and jobs, is still the most significant problem for South Africa.

I appreciate these programmes attempt to provide some income for a short period. But the short duration of the earnings window of EPWP or youth job scheme – typically a few weeks to a few months – with its unskilled participants and low wages means beneficiaries have access only to subsistence income and no meaningful time to accumulate livelihood assets and opportunities to alter entrenched poverty/deprivation that only a sustained employment over a long period allows.

Social grants and transfers like free basic services have the same limitations: they fail to provide beneficiaries with livelihood assets, including financial, that sustainably and permanently help them move out of poverty, or reduce food poverty. It’s a sad commentary on the country and a judgement of what it considers success and achievement that the social grants system is considered a victory of the post-apartheid welfare state when it’s an indictment of its leaders’ abject failure to provide conditions for socio-economic growth and development for a third of the population (not including old-age and military pensions).

South Africa’s politicians frequently throw money at problems believing it’s the cure-all only to see problems persist, and then wonder why. In the meantime, they pretend to be unaware of, and fail to deal with, entrenched structural issues.

De Lille said of Cape Town’s EPWP – and the sentiment may be extrapolated to all government’s poverty alleviation and job creation programmes – there’s evidence a few weeks makes a permanent difference for the majority of beneficiaries. However, our poverty and unemployment levels would be a lot lower if that’s true.

Footnote:

I worked for a Cape Town non-profit organisation that runs an internationally praised skills training programme for youth from disadvantaged communities. It offers a ten week and longer basic vocational, office management and computer skills programmes followed by temporary job placement. (Recently a luxury German motor manufacturer partnered with them.)

Job placement, which is not guaranteed, depends on available vacancies at partner employers, and often is not in the sector students trained for. But it’s a short-term job, usually up to six months. Often permanent jobs are offered after the initial period.

When I was there the success of the skills programme was measured by the number of temporary (and longer) job placements. Long-term analysis of former students’ economic and job situations was difficult because in many cases phone numbers changed, they moved, or never replied to follow-up calls after the temporary jobs expired. But – and no fault of the NGO – the impression I got was it wasn’t very encouraging.

The combination of skills training with medium to long-term (that’s essential) job placement is probably the best and only strategy for creating livelihood assets, jobs and ensure individuals’ social and economic advancement. But the evidence, or lack of it, including from unimpeachable sources like auditor and statistician-generals, is unequivocally, EPWP failed the test.

However, commendable programmes like the above NGO’s and similar struggle to make a significant impact when the economy is not growing where qualified and experienced people are losing their jobs or can’t find work. And that’s the problem.