An open letter to Minister Pravin Gordhan

By Ian Dewar

Minister Gordhan, I write to you because I find myself deeply disappointed by the centralist orthodoxy of your budget speech. I live in a small rural town where 25.9% of the local workforce is unemployed and 45.9% of local households earn less than R1600 per month. This means that our local Gini coefficient of income disparity is somewhat worse than the national coefficient which Trevor Manuel acknowledged in the 2030 vision plan of the National Planning Commission – it has now crossed the truly frightening threshold of 0.70.

When I read previously (on page 200 of your 2011 Local Government Budgets and Expenditure Review) that, on average, municipalities spend less than 1% of their budgets on local economic development, I fully expected that some form of remedial intervention would be forthcoming from treasury to rectify this critical strategic failure to comply with legislated local government obligations for its manifestation.

On this basis then, the big question which arose for me from your speech is: what hope is there for any meaningful change in the appalling state of our rural economy? The answer must be none at all because your speech completely omitted any mention of local economic development (LED).

Quite to the contrary Minister, from your speech it is apparent that the state remains firmly entrenched on the old, utilitarian, ‘business-as-usual’ path of centralised government, and that the legislated democratic decentralisation to the cooperative and participative path of local municipal governance – necessary to implement meaningful LED – remains moribund at the far end of the state’s priority list.

For those of us trapped at the bottom of the economic pyramid the future therefore remains, yet again, very bleak indeed. So Minister, what can be done to resolve this institutional failure to address what is undoubtedly the most critical issue facing South Africa right now? If we don’t address our dangerously high Gini coefficient very soon, surely we will pass through a bifurcation point into economic catastrophe.

Though I do realise that the Expanded Public Works Programme creates much needed jobs whilst building key state infrastructure, and that providing social grants to economically marginalised people does help them survive in an otherwise unresponsive economic vacuum, these state interventions are patently not sustainable in the long run. The current structure, and therefore product-base, of our radically lopsided economy is just too small for its tax base to be able to keep on affording the vast and growing scale of need.

From the very bottom where I live what we need is clear; it’s not rocket science – just a matter of practical local reality. In order to solve our own local economic problems we need the physical and digital economic infrastructure, the local organisational capacity and strategic skills to operate it, and the local land upon which to build it. With these three potentials in place we could then expand the structure of the national economy by adding to it the products and services base required to have a viable local economy; as could every small community in every municipal economy in South Africa.

The problem is, Minister, you didn’t create the space in your budget speech for this constitutionally required eventuality. In this regard therefore I would ask the following of you: Please help change South Africa’s economy for the better by 1) moving LED infrastructure building onto the top of the public works agenda, 2) legislating LED onto the top of every municipal government agenda, and 3) properly mobilising mandated LED activities with adequate Treasury funding.

We, the democratic local community in law, would then be enabled to self-build our own LED infrastructure, and thereby gain the means and experience to start expanding our own local economy through our own creative efforts. In this way the sum of the much higher efficiency in many such local economies would become far greater than the singular inefficiency of the current whole.

Perhaps then, Minister, we could afford to pay the steeply higher charges for the utilitarian government services we do still require.

Ian Dewar is an independent civic entrepreneur and sustainable systems researcher based in the Theewaterskloof municipality of the Western Cape Province.