Alleviating Poverty in the Cape of Good Hope

PRESS ARTICLE: Cape independence must lead to a better life for ALL

How will we define if Cape independence has been a success or not?

In the Cape Independence Advocacy Group’s (CIAG) poll, 77% of black Western Cape citizens felt their quality of life would worsen in an independent Cape. Of all the statistics in our poll I found this both the most challenging, and the most heartbreaking. I co-founded the CIAG and I certainly didn’t do so with the intention of reducing the quality of life for the ethnic group who have already suffered the most in South Africa. My intentions are the exact opposite, and all of us at the CIAG are driven by a desire to make the life of every single Western Cape citizen better, regardless of their race, religion or culture. In truth, if South Africa actually wanted to be saved, we would be fighting for them too, but that ship has now sailed. Lost causes are not on our agenda and rehab only works for addicts who want to get clean.

Let us not mince words, either I am wrong, or 77% of black Western Cape citizens are wrong. So which is it? Let me start with something we definitely don’t have a shortage of – land. This is not the same as saying land has been equitably distributed, it hasn’t, but we can get to that later.

Land is plentiful in the Western Cape (and South Africa)

The population density of the Western Cape is 45 persons per Km 2 . This is almost identical to the population density of South Africa which is 49/Km 2 . Looking at the Human Development Index (HDI), the top 5 ranked countries in the world have a median population density of 240/Km 2 . The world’s ten largest agricultural exporters have a median population density of 178/Km 2 . There is more than sufficient land in the Western Cape to provide for both an excellent quality of life for all, and for an independent Cape to be a major agricultural force on the global stage.

I have heard people talk about our distance to markets as a potential weakness for trade, but we are located on what is shortly forecast to be the world's most populous continent, a continent which cannot produce its own food needs. The recent agri census showed that roughly 50% of all Western Cape farmland was, to all intents and purposes, fallow. That, to me, smells of opportunity. Water is a concern, but, of the world’s top ten agricultural exporters, two, Belgium and Italy are classified as having ‘high’ levels of water scarcity, whilst two others, Germany and France, are classified, alongside South Africa, as ‘medium high’. Green Cape has already done extensive research on potential solutions to water security, with commercial agriculture being the largest water consumer.

So, if land is an opportunity rather than a weakness, what will drive human development in an independent Western Cape?

What will drive human development in an independent Cape?

I would assert that there are three primary drivers of economic and social welfare, with most if not all other measures dependent upon them. These are the ease of doing business, employment, and education. Equip people with the means and the skill with which to acquire wealth and the majority of your other problems will quickly fade away.

Here lies the key, and the solution, to South Africa’s problems. South Africa ranks #84 for ease of doing business.

The top 5 ranked countries for HDI average #19. The USA ranks #6, and China #31. The top 10 agricultural exporters rank, on average, #27. South Africa ranks substantially lower than any other country on these lists. It is difficult to do business in South Africa. The government is in many ways openly hostile to business and supportive of militant and unrealistic unions with whom they have a direct alliance. Race based policies, primarily BEE and AA, are a bureaucratic nightmare and inhibit growth.

The labour market is far too rigid, property rights are under threat, our currency is weak and unstable, power supply is heavily constrained, and we have a skills shortage. Unsurprisingly, since it is hard to do business in South Africa, and there are currently eighty three other countries in the world where it is easier, our economy performs very badly. This means that we have fewer businesses, and therefore we have fewer jobs. Global ranked 100 countries on their 2020 unemployment rate. South Africa was the worst at 35.1%. The average unemployment rate was 9.5%, the median 8.2%. The second worst ranked country, Sudan, was a full 10% behind us at 25.0%.

Unemployed people have very limited choices. The long term unemployed certainly don’t get to participate in the economy as home owners, investors, entrepreneurs or aspirant farmers. Our third driver is education. Ground Up claims that, in South Africa, 58% of school children leave school without having matriculated. This number is a little lower in the Western Cape at 49%. For context, there was a recent scandal in the UK when this rate rose to 18%.

The single biggest ideological difference between the Western Cape and South Africa is that the Western Cape recognises that these statistics are almost entirely self-inflicted, and they are within our control to address. South Africa accepts virtually no responsibility for any of these issues, choosing rather to blame historical legacies, to which it responds by implementing policies which further reduce the ease of doing business.

These in turn increase unemployment, whilst failing to improve educational outcomes. This creates the downward economic spiral which South Africa has now been in for more than a decade, and will not be exiting any time soon. This ideological difference in precisely the reason why the Western Cape has consistently made distinctly different political choices to the rest of South Africa, and it is the reason why an independent Western Cape will thrive once liberated from the self-destructive tendencies of the ANC. The EFF would be immeasurably worse. Black and coloured Western Cape citizens bear the brunt of South Africa’s economic policy nightmare.

Creating a better life for all

So, what must we do to address poverty and inequality, and to truly create a better life for all, regardless of race, religion or culture? Here I cannot speak for the CIAG. Our mandate is to deliver the choice of government into the hands of the Western Cape electorate. The choice they then make is theirs, not ours, and must be decided in the Cape of Good Hope’s first democratic election.

The CIAG itself is politically bi-partisan, so from here on in I can only speak for myself, and what I would like to see. Firstly, let us recognise that the most significant mechanism the ANC used to reduce the number of people living below the poverty line from 34% in 1996 to 17% in 2011 was the social welfare system. Tragically their economic policies subsequently eroded much of these gains.

Caring for the most vulnerable in our society is not only essential to our humanity, but also critical to social order, and therefore it is a universal component in developed countries. It is entirely untenable to have a country where welfare recipients outnumber tax payers, but the solution is not to penalise the poor, but to improve their circumstances to such an extent that they no longer need welfare. Social welfare will remain an essential requirement in the Cape of Good Hope and welfare grants will continue.

The question is how do we provide people with a substantial enough income that the majority of them no longer require welfare? For the overwhelming majority of citizens, the answer is employment. Unless you still believe that the failed communist experiment might finally work the umpteenth time around, employment requires a blossoming private sector. If you listen to some people you would think investors and investment were in short supply. Nothing could be further from the truth. The global economy is awash with money looking for a good home.

I recently spoke to a director of one of the big accounting firms in Europe; he said ‘The problem at the moment is that there is nowhere to go to get income”. South Africa’s investment woes are not derived from a lack of potential suitors, but because the conditions we currently seek to impose on investors make investment in South Africa all but impossible. Foreign investment requires two things. The possibility to generate an appropriate return on your investment relative to the risk being taken, and a transparent and stable enough environment to be able to calculate what the likely return will be.

Endemic corruption, a depreciating currency, an unreliable power supply, weak property rights, excessively powerful unions and unreasonably rigid labour laws most certainly do not provide that. The Cape of Good Hope can address all of these requirements from the outset and create an investment friendly environment, which will in turn create jobs in abundance.

Developing the local economy

Foreign investment, however, is only half the story. When Margaret Thatcher turned the UK economy around, following an IMF bailout, one of the cornerstones of her economic policy was empowering the working class to start their own businesses, and to buy their own homes. She took no prisoners, including breaking once and for all time the excessive power of the unions, and for that many still revile her. None of them will tell you that she became the longest serving British prime minister of the 20th century on the back of working class votes. South Africans are extraordinarily resourceful people. To empower would be entrepreneurs, the Cape of Good Hope could do four things. Provide easy access to funding, provide access to markets, provide training and support, and ensure law and order.

Thatcher came to power in 1979. In 1981 the UK launched the ‘Small Firm Loan Guarantee Scheme’. It was so successful it ran for 28 years, where after it was replaced by a similar scheme which is still in operation today. It is a scheme that I believe would be fantastic for the Cape of Good Hope. Essentially it was a public private partnership between the banks and the government to stimulate growth. The government provided collateral for projects deemed commercially viable by the banks, but where the entrepreneur had no collateral to offer (everything they did have had to be offered first). It was an incredibly successful way of turning small businesses into medium sized ones, and would be an ideal way to assist those Western Cape entrepreneurs with viable projects, but no access to funding.

Once the Cape of Good Hope has attracted investment, created jobs and incubated small businesses, its citizens will begin to be able to partake in the economy as equals, each according to their ability.

Education, skills and housing are critical

White privilege is a very real thing, but one that is so appallingly misdiagnosed as to have become a contentious issue, where it should be a given. The overwhelming majority of white home owners were neither given, nor inherited, their middle class homes in middle class suburbs. Their privilege is being presented with income earning opportunities, on account of the education and skills they have acquired, which has placed them in a financial situation to be able to buy or rent decent quality housing.

The Cape of Good Hope does need a large scale housing solution. Its citizens simply cannot be expected to live in shacks and backyard dwellings. This cannot and must not be left to the free market, significant government interventions are required. Internationally, there are numerous examples of successful public private housing partnerships which can quickly eradicate informal settlements, and there is ample private funding to complete the task. Once again this is conditional upon creating circumstances conducive to investment. The Western Cape property developers association already have a plan. It is the government that is currently standing in their way.

Ultimately a social housing scheme is a necessary transitional arrangement, whilst Cape of Good Hope citizens become empowered in their own right to provide for themselves. So let me return to the question where we began; how will we know if an independent Cape has been successful or not? Here are my criteria for success.

Unemployment rates below 10%, 70% or more of our young people leaving school having matriculated, the Cape of Good Hope ranking within the top 50 countries worldwide for HDI and green memorial parks in Khayelitsha, Lavender Hill and Gugulethu where the history of a time where people were once forced by circumstance to live like animals is told, and where children of all races play together alongside those memorials in safety and happiness. If you live in the Western Cape and this isn’t the future you see mapped out before you as a part of South Africa, perhaps you should give Cape independence some serious thought. More than 1 in 3 Western Cape citizens are already in favour. Together, we can do this.

This article was first published in 'theyoungcape'.

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