National case study Republic of South Africa.The need for a State-Civil society dialogue to develop public policies for the Social and Solidarity Economy

International Forum on Social and Solidarity Economy, FIESS 2011

Susan Steinman, October 2011

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Summary :

South Africa is currently looking at its Social and Solidarity Economy (SSE) as a source of job creation and there is renewed interest in all enterprises within the sector as indicated in the new macroeconomic policy, better known as the New Growth Path.

The fact is that, while the growth in some Social and Solidarity Economy Organisations (SSEOs) is disappointing, some of the world’s best social enterprises can be found in South Africa – a developing country facing many challenges with the creativity that comes along with resilience in the face of adversity and poverty.

Government‘s commitment resulted in a renewed interest in the sector which is drawing new stakeholders, intermediaries and investors. There are a few networks within the NPO sector, but a body that can comprehensively represent all the different stakeholders within the SSE still needs to emerge as the sector is rearranging itself. However, government consults comprehensively with the SSEOs and most interviewees agreed that policies for the SSEO are enabling – the problems that occur are on the implementation level.

Government policies are directed to a more inclusive economy and special attention is paid to People With Disabilities (PWDs), women and broad-based black economic empowerment (BBBEE)focus on inclusiveness in the economy for previously disadvantaged individuals. There are still problems on the implementation level, but the SSE is more inclusive than the private sector.

There are great examples of public-private partnerships between the SSEOs and government at all levels. There are many examples of government providing infrastructure, land and buildings for community development purposes serving poor communities.

The NPO sector is emerging as a major employer – in particular as an employer of women and black people. The growth of this sector may have to do with the large amount of government assistance as the sector is largely fuelled by grants. Yet, access to finance remains a burning issue and some protective workshops find it hard to cope with the minimum wages laid down by the different bargaining councils. The decent work agenda may have to be compromised in terms of compliance with the minimum wage and health and safety regulations.

Cooperatives have tremendous potential for job creation in South Africa and in particular the Economic Development Department as well as the Department of Trade and Industry are pushing for a higher success rate for these community-based organisations in the SSE. The new Cooperatives Act (No. 14 of 2005) facilitated an unprecedented boom in the registration of new cooperatives in various sectors and this figure quadrupled the numbers that were registered during the previous 82 years (1922-2004). The majority of these cooperatives are black women-owned. However, despite the deep commitment from government and these promising figures, the mortality rate of cooperatives is 88%. This high failure rate is attributed to a number of factors ranging from interpersonal conflicts and low literacy levels, to a lack of training, coaching and mentoring. There are multiple causes for the failures and these are affirmed by case studies within the sector.

Whereas the cooperatives pose a tremendous challenge to the country, South Africa is one of the first countries in the world to introduce a social stock exchange which has, since its inception raised R14.65million for 73 projects designed to benefit a total of 78,268 individuals.

Social enterprises or enterprising non-profits are emerging as an alternative to cash-strapped charities, but the rise of social enterprises is not supported by legislation and it is expected that South Africa will move in the direction of something similar to the “community interest companies” in the UK.

The most important finding is that, while South Africa has enabling policies and adequate consultation with stakeholders in constructing policies, there is a lack of “policy enablers” to ensure success at the implementation level. Should government be able to put “policy enablers” in place together with a system of thorough monitoring and evaluation, the anticipated jobs will be created.

Sources :

Web site of FIESS