Jan 28, 2021
Equity and Local Economy
I was stimulated to write about Equity and Local Economy this week, in part after participating in a webinar entitled: ‘South African business — are they part of the problem, or part of the solution?’ and by my other drive on the subject — that wealth disparity is such a huge issue in this country. I am not an economist, so definitely not an authority on the subject, but speak from the heart and always with the lens of trying to keep it as simple as possible. Not that easy on this complex subject in South Africa today.
In terms of One Planet Living, we believe it is important to create safe, equitable places to live and work which support local prosperity and international fair trade. The goals under this principle are to foster diversity and create a vibrant and resilient economy where a significant proportion of money is spent locally.
The scene in SA at the beginning of the Covid pandemic, however, was an already depressed economy, so much so that an austerity budget was published at the beginning of March 2020. With our debt: GDP ratio being too high, our country was already borrowing more than we could afford to pay back. By the end of March a second national budget had to be announced to make allowance for the Covid emergency situation, and in terms of credit ratings, South Africa was downgraded to junk status, meaning that there will be limited investors wanting to invest in SA as we have accumulated too much debt which we now cannot afford to pay off. Special Covid budgets necessarily had to be put aside but likely will now detract from support for businesses and job creation. Sadly it is estimated that during the Covid period in SA, some 2 million jobs have been lost. It is a somewhat depressing picture and I can’t help but think ‘how do we eat an elephant?’
So how do we look to the future — to ‘Build Back Better’ as is becoming the new mantra? If you are seriously an economist, then UCT’s Virtual Vice-Chancellor’s Open Lecture with guest speaker, Colin Coleman, will appeal. Colin is a Senior Fellow and Lecturer at Yale University’s Jackson’s Institute for Global Affairs and former partner at Goldman Sachs. He states that Apartheid’s legacy two-speed economy, and the fault lines exposed by COVID-19, has shone a light on South Africa’s food security, inequality and unemployment challenges. This pandemic has again highlighted the need to restructure the economy to one working for all. He speaks to inclusive growth, technology, productivity and enhanced skills being the foundation of economic expansion and competitiveness. The time is now for a post COVID-19 nationwide movement to defeat unemployment, to promote inclusion and food security — and he proposes a 10-point plan. As per the Eco-footprint for Durban that Bioregional collated last year, growing food locally would be a big win for us in solving food insecurity, creating employment and decreasing our eco-footprint.
So, what are some of the things we can do, to address our own equity and local economy principle?
1. Local is lekker
We have touched on this in previous newletters, particularly when it comes to food, highlighted here. Supporting local enterprise, be it food growing, locally produced goods or services, is one way to support a local economy to thrive. And those who are agile to change, should be supported — informal entrepreneurs, for example, who during lockdown purchased fresh produce from local growers, to supply fresh vegetables to those (mainly elderly) who did not want to venture to the shops. Thus supporting growers and gaining an income at the same time. Another notable entrepreneur being bold during this time is Freshbox, a convenient weekly fruit and veg delivery where each box sold gives to a local child in need. And their strapline: ‘Helping to address malnutrition is as simple as eating fruit!’ What you buy (supporting local growers) also gives to those in need and promotes health and happiness — nice.
When it comes to products we have some wonderful local shops in Durban that support local entrepreneurs — to name but a few: Hillcrest Aids Centre, Embo, the small shops at the Pot and Kettle stop in Botha’s Hill (the Puzzle Place is a must) — all these will be needing our support in the coming months. One Planet companies support local economies in which they operate by seeking to supply locally, purchase from local suppliers, hire locally and support their local community (see, too, point 5). An example on a personal note could be gifting — buy gifts or better still, gifted services, from local business, where your money will be returned to the local economy. Try something new and diversify, and always think who am I supporting by buying this product / service.
2. Small is beautiful
UKZN Professor and Economist Bonke Dumisa, in a recent webinar, was lamenting how historically small businesses in the townships used to do well, before big retailers came along and made SMME’s non-sustainable. A lot of people were then forced to rely on government grants — which are not sustainable. Covid 19 is forcing the world to review this economic model, however, with manufacturing being one of the hardest hit industries because of the pandemic… and the agility of being small might once again be beneficial. Coming to mind is Local Chow (yes it is food again), not in Durban this time but is a start-up food delivery service that promotes local food by giving local restaurants, up-and-coming chefs and small scale farmers a platform to reach more people in their areas. Tough competition I guess in Uber Eats and Mr Delivery — but new thinking again in how to get hopefully healthy food, to customers. And new small business thinking is part of the paradigm shift e.g. composting in Southbroom as was part of our zero-waste newsletter.
3. Co-operation is key
Too many chiefs are never a good thing …. And in a free market economy if small businesses join together e.g. spaza shops, to make wholesale purchasing possible, this has benefits on the price tag. But in these difficult times, when people have less disposable income, businesses must aim to keep their end prices as lean as possible, too, to keep people supporting local. If I can’t provide it, can someone else in my community do so — with an example of successful small township sewing groups coming mind e.g. Waterloo Sewing Group in north Durban who sew uniforms for the local schools. In this time of Covid 19, buy your masks, for example, from local sewing groups and support local business. Engagement and listening to a wide range of people in your local area is also helpful, so make your events accessible e.g. disabled access, culturally appropriate, childcare availability if possible. This is also part of an equitable environment, enabling participation by a greater number. One innovative company in Durban recently opened a crèche at its office after learning how many of its female staff needed child care — and realised this would make for happier employees and less absenteeism, if their children were on site as well. This was another job opportunity created, too.
4. Education is vital
Prof Dumisa highlighted that education must be focused towards people becoming self-sufficient and skilled to become ‘creators’ and not just ‘users’. While it is popular for everyone to want to become a consultant, this is not sustainable in terms of job provision — young people should be trained in skills that help them to start their own businesses which can again target local areas. Plumbers and electricians come to mind — always skills that every home and business owner is going to need. Make the most of local expertise, too, by skills sharing — from plumbing to mentoring, there are lots of opportunity to help each other, save money and meet new people.
5. Look with new eyes
More than ever and forced upon us by the pandemic, our moral consciences must be pricked. We will succeed if we can change the mindsets of people and respect ourselves. Corruption is a scourge our country continues to fight against — as is alcoholism and gender based violence. Tapping into people’s interests, passions and potential means we must do what matters — and play our parts well. An example is a belt factory in Durban that is very aware of its surrounding community and so allows church and community upliftment programmes to rummage through stored waste and select what they need and take it away at no cost. Hawkers are also invited to remove materials from stored rejects on allocated days, at no cost to them. They make belts and other leather items for sale from these offcuts. More established SMME informal traders pay a below-market rate for over-runs that are left over when an order is completed. People, planet and profit is firmly interlinked on this company’s agenda.
We have some tough questions to ask in SA, where income inequality is so marked. Part of the moral conscience should be to state ‘I must be paid what I deserve’ that does not speak to extreme excess and rather focuses on your level of productivity. This being a free market system the government does not legislate what CEO salaries should be — but by being transparent about remuneration throughout your company and putting in place what may be seen as radical reform — a capped pay ratio — would ensure executive salaries don’t contribute to income and wealth inequality. This speaks to the concept of a people centred management style, most notably pioneered by Brazilian businessman Ricardo Semler and introduced in his autobiography Maverick! He developed an unusual management, labour relations and work environment in the business he managed, Semco, today one of Brazil’s largest conglomerates — for example allowing staff to set their own production quotas, profit sharing right down to the factory floor and streamlining and simplifying business processes. New age thinking that may be appropriate in this new age post Covid world.
A Living Wage matrix, too, is better than a Minimum Wage if it can be afforded, as the minimum wage in SA remains woefully inadequate. In this interesting article on Human Capital Trends, consultancy Deloitte reports that ‘social enterprise’ has gone to work, with technology and human collaboration at the forefront of discussions. “Organisations are being called on to do more than just deliver profit — a bigger call to action — driven by the rise in the power of individuals and raising their voice to influence what organisations were doing.” Rapid uptake of new technology is definitely part of the new world order, as we have seen with our rapid shift to online systems for meetings, webinars and the like, due to Covid 19. What the pandemic has shown us is that socially engrained practices are not off-limits for change if the stimulus is powerful enough.
Finally, new age investing also presents interesting opportunities to invest in sustainability — supporting the development of OnePlanet.com as a unique, easy to use online action planning tool — or impact farming which offers you investment in sustainable agriculture (blueberry bushes, beehives and solar panels) on farms without you ever needing to leave your couch! Investing in local employment and development opportunities, and Earth friendly practices, is a win-win situation for all.
These are some of new ideas that are needed now to Build Back Better for all. Resilience leads to recovery and sustainability — it is about life-long learning, even in a pandemic, and never being afraid to change.
