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Umsebenzi Online

Volume 3, No. 16, 25 August 2004

In this Issue:

Apology to readers of Umsebenzi Online
Due to problems beyond our control, we could not publish Umsebenzi Online as expected on 18 August. With this 25 August edition, we hope that you will understand and accept our apology.
Umsebenzi Online will continue to be published on the 1st and 3rd Wednesday every month starting with the next edition on 1 September.

Red Alert

Mobilise the workers and the poor as progressive motive forces to accelerate land and agrarian transformation in South Africa

By Blade Nzimande, SACP General Secretary

Our Central Committee (CC) is meeting this coming weekend to discuss and adopt, amongst other things, our 2004 Red October Campaign and Plan. The CC will however also be dealing with other critically important matters, including evaluation of developments within ANC, Alliance and government since the elections. The CC will also undertake a comprehensive class analysis of the first ten years of our democracy, in order to identify some key challenges facing the SACP over the next decade. In addition we will be undertaking a comprehensive review progress of our financial sector campaign and decide on appropriate action in the wake of slow delivery by the financial industry to millions of our people.

Our main focus of our 2004 Red October Campaign is to launch a sustained campaign on acceleration of land and agrarian transformation, primarily directed at commercial agriculture. To this end we have invited the Minister of Land and Agriculture, Cde Thoko Msane-Didiza, to address and engage with the Central Committee on progress and in land and agrarian transformation.

Our countryside reflects very sharply the enclave nature of our economy. It is divided into two very distinct (racial) enclaves shaped by centuries of land dispossession and forcible proletarianisation of the black rural masses, one being former bantustans and the other white, dominated by agribusiness and white farms.

The ‘white’ countryside

The South African agricultural economy is dominated by large agri-business that spans the entire agricultural value chain. Like the rest of the South African economy, the accumulation regime in agriculture has not fundamentally changed over the last ten years. Even worse, South Africa’s agriculture and its accumulation regime still represent some of the worst features of the political economy of land and agriculture under apartheid. More than 80% of prime agricultural land is owned by about 55 000 mainly white corporate and individual farmers.

Since 1994 South African agri-business in particular has consolidated its economic position, and sections of it actually flourishing, not least because of new regional and global opportunities post-apartheid. For example, real profit rate by agriculture, forestry and fishing rose from 100 in 1995 to 143 in 2002, thus increasing this industry’s share of total profits from 67,8% in 1995 to 72,7% in 2002. Labour productivity in this industry rose from 123,6 in 1996 to 151,9 with an average annual growth rate of 3,26 in 2002.

Despite this performance black, mainly African, farmworkers have suffered greatly and have borne most of the brunt of the continuing accumulation regime in agriculture. They still represent what is perhaps the most exploited section of South Africa’s working class. For instance, this industry’s share of total employment declined from 10,7 in 1996 to 9,9% in 2002. The wage share by this industry has further declined from 32,2% in 1995 to 27,3% in 2002. Another example of how capitalism is failing our democracy!

Yet there are opportunities. For example it is estimated that between 43-47% of all cattle in South Africa, about 12% of sheep, and 60% of goats, are owned by black, and predominantly, African population, and yet this section of our people only produce 5% of all red meat in South Africa.

The commercial agricultural sector is still characterised by the many farmworkers’ families living on farms. Not only are these workers being paid low wages, but also they are, in many instances together with their families, daily subjected to all forms of exploitation and abuse. Some of these abuses include long working hours of work and gross lack of access to basic services like water, electricity, proper housing and sanitation continue to be major problems, despite new statutory minimum conditions of service.

There is widespread violence directed against black farmworkers as a routine form of discipline, including murders. This is complicated by an untransformed justice system that still predominantly favours the white farmers. Much as we deplore and condemn all forms of violence in the countryside, media tends to project a false picture as if most of the violence is that directed against white farmers. The most pervasive form of violence is that directed against black farmworkers.

Since 1994 our government has made significant interventions in the agricultural economy. The flagship of government’s land and agrarian programme has been land reform and land restitution. However this is moving rather slowly as it is only 3% of the land that has been redistributed to the majority, hence, the government’s recent release of an AgriBEE Charter. Other progressive measures taken by government include extension of security of tenure for farmworkers and their families, as well as the labour market reforms setting minimum wages and conditions of service.

As the SACP we have welcomed the recent publication of a draft empowerment charter for agriculture, underlining the urgency of accelerating land and agrarian transformation and as an important pressure point on private capitalist agriculture. An important objective of our campaign is to ensure that the voice of the workers and the poor is heard in the development and finalisation of this AgriBEE Charter.

However, significant as these reforms and interventions are, they have not fundamentally (or even remotely) transformed the current accumulation regime and the political economy of this ‘white’ countryside. Despite some improvements, apartheid class, gender and racial relations remain. Agriculture in general, and small and medium farmers in particular, represent some of the most backward sections of white private capital in South Africa, and the one most strenuously resisting transformation of the countryside.

However it is important that we should not blame government for all these weaknesses, rather to mobilise social motive forces for rural transformation and put more pressure on commercial agriculture.

The former Bantustans

The vast majority of the rural population in South Africa is located in the former Bantustans. In most of these territories our people are subjected to the rule, authority and patronage networks of the system of traditional leadership. There is minimal productive economic activity, thus having some worst forms of poverty. However this does not mean there is no accumulation at all.

The single largest source of income in these former Bantustans is wage remittances from the urban areas, in some places estimated to be as high as 80%. Social grants are the second most important source of income, contributing between 10% and 20%. This figure is possibly much higher today as unemployment rises and government’s increased expenditure on social grants. In fact in thousands of rural villages, the highest source of income is now from the social grants. These grants have cushioned many of the rural people from the worst forms of poverty.

Yet there are very real possibilities to generate productive economic activity in these areas provided there is a systematic and focused state-led strategy in this regard. For example the livestock in the hands of many rural families, as highlighted above, is something that can be used as a basis for generating sustainable income and livelihoods. In addition many people in rural areas have access to some agricultural land, which with systematic support, including necessary agricultural inputs, can be used to launch sustainable household-based subsistence agriculture, co-operative and small-scale farming.

Government has also made some significant policy and legislative interventions in this enclave of the rural economy since 1994. Our new democratic constitutional dispensation, principally the establishment of wall-to-wall municipal government, is an important advance towards liberating our people from the legacy of apartheid and bantustan administrations and undiluted rule by traditional leaders.

The government’s approach to traditional leaders has creatively sought to recognise their role, but within the context of democratically elected government. This has gone some way in securing the support of most traditional leaders for our democratic dispensation, though not without contradictions and contestations.

Some of the key challenges

Government has understandably made quite different interventions in relation to the two enclaves of the rural economy, because the two are obviously not the same. However what has been a missing link is an overarching strategy for the countryside as a whole, the ‘white’ and former Bantustan ‘countrysides’. Much as the two require different strategies but these must be components of a single overarching strategy to create a deracialised, sustainable rural economy, and a single countryside. This should be the main thrust of government’s Integrated, Sustainable Rural Development Plan.

It is our conviction that the foundation for building sustainable livelihoods and fight poverty in the countryside should be accelerated access to productive land for household based subsistence in both, and cutting across, the dualistic rural economic enclaves. Much as we know that under capitalism, a black farming capitalist class will emerge, albeit very small, this will not address rural poverty, nor even transform the current accumulation regime in agriculture. This also means revisiting the question of agricultural extension officers; as such a strategy will require the training and deployment of thousands of these.

A critical debate that needs to be taken forward is around the development of a coherent industrial strategy in agriculture whose main objective would be to progressively restructure commercial agriculture to respond to the challenge of poverty and job creation. Crucial in all this is the mobilisation of the social motive forces for transformation, principally farmworkers, the poor, agricultural co-operatives and other small-scale farmers. There should therefore be a partnership between these forces and an active, and interventionist state.

The above constitute some of the perspectives and issues that will inform our 2004 Red October Campaign and beyond.

Financial Sector Summit – Anniversary But No Celebration (Report from the Financial Sector Campaign Coalition)  

The second anniversary of the signing of the Financial Sector Summit agreements on 20 August has come and gone with no progress on finalising the Financial Sector Charter, one of the main products of the Summit. Unfortunately, this anniversary is no cause for celebration. This in the same week as National Savings Week!

The Summit agreements were negotiated by the four partners in the National Economic Development and Labour Council (Nedlac) - community, labour, business and government constituencies - and signed on 20 August 2002.

Two years later, the financial sector is in no hurry to finalise Charter targets or composition of the Charter Council. Intransigence by banks, insurance companies and black industry professionals has resulted in the Charter drafters failing to meet Charter commitments and missing important deadlines.

The first was the 30 June commitment to finalise Charter targets, an undertaking by the industry to Finance Minister Trevor Manuel on the launch of the Charter in October 2003.

The second was a request for a progress report by Parliament on 11 August. Parliament invited the Nedlac constituencies to appear before it but the business constituency requested a postponement. It appears they were not ready to report to parliament on progress, or the lack of it.

So what is the hold up? Firstly, the financial sector balks at the idea of equitable representation on the Charter Council for community and organised labour. The offer on the table is a Charter Council of 18 members – 14 business, 2 government, 1 labour and 1 community. What trade union or community leader would accept such an imbalance? Why would it be in the interests of our constituencies for us to participate at all in such a skewed structure? We have proposed equal representation and decision-making by consensus. The industry has rejected this model.

Secondly, the banks and the insurance companies cannot agree amongst themselves on the total to be invested through the Charter process. The October charter said ‘up to R75billion’ would be available for what it called ‘empowerment financing’ of low-cost housing, infrastructure development,

BEE transaction financing, black SMEs and agriculture.

After eight months of research, hundreds of hours’ work in technical task teams and probably hundreds of thousands of rands in costs, the industry factions still cannot agree on either the total amount or its breakdown.

It turns out that the task teams were largely populated by banks’ staff, under supervision of the Banking Council. It seems the insurers did not pay much attention. Only when the technical teams recommended that the R75bn be increased by R20bn did the insurers sit up and listen. And then they put their collective foot down and said ‘back to the drawing board’.

Bankers and insurers went into a huddle over the targets but excluded community and labour groups. We made it clear we could not participate in work to finalise targets until we have formal status in the Charter process. That means establishing the Charter Council.

Together with the general secretary of COSATU, Zwelinzima Vavi, the FSCC wrote on 8 July to the chairperson of the Charter drafting group, the Banking Council’s Bob Tucker, urging an immediate resolution of the Charter Council issues.

Together, we issued a public statement on 27 July, widely reported in this and other media, calling for outstanding issues to be resolved no later than the 20 August Summit anniversary.

We expressed concern that Charter work was continuing behind closed doors and reserved our rights on all decisions taken during our exclusion. We gave notice we would oppose the gazetting of the Charter until it is agreed by all parties.

The industry has not responded to us. We are still waiting for a reply, but we are not holding our breath.

In the meantime, we have seen big empowerment share deals taking priority over truly broad-based black economic empowerment. The current preoccupation with big deals to sell shares in banks and other financial institutions to black shareholders violates the spirit of the Financial Sector Summit agreements. These agreements outlined a package of changes to better the lives of the majority of South Africans, not just an elite, over-empowered, minority.

And while we are committed to working with black professionals in the financial sector to achieve genuine broad-based economic empowerment, workers and communities are deeply concerned that elevating transaction financing above the broader interests of millions of our people threatens broad-based empowerment and financial sector transformation.

We are appalled that some black professionals are now advancing the shameless argument that half of the sum earmarked to meet the Charter’s targets should be allocated to BEE transaction deals.

This would mean that low-income housing as well as other targets would come a poor second to financing BEE deals. This is not the kind of transformation we fought for; we will fight any attempt by a small elite to steal the people’s victory.

We need a big deal on housing for our people – and that includes reviewing the model for financing low income housing as well as the amounts the banks are willing to lend.

We call on the government not to withdraw the Community Reinvestment Bill that was put on hold in anticipation of the Financial Sector Charter commitments on housing.

The broader issues of investing in poor communities to create work and fight poverty are a national priority and we call on government and business to support this position. Following the Growth and Development Summit review last month, at which President Thabo Mbeki strongly criticised the lack of progress on GDS goals, we want to see urgent progress on concrete proposals to meet the 5% investable income commitment agreed at the Summit.

As well as urgently finalising the Charter targets, other issues, including access to banking and financial services by workers and the poor, employment equity, skills development and procurement practices, must be prioritised with buy-in from all social partners.

And plans to address issues not addressed in the Charter, such as assistance for co-operatives, access to financial services for the millions employed in the informal economy and ending HIVAIDS discrimination, must also be fast-tracked.

When we negotiated the Summit agreements in 2002, we believed banks and insurers were at last committed to meaningful change. We warn that our people’s patience is wearing thin. Two years is long enough. We will be going back to our members in the coming days and weeks to seek mandates to ensure the financial sector is transformed to the benefit of all South Africans.


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