The Challenge of Sustainable Rural Development: A Case Study from the Eastern Cape

1. The Challenge of Sustainable Rural Development: A Case Study from the Eastern Cape By Professor Gilingwe Mayende 15 September 2011

2. Contents • A brief historical sketch • The current situation: Mhlontlo case study • Government’s response 1: the ISRDP • Government’s response 2: the CRDP • Some key emerging challenges of the CRDP • Some key imperatives • Agricultural Co-operatives • Key determinants of sustainability

3. A Brief Historical Sketch • Land dispossession • By 1900 previously prosperous African agricultural production had been destroyed • Exacerbated by the deleterious effects of the1913 Native Land Act and subsequent ‘group areas’ legislation • By 1936, Africans had access to only 13% of the land • lots reduced to 1.5 hectares per household on average

4. A Brief Historical Sketch • Rapid increases in population went hand in hand with regression to sub-subsistence levels • Wage migrant labour and establishment of labour reserves • Poverty deepened to such an extent by the 1970s around 70 per cent of the homeland populations lived below the poverty line • ‘Betterment’ schemes in the 1940s and 50s • Continued into the era of so-called ‘homeland independence’

5. A Brief Historical Sketch • Agricultural production continued its downward slide into the 1980s • ‘Homeland’ governments began a trend of using parastatal institutions to provide agricultural services like TRACOR in the former Transkei and ULIMOCOR in the Ciskei • The parastatals acted as ‘agricultural entrepreneurs’, engaging in actual productive activities while the people were largely non involved • Envisaged emergence of ‘serious’ and ‘progressive’ African farmers never materialised

6. The Current Situation: Mhlontlo Case Study • Mhlontlo Local Municipality is one of 7 that form part of OR Tambo District Municipality • Physical characteristics similar with rest of former Transkei territory in terms of soil quality, climate, rainfall patterns, etc – exception is southernmost part known as Pondoland • Demographically the area also fits the usual pattern of overcrowding, high infant mortality rates, low adult life expectancy and high rates of migration to towns and cities • Almost totally cut-off from the mainstream of the country’s economy except through labour migration and remittances

7. The Current Situation: Mhlontlo Case Study • Mhlontlo LM declared a pilot site for the Comprehensive Rural Development Programme by the EC Provincial government in June 2008 • Research conducted in the area by the presenter in August 2009 – March 2010 • Similar processes of land dispossession as in most of SA, culminated in the 1860s with Amampondomise losing large tracts of in the relatively large farming area that incorporates the towns of Maclear (Nqanqaru), Ugie (Inxu) and Elliot (Untunjinkala)

8. The Current Situation: Mhlontlo Case Study • Empirical data collection included a baseline household survey of a sample of 800 households in ten villages out of a total of 34 000 • Mhlontlo’s IDP shows the area as having a population of 197 723 of whom 99% are Africans • Unemployment is at 87.4% against a provincial aggregate of 44.7% and a national figure of 38.6% • 60% have no access to clean drinking water, and 68.7% do not have electricity • Proportion of households receiving old age grants is 48%, child support grants 6.25%, and disability grants 11.88% • Data on distribution of arable land in the area also shows the average plot being 1.5 hectares

9. The Current Situation: Mhlontlo Case Study • The region is lagging far behind others on the EC, with proportion of households living in poverty as high as 82% as against a provincial aggregate of 67.4% • Proportion of households having access to basic services is 16.6% against a provincial aggregate of 43.3% • The literacy rate is only 49.1% compared to a provincial aggregate of 63.5% • Rural-urban migration continues to be high, with 51.4% of households having at least one member who has migrated • Significantly, oscillatory migration has been diminishing, with increasing numbers opting to base themselves permanently in the towns or cities

10. The Current Situation: Mhlontlo Case Study • Data on wages and income show severe deprivation as only 13% of the households in the sample indicated having any source of income, with 86.98% having no income • Only 24.41% received remittances, which suggests the diminishing importance of this source of supplementary income – compared to the high of 70% in the 1970s • Only 1.75% of the households in the sample sell any crops • While 13.6% received food parcels, 82.7% indicated that they requested food from neighbours occasionally and 10.7 per cent on a weekly basis • In the sample, 64% reported that they were engaged in arable production on a regular basis, with 62% planting maize as the main crop

11. The Current Situation: Mhlontlo Case Study • Only 38% owned cattle (5 on average), 36% sheep and 25.75% goats • Interestingly, 59% of the sample households wanted to become surplus-producing smallholders, whilst another survey (conducted by the Agricultural and Rural Development Institute at the University of Fort Hare) found that only 15% of rural households in the Eastern Cape want to engage in agricultural production • An examination of the list of priorities highlighted by the survey respondents also provides interesting findings, with their order of preference being: income, ability to feed oneself, health facilities, educational facilities, good roads, and starting a business

12. The Current Situation: Mhlontlo Case Study

13. Government’s Response 1: the ISRDP 2001-2008 • ISRDP was adopted in 2000 and launched hastily thereafter • Was to be implemented in 21 rural nodes with the URP in 8 nodes • In his 2001 State of the Nation Address (SNA) the then President Thabo Mbeki said: “Our central aim is to conduct a sustained campaign against rural poverty and underdevelopment, bringing in the resources of all three spheres of government in a co-ordinated manner” • However, the programme saw little success

14. Government’s Response 1: the ISRDP 2001- 2008 • Policy gurus in the Presidency were at the same time ramming through the urban-biased Spatial Development Initiative, which saw development as being driven by urban-based investment, with rigidly set parameters of ‘people and not places’ • In practice, ISRDP turned out to be neither integrated, nor sustainable, nor was it any real sense a rural development programme as it was vaguely defined, inadequately financed, poorly implemented and weakly co-ordinated • No proper technical and management capacity at DPLG which was given the task of ‘co-ordinating’ the programme • IDT was brought in but faced major operational constraints • No surplus funds among the government departments to take ISRDP programmes

15. Government’s Response 2: the CRDP since 2009 • A central feature of the emerging strategy on rural development in SA is its almost exclusive focus on the former homelands • Paradoxically these areas are seen as having an intrinsic capacity to provide a basis for a thoroughgoing agrarian transformation process that could lead to eradication of poverty and the creation of ‘vibrant and sustainable communities’ • A ‘fundamental shift in direction’ came with the announcement of the CRDP by President Jacob Zuma in his SNA in which rural development was highlighted as one of five priorities of his new government

16. Government’s Response 2: the CRDP since 2009 • The government’s position on rural development derived directly from the relevant resolutions of the ANC’s 2007 Polokwane National Conference • CRDP highlights the lead role to be played by agrarian transformation as a central platform for rural development and as a springboard towards other productive processes, including spin-offs in rural manufacturing, particularly agro-processing, as well as a range of non-agricultural activities • CRDP’s major objective is the establishment of ‘vibrant and sustainable rural communities’ characterised by access to productive assets, employment opportunities, etc

17. Government’s Response 2: the CRDP since 2009 • Strategic investment in infrastructure for the benefit of entire rural communities and not only those involved in agricultural production • Social mobilisation through the establishment of social clubs and co-operatives for economic activities, wealth creation and productive use of assets • Linking of agrarian transformation to land reform for the purpose of accelerating access to land in relevant cases, strengthening tenure security and speedy processing of outstanding restitution claims – mostly a regurgitation of existing plans

18. Government’s Response 2: the CRDP since 2009 • Establishment of relevant co-ordination and implementation structures • CRDP governance structures – more of the same, little innovation • Department of Rural Development and Land Reform • Strategic partners: Relevant govt departments, DBSA, IDT, NGOs, Land Bank, Commercial banks, etc • Council of Stakeholders (COS) • CRDP Technical Committee • Households: co-operatives and enterprises; groups of 20 households

19. Some Key Emerging Challenges for the CRDP • Lack of funds and an effective funding model • No empowerment model for communities by encouraging them to establish their own organisations that should drive their development from below • The approach of utilising only formal structures such as municipal wards and traditional councils is problematic • Delivery mechanisms lack innovation and assume a balanced equation in terms of the configuration of role players at the local level, yet there is considerable tension between traditional authorities and elected councils, whilst communities are organisationally weak and therefore marginalised

20. Some Key Emerging Challenges for the CRDP • Methodologically, the research approach of the programme based on ‘pilot studies’ has a number of flaws, e.g. • The pilot site is determined politically and chosen arbitrarily because it supposedly exhibits certain characteristics that are identified beforehand – similar to ISRDP • Work done within a pilot study area takes place under ideal conditions, which gives the information gathering exercise a highly subjective character • The piloting exercise is also a concentrated effort, characterised by the disproportionate deployment of resources, including senior government officials who pay repeated extended visits

21. Some Key Emerging Challenges for the CRDP • ‘Lessons’ derived from the Giyani pilot are not necessarily replicable elsewhere; e.g. provision of 231 houses will not easily be replicated in the 161 wards in the area let alone the thousands of rural villages throughout the country • Institutional, management and technical capacity issues have not been addressed effectively • Leveraging of strategic partnerships to enhance technical capacity has not been done effectively – with a few exceptions such as DBSA • Design challenge: programme designed largely as a subsistence model • Access to finance for programme beneficiaries has not been clarified

22. Some Key Emerging Challenges for the CRDP • No clarity as to whether the CRDP is based on a grant (handout) or subsidy model • The model seems to falling into the trap of the pitfalls of the ISRDP in terms of the group-based approach • Misunderstanding of what agrarian transformation should entail • Agrarian transformation may be defined as referring to “measures aimed at achieving equity”, optimum utilisation of land, and in relevant instances its redistribution, “for the primary purpose of transforming, re-organising and enhancing the agricultural production process. It also refers to a process of engendering of a more comprehensive and demographically representative spread in the distribution of social and economic benefits from the agrarian economy” (Mayende, 2010: 58). An additional benefit of agrarian transformation is that it enhances the process of social cohesion among communities as well as the dignity of households and individuals.

23. Some Key emerging Challenges for the CRDP • While it makes reference to non-agricultural interventions, the CRDP has hardly any links with the SMME development work being done by the DTI and SEDA, and the Dept of Public Works’ EPWP • CRDP is also vague on how agro-cessing would be introduced, and how funding for it would be mobilised, including private sector investment • DRDLR facing extreme difficulty in mobilising partners within govt for provision of social and productive infrastructure • CRDP lacks an effective empowerment model that would ensure that communities develop the skills and capacity that are required through effective training and capacity-building • The section on co-operatives in the CRDP framework document is very weak and lacks a clear vision

24. Some Key Imperatives • Creation of opportunities for employment and suitable conditions for raising an adequate income. The ability to raise an adequate income is the fundamental requirement for human dignity and decent work. • Enabling of the beneficiaries to produce a surplus and make a profit • Integration of the beneficiaries into the wider national economy as producers of goods and services, and as contributors to the national fiscus as taxpayers • Effective organisation of the production process with issues such as natural resources, capital assets, inputs and markets being integral parts of strategy

25. Some Key Imperatives • Deepening and broadening of the benefits of this development process through agrarian transformation should lay the foundation for the development of downstream industries in agro-processing, manufacturing, transportation, equipment maintenance, and more effective promotion of service industries such as tourism. • Promotion of the establishment of non-agricultural enterprises linked to agrarian transformation • Movement away from the project approach (ISRDP approach) towards a more integrated programme approach covering larger target groups and areas • Investment in infrastructure directly productive infrastructure such as irrigation systems, while roads must connect the production areas with markets.

26. Some Key Imperatives • Establishment of the Department of Rural Development and Land Reform (RDLR) a highly positive development • Need for a Rural Development Act to pull together all important elements of strategy, policy and programmes • Speedy creation of rural development cluster system and movement towards stronger co-ordination also positive • Incipient movement away from the unsustainable project approach also positive

27. Some Key Imperatives • Need to address capacity issues for implementation more effectively through targeted recruitment of project level staff and their deployment to all projects • Project and programme staff a critical factor for success or failure extension officers and community development workers (CDWs) • Clear definition of role of local government • Partnerships - e.g. WSU-Mhlontlo Municipality; UFH and surrounding communities • Factoring in of indigenous knowledge systems

28. Some Key Imperatives: Pre-settlement Support • Provision of systematic and in-depth training, covering all relevant subjects such as management of farming enterprises, working with different crops and livestock categories and breeds, practical production techniques, financial management and labour relations • As government correctly asserts, the role of agricultural colleges in spurring on the process of agrarian transformation is going to be critical and pivotal • Scientific research through agricultural colleges and research stations following international best practice such as China where these institutions provide direct support to the producers, with the students doing their practical field work among the producers under the supervision of their lecturers and experienced researchers

29. The New Co-operative Thrust in SA • A wide range of government departments such as the DTI, Department of Higher Education, Labour, Agriculture Forestry and Fisheries, Social Development, Defence and Military Veterans are actively working towards establishment of co-operatives • A number of institutions such as SEDA, NEDLAC, COSATU and many others are also playing a pivotal role • National Treasury is working on the establishment of a Co-operative Bank • Existing legislation and policies are being revised to provide inter alia for the establishment of a Co-operatives Development Agency and an apex body that will represent all co-operatives in the country

30. Agricultural Co-operatives Success stories in Africa and Asia show that co-operatives: • Enable their members to become active and meaningful participants in local and national economies, and they promote socio-economic development • They help create employment and the development of human resources as they provide training opportunities for non-skilled and skilled members • Provide an organisational framework to deliver cheaply interventions aimed at assisting members to access services such as extension and input supply and facilitate access to financial services • Smooth income flow to members through bulk marketing and collective negotiation, collective investment in machinery, as well as promote economies of scale

31. Agricultural Co-operatives • They facilitate expansion of productive activity and diversification to agro-processing and other forms of value addition, and enable the producers to sell in processed form commodities previously sold in raw form very near to the farm gate, which in turn promotes entrepreneurship • Ease pressure and over-dependency on the government with regard to provision of housing, healthcare, electrification • Enhance family and social values, and promote peace and security within communities by lessening social tensions and discouraging deviant behaviour • Promote social cohesion and peer monitoring

32. Challenges facing Agricultural Co-operatives in SA • Inculcation of a culture and mindset of entrepreneurship • How to ensure effective participation by communities and avoid the dominance that is often exercised by prominent individuals • How to get local government to interface effectively with the institutions supporting co-operatives and to play a meaningful and effective role • High failure rate among co-operatives

33. Challenges facing Agricultural Co-operatives in SA • A strong co-operative movement would ensure a strong movement towards rural development • This would also support the democratisation of the South African economy right down to the village level • How do we assist the state bureaucracy to drive the process of creating a strong co-operative movement, through facilitation not prescription? How to harness the youth and empower them through co-operatives • Low asset resource base among communities

34. Challenges facing Agricultural Co-operatives in SA • How to empower the youth through co-operatives • Low asset resource base among communities • General lack of knowledge and skills • Ineffective funding models • Current handout mentality and culture of entitlement • Ineffective training methods

35. Co-operatives and the Bottom-up Approach • The current situation is characterised by the general lack of organisation among communities vis-à-vis formal government structures, particularly at the provincial and municipal levels • The current turn-around in the process of eradication of poverty in Brazil is being propelled by social movements which have empowered themselves through learning and other capacity building initiatives • Co-operatives are a central factor in this turn-around process • In other words the main driver of development is empowerment and not always policies developed in top-down fashion

36. Co-operatives and the Bottom-up Approach • This has created a situation where, because they are not organised, communities are in a weak position and cannot represent their interests effectively • It has also provided good ground for the top-down model to flourish • It must be acknowledged that there have been many efforts by a range of civil society organisations but these have been largely unsuccessful • In countries like Brazil and Mexico as well as Uganda and Ghana co-operative movements emerged and thrived under conditions of dictatorship, repression political strife • The building of a co-operative movement in SA has to occur under conditions of democracy

37. Co-operatives and the Bottom-up Approach • A strong co-operative movement will give the masses a strong institutional voice to represent their interests effectively vis-à-vis formal structures of government, to challenge and contend/negotiate • Presently communities are just told to establish a committee of representatives which in many instances is an amorphous structure not linked to productive activity • Lack of empowerment of communities to drive their own development as co-implementers of projects and programmes alongside government

38. Co-operatives and the Bottom-up Approach • The critical element is that communities must become real owners of their development projects • How to ensure that the interests of the communities are not left only to their elected representatives at the local and provincial levels, but they also have a strong institutional voice to represent their interests • But is it right that a co-operative movement should be created and sustained by the government?

39. Key Determinants of Sustainability • The most important factor in rural development is the development of the income-generating capacity of households • Mobilising funding from various sources, including the private sector underpinned by a clear investment model • Innovative governance 1 – encouraging communities to establish their own structures and not rely solely on government and traditional structures • Innovative governance 2 – establishing a legal framework that mandates DRDLR to co-ordinate rural development programmes

40. Key Determinants of Sustainability • Locally-based planning should not be informed by a one size fits all approach – each locality has its unique features • Technical capacity needs to be mobilised more aggressively through leveraging of strong strategic partnerships • Co-operatives should be located at the centre of rural development modelling as they would serve as the key drivers of socio-economic development • Autonomy, self-help, peer-monitoring and innovation are key propellants of co-operatives • With the exception of China where the CCP is the sole organisational form, social movements are playing a key role in propelling rural development in emerging markets

41. Key Determinants of Sustainability • To move away from culture of entitlement through handouts, a subsidy based funding model for programme beneficiaries is essential but it must go hand in hand with an ‘own contribution’ component • Households/communities must also be prepared to take risk • Major focus of resources should be put on extension services to support productive activities of co-operatives • Training should move away from the classroom-based type towards more interactive approaches such as Paolo Freire’s Dialogical Approach • Research backing for the CRDP is essential

42. Thank You