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South Africa: Lesson in Way China Approached Poverty Puzzle
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Business Day (Johannesburg)
COLUMN
26 September 2007
Posted to the web 26 September 2007
Neva Makgetla
Johannesburg
THE challenge of poverty in SA remains daunting, although most studies suggest some improvement in recent years.
In 2005, some 6-million households, about half the population, spent less than R800 a month. That means they were living under the internationally accepted poverty line of one dollar per person a day.
In the past 25 years, only a few countries have succeeded in addressing poverty on this scale. The biggest by far is China, which -- according to World Bank estimates -- reduced the share of the population living under a dollar a day from more than 60% in 1980 to 10% today.
Far-reaching structural change in the economy underlies poverty alleviation in China. But it was helped by a policy framework that turns conventional notions of poverty relief on their head. Instead of assisting individual households, the government has focused on expanding paid employment and helping rural communities improve productivity.
Agricultural development proved critical because about 60% of the Chinese population and the vast majority of the poor live in the countryside. In contrast, in SA less than 30% of the population and half the poor live in rural areas.
Returns to agriculture in China increased substantially from 1980, while agricultural output tripled. Virtually every rural household has access to land, so the benefits were spread fairly equitably. Given such small farms, however, agriculture alone could not lift most households out of poverty. An equally important contribution came from migrant labour. Since 1980, the urban population in China has risen from 20% to 40%. About 200-million people -- equal to two-fifths of the rural labour force -- work as migrants, largely in boomtowns on the Pacific coast.
Migrant workers can't get permanent residence permits where they work. That means that they and their families have no right to government services or housing. The government has begun to facilitate migration through training and placements, but expects most migrants ultimately to return to their smallholdings.
In the meantime, the migrants' earnings of between R500 and R1000 a month are needed to lift their families out of poverty.
Over the past 20 years, the Chinese government has argued with increasing urgency that growth in itself is not enough. The reforms of the 1980s were associated with deepening inequality, although China remains far more equitable than SA.
In response to worsening inequality, the Chinese government began to emphasise that to deal with poverty, economic policy must support sectors that can generate employment on a mass scale. To co-ordinate its response, it set up an Office of Poverty Alleviation at national level, backed by provincial and local structures. The office itself spends only R14bn a year, about half on public employment programmes. But it seeks to multiply its budget by encouraging public and private organisations to invest and run community-service programmes in poor regions, as well as providing jobs and training to migrant workers.
Poverty alleviation efforts build on China's highly decentralised local government structures. Poor villages typically contain only 500 to 2000 people. They provide a structure for community engagement that is largely lacking in SA. Instead of waiting for applications from microenterprise, for instance, Gansu province provides an annual subsidy of about R500000 to poor villages, equal to about 5% of village income for the year. The villages choose how to invest the funds to improve productivity or infrastructure. Community efforts are backed by a mass roll-out of innovative micro-technologies for both household services and agricultural production.
Obviously, SA cannot simply copy China's successes. SA has a profoundly different economic structure and prospects, a far smaller domestic market, a more urbanised population, and much deeper inequalities. Still, the Chinese experience suggests that we should think more carefully about employment creation and systematic community organisation and resourcing as the basis for sustainable strategies to overcome poverty.
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Makgetla is sector strategies co-ordinator in the Presidency. This article reflects her personal views only.
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