For the Executive: a brief Paraphrase

THE POOR MAN’S CAPITAL

The Bridging of the Gap

Eddie Bruwer

One of the biggest global challenges today is the tragic Gap dividing Rich and Poor. This Gap cuts through the global economy, dividing North and South. In South Africa the internal Gap carries the dark undertones of a previous policy of discrimination on the lines of race. Two economies developed: a First and a Second. The First (the Formal) Economy is part of the international global market economy, and aim at the generation of profit. The Second (Informal) Economy has its roots in the heart of rural Africa, and its emphasis is on human relationships and survival.

Even the experience of the 1994 miracle could not bridge this Gap in South Africa. Benevolent governance has succeeded in shifting and somewhat softening the traditional Gap by drawing a significant new Middle Class and a small Upper Class out of the formerly disadvantaged communities. However, millions of able-bodied and intelligent people with creative minds are still waiting on the platform (Freedom Park) with valid boarding tickets (Human Rights) for their development train to arrive. Train after train arrives to pick up some, but leave the majority waiting on the same platform. Neither the power of the State, nor the trickle down effect of a thriving economy, nor even the magic of education and technology have been able to bring the two economies within touch of each other. The Gap remains.

"I am because I participate" is a traditional philosophy in Africa. It is on this philosophy that the solution of the problem of inequality hinges. A participation model is needed that will lure both economies into one programme. The need is to build a bridge that connects the two economies, with foundations firmly grounded on both sides. The search for equality requires participation and engagement from both sides of the economic divide; equality that does not imply similarity in method or contribution. Equality in weight and reward should be the aim. My suggestion is to unite in an effort to bridge the divide between the two economies by developing (like the image on a photographic film) the hidden potential of the Second Economy, and enriching and enhancing it to a level that they can come into their own as equal partners with the First Economy.

To enhance the level of participation from the side of the second economy we need a paradigm shift. Our focus has to shift from poverty alleviation to poverty eradication. For as long as we categorise people as the objects of poverty alleviation and not as the subjects of poverty eradication they will remain dependent, struggling and frustrated. One of the most degrading labels to give a person is to declare him/her a lifetime dependent. Categorising people in negative terms as helpless or have-nots are derogative and dehumanising. It creates distance, hinders transformation, and implies that no meaningful contribution can be expected from that side. People become what you call them.

The First Economy will have to step down from the level of mere financiers and job-creators to the level of genuine partners in development. Building a nation with a national economy becomes possible when a way is found for genuine participation in trade and industry by all sectors of a country.

To bring these extremes together will be no easy task. This proposal has the following elements:

The aim is to create Co-operatives within the Second Economy that will form 50/50 partnerships with the First Economy to become involved in competitive economic development. This will lead the way from
1. a donor-dominated model of job-creation or development grants on the one side and
2. a struggling dependent model on the other to a
3. combined effort built on structured partnerships to eradicate the gap between Rich and Poor.
To achieve this aim an Institute will be needed to act both as an axel of a wheel and a catalyst to facilitate the process to:
1. Mobilise the Second Economy to build a Community Based Development Fund with :
  1. stokvel-like savings in small groups,
  2. use of Smartcard for shopping to negotiate discounts from designated stores and
  3. avail property (e.g., Subsidised Housing) as collateral for loans on co-operative projects.
2. To make this possible a team will have to be established [the nucleus is available], with the objective to get 100 000 participants to join within the First 4 years [6000 in the First Year]. This will make it possible to make in the first year of full operation - the 5th year- alone, an amount of almost R 160 mill. available as their share of capital in Co-operative enterprises. An additional amount of R40 mill. will be available for stokvel operations of the small participating groups for soft loans to members.
3. Make sure of good administration of the contribution of the Second Economy as well as providing legal infrastructure for a Co-operative of Co-operatives of small groups.
4. Negotiate with Government to get full support for
  1. at least an equal amount (i.e. another R 160 mill) available for participants in the enterprise as well as
  2. support from the Dept. of Labour for Action Training.
5. Find suitable Partners in the First Economy to make an equal contribution of capital available (i.e. another R 160 mill,) and provide business expertise to establish and manage the project.
6. Search for suitable projects/industries to get involved with. A potential total capital investment of R 480 Mill. in the 5th year of operation alone will be available. The partners from the Second Economy will have a 50% share in it.
To make the Institute possible it will be necessary to establish a non-profit organisation (in SA this is know as a Section 21 Company without Financial Gain) with credible Directors at the head and a handpicked staff to make the wheel rolling. The running costs for the Institute will be an estimated R 1,5 Mill. p.a. To safeguard the process from the possible poison of money being used as a tool for manipulation, this amount will have to be found before mass mobilisation can begin. A concept business plan is available.

The magic moment for the African Renaissance will become real to the masses when the African butterfly comes out of its cocoon to sit on the open flower of the developed world and sucks from its sweetness, but through cross-pollination also contributes towards the celebration and begetting of new life.

To make the full document more accessable the full index of Poor Man's Capital is repeated below:

CONTENTS: [Revised January 2006]