Innovation for the Urban Age : Innovative Approaches to Public Governance for the New Urban Age 9789462744011, 9789462366114

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current issues in public administration a n d go v e r n a n c e

INNOVATION FOR THE URBAN AGE

Innovative Approaches to Public Governance for the New Urban Age

Goos Minderman Purshottama Sivanarain Reddy

Innovation for the Urban Age

INNOVATION FOR URBAN AGE

THE

INNOVATIVE APPROACHES TO PUBLIC GOVERNANCE FOR THE NEW URBAN AGE THE WINELANDS PAPERS 2014

GOOS MINDERMAN

AND

PURSHOTTAMA SIVANARAIN REDDY (EDS.)

Published, sold and distributed by Eleven International Publishing P.O. Box 85576 2508 CG The Hague The Netherlands Tel.: +31 70 33 070 33 Fax: +31 70 33 070 30 e-mail: [email protected] www.elevenpub.com Sold and distributed in USA and Canada International Specialized Book Services 920 NE 58th Avenue, Suite 300 Portland, OR 97213-3786, USA Tel.: 1-800-944-6190 (toll-free) Fax: +1-503-280-8832 [email protected] www.isbs.com Eleven International Publishing is an imprint of Boom uitgevers Den Haag.

ISBN 978-94-6236-611-4 ISBN 978-94-6274-401-1 (E-book) © 2016 The authors | Eleven International Publishing This publication is protected by international copyright law. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher. Printed in The Netherlands

PREFACE The editors of this book, which incorporates many excellent papers of the 14th Winelands Conference at the School of Public Leadership of the University of Stellenbosch, would like to place on record their gratitude and acknowledgement to several people and organisations who made this publication a reality. First of all we would like to thank the University of Stellenbosch for their confidence in us in terms of assembling this book. They gave us complete freedom in terms of the editing. We would also like to thank the Director of the School of Public Leadership Prof. Dr. Johan Burger and the Director and Staff of the Winelands Conference led by Mr. David Daniels for the highly successful 2014 Winelands Conference. In this context, several people are thanked for their assistance in terms of ensuring that this publication initiative bears fruition. The authors are thanked for their papers and their patience in the review process and the publishing of the chapters: it is generally a long drawn out process. We trust that you are proud of your contribution to this publication. A long list of reviewers are to be thanked for their voluntary work on a conference they did not attend. Your criticism and reflections gave this book the guarantee of a good academic discourse and a contribution to the knowledge base of the discipline. The review and related comments provide an opportunity for critical review and reflection. A doubleblind review process is always valuable if done with academic respect and collegiality as demonstrated in your work. The financial support of the Vrije Universiteit Amsterdam, especially the Zijlstra Center and the Van Coevorden Adriani Stichting, has also made this work possible. It is always great to have benefactors that support the international exchange of research and information. We would also like to thank Eleven International Publishing who has taken this project on for the third time. Several impressive books are gradually filling bookshelves around the world. Last but not least, this book would not have been possible without the unconditional and everlasting energy of Werner Burger, who must have broken all records in terms of

v

PREFACE corresponding with authors, reviewers and editors to ensure that this book was published. Our gratitude also goes to Sjors van den Berg who performed the herculean task of the technical editing of the book. Both of you have performed exceptionally well in terms of finalising this publication, and it is deeply appreciated. Goos Minderman Purshottama Sivanarain Reddy

vi

TABLE

OF

CONTENTS

Introduction

1

1 Innovative Governance in the Urban Era Goos Minderman

3

Section A Civic Rights, Building Citizenship and Service Delivery

11

From the Freedom Charter, through the Bill of Rights to the ‘Rights to the City’: What Is the Relevancy for a Sustainable South Africa? Anneke Muller

13

2

3

The National Development Plan and Corruption: The Significance of Innovative Leadership Pregala Pillay and Evangelos Mantzaris Transdisciplinary Research for Innovation in Informal Settlement Upgrading Lorraine Amollo Ambole

41

4

Innovation in Rural Development within South Africa: A Critique of Soft Systems Methodology Cheryl Mohamed Sayeed, Pregala Pillay and Purshottama Sivanarain Reddy

59

5

What Structural Factors Influence Public Service Delivery? Lessons Learned from a Study of Swiss Municipalities Reto Steiner, Claire Kaiser and Lukas Reichmuth

79

6

99

7

Comparative Health Reforms in Brazil, India, and South Africa: A Research Agenda James Warner Björkman

129

Section B Active Citizenship and NGO Governance

153

8

How to Co-operate with Stakeholders: Lessons Learned from the Netherlands Arno Geurtsen and Ans Verstraeten Is Internal Supervision in Dutch Non-Profit Organizations Relevant to the Decentralization of Central Government? Goos Minderman

155

9

vii

175

TABLE

OF

CONTENTS

10

Reigniting Active Citizenship in South African Local Governance: The Role of the Third Sector Ntuthuko Mchunu and Francois Theron

205

11

Government as a Platform? Public Virtual Structures for Service Delivery and Participation as Elements of a Renewed Public Administration Ayad Al-Ani

225

Section C Growth, Economic Development and Risk Management

247

12

Local Economic Development: An Ingredient for Growth and Poverty Alleviation Sam Koma

249

13

Local Economic Development and Inclusivity in South Africa: A Case Study of eThekwini City Council Purshottama Sivanarain Reddy

269

14 Youth Capacity Building and Unemployment in Ethiopia Robert Dibie

295

15

Economic Development in Saldanha Bay: A Reflection of the Past and a Peek at the Future Louis Scheepers and Lesly Welman

343

16

Options for Resourcing Environmental Management in the City of Cape Town Johan Ackron

363

General Conclusions

391

17

Towards Innovative Governance for the Urban Age: Some Concluding Notes Purshottama Sivanarain Reddy

393

Authors

413

Reviewers

423

viii

INTRODUCTION

1

INNOVATIVE GOVERNANCE

IN THE

URBAN ERA

Goos Minderman To make their cities attractive places to live in, civic authorities need to harness the energies of all the individuals and businesses flocking into their metropolises. They need to foster the innovative spirit of social entrepreneurs who can step in with new solutions to meet demands for services and infrastructure. They must increase their political clout by forming productive partnerships with the private sector and civil society groups. Quoted from Livable Cities: Challenges and Opportunities for Policymakers. Economist Intelligence Unit, 2010.

1.1

INTRODUCTION

There is a road from the northern hills of Cape Town (Bellville area) straight to the harbour and the centre of Cape Town. It is a straight line as in an American desert. The road is perhaps one of the oldest roads; it was used by the first settlers to enter the continent after leaving ships in Cape of Good Hope. This road, now called Voortrekkersroad, is a central spine in the west part of the city, but it is now used in quite a different way than in history; it is a road where new immigrants from the continent go in the direction of the city. Thousands of them hold half way and look for a place every month. There are informal settlements, dodgy businesses, traffic problems and a completely neglected context. The Voortrekkersroad is a symbol of modern urbanization in the Mother city, or at least it was. Already more than half of the world population is living in large cities. The World Bank has stated that the growth of (mega) cities is immense; some African cities are growing more than 10% in population annually. That is without a doubt the highest percentage ever recorded. What does this mean in terms of public service delivery? What consequences do these densities have for government? How do governments balance equity and equality in these cities? What are the investments needed to ensure a balanced community? How can – in the words of Architect Edward Soja – planning and delivery on the scale of these cities or (mega) city regions cope with challenges and tensions between the realms of people, planet and profit (Soja, 2010)?

3

GOOS MINDERMAN When we are looking at planning, it is clear that the good old days of long-term comprehensive public planning have changed. To take the South African situation as an example, the start of the basic statistics of population is already absent. Let alone the huge migration that is a reality every day; the city of Cape town is attracting more than 10,000 immigrants from the continent (and far beyond) every week. Every planning of population growth is speculative, inaccurate and therefore always disappointing for good governance. On the other hand, the delivery structures in cities have changed. Public service is not the monopoly of government; a large network of public, semi-public, non-profit and private partners work in all sorts of networks to ensure the necessary balance of millions. The networks are not static but quite flexible and unpredictable. The city changes, the needs change and the networks adapt very quickly, leaving behind what was started once with another vision or policy. The role of government in these networks evolves also; a clear definition of government roles is at its best a subjective fitting one in a special context and in a specific era. The fact that local or regional government is legitimized by millions of voters also means a political power and a growing tension between local and central government. Cities change not only because of a multitude of people or density. Sometimes change is well-planned and occurs in stable areas such as the Dutch Randstad (the area from Amsterdam, The Hague and Rotterdam) and sometimes less planned, taking place in unstable areas. In regions, we encounter cities within the cities or city regions – a sort of conglomerate. Also large cities can have different municipalities, cultures or social communities. City problems are also important for the rural areas around. In many aspects, the influence of (mega)cities on the rural environment is huge: socially, economically and psychologically. The city rules, and the rural region urbanizes with it or is dependent on the cities. People focus on cities and get themselves urbanized in a rural context. Nijkamp refers to a certain Lifestyle in the urban world (Nijkamp, 2010). All these transitions are complex. And to make it even worse, it will get more and more complex . Rotmans’ message of transition is that we do not live in a time of change but in a change of times (Rotman, 2012). Modern communication technology is very much linked with complete, new social structures and complete, new emancipation of individuals who can formulate and articulate public needs by smartphone. People get educated by smartphone. Large institutions will have to pay attention to these far individualized techniques that could ultimately destroy institutions because they enable people to take care of themselves. We pay by phone and the internet, not by bank. Support for an

4

1

INNOVATIVE GOVERNANCE

IN THE

URBAN ERA

individual case can be organized by a simple e-mail and raise a thousand reactions on twitter of elsewhere. Political and democratic legitimization is changing from the ballot box to the internet. So, how does government cope? What sort of innovations, changes or strategies does government have in this urban era? It was this specific question that was raised by initiatives such as the Greater Tygerberg Partnership in the Cape Town Area in South Africa and that emerged into the central question of the 14th International Winelands Conference from the School of Public Leadership, part of Stellenbosch University. The Partnership started to look at the development of the abovementioned Voortrekkersroad.1 A spine through the city region is located between the airport, the city, the wealthy northern hills and the harbour. Who is leading this process? Who leads the networks of stakeholders in the area? It is these questions that were central to the Conference in March and April 2014 at Stellenbosch University, ‘Innovations in an urban era’. From many corners of the world, academics and practitioners gathered for a week on different aspects of this theme, all bringing in papers and presentation adding to the central question: what is innovative governance in the urban era? This book bundles the best papers of that conference.

1.2

THE STRUCTURE

OF

THIS BOOK

This book is divided in three sections. The determining of these sections is always somewhat difficult and subjective. There is – no doubt – also another possibility to present the chapters in a logical form. It is a result in itself to find that these three aspects of innovative governance in the urban era seemed to submerge as important issues on urbanization. Next to the contributions about governance itself, non-profit organizations and issues around economic development came up as independent groups of chapters. The first section concerns civic rights, building citizenship and service delivery. In six different chapters, aspects of innovation of governance and decision making are presented. The second section deals with the organizational side of governance, meaning stakeholder management, risk management, internal supervision of non-profit organizations and implementing active citizenship. The third section is about the economic dimension of urban policy making: the development of economic growth. 1

Site: www.gtp.org.za.

5

GOOS MINDERMAN The first section deals with the role of governance towards citizens and the citizens’ perspective on governance. Anneke Muller underlines the complexity of the issue from a legal point of view, presenting a literature review. With this, she opens the debate in this book with the most basic notions. Her statement is that government has the task to implement and to ensure human rights. She focuses on poverty and inequality in a context where urbanization is faster than the provision of housing and services. Without that basic but complex notion, development will not be sustainable. In her overview, she concludes that – looking from a perspective of ‘the rights of the city’ – some gaps in the legal framework must be dealt with, as promised by the constitution. An important mechanism against the rights of citizens is corruption. Corruption is the axe on the roots of any development. Mantzaris and Pillay present a firm opinion on the need of innovative leadership to combat corruption, especially within the South African context. Their plea is for collective leadership to establish the connections between organizational culture, leadership and innovative climate in the various institutions. Although they call their data on this subject depressing, the chapter gives a clear direction for innovation in the urbanized situation and government. Next to the organizational aspects of government, innovation is also needed in the dynamic of government. South Africa’s National Development Plan is much discussed. Ambole argues in her chapter that planning should be placed in the context of social innovation – an incremental, grass root level process. The South African case of urbanization has been the cause for smaller and larger informal settlements with huge problems. The concept of social innovation is a conceptual framework focusing on the needs of the poor to ensure sustainable social change. The author reflects on the case of Ekanine. Public participation and a search for a better definition of public needs are also the subject of Mohamed Sayeed, Pillay and Kerry. Although they focus on rural development instead of urbanization, the latter influences the first in many ways. Taking the Soft System Methodology as a point of departure, they formulate two objectives: a stimulating, learning innovation, on the one hand, and an opportunity to understand the complex nature of rural development, on the other hand. The authors acknowledge that the Soft Systems Methodology does not provide answers to all questions, but they conclude that the methodology can be – and should be – considered as part of a toolbox for innovation in governance. The same goes for the contribution on systematical self-assessment of public managers. Steiner, Kaiser and Reichmuth describe their research regarding the municipality managers

6

INNOVATIVE GOVERNANCE

1

IN THE

URBAN ERA

in Switzerland. They analyzed the effect of standardized self-assessment on the level of support of citizens. One of the interesting results of this research is that densely populated municipalities do not have lesser difficulties in providing public services than less dense populated municipalities. On the contrary, it seems that densely populated areas have more problems in servicing the public needs. ‘Bigger is not always better’ – an important message in times of urbanization. The opposite seems to be the message in the area of health care services. Björkman gives a comprehensive summary of a very large and ongoing research project on health care systems. His chapter compares the health care reforms in South Africa, Brazil and India. His point is that in these reforms – and especially in the reallocation of human recourses – urban areas are better off than rural areas. Björkman places the health care systems in the complete context of the economy and the state on governance of the various nations. A health care system consists of three elements: the delivery of services, the enabling of the delivery of services (finance, HRM, etcetera) and activities of others that influence the health care services. The latter means that contextuality is of most importance for service delivery. The differences between urban and rural health care systems seem to be a very relevant aspect in this context. The second section focuses on the development of the third sector, the non-profit sector or NGOs. Although the literature on non-profit organizations is limited – especially in South Africa – three contributions focus on the need and the development of the third sector. In large urban regions, where even local government is still very distant because of the scale, non-profit organizations have an important role in realizing service delivery and supporting the level of quality of the social context. Private initiatives – sometimes started as volunteer organizations and sometimes highly professional and institutionalized – create services between what government or the corporate sector can realize. Between ‘public’ and ‘corporate’ are numerous forms of services and organizations. In very large cities, these organizations become more important for services and advocacy. Non-profit organizations almost always work in a network of organizations like municipalities, companies and others. Stakeholdership and stakeholder management are therefore of great importance. Geurtsen and Verstraete explore a model of stakeholder management in the non-profit sector, also looking at municipalities. Their building bricks are the three concepts of trust, legitimacy and reputation. Working with these building bricks, a sustainable and corruption-free network of interlinked organizations can be examined. To know the explicit expectations of stakeholders is a key element, and the authors suggest further conceptualization of that aspect.

7

GOOS MINDERMAN Mchunu and Theron argue that in South Africa, the third sector has not been able to effectively utilize the space between market and state. The source of this inability is the lack of participation of the public. The authors argue that the South African version of active citizenship “smacks of isolated efforts, reactionary and passive citizenry often accompanied by destructive and disruptive tendencies.” In their quest to revitalize the third sector in South Africa, they offer important ideas on cooperation of contributing governments and other organizations. As a form of participation, supervisory boards have been introduced in the non-profit sector in the Netherlands in the 1990s. Minderman describes these boards as new checks and balances within non-profit organizations, taking over some of the supervising tasks of government. The governance of these organizations in health care, education or social housing is now seriously challenged; loss of quality, fraud and some bankruptcies seem to be part of the result of a decentralization policy. The author underlines the need of a good cooperation with government supervisors of non-profit organizations. The new virtual communication possibilities create a complete new governance model for government. Ayad Al-Ani is underlining this development in his contribution. New forms of collaboration between government and citizens produce colourful, up to date, specialized and tailor-made management information. And with that is an exceptional change of improving service delivery in which co-creation and cooperation are central words, not only between government and citizens but also in service delivery between citizens. The third section takes us to the heart of the business: economic growth and development. The importance of local economic development for cities and rural areas is undisputed; it is essential for employment, the battle against poverty and the quality of life. Economic development influences urbanization and vise versa; it is a self-fulfilling mechanism of entrepreneurial cooperation. Koma states that new innovative policy strategies are needed based on his comparison of the South African and Hungarian situations. The Hungarian case provides valuable lessons in the field of comprehensive financial and business support services to enterprises and the facilitation of strong partnerships and collaborations between the key stakeholders, including both public and private sector organizations. Local economic development is also the key issue of Reddy, who connects this theme with inclusivity. “Key characteristics of an inclusive municipality is the need to foster growth

8

INNOVATIVE GOVERNANCE

1

IN THE

URBAN ERA

and at the same time ensure equity, as the notion of inclusiveness denotes a locality where local communities irrespective of their ethnicity, race, gender, religion or financial circumstances should feel free and be at liberty to engage fully in the process of local governance, be it at the political, social or economic level.” This chapter focuses on the concept of inequality and, more specifically, on development backlogs. The case of eThekwini municipality in KwaZulu Natal illustrates the research that concludes on the position of youth, women and informal sectors in the local economic development. One of the most pressing economic problems in many large cities and many countries is youth unemployment, especially in countries where there is a demographic overrepresentation of young people in the total population. The contribution of Dibie (Indiana University of Kokomo) consists of a very well-documented case of economic development, especially in the area of youth capacity building and employment in Ethiopia. He addresses the economic policy for Ethiopia on a national scale, showing that public policy has not resulted in more jobs for young people in the private sector and NGOs. The unbalanced focus on the supply side of employment has led to a problem on the demand side of the employment market. The chapter recommends a better coordinated mechanism for employment policies in Ethiopia and Addis Ababa in particular. The chapter of Scheepers and Welman takes us back to a South African case study. They analyse the economic development for the last 20 years in Saldanha Bay. Shifting from an area that focused on agriculture and fishery, it became a steel manufacturing area as a result of government development policies. The chance also initiated a process of integrated spatial planning and the attraction of foreign investors. This careful planning is needed to ensure and sustain a balanced spatial structure and comes in many forms; economic development is a multi-dimensional issue respect for the history, and a clear view in the future is an important aspect of this planning. Good planning is the challenge for government to keep even accelerated development within boundaries of a complex balance. The last (but not least) contribution brings us home to where the Conference started: the mother city of Cape Town. The chapter of Ackron underlines the former chapter where development is seen as a complex process with many relevant aspects. The authors of this chapter argue that environmental sustainable management is not something of the open field but also a very serious aspect of urban planning and policies; investing in the green city, reducing environmental and social risk and addressing the implications of climate change are most important. In a literature review, they identify options for such policies. They conclude that there are three key drivers for government; the environmental change

9

GOOS MINDERMAN is happening, a failure in acting is the most costly of all and the cost should be efficiently and equitable allocated over all sectors and stakeholders. The final conclusion is that cities will be required to make some difficult trade-offs to meet its expanding environmental management responsibilities. The closing remarks are the privilege of the South African editor of the book, Pushottama Sivanarain Reddy. His point of view is a must read for all. REFERENCES Nijkamp, P. (2010). Megacities, Land of Hope and Glory. In: S. Buijs, W. Tan and D. Tunas (Eds.). Megacities, Exploring a Sustainable Future. The Netherlands, Rotterdam: 010 Publishers. pp. 101-113. Rotman, J. (2012). In het oog van de orkaan. The Netherlands, Boxtel: Aeneas Uitgeverij Boxtel. Soja, E. (2010). Regional Urbanization and the Future of Megacities. In: S. Buijs, W. Tan and D. Tunas (Eds.). Megacities, Exploring a Sustainable Future. The Netherlands, Rotterdam: 010 Publishers. pp. 57-76.

10

CIVIC

SECTION A RIGHTS, BUILDING CITIZENSHIP AND SERVICE DELIVERY

2

FROM BILL

THE

OF

FREEDOM CHARTER,

RIGHTS

WHAT IS

THE

TO THE

THROUGH THE

‘RIGHT

RELEVANCY

FOR A

TO THE

CITY’:

SUSTAINABLE

SOUTH AFRICA? Anneke Muller LAND, n. A part of the earth's surface, considered as property. The theory that land is property subject to private ownership and control is the foundation of modern society, and is eminently worthy of the superstructure. Carried to its logical conclusion, it means that some have the right to prevent others from living; for the right to own implies the right exclusively to occupy; and in fact laws of trespass are enacted wherever property in land is recognized. It follows that if the whole area of ‘terra firma’ is owned by A, B and C, there will be no place for D, E, F and G to be born, or, born as trespassers, to exist. Bierce, Ambrose (1911) The Devil’s Dictionary (previously published as The Cynic’s Word Book, 1906) [Online] Available at www.Abika.com [Accessed 19 May 2013].

ABSTRACT Important challenges of sustainable development include how to negotiate the sharing of limited (and already unequally shared) resources to meet the developmental needs of present and future generations. South Africa (SA) has a long history of development dreams based on human rights (HR), from the ANC’s 1923 African Bill of Rights, the Freedom Charter of 1955, to the 1996 Constitution with its very progressive Bill of Rights. The progressive realisation of socio-economic rights is however problematic, with the State being implicated in destroying livelihoods of informal traders and informal homes. In recent years, ‘service delivery’ protests have increased in number, due inter alia to social exclusion and a lack of authentic participation. Although the Bill of Rights has successfully been used by social groups to advance rights, it seems as if there are a number of structural impediments that negate the dream of a human right culture. In this context, the question is asked whether SA can learn from the ‘Right to the City’ concept, first used

13

ANNEKE MULLER by Henri Lefebvre and in 2005 adopted in the World Charter of the Right to the City, which guarantees the progressive enjoyment of universal economic, social, cultural and environmental rights. This paper is an exploration of the literature on HR perspectives and the ‘Right to the City’ concept from various perspectives. It looks at how the concept has been used in UN policies, as well as in Brazil. The lens of the ‘Right to the City’ is then used to explore the actual experiences of rights-based development in SA, making use of content analysis of laws, policies, plans and court cases.

2.1

INTRODUCTION

South Africa is a country with many sustainability challenges, including climate change, biodiversity loss, extreme poverty and rising inequality; high prevalence of HIV/AIDS; urbanisation that is faster than the provision of housing and services; backlogs from the Apartheid era; an economy that does not create jobs for those most in need of it and an education system that fails to save people from inter-generational poverty (NPC 2011: 9, 10 & 13). One of the main challenges of sustainable development (SD) is how to negotiate the sharing of limited (and already unequally shared) resources to meet the developmental needs of present and future generations. Market-based solutions means those who have a higher ability to pay, will be much better served (Sager, 2013: 155). Swilling and Annecke (2012: xiii) mention that a just transition to sustainability needs to address widening inequalities between poor and rich, who consumes 80% of resources. Agyeman, Bullard and Evans (2002: 77) believe environmental quality is ‘inextricably linked’ to human equality, because countries with more equal income distributions and more civil and political rights, tend to have higher environmental quality. Neo-liberal policies are especially problematic for inequality, with their one-dimensional focus on cost-recovery, efficiency, deregulation, privatisation, rolling back the state, limitations on planning and commodification of common spaces, services and resources like water, in the belief that most problems have market solutions (Sager, 2013: 129). State failure is seen as more problematic than market failure, and even planning’s role in addressing market failures has come under fire (Sager, 2013: 130; Fung & Wright, 2003: 4). Clarke (2004, cited in Sager, 2013: 130) claims that these neo-liberal policies have dissolved the public realm, based on the view that “the market should discipline politics … contrary to the social-democratic view that politics should discipline the market”. Purcell (2002) agrees that it has led to the “disenfranchisement of urban inhabitants”, with decreasing “control over decisions that shape the city”. According to Harvey (2008: 23) “[w]e live, after all, in a world in which the rights of private property and the profit rate trump all other notions of rights”. This has led to more competition, less redistribution, uneven development and socially polarised communities. 14

2

FROM

THE

FREEDOM CHARTER, THROUGH THE BILL OF RIGHTS TO THE ‘RIGHT TO THE CITY’: WHAT IS THE RELEVANCY FOR A SUSTAINABLE SOUTH AFRICA?

Alternatives to promote just sustainability can be found in human rights (HR) and ‘The Right to the City’. The building blocks for SD have been described as green, brown and red (HR) development agendas (Cock, 2004). The 2012 UN Conference on SD document “The future we want”, is interwoven with rights language, with the concept of SD linked to “the right to development and the right to an adequate standard of living” (UN, 2012: 2). The document acknowledges “the critical importance of water and sanitation within the three dimensions of sustainable development” (UN, 2012: 23). The Sustainable Development Solutions Network (SDSN), launched to help design the post-2015 global sustainable agenda, identifies inclusive, productive and resilient cities, with universal access to basic urban infrastructure and services, as one of the ten priority challenges of SD (UN-SDSN, 2013: 8. 18 & 19). The SDSN includes HR and social inclusion, as well as the right to development, in their list of four related normative concepts that should guide any global framework to address SD (UN-SDSN, 2013: 5). This paper is an exploration of the literature on HR perspectives and the ‘Right to the City’ concept, from various perspectives. It also looks at how the concept has been used in UN policies, as well as in Brazil. The question is what SA can learn from this concept, which is used to explore the actual experiences of right-based development in SA.

2.2

2.2.1

HUMAN RIGHTS PERSPECTIVES Introduction and History

After the Second World War, the 1945 UN Charter required countries to respect and promote a HR culture, although it was only in the 1948 Universal Declaration of HR (UDHR) that content was given to rights. Today there are a number of treaties promoting HR, including covenants on civil and political rights and on economic, social and cultural rights and conventions on the elimination of racial discrimination; discrimination against women and against torture; as well as on the rights of children and persons with disabilities. The different types of rights (see Table 2.1) have been described as first-, second- and third- generation rights (Vasak, 1977: 29). Civil and political rights are seen by some as genuine rights, with other rights as second or third class. Some Constitutions, for example the USA, only include first generation rights. Socio-economic rights have been criticised for being “costly, programmatic, time-consuming and vague...where the courts are unlikely to give clear and precise enforceable orders” and during the Certification of

15

ANNEKE MULLER Table 2.1

Three Generations of Human Rights

Generation of rights

Also called

First generation

Blue rights

Second generation Red rights Third generation

Types of rights

Obligations

Liberty

Civil and political rights

Negative– states should not interfere with individual liberties

Equality

Social, economic and cultural rights

Positive action required by states

Collective rights; right to clean environment; right to development; right to common heritage of mankind

Requires combined efforts by individuals, states, public and private institutions

Green rights Fraternity/ Solidarity

Table based on Vasak, 1977; Pienaar & Muller, 1999

the 1996 Constitution, the objection was raised that these right allow the judiciary to encroach on the terrain of the legislature and the executive, since they will have budgetary implications. The Constitutional Court countered that first generation rights also have budgetary implications (Pienaar & Muller, 1999: 374).

2.2.2

Advantages of Human Rights Approaches

Rights frameworks create entitlements which can be claimed and used to transform and re-orientate policies and budgets towards the poor and their livelihood struggles. A Bill of Rights can be used both as a sword and as a shield by various social movements. However, this is done in the knowledge that law mostly tends to serve the interests of those that can pay for their rights (Anderson, 2003). The law and courts are therefore problematic for building out rights, being inherently conservative. States should play very important roles in building out rights, and Windfuhr (2000: 25, as cited in Uvin, 2007: 600) claims that HR approaches “means foremost to talk about the relationship between a state and its citizens”. Conway et al. (2002) declare that rights perspectives focus “attention to who does and who does not have power, and how this affects the formulation and implementation of policy”. According to Ho (2007), the unequal share of power to decide over the distribution of resources is the central cause of structural inequalities, as a form of structural violence that systematically denies some people their basic human needs. However, as much as rights discourses can promote transformation, they can also “serve to insulate and legitimize power” and protect the status quo (Ibhawoh, 2011: 80).

16

2 2.2.3

FROM

THE

FREEDOM CHARTER, THROUGH THE BILL OF RIGHTS TO THE ‘RIGHT TO THE CITY’: WHAT IS THE RELEVANCY FOR A SUSTAINABLE SOUTH AFRICA?

The Right to the City

The Right to the City is an important theoretical concept for SA, where during Apartheid most Black families were denied the right to live in cities. Although influx control has been scrapped in 1987, cities still use the management of informal settlements (though antiland-invasion units) as methods to keep new arrivals out (Huchzermeyer, 2009). The ‘Right to the City’ dates back to 1968, a period of student and civil rights protests in the USA and Paris, when a quite radical version of the concept was first used by the French Marxist philosopher Henri Lefebvre (Harvey, 2008). Lefebvre stated that urban space reproduce underlying social relations and to change these spaces, urban inhabitants should be involved in all decisions that produce urban space (Purcell, 2002: 102). According to Purcell (2002: 100), Lefebvre created a “more radical ... and more open-ended vision of urban politics” than can be found in contemporary visions from the literature, with the Right to the City as “a truly democratic challenge to marginalization, oppression [and] new forms of domination”. David Harvey’s influential 1973 book ‘Social Justice and the City’ was followed by a number of articles by him on the Right to the City. Harvey (2008: 34) believes the city under capitalism promotes inequality and claims that “a process of displacement and ... ‘accumulation by dispossession’ lie at the core of urbanization under capitalism”. The neo-liberal city illustrates a lack of democracy and a “political withdrawal from collective forms of action” (Harvey, 2008: 32). Harvey considers the democratisation of the Right to the City, and the construction of a broad social movement to enforce it, as imperative to achieve more just cities and attempts to achieve this within the bounds of capitalism, without major structural changes to society, to be futile and destined to failure (Marcuse, 2009b:50). While Marxists see abolition of the capitalist mode of production (and nationalisation of private property by the state) as solution to housing problems, Marxist Humanists do not see it as a question of nationalisation versus private property, but rather a problem of freedom (where both these options could curtail people’s freedoms). Lefebvre’s Right to the City has therefore been described as a Marxist Humanist position. According to Huchzermeyer (2009), the works of Henry Lefebvre and David Harvey on the Right to the City have also filled the gap “derived from the Marxist ideology of nothing but a revolution”. Görgens and van Donk (2012) see the Right to the City as the struggle “against all causes of exclusion: economic, social, territorial, cultural, political and psychological”. For them the Right to the City is about guaranteeing permanent access to all citizens (whether unemployed, illegal, disabled or poor) to water, sanitation, waste removal, energy, health care, education and other services.

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ANNEKE MULLER 2.2.4

Development in Brazil

SA can learn a lot from developments in Brazil, the poster child of the Right to the City. Brazil and SA both have histories of inequality and oppression. Brazil was a military dictatorship until 1985 and in 1988 promulgated its present constitution, while SA held its first democratic elections in 1994 and adopted its final constitution in 1996. According to the 2013 Human Development Report and the World Bank’s databank, both countries are very unequal societies, with the income Gini index of Brazil 60.8 and SA 59.3 in 1993. Brazil has since brought their Gini index down to 54.1, but SA’s index increased to 63.1 (2009 data) (World Bank, 2013; UN, 2013: 153 & 154). In 1980, Brazil had a Human Development Index (HDI) of 0.522, which was lower than SA’s index of 0.57 (UN, 2013: 149). By 2012, Brazil’s HDI had increased to 0.73 (making it a high human development country), while that of SA increased to 0.629, a medium level of human development (UN, 2013: 149). In 2012, Brazil’s total population was nearly four times the size of that of SA and Brazil is 84.9% urbanised, compared to SA’s level of 62.4% (UN, 2013: 195 & 196). Brazil has incorporated the Right to the City into its legal framework, in the form of the 2001 City Statute (Federal Law 10.257), building out sections 182 and 183 of the 1988 Constitution regarding urban policy. This City Statute adopted after pressure from social movements, promotes the collective and social (and user) value of land over the exchange (or market) value thereof (as does section 182 of the Constitution). The “common good, safety and well-being of all citizens, as well as environmental equilibrium” is therefore prioritised (POLIS, 2002: 40, cited by Brown-Luthango, 2010), while also balancing individual and collective interests over land. Section 183 of the Constitution makes it possible for people, who do not own any other land, to claim land of not more than 250m2 on which they have lived for more than five years without interruption or opposition. The City Statute also makes possible the designation of special zones of social interest (ZEIS) to protect land in certain areas from real estate speculation. The City Statute provides for several collective rights, including “the right to urban planning, the social right to housing, the right to environmental preservation, the right to capture surplus value and the right to the regularization of informal settlements” (Fernandes, 2007: 211). According to Fernandes (2007: 211 & 213), this new legal-urban order is based on the integration of urban planning, law and management and on three interlinked processes of legal-political reforms: representative democracy and wide participation; decentralisation of decision-making and a new legal-administrative framework setting out the changing state-society relations. The two core pillars of Lefebvre’s Right to the City (right to habitation and right to participation) therefore forms the basis of these legal reforms (Fernandes, 2007: 211).

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The participatory budgeting system found in Porto Alegre, Belo Horizonte and many other municipalities is another much admired aspect of Brazilian policy (World Bank, 2003; Baiocchi, 2003). Porto Alegre started their participatory budget in 1989 and over time the number of people involved in the process has steadily increased. The outcome of this process was dramatically increased access to water and sanitation (UNESCO, undated; World Bank, 2003). Further improvements included a quadrupling in the number of schools; increased public housing; budgetary increases for health and education; greater transparency and also increased municipal income as more people started paying taxes (World Bank, 2003). According to Goldsmith and Va´ıner (2001: 2), “the reconfiguration of power in Porto Alegre is beginning to reduce spatial inequalities”. During the early years, the poorest of the poor did not participate (being afraid of eviction from land to which they did not have legal title), while the working poor and legal residents were well represented (Goldsmith & Va´ıner, 2001; World Bank, 2003; Walker, 2013: 206). Another challenge is that the participative budgeting process is not constitutionally guaranteed but a mayoral initiative (World Bank, 2003). After 2005, when a coalition of centre-right political parties took office, the feeling of landless people was that tenure security became more difficult to obtain with forced and even violent evictions more common than under the previous Worker’s Party and their coalition of left-wing parties, who governed the city from 1989 to 2004 (Walker, 2013: 204 & 205; Gandin & Apple, 2012: 621). However, some land occupation groups, such as the ‘Three Women Land Occupation’ still obtained slumupgrading projects through the participatory budget (Walker, 2013: 214).

2.2.5

The Right to the City and Participation

The focus within the Right to the City is therefore very much on authentic public participation and democratic processes based on deep and deliberative democracy. Appadurai (2001: 25) defines ‘deep democracy’ as the actions of movements of the poor trying to claim voice and space. Gaventa (2006b) contrasts various forms of deep democracy with “thinner forms of democracy associated with liberal and neoliberal thinking”. Similarly, Fung and Wright (2003) also view deepening as an alternative to the liberal viewpoint of reducing the role of the state and politics, with Porto Alegre as an example of Empowered Participatory Governance. They mention six normative principles of this model (Fung & Wright, 2003: 30), namely genuinely deliberative decisionmaking processes; translated into action; effectively monitored by deliberative bodies; coordinating actions of local, devolved units with a form of centralised coordination and power, disseminating innovations amongst units; these processes as ‘schools for democracy’ and the actual outcomes that is better than under prior institutional systems.

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ANNEKE MULLER The concept of deliberative democracy has similarities to Healey’s (1992) ‘planning by debate’, also known as communicative or collaborative planning or critical planning theory (CPT), which has been described “as a critical theory inspired by pragmatism and Jürgen Habermas’s theory of communicative action” (Sager, 2013: xi). According to Sager (2013), CPT is often criticised for not being able to deal with problems of clashing rationalities or differences in power and being open to manipulation, thereby being used to support and serve neo-liberalism (Sager, 2013: xviii). Sager (2013) however focuses on how to revive CPT and counter the problem of serving the neo-liberal system. In line with the concept of claimed spaces for participation (Gaventa, 2006a), the more radical versions of the Right to the City as developed by Lefebvre and Harvey would include, if deep participatory processes do not exist, for social movements to claim the rights of habitation and participation. Even the preamble of the UDHR accepts that HR might have to be claimed through rebellion: Whereas it is essential, if man is not to be compelled to have recourse, as a last resort, to rebellion against tyranny and oppression, that human rights should be protected by the rule of law.

2.2.6

World Charter and Other Documents on the Right to the City

In 2005, the ‘World Charter of the Right to the City’ was adopted by the World Social Forum, with the support of UN-Habitat and UNESCO. This version of the Right to the City guarantees to progressively make effective the enjoyment of universal economic, social, cultural and environmental rights, based on the right that all citizens have to participate in urban planning, policy-making, budgets, regulation, management, healthy environments (which includes the rehabilitation of degraded areas and facilities), historical and cultural heritage and the renovation and improvement of cities (World Social Forum, 2005). Cities should guarantee citizens the right to access to public information, justice, public security, work, development, water, sanitation, waste removal, energy, health care, education, telecommunications, public transport and mobility, housing, an integrated and equitable city and a healthy and sustainable environment, based on participative planning. This charter unpacks and provides further detail for all these rights. A number of cities have since aligned themselves to this Charter. The concept of the Right to the City is becoming increasingly popular. UN-Habitat (2010) and UNESCO (2006 & 2011) have brought out documents that promote the

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Right to the City, and even the World Bank has published some documents and in January 2014 organised a workshop about it. Huchzermeyer (2009), however, describes the mainstreaming of the Right to the City within UN-Habitat and other organisations as “something of an empty buzz word, where the concept of grassroots autonomy and meaningful convergence is completely forgotten”. However, a number of these documents include very useful research and policy suggestions. The UN-Habitat’s State of the World’s Cities report (2010: 21) for example proclaims: The right to the city calls for a holistic, balanced and multicultural type of urban development. Therefore, it must pervade all policy areas, including land use, planning, management and reform, and it must do so in close cooperation with government agencies and civil society.

2.2.7

The Right to the City and Spatial Justice

Planning has in the past been complicit in “sweeping the poor into the sea” (Watson, 2009). Planning legislation, with concepts such as land use zoning, master planning and modernist visions of the ideal city, has been shaped by ideas borrowed from the global North which did not suit the African context (Watson, 2009: 172). In Africa, these laws have also been misused to motivate evictions from informal settlements and the destruction of livelihoods (Berrisford & Kihato, 2006). Alternatives can be found in spatial concepts, such as the ‘Just City’ and ‘Spatial Justice’, which have analogies to the Right to the City concept. The Just City concept dates back to 1997, when Susan Fainstein wrote about Amsterdam as an Egalitarian city, and later as a Just City (Fainstein, 1997, 2006 & 2010). She defined the good city with reference to the concepts of “democracy, equity, diversity, growth, and sustainability” (Fainstein, 2006). Marcuse (2009a: 193) added to this list a city that promotes the full development of human capabilities and potentials. Others have also illustrated how the shape of the city, access to the public realm or citizenship rights contributes to good cities. Fainstein (2006) declares that just cities require just social movement strategies and democratic processes (just means), as well as just policies (just ends). Justice also requires all levels of governance to support each other, since justice cannot be attained by the local level alone. In her discussion of Amsterdam, Fainstein (1997) mentions policies that promote equality, such as physical planning for compact, mixed-income cities, excellent public infrastructure, high social welfare expenditure, a redistributive national state, public-non-profit partnerships, low rents, cross-subsidies for social housing, the municipality owning most land within its boundaries and promoting a specific socio-spatial mix

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ANNEKE MULLER by scattering subsidised housing throughout the city; discouraging displacement by gentrification and tenure rights for squatters. These policies went side by side with a very active civil society. She compares these policies to the pro-growth, pro-market policies of London and New York, which led to exclusion and unjust development. In ‘An in memoriam for the Just City of Amsterdam’, Uitermark (2009) mourns the death of Amsterdam’s short-lived aspiration to be a just city and the social movements that fought for it, as neo-liberal policies increasingly took over during the late 1990s. The original push for the just policies came from social groups that protested against “modernist fantasies on urban space”, the destruction of affordable housing and the lack of participation in planning. According to Uitermark (2009: 350), the two essential preconditions for just cities are methods to ensure an equitable distribution of scarce resources (regardless of people’s purchasing power) and methods to give residents control over the creation of their living areas. The more recent concept of ‘spatial justice’ (Marcuse 2009b; Soja, 2009 & 2010) recognises that space shapes the social, while the social also shapes space. Since space is socially produced, it can be socially changed. Soja (2009) views spatial injustice as both an outcome and a process, with class, race and gender as forces that shape spatial discrimination, as well as the political organisation of space (for example identification of electoral districts, redlining of areas by withholding investments, exclusionary zonings, segregation and colonial policies). According to Marcuse (2009b: 52-55), spatial justice is a derivative of social justice in a society, and there are two main forms of spatial injustice – the unequal allocation of resources over space and the confinement and segregation of any group in space. To address these spatial effects of social injustices require spatial remedies but also changes to social, political and economic conditions.

2.3

2.3.1

HUMAN RIGHTS

IN

SOUTH AFRICA

Introduction

The ‘Right to the City’ is used to explore the experience of right-based development as it plays out in SA and highlight a number of gaps in SA’s legal framework that need addressing. Urban policies that have been adopted since 1994 have done little to change the unequal, segregated and spatially unjust form of the Apartheid city. In actual fact,

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housing policies, property-led development and income inequalities have exacerbated the segregation and exclusion (Turok, 2011 & 2013). According to the 2011 Census (StatsSA, 2011), there are over 2 million households (out of 14.45 million) who live in informal homes, backyard shacks, caravans, tents and other types of homes (excluding traditional homes). Over 1 million households have no access to piped water, while over 3.8 million households have access to piped water but not on site or in their homes. Just over 1.7 million households use chemical toilets, bucket latrines, or have no access to toilets at all, while another 4.6 million make use of pit latrines. Although the reduction of poverty and inequality are key strategic objectives of government (NPC 2011: 7), many people are still waiting for the establishment of “a society based on democratic values, social justice and fundamental human rights”, which would “improve the quality of life of all citizens and free the potential of each person”, as promised in the preamble to the 1996 Constitution.

2.3.2

The Freedom Charter

SA’s human rights history started more than 90 years ago with the ANC’s 1923 African Bill of Rights, followed by the African Claims (Bill of Rights) of 1943 (Nthai, 1998) and then the more well-known Freedom Charter of 1955, adopted only 7 years after the UDHR. Many of the provisions of the Freedom Charter were taken up in the Bill of Rights, but a number of issues are still unresolved to this day, including the following: [t]he national wealth of our country, the heritage of South Africans, shall be restored to the people; The mineral wealth beneath the soil, the Banks and monopoly industry shall be transferred to the ownership of the people as a whole. Many groups still call for nationalisation, linking it back to the Freedom Charter (News24, 2013; Business Day, 2013). SA was quite successful in transformation of political conflict but not so successful in transforming economic conflict through the redistribution of wealth (Auvinen and Kivimäki, 2001: 77). Turok (2010: 266) also claim that “[p]olitical freedom has patently not been matched by economic freedom”. The fact that there is no work for many is a major challenge. Although the government

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ANNEKE MULLER nationalised mineral rights by placing them in the care of the State, and have done the same for water rights (through the National Water Act 36 of 1998), this has not necessarily led to a more equal dispensation. Land reform has been written into the property rights clause of the Bill of Rights, but differs from the provision of the Freedom Charter that all the land re-divided amongst those who work it to banish famine and land hunger; The state shall help the peasants with implements, seed, tractors and dams to save the soil and assist the tillers. Land reform is viewed mainly as a rural issue, but SA is already 62.4% urbanised and land reform must also be seen as an urban issue, where access to land for urban agriculture or housing is very much part of the Right to the City. Regarding housing, the Freedom Charter stated that: “Unused housing space to be made available to the people”. “Slums shall be demolished, and new suburbs built where all have transport, roads, lighting, playing fields, crèches and social centres”. “Fenced locations and ghettoes shall be abolished, and laws which break up families shall be repealed”. The Upgrading of Informal Settlements Programme (UISP) of 2004 accepts that informal areas should rather be upgraded than demolished, often being better located than new low cost suburbs. The lack of legal spaces where poor people can settle is still a problem and temporary relocation areas (such as Symphony Way in Delft, Cape Town, also known as Blikkiesdorp) can still be seen as ‘fenced locations and ghettoes’. Blikkiesdorp has been compared to an alien camp from the film ‘District 9’ (Davids, 2010), while other criticisms include. “Transit camps often look like concentration camps with razor-wire fencing, spotlights, single entrances and 24-hour police guards,” says shack-dwellers’ movement Abahlali baseMjondolo, which won the Durban High Court victory. “Residents are often highly controlled in these places, as if they are in prisons” (Hromnik, 2009). Many of the issues mentioned in the Freedom Charter are therefore still issues that are relevant for the Right to the City.

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The Constitution of the RSA of 1996

The very progressive 1996 Bill of Rights includes first-, second- and third-generation rights which the State is obliged to respect, protect, promote and fulfil (Pienaar & Muller, 1999: 373). The main role of this Constitution is to promote ongoing transformation to a more equal society and for this purpose a number of institutions were created by chapter 9 of the Constitution to promote rights, such as the Human Rights Commission. Access to sufficient water is mentioned in the Bill of Rights, but not the right to sanitation. Section 3 of the Water Services Act 108 of 1997 extended the Bill of Rights by including that “[e]veryone has a right of access to basic water supply and basic sanitation”. After 1994, government provided water on a cost-recovery basis, but many people could not afford to pay, and it led to a number of cholera epidemics and water protests. A free basic water policy was instituted in 2001, but in March 2014, the Human Rights Commission (SAHRC, 2014) stated that water provision was still viewed more as commodity than human right. The lack of access to sanitation is a cross-cutting human right issue, which social movements such as the Social Justice Coalition (SJC), a “grassroots social movement campaigning for safe, healthy and dignified communities” in Khayelitsha, have focused their effort on, since it addresses the lack of dignity (section 10) and the right “to be free from all forms of violence from either private or public sources” (section 12 of the Bill of Rights). This struggle links to the fact that people are attacked or raped on their way to public toilets or the bushes (SJC, 2012 & 2013; Ndifuna Ukwazi, 2014). The SJC even call their official newspaper ‘The Toilet Paper’. The Constitution also does not protect livelihoods, which is problematic due to the lack of formal jobs. The State has in many cases evicted informal traders and destroyed livelihoods (ESSET, 2010; Charman, 2012), such as in the 2013 ‘Mayoral Clean Sweep initiative’ of Johannesburg Municipality (Rabkin, 2013; Evans, 2013), with similar evictions in Ethekwini (Ngubane, 2013) and Stellenbosch (Nicholas, 2014). Despite Cape Town’s supposedly more developmental approach to informal traders and new 2009 informal trading bylaws (Bamu & Theron, 2012), traders experienced a spate of evictions during preparation for the 2010 World Cup (ESSET, 2010). Socio-economic rights have featured in several constitutional court cases, but outcomes have been disappointing from the perspective of the Right to the City, with some progressive and other very conservative decisions. Roithmayr (2011) and Bond (2011) questions whether, after the constitutional court case of Mazibuko v City of Johannesburg 2010 4 SA 1 (CC), rights-based litigation still has a role to play in advancing the interests

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ANNEKE MULLER of the poor. Bond cites Dugard (2010) regarding the “[c]onstitutional court’s apparent retreat from enforcing socio-economic rights”. Roithmayr (2011: 317) argues that in the Mazibuko case the constitutional court “embraced a neoliberal interest in cost recovery from the poor, and has declared cost recovery programs constitutional even when they infringe on socio-economic rights”. Another constitutional court case that went against the Right to the City is the 2009 case by the Residents of Joe Slovo Community, Western Cape v Thubelisha Homes and others (CCT 22/08), where a community of 20,000 people was to be moved 20 kilometres away from their well-located site to make way for the N2 Gateway project (Huchzermeyer, 2009; COHRE, 2009). However, this eviction was so expensive to implement, that the eviction order was withdrawn. In the context of the right to development, COHRE (2009) questioned whether one can view projects like the N2 Gateway that violate housing and human rights, as ‘development’. Bilchitz (2010: 597) questioned whether the constitutional court was wasting away the rights of the poor in the Nokotyana v Ekurhuleni Metropolitan Municipality 2010(4) BCLR 312 (CC) case, which was the first dealing with the right to sanitation, but the court avoided “giving definitive content to socio-economic rights …[which] appears to be an abrogation of the Constitutional Court’s most basic duty to interpret the constitutional provisions of the Bill of Rights”. Despite a number of progressive policies regarding upgrading of informal areas and free basic water and sanitation (only applicable after people are connected thereto), the building out of socio-economic rights does not actually feature very highly in policymaking and planning (Muller, 2006). A number of sections in the Bill of Rights require the state to “take reasonable legislative and other measures within its available resources”, either “to achieve the progressive realisation of this right” or to “foster conditions to enable citizens to gain access to” the specific right. However, socio-economic rights are rarely mentioned in planning documents such as integrated development plans, and if rights are mentioned, they are not linked to any strategies or plans to implement them. Since 1994, socio-economic rights have not been mentioned in any State of the Nation speech. Although rights are mentioned in the National Development Plan’s Vision for 2030 (NPC, 2012), these references do not deal with socio-economic rights.

2.3.4

Spatial Justice in SA Cities

SA cities still lack spatial justice, with former group areas and new low income areas developed on cheap land on the edges of cities, far from work, good schools, existing

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social support systems and with higher transport costs. Spatial exclusion is exacerbated by social, economic, political and cultural exclusion (Turok, 2010, 2011 & 2013). SA still has no national urban policy to deal with urbanisation. In September 2014, a draft Integrated Urban Development Framework (IUDF) was published (following a number of previous attempts), but it does not adequately address urban land reform, urban poverty and informality and makes no mention of the progressive realisation of socioeconomic rights. It does restate some other challenges, such as the need to review the ward committee system to promote better participation. After 1994, the government transferred well-located state land to state owned entities, to be sold off for profit. Before 1994, urban plans such as the Cape Metropolitan Spatial Development Framework envisioned this land for low-cost housing to redevelop the Apartheid city. The 2004 version of the UISP (2004: 13) suggested that state, provincial and municipal land and land belonging to public entities “should, where possible be made available free of charge and state land release mechanism must be enhanced to support this process”, but this provision does not feature in the present Housing Code and has not been made operational. There is a lack of adequate funding mechanisms and budgets to buy well-located land. Since 1994, all land had to be bought out of the housing subsidy, while prior to 1994 provincial authorities had separate budgets for land acquisition. After 2004, the UISP made available limited funding for land, and that the cost of land be excluded from the consolidation (housing) subsidy. The Spatial Planning and Land Use Management Act 16 of 2013 (SPLUMA) includes the principle of spatial justice under its development principles, including access to secure tenure and incremental upgrading of informal areas (section 7(a)(v)). It seems as if the Act intends to create a framework for planning; land identification and the upgrading of informal areas. Unfortunately, this framework still has to be fleshed out by national regulations and provincial legislation. SPLUMA is not well coordinated with provincial legislation and with other laws such as the Prevention of Illegal Eviction and Unlawful Occupation of Land Act 19 of 1998 (known as PIE). PIE requires certain socio-economic considerations to be taken into account when granting eviction orders. The court in certain cases has to take into account “the rights and needs of the elderly, children, disabled persons and households headed by women”. In urgent proceedings, the court has to balance “the likely hardship to the owner” with “likely hardship to the unlawful occupier”. Despite PIE, evictions without adequate alternative land being made available is the general rule in most cities. There are

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ANNEKE MULLER no provisions making it mandatory for municipalities to identify and obtain alternative land. The socio-economic considerations to be taken into account also do not measure up to the ‘social use’ of land written into the Brazilian Constitution and City Statute. Although influx control has been scrapped in 1987, the management of informal settlements through municipal anti-land-invasion units, without providing alternative land where people may settle legally, can be viewed as ‘influx control by stealth’. 2.3.5

Protests, Participatory Governance and Deep Democracy

The Constitution refers to the concept of ‘participatory democracy’ in sections 57, 70 and 116, and to participation in sections 152 and 196, referring to “involvement of communities” and “participate in policy-making”. Unfortunately the Bill of Rights does not guarantee participation, although the constitutional court in recent cases has focussed on building out ‘meaningful engagement’ but only on a case by case basis and not with reference to the wider lack of participative democracy in SA. Government’s building out of participation has been around the concept of ‘ward committees’, which has not been effective, nor is it able to change power dynamics and focus more resources on the poor, with the focus on local participation, without higher level coordinated spaces to negotiate resource-sharing as suggested by Fung and Wright (2003: 30). The SA system does not measure up to the Brazilian experience of participatory budgeting. In recent years, so-called ‘service delivery’ protests have increased in number and violence, due to social exclusion, feelings of abandonment and a lack of authentic participation (Alexander, 2010; GGLN, 2011; Johnston & Bernstein, 2007; Von Holdt et al, 2011; Selmeczi, 2012). Many communities do not believe there are valid platforms where they can negotiate their claims. The Bill of Rights have been used by some social groups to advance rights, but as mentioned above, structural impediments do not make courts a good platform for negotiating resource sharing. The deep democracy politics of organisations such as the Shack/Slum Dwellers International, with their global networks, which focus both on opposition to and co-production of policies with the government, have been more successful in claiming spaces and resources (Mitlin, 2008: 350), with Cape Town basing elements of their upgrading strategy on a SDI ‘re-blocking’ model.

2.4

CONCLUSION

SA is still a very unequal society, with a history of denying Black families access to cities. To create great, inclusive, just and sustainable places require lessons to be learnt from the

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‘Right to the City’, such as that the state should accept responsibility for expanding people’s access to these rights and addressing major structural changes. Although the SA Bill of Rights creates a powerful framework for the Right to the City, there are gaps in the legal framework, while the courts have also taken a very narrow and conservative interpretation of some of the socio-economic rights. The biggest problem is that analysis of policies and plans have shown that HR approaches to development are not part of the way government views development. To move beyond paper rights requires human rights to ‘pervade all policy areas’ and feature in all plans, with strategies and implementation plans in place at all three spheres to address the progressive realisation of each right. The problem of access to land to legally settle is one of the biggest challenges for the Right to the City. A progressive national urban policy is needed that make urban land reform mandatory and addresses the progressive realisation of socio-economic rights, protection of livelihoods, as well as broad participation. Detailed policies need to be put in place for the identification, purchase, planning, servicing and rapid release of land for low income housing and secure tenure for informal settlements. Apartheid cities require better spatial but also social, economic and institutional policies to address spatial injustice. Most importantly, the Right to the City requires the building out of deep democratic spaces where urban residents can claim resources, as in the participatory budgetary processes of Porto Alegre and other Brazilian cities. REFERENCES Agyeman, J., Bullard, R.D. & Evans, B. (2002). Exploring the Nexus: Bringing together Sustainability, Environmental Justice and Equity. Space and Polity 6(1): 77-90. Alexander, P. (2010). Rebellion of the Poor: South Africa’s Service Delivery Protests – A Preliminary Analysis. Review of African Political Economy 37(123): 25-40. Anderson, M. (2003). Access to Justice and Legal Process: Making Legal Institutions Responsive to Poor People in LDCs. IDS Working Paper 178. February 2003. Brighton, Sussex: Institute of Development Studies. Appadurai, A. (2001). Deep Democracy: Urban Governmentality and the Horizon of Politics. Environment & Urbanization 13(2) October: 23-43.

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ANNEKE MULLER Auvinen, J. & Kivimäki, T. (2001). Conflict Transformation in South Africa. Politikon 28(1): 65-79. Baiocchi, G. (2003). Participation, Activism, and Politics: The Porto Alegre Experiment and Deliberative Democratic Theory, Chapter 2 in Fung, Archon & Erik Olin Wright (eds). Deepening Democracy: Institutional Innovations in Empowered Participatory Governance. London: Verso Books. Bamu, P. & Theron, J. (2012). Nothing about Us without Us: A Case Study of the Dynamics of the Informal Workplace at Mitchell’s Plain Town Centre, Development & Labour Monograph Series, Institute of Development and Labour Law, UCT [Online] Available at: [Accessed 20-03-2014]. Berrisford, S. & Kihato, M. (2006). The Role of Planning Law in Evictions in Sub-Saharan Africa. South African Review of Sociology 37(1): 20-34. Bierce, A. (1911). The Devil’s Dictionary (previously published as The Cynic’s Word Book, 1906) [Online] Available at: [Accessed 19-05-2013]. Bilchitz, D. (2010). Is the Constitutional Court Wasting away the Rights of the Poor? Nokotyana v Ekurhuleni Metropolitan Municipality: notes. SA Law Journal 127(4): 591-605. Bond, P. (2011). The Right to the City and the Eco-Social Commoning of Water: Discursive and Political Lessons from South Africa, In Farhana Saltana & Alex Loftus (eds). The Right to Water, London, Earthscan. Brown-Luthango, M. (2010). Access to Land for the Poor – Policy Proposals for South African Cities. Urban Forum 21: 123-138. Business Day (2013). Mantashe hits out at EFF for ‘distorting the Freedom Charter’. Business Day BDlive [Online] Available at: [Accessed 6-03-2014]. Charman, A. (2012). Is Informality Being Disallowed by Government? November 2012. Econ 3X3 [Online] Available at: [Accessed 29-01-2013].

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Cock, J. (2004). Connecting the Red, Brown and Green: The Environmental Justice Movement in South Africa, Paper prepared for the Globalisation, Marginalisation & New Social Movements in post-Apartheid South Africa joint project between the Centre for Civil Society and the School of Development Studies, University of KwaZulu-Natal [Online] Available at: [Accessed 17-05-2005]. COHRE: Centre on Housing Rights and Evictions (2009). N2 Gateway Project: Housing Rights Violitions: ‘Development’ in South Africa [Online] Available at: [Accessed 6-03-2014]. Congress of the People (1955). The Freedom Charter, Adopted at Kliptown, 26 June 1955 [Online] Available at: [Accessed 14-09-2013]. Conway, T., Moser, C., Norton, A. & Farrington, J. (2002). Rights and Livelihoods Approaches: Exploring Policy Dimensions. Natural Resource Perspectives (ODI) 78, May 2002. Davids, N. (2010). Blikkiesdorp: It’s a Concentration Camp’ Times live. 19 April 2010 [Online] Available at: [Accessed 6-03-2014]. ESSET: Ecumenical Services for Socio-Economic Transformation. 2010. Media Statement: Grave Concern about Looming Strings of Informal Traders Evictions. 3 March 2010 [Online] Available at: [Accessed 20-03-2014]. Evans, S. (2013). ‘Convenient’ to Remove Lawful Traders in Op Clean Sweep. Mail & Guardian 5 December 2013 [Online] Available at: [Accessed 20-03-2014]. Fainstein, S.S. (1997). The Egalitarian City: The Restructuring of Amsterdam. International Planning Studies 2(3): 295-315.

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ANNEKE MULLER Fainstein, S.S. (2006). Planning and the Just City. Conference on Searching for the Just City, GSAPP, Columbia University, 29 April 2006. Fainstein, S.S. (2010). The Just City. Ithaca: Cornell University Press. Fernandes, E. (2007). Constructing the ‘Right to the City’ in Brazil. Social and Legal Studies 16: 201-221. Fung, A. & Olin Wright, E. (2003). Deepening Democracy: Institutional Innovations in Empowered Participatory Governance. London: Verso Books. Gaventa, J. (2006a). Finding the Spaces for Change: A Power Analysis. IDS Bulletin 37(6): 23-33 [Online] Available at: [Accessed 6-03-2014]. Gaventa, J. (2006b). Truimph, Deficit or Contestation? Deepening the ‘Deepening Democracy’ Debate, Institute of Development Studies (IDS) Working Paper 264. Brighton, UK: IDS, University of Sussex. Goldsmith, W.W. & Va´ıner, C.B. (2001). Participatory Budgeting and Power Politics in Porto Alegre. Land Lines 13(1), January 2001. GGLN: Good Governance Learning Network (2011). Recognising Community Voice and Dissatisfaction: A Civil Society Perspective on Local Government in South Africa. Cape Town: GGLN. Görgens, T. & van Donk, M. (2012). Exploring the Potential of the ‘Right to the City’ to Integrate the Vision and Practice of Civil Society in the Struggle for the Socio-Spatial Transformation of South African Cities. Paper presented at ‘Strategies to Overcome Poverty & Inequality: Towards Carnegie III’, 3-7 September 2012. Harvey, D. (2008). The Right to the City. New Left Review 53, September/October: 23-40. Healey, P. (1992). Planning through Debate: The Communicative Turn in Planning Theory, The Town Planning Review 63(2) April: 143-162. Ho, K. (2007). Structural Violence as Human Rights Violation. Essex Human Rights Review 4(2), September: 1-17.

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Hromnik, J. (2009). No Temporary Solution. The Business Day Weekender, 14 March 2009 [Online] Available at: [Accessed 6-03-2014]. Huchzermeyer, M. (2009). Does Recent Litigation Bring Us Any Closer to a Right to the City?’ University of Johannesburg Workshop on ‘Intellectuals, ideology, protests and civil society’, [Online] Available at: [Accessed 6-03-2014]. Ibhawoh, B. (2011). The Right to Development: The Politics and Polemics of Power and Resistance. Human Rights Quarterly 33(1), February: 76-104. Johnston, S. & Bernstein, A. (eds) (2007). Voices of Anger: Protest and Conflict in Two Municipalities. April 2007. Johannesburg: The Centre for Development and Enterprise. Marcuse, P. (2009a). From Critical Urban Theory to the Right to the City. City: Analysis of Urban Trends, Culture, Theory, Policy, Action (Special issue: Cities for People, not for Profit) 13(2-3): 185-197. Marcuse, P. (2009b). Spatial Justice: Derivative but Causal of Social Injustice, Spatial Justice no. 1, September 2009 [Online] Available at: [Accessed 11-04-2010]. Muller, A. (2006). Sustainability and Sustainable Development as the Making of Connections: Lessons for Integrated Development Planning in South Africa, published in Cullinan, M., Madell, C. and Watson, V. (eds) (2006). Proceedings of the Planning Africa 2006 Conference. NPC: National Planning Commission (2011). Diagnostic Overview [Online] Available at: [Accessed 6-03-2014]. NPC (2012). National Development Plan: Vision 2030 [Online] Available at: [Accessed 6-03-2014]. Ndifuna Ukwazi (Dare to know) (2014). Our Struggle for Safety and Justice in Khayelitsha: The O’Regan-Pikoli Commission of Inquiry into policing in Khayelitsha. January 2014. With support from Equal Education, Social Justice Coalition, Triangle project; TAC and the Henrich Böll Stiftung.

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ANNEKE MULLER News24 (2013). ANC Has Abandoned the Freedom Charter-Numsa, 20-12-2013 [Online] Available at: [Accessed 6-03-2014]. Ngubane, S. (2013). Bead Traders Evicted for Permit Violation. IOL news 15 July 2013 [Online] Available at: [Accessed 20-03-2014]. Nicholas, J. (2014). Terug, maar vir hoe lank? Eikestadnuus 23 Januarie: 1. Nthai, S.A. (1998). A Bill of Rights for South Africa: An Historical Overview, Consultus, November [Online] Available at: [Accessed 20-03-2014]. Pienaar, J. & Muller, A. (1999). The Impact of the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998 on Homelessness and Unlawful Occupation within the Present Statutory Framework. Stellenbosch Law Review 10(3): 370-396. Purcell, M. (2002). Excavating Lefebvre: The Right to the City and Its Urban Politics of the Inhabitant. GeoJournal 58: 99-108. Rabkin, F. (2013). Evicted Johannesburg Traders Can Return to Inner City, Court Rules. Business Day, 5 December 2013 [Online] Available at: [Accessed 20-03-2014]. Roithmayr, D. (2011). Lessons from Mazibuko: Persistent Inequality and the Commons. Constitutional Court Review, 1 [Online] Available at: [Accessed 5-032014]. Sager, T. (2013). Reviving Critical Planning Theory: Dealing with Pressure, Neo-Liberalism, and Responsibility in Communicative Planning. RTPI Library Series, London: Routledge. Selmeczi, A. (2012). “We Are the People Who Do Not Count”: Thinking the Disruption of the Biopolitics of Abandonment. Doctoral Thesis, Doctoral School of Political Science, Public Policy and International Relations, Central European University, Budapest, Hungary [Online] Available at: [Accessed 2-12-2012].

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Social Justice Coalition (2012). 2011: The Year of the Toilet. The Toilet Paper, The Official Newspaper of the Social Justice Coalition 1, January. Social Justice Coalition (2013). City Failing Poor on Sanitation. The Toilet Paper, The Official Newspaper of the Social Justice Coalition 3, June. Soja, E.W. (2009). The City and Spatial Justice. Spatial Justice no 1, September [Online] Available at: [Accessed 11-04-2010]. Soja, E.W. (2010). Seeking Spatial Justice. Minneapolis: University of Minnesota Press. SAHRC: South African Human Rights Commission (2014). Water and Sanitation, Life and Dignity: Accountability to the People Who Are Poor: Findings and Recommendations [Online] Available at: [Accessed 15-03-2014]. StatsSA: Statistics South Africa (2011). Census 2011: Census in brief [Online] Available at:

[Accessed 6-03-2014]. Swilling, M. & Annecke, E. (2012). Just Transitions: Explorations of Sustainability in an Unfair World. Cape Town: UCT Press. Turok, I. (2010). South Africa’s Challenge of Shared Prosperity, Local Economy 25(4): 265-268. Turok, I. (2011). Persistent Polarisation Post-Apartheid? Progress towards Urban Integration in Cape Town. Urban Studies 38(13): 2349-2377. Turok, I. (2013). Transforming South Africa’s Divided Cities: Can Devolution Help? International Planning Studies 18(2): 168-187. Uitermark, J. (2009). An in Memoriam for the Just City of Amsterdam. City 13(2-3), June-September: 348-361. UN: United Nations (2012). The Future We Want. Resolution 66/288 adopted by the General Assembly on 27 July 2012 [Online] Available at: [Accessed 6-03-2014].

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ANNEKE MULLER UN (2013). Human Development Report 2013: The Rise of the South: Human Progress in a Diverse World [Online] Available at: [Accessed 6-03-2014]. UNESCO: United Nations Educational, Scientific and Cultural Organization (Undated). Most Clearing House Best Practices: The Experience of the Participative Budget in Porto Alegre, Brazil [Online] Available at: [Accessed 12-05-2011]. UNESCO (2006). International Public Debates: Urban Policies and the Right to the City. Paris: United Nations Educational, Scientific and Cultural Organization (UNESCO) & UN-Habitat. UNESCO (2011). Urban Policies and the Right to the City in India: Rights, Responsibilities and Citizenship, November, New Delhi: UNESCO. UN-Habitat: United Nations Human Settlement Programme (2010). State of the World’s Cities 2010/2011: Bridging the Urban Divide [Online] Available at: [Accessed 6-03-2014]. UN-SDSN: United Nations Sustainable Development Solutions Network (2013). An Action Agenda for Sustainable Development. Report for the UN Secretary General [Online] Available at: [Accessed 6-03-2014]. Uvin, P. (2007). From the Right to Development to the Rights-Based Approach: How ‘Human Rights’ Entered Development. Development in Practice 17(4-5): 597-606. Vasak, K. (1977). A 30-Year Struggle: The Sustained Efforts to Give Force of Law to the Universal Declaration of Human Rights, The UNESCO Courier, November [Online] Available at: [Accessed 6-03-2014]. Von Holdt, K., Langa, M., Molapo, S., Mogapi, N., Ngubeni, K., Dlamini, J. & Kirsten, A. (2011). The Smoke That Calls: Insurgent Citizenship, Collective Violence and the Struggle for a Place in the New South Africa. Eight case studies of community protest and xenophobic violence, July. Centre for the Study of Violence and Reconciliation & Society, Work and Development Institute, Johannesburg: University of Witwatersrand.

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Walker, A.P.P. (2013). Embodied Identity and Political Participation: Squatters’ Engagement in the Participatory Budget in Brazil, Ethos 41(2): 199-222. Watson, V. (2009). The Planned City Sweeps the Poor Away: Urban Planning and 21st Century Urbanisation. Progress in Planning 72: 151-193. World Bank (2003). Case Study 2 – Porto Alegre, Brazil: Participatory Approaches in Budgeting and Public Expenditure Management. Social Development Notes no 71. March [Online] Available at: [Accessed 6-03-2014]. World Bank (2013). Data: Gini Index [Online] Available at: [Accessed 6-03-2014]. World Social Forum (2005). The World Charter for the Right to the City [Online] Available at: [Accessed 5-03-2014]. LAWS

AND

POLICIES

COGTA: Department of Cooperative Governance & Traditional Affairs (2014). Integrated Urban Development Framework: Draft for Discussion. September [Online] Available at: [Accessed 20 March 2014]. DWAF: Department of Water Affairs & Forestry (2001). White Paper on Basic Household Sanitation [Online] Available at: [Accessed 20 March 2014]. DWAF (2002). Free Basic Water Implementation Strategy of 2002 [Online] Available at: [Accessed 20 March 2014]. National Department of Housing (2004). National Housing Programme: Upgrading of Informal Settlements. October 2004 (Final version).

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ANNEKE MULLER National Department of Human Settlements (2009). The National Housing Code: Incremental interventions: Volume 4 Part 3 Upgrading Informal Settlement [Online] Available at: [Accessed 20-03-2014]. RSA: Republic of South Africa (1991) Less Formal Township Establishment Act (LeFTEA) 113 of 1991. RSA (1995). Development Facilitation Act (DFA) 67 of 1995. RSA (1996). Constitution of the Republic of South Africa of 1996. RSA (1997). Water Services Act 108 of 1997. RSA (1998). Prevention of Illegal Eviction and Unlawful Occupation of Land Act (PIE) 19 of 1998. RSA (1998). National Water Act 36 of 1998. RSA (2002). Minerals and Petroleum Resources Development Act 28 of 2002. RSA (2013). Spatial Planning and Land Use Management Act 16 of 2013. COURT CASES Mazibuko and Others v City of Johannesburg and Others (CCT 39/09) [2009] ZACC 28; 2010 (3) BCLR 239 (CC); 2010 (4) SA 1 (CC) (8 October 2009) [Online] Available at: [Accessed 20-03-2014]. Nokotyana and Others v Ekurhuleni Metropolitan Municipality and Others (CCT 31/09) [2009] ZACC 33; 2010 (4) BCLR 312 (CC) (19 November 2009) [Online] Available at: [Accessed 20-03-2014].

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Residents of Joe Slovo Community, Western Cape v Thubelisha Homes and Others (CCT 22/08) [2009] ZACC 16; 2009 (9) BCLR 847 (CC); 2010 (3) SA 454 (CC) (10 June 2009) [Online] Available at: [Accessed 20-032014]. Residents of Joe Slovo Community, Western Cape v Thubelisha Homes and Others (CCT 22/08) [2011] ZACC 8; 2011 (7) BCLR 723 (CC) (31 March 2011) [Online] Available at: [Accessed 20-03-2014].

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THE NATIONAL DEVELOPMENT PLAN

AND

CORRUPTION: THE SIGNIFICANCE OF

INNOVATIVE LEADERSHIP

Pregala Pillay and Evangelos Mantzaris

ABSTRACT The article begins with the assertion that the National Development Plan and its relevant chapters could be useful in the fight against corruption in South Africa as its research and recommendations show a clear understanding of the phenomenon and its dire repercussions. The article seeks to identify and explore the relations between organizational culture, leadership and the innovation climate in the various institutions fighting corruption. Within this context, the connections between innovative leadership and the fight against corruption are examined. The article argues among other things that there cannot be innovation without collective leadership that is instrumental in solving the political/ administrative conundrum, which has been one of the foundations of corrupt practices in the South African public sector. It is shown that the constitutional dictates of the three layers of government can better be served by a leadership, where the individual leader is obligated to cooperate, and synergize actions through the existing networks that are key to effective service delivery. Such actions are shared among different role players and common, negotiated and agreed upon strategic, tactical and operational imperatives, where the artificial separation between managers and leaders is transformed into an attitude and a ‘way of life’. It is concluded that in this process of transformation, collective leadership enhances collective vision, strategies and tactics that lead to well-motivated and inspired actions at all organizational levels. Such a collective innovative leadership can become the epicentre of the struggle against power relations and authority, the foundations of corrupt practices.

3.1

INTRODUCTION

The erosive effect of corruption has seriously dented the public confidence in the South African government and its political leadership. Senior government figures, including the

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President, have acknowledged that the fight against corruption is of paramount importance. The article will seek to establish the connections between organizational culture, leadership and the innovation climate in the various institutions fighting corruption. Within this context, the innovation climate, which underlines the degree of support and encouragement an organization provides to its employees to take initiative and explore innovative approaches in fighting corruption and the role of innovative leadership in this process, will be examined. While it is assumed that accountable governance requires leadership, the question remains whether transformative and competent institutions can be developed and sustained without the appropriate innovation climate that can only flourish with leadership that is devoted and dedicated, capable and committed, and self-sacrificial and not selfserving.

3.2

THE NATIONAL DEVELOPMENT PLAN

ON

CORRUPTION

The National Planning Commission, appointed by the President of the South African Republic and comprising of a wide spectrum of experts in various fields in South African academia and intelligentsia published its report on the 15th of November 2011. Chapter 14 of the National Development Plan (NDP) entitled “Promoting Accountability and Fighting Corruption” states the following: As the Diagnostic Report of the National Planning Commission notes, poor governance can fatally undermine national development. Evidence gathered by the commission indicates that South Africa suffers from high-levels of corruption that undermine the rule of law and hinder the state’s ability to effect development and socioeconomic transformation. The performance of state systems of accountability has been uneven enabling corruption to thrive. Corruption is not specific to the public sector; the private sector has been tolerant of and engages in corrupt practices. Although the entire country is harmed by corruption, the costs fall most heavily on the poor through the impact on the quality and accessibility of public services. Overcoming the twin challenges of corruption and lack of accountability in our society requires a resilient system consisting of political will, sound

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CORRUPTION: THE SIGNIFICANCE OF INNOVATIVE LEADERSHIP

institutions, a solid legal foundation and an active citizenry that is empowered to hold public officials accountable. In order for Vision 2030 to be realized, the Planning Commission has singled out four focus areas in which policies should be implemented in order for the public service to achieve an accountable state and zero-tolerance of corruption: The creation of a resilient anti-corruption system that can operate freely from political interference and is supported by both public officials and citizens. In this system the designated agencies have the capability and resources to investigate cases of corruption; leaders take action when problems are brought to their attention; citizens resist the temptation to pay bribes because they recognise that their individual actions contribute to a bigger problem; the private sector does not engage in corrupt practices, and the media fulfils its investigative and reporting function to expose corruption in the public and private sector. Accountability and responsibility of public servants means that they should be made legally accountable as individuals for their actions, particularly in matters involving public resources. The creation of an open, responsive and accountable public service means that state information, including details of procurement, should be made openly available to the citizens. Furthermore, an information regulator should be established to adjudicate appeals when access to information is denied.

*

*

*

The strengthening of judicial governance and the rule of law requires the implementation of clear criteria for the appointment of judges and scale up upgrade judicial training in order to improve the quality of judges. Of the above recommendations and of great importance to their implementation are that designated agencies should have the capability and resources to investigate cases of corruption and that leaders take action when problems are brought to their attention. This recommendation clearly indicates that the building and maintenance of a resilient anti-corruption system have to be based on the independence of anti-corruption agencies from the Executive. For an agency to be able to be resilient, sustainable, efficient and effective, there is the necessity for it to be independent from the Executive. The Commission’s emphasis on strengthening the anti-corruption system is based on the assumption that it requires sufficient staff and resources with specific knowledge and skills, special legislative powers, high-level information sharing and co-ordination, and operational independence. Independence entails insulating institutions from political pressure and interference. It is stated in the NDP that a single agency approach is less

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resilient in this respect because if the lone anti-corruption body faces political capture, the independence of the entire system is compromised. There is a belief that a multiplicity of agencies provides checks and balances that are essential in the South African context and develops a systemic resilience against interference. Strengthening the anti-corruption system requires increasing the specialist resources of anti-corruption agencies, improving coordination and cooperation between agencies and ensuring that the independence of each of the agencies is maintained. There should be greater emphasis on preventing corruption through public education drives. This should cover how it affects the delivery of services essential to citizen’s daily lives and the mechanisms through which cases of corruption can be reported. One of the key conclusions of the NDP pinpoints that: No effort to tackle corruption can succeed without political will and support for anti- corruption agencies. Political will refers to more than public statements of support, and includes a commitment to acting on that support by providing sufficient resources and taking action against corrupt officials. Political parties must strive to maintain a high- level of ethical conduct amongst their members. Political leaders must remain conscious of the impact of their behaviour on the honour and integrity of the political office they hold. There are some key concepts and meanings that need both legal and practical scrutiny with regard to this statement. The first is that an effective, efficient and decisive anticorruption agency must have special legislative powers. Most importantly, it should have “operational independence.” The Report categorically states that independence entails insulating institutions from political pressure and interference (National Development Plan, 2011).

3.3

ORGANIZATIONAL CULTURE

Despite variations in definitions and understanding of the concept of operationalization and application of organizational culture, it is generally agreed that it is the amalgam of human behaviour, adaptation and integration, relations with authority, values, visions, norms, systems, symbols, beliefs and habits. It is also the relationship of the individual with the collective, internal and external realities and challenges facing an organization (Schein, 2009).

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Organization cultures differ in content, essence, appearance and outcomes, and they are shaped by the uniqueness of internal and external factors which organizationally and principally represent the collective values, beliefs and principles of organisational members (Kotter, 1992; Schein, 2009). Within a specific organization, the existing many levels of culture determine to a large extent individual and collective behaviour. History, tradition, ideology and political realities lead to the shaping up of organizational cultures internationally and the core values, assumptions, interpretations and approaches that characterize organisations. The widely accepted four dominant culture types – hierarchy (internally focussed and controlled), market (externally focussed and controlled), clan (internally focussed and flexible) and adhocracy (externally focussed and flexible) – still dominate international literature and those who do not adopt a dominant culture type either tend to be unclear about their culture or emphasize the four different cultural types (Weber, 1947; McGregor, 1960; Argyris, 1964; Likert, 1970; Williamson, 1975; Pascale & Athos, 198; Cameron & Quinn, 1999).

3.4

LEADERSHIP, ORGANIZATIONAL CULTURE INNOVATIVE CLIMATE

AND THE

CREATION

OF

There is no doubt that a strong relationship between organizational culture and leadership in organizations is a key issue for success (Kotter, 1998; Schein, 2009). It has been shown by a number of authors that leaders who inspired and helped create adaptive cultures possessed the qualities of transformational leadership (Parry, 2002; King, 1990; Osborne, 1998). Leaders could promote an innovative culture, be product champions or innovators and create an organizational structure that promotes and supports innovativeness (Schin & McClomb, 1998; Schein, 2009). At an earlier effort (Mantzaris, 2014), an exploration of theories and empirical research showed that building a climate for innovation through transformational leadership and organizational culture could have an immensely positive effect on organizational culture. This is achieved through the encouragement of flexibility, adaptation, cooperation and innovation. This presupposes an environment where leaders shape the nature and success of creative efforts and the development of a workable leadership style based on fearlessness, creativity and collaboration. Such innovative leaders are confident in risk taking, engendering innovative approaches that inspire competence and motivation and commitment, justice, loyalty trust and ultimately integrity among the staff in respect of the values of the institution.

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In such an organizational climate, leaders set challenging goals but ones which are attainable. Leaders attempt to motivate employees by clearly articulating an appealing vision of the organization’s mission and future. As Mumford and Licuanan (2004) have written, intellectual stimulation encourages creative thinking, risk taking, participation at an intellectual level and followers challenging their own assumptions. It has been said, thus, that organizational culture is instrumental in innovation in the workplace through creativity and transformational leadership (Du Brin, 2010: 2-5).

3.5

THE NDP

AND THE

SOUTH AFRICAN CIVIL SERVICE

The NDP identifies key foundations in the fight against corruption where a resilient system consisting of political will, sound institutions, a solid legal foundation and an active citizenry is empowered to hold public officials accountable. The insulation of institutions from political pressure and interference is sine qua non in the fight against corruption. Although the word leadership or innovative leadership for that matter do not appear in this section of the NDP document, its spectre is present. The South African public service system in both content and essence is based on Weber’s characteristics of a well-structured bureaucracy (Weber, 1947) (rules, specialization, meritocracy, hierarchy, impersonality and accountability). They were and are still adopted widely in organizations whose major challenges were to establish efficient, reliable, smooth-flowing, predictable output. The organizational culture compatible with this form is characterized by a highly formalized and structured place to work. Within this system, the essence of effective leadership is confined to solid coordination and organization leading to the cementing of a well-running organization. Within this process, the longterm concerns of the organization are stability, predictability and efficiency, which are paramount. Formal rules and policies hold the organization together. New employees begin by performing only one specific function (Cameron & Quinn, 1999). The typical organizational bureaucratic model described above, despite the efforts of the public management leadership in the country through the adoption and implementation of the New Public Management, has been used and abused as leverage for corrupt activities throughout the public sector layers for a number of reasons: Rules exist but have been violated through all layers of the public system. Specialization is a scarce commodity as will be outlined in the following sentences. * *

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3

*

*

*

*

THE NATIONAL DEVELOPMENT PLAN

AND

CORRUPTION: THE SIGNIFICANCE OF INNOVATIVE LEADERSHIP

Meritocracy has been a sacrificial lamb in the sphere of the political/administrative conundrum. Hierarchy means very little within the confusing state of the lack of political will both within the administrative and political spheres. Impersonality has been diluted in the murky waters of personal enrichment throughout the administrative and political hierarchy. Accountability has been questionable at all strategic and operational levels of the public service.

The adherence to a number of the Weberian characteristics of an efficient bureaucracy was spent when new research revealed that fewer than half of the country’s municipal managers and their municipalities’ chief financial officers have the required skills to execute their jobs. In terms of the regulatory standards, municipal managers should have a relevant Bachelor’s degree, a certificate in municipal finance management and five years’ experience at senior management level. Chief Financial Officers (CFOs) and directors in metropolitan municipalities should have an honours degree, have a postgraduate certificate or be registered as a chartered accountant and with seven years of senior management experience. Their counterparts in smaller municipalities should have a relevant bachelor’s degree and a certificate in municipal finance. A poll of municipalities that took place in six provinces by the City Press newspaper has revealed that only 40% of municipal managers and 34% of their CFOs have met the finance minister’s deadline to acquire the appropriate qualifications. Officials working in 164 municipalities in the Western Cape, Free State, Mpumalanga, Gauteng, Northern Cape and Eastern Cape participated, while the Limpopo, North West and KwaZulu-Natal cooperative governance departments refused to cooperate. The research revealed that only 66 municipal managers and 57 CFOs complied with the Treasury’s minimum competency levels which were published in 2007. Although they were given a deadline of January 2013 to comply or face losing their jobs, to date, many have still not complied. This reality points to a number of serious questions that need answers: While a policy is in place, is there a political will to implement it? Are these regulations treated as an urgent priority? Does the non-compliance bear political and administrative responsibility? Does it lead to regulatory consequences? Is there pressure for officials to perform? * * * * *

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Can effective, efficient and sustainable service delivery exist when municipal officials are not properly trained and equipped?

As an answer to these questions, the research revealed that out of Mpumalanga’s 21 municipalities, only Mbombela’s municipal manager has the required qualifications. He had a law degree and a project management qualification. Only two of the province’s CFOs – employed in the Chief Albert Luthuli and Lekwa municipalities – met the standard. In the Free State, all 24 managers and CFOs were not compliant by the deadline. Treasury extended the deadline for the senior officials to obtain the minimum qualifications within 18 months after consulting with the cooperative governance department. 269 of the country’s 278 municipalities had applied, and the Department granted an extension. The Cooperative Governance Department believed that they had “demonstrated that they had taken reasonable steps towards compliance, including having officials registering for relevant training.” However, they needed more time to complete their courses (Treasury regulations were promulgated seven years ago). These developments point to the undoubted fact that the Treasury has made compromises on the deadline. Hence, what has been tolerated over the years is the continued employ in key financial management and supply chain management positions of persons who do not have relevant skills or experience and who have made no effort to address the problem. A senior official of the South African Local Government Association (SALGA) defended the officials, saying that a failure to complete courses did not mean they were incompetent. He said: A strict interpretation of the regulations provides that no person may be employed if the [courses] are not completed. However, Treasury allows managers to inform [it] of appointees not complying when appointed and submitting a plan on how it would be achieved. [SALGA] supports the principle of professionalisation of local government. In one ‘extreme case,’ the research revealed that a Northern Cape municipal manager occupied his job with a grade 9 education. The appointment occurred in 2011; four years after, the Treasury issued the regulations that council senior officials at least have a degree. The official earns R950,000 a year and manages a R205 million annual budget. The latest Auditor-General report into local government finances revealed that this municipality’s books were in shambles and it was scathing about the frequent violation

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of tender procedure, and the unavailability of documents to prove what was spent. It was shown that the municipality’s financial stability was ‘under threat’ as revenue was not collected and the budget was overspent by R24.8 million (City Press, 2014). It can be understood that these are the senior officials who are expected to provide innovative leadership to their municipalities and be instrumental in fighting against corruption perpetrated by dishonest, greedy, compulsive, materialist, manipulative and unethical individuals, groups or companies. They take advantage of the lack of leadership, which is, in most cases, the root cause of corruption based on a deep feeling of entitlement for illegal actions based on circumstances created by political or administrative opportunism, organizational mismanagement, mutually corrupt relationships, lack of skills and a capable and innovative organization. These realities increase the opportunities and temptation that breed and expand corrupt practices and galvanize temptations and mind-sets leading to “white collar crime,” irrespective of its foundation (greed, need, want, material gratification, unfulfilled aspirations, knowledge of impunity or their combinations thereof). The ethical and innovative leadership ‘gap’ creates on many occasions a multitude of self-enrichment type opportunities presenting themselves to public sector officials, either through their own ‘entrepreneurial’ activities or through intermediaries, family connections, third persons and the like . It can be evident that the absence of a capable state and innovative leadership with an abundance of the prerequisite competencies make such opportunities for corruption an inevitability. Power relations and authority devoid of ethics increase the possibilities and opportunities for corrupt practices that take advantage of existing weak systems. The fundamental key elements identified in the NDP, in short, a resilient system consisting of political will, sound institutions, a solid legal foundation and an active citizenry that is empowered to hold public officials accountable, either do not exist or are dysfunctional with the possible exception of the legal aspect where section 9 institutions have shown their mettle. The insulation of institutions from political pressure and interference sine qua non in the fight against corruption has been a pipe-dream with notable exceptions. The key question arising then is what is the way forward in supplementing and cementing the NDP’s vision?

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THE CRUCIAL ROLE

OF

COLLECTIVE LEADERSHIP

There cannot be innovation in collective leadership without solving the political/administration conundrum. As has been shown elsewhere (Mantzaris & Pillay, 2014), the lack of building a common integrity in a coordinated and synergetic war room against corruption based on new innovative thinking, knowledge, strategies and comprehensive initiatives among administrators and politicians will never reverse corruption’s proliferation. Hence, the first step towards innovative leadership against corruption is the collective political will among elected leaders and their administrative counterparts. The seminal State of Local Government in South Africa: An Overview Report (DPSA, 2009) was an honest examination of the achievements, weaknesses and challenges facing South Africa’s local government. It pinpointed that problems within the political administrative interface were instrumental in perpetrating corruption and fraud, poor financial management and insufficient municipal capacity. Although the South African laws, rules and regulations can be described as rigid, it is high time that leadership in the public sector should not be viewed monolithically and the various ramifications of leadership, especially an innovative variety, need to be explored in a different context on the basis of the different missions, organizational structures, accountability mechanisms, constraints or opportunities. The laws, rules and regulations in South Africa prescribe a hierarchical (top-down) view of leadership. Hence, within the ambit of the current modernization of public functions within the context of New Public Management, the notions of outputs, efficiency and effectiveness have become the sine qua non of management and thus point to an immediate need for a better understanding of the practice of leadership in the public sphere. In this sense, the role of an individual leader within a group becomes a problem of an individual versus the collective will (Alban-Metcalfe & Alimo-Metcalfe, 2007; Van Wart, 2003). The constitutional dictates of the three layers of government, thus, can better be served through leadership in the collective sense, where the individual leader is obligate to network, cooperate and synergize his/her actions through the existing networks that are key to effective service delivery that is shared among different role players and common, negotiated and agreed upon strategic, tactical and operational imperatives (Yukl, 2010; Charan, 2006).

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Under such circumstances, the separation between managers and leaders becomes artificial, as leadership becomes an attitude and a ‘way of life’ and where ‘transactional leadership’ is through planning and action transformed into a ‘transformational leadership’, synonymous with innovation (Yukl, 2010). In this process, the individual dimension of the leader does not only relate to the operational level while the collective is transformed into a social practice of a more complex level. Within the collective/innovative milieu, the transformational/innovative leader bases all key decisions in respect to service delivery to close collaboration with his/her co-leaders (heads of departments/sections) who have the expertise and knowledge to identify the existing challenges within their respective units, including corruption issues. It is such collective leadership that cements and maintains higher levels of motivation and commitment within a working environment and strengthens human and professional relationships. In the process, collective learning, achievement and individual development take place, and an organization culture of trust in the workplace is enhanced (Mullins, 2007; Harms & Crede, 2010:6-8). Collective leadership enhances collective vision, strategies and tactics that lead to wellmotivated and inspired actions (Yukl, 2010) as well as knowledge expansion, calculated and well-planned and implemented risk taking, creativity and collaborative endeavours. The expansion of leadership from the top to ‘middle management’ leads to clarification of goals and objectives of the organization and the interaction between supervisors and subordinates. The diversification of backgrounds and ideas cements and expands the levels of creating thinking (Harms & Crede, 2010:9-11). In such a process, personal development is elevated to a collective one, a complementary endeavour in managing situations and a position contradicting the dominance of a dyadic and hierarchical vision in the public sector (Gronn, 2008; Hiller Day & Vance, 2006). A collective vision is based on the premise that several leaders exercising different levels of leadership are called upon to intervene on the basis of their position of power or influence to provide effective leadership, so that the situation or the problem can be successfully managed (Raelin, 2005). The empirical section identifying the major gaps in top municipal leadership in South Africa presented above indicates that both the professionalization of the public services in South Africa and the attainment of a capable state demand that an individual leadership

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development is of crucial importance. However, such a development needs to be based on the knowledge of the principle that public sector leaders have limited control (Mantzaris & Pillay, 2014); they coexist collectively and in a dependent and independent manner and they are accountable to their communities first and foremost (Svara, 1999; 2010). Given the fact that corruption takes place within both the administrative and political spheres of government and is principally based on the foundation of power relations and authority, collective leadership can be a catalyst in the existing tensions between the political and administrative interface, the insufficient separation of powers between the parties and the inadequate accountability measures and support systems and resources of the affected parties. This does not mean that the political and administrative responsibilities will replace each other; these two levels of action are consubstantial and reciprocal (Svara, 1999; 2006), as one needs the other to function, especially at the strategic and planning levels. The scourge of corruption is rooted on the fact that in most occasions, especially in South Africa, political leaders exercise power for personal purposes and thus come into conflict with administrators. In the case where administrators happen to hold high political office in the ruling party, then the conflict over the material benefits increases. The eternal Machiavellian truth that states that he who is the Prince and he who is the servant becomes antithetical to a capable state and the fight against corruption. The personal materialist interests become the first and foremost ‘terrains of struggle’. The collective leadership model leading to innovative leadership is capable of replacing the Machiavellian separation of Prince and servant, the egoistic view of leadership, thus leading to an ethical demand of putting the peoples’ interest over individual interests. The divisions between elected politicians and the career bureaucrats who advise them become obsolete. The key element of a collective innovative leadership internationally and especially in South Africa is the creation of an organizational culture based on the development of ethical and legal sensitivity. In this sense, the Weberian hierarchical culture that leads to tensions between organizational and individual interests and ultimately results in ethical and legal problems for practitioners will be replaced by the collective political will. Employee integrity, control, equitable treatment and job security (Cummings & Worley, 2004), together with the elements already identified earlier, become weapons against corruption. A transformational/innovative organizational culture cannot be complete without an elaborate and well-planned assessment and evaluation process, conducted periodically

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to monitor the change progress and identify areas that need further development. In such a process, the leadership will be able to pinpoint hurdles to positive change and identify possibilities of resistance to it that can be rectified through a ‘revitalization’ of the project (Bligh, 2003). There cannot be a positive change of culture in the organizations without the mobilization of collective innovative leadership determined to challenge and defeat existing bureaucratic and individual-centred cultures. Only when cultural innovation within an organization becomes a reality, an extremely difficult task when compared to ‘cultural maintenance’, a collective leadership prevails as the ideal model for the future. This is because politicians and administrators in most occasions resist changes that negatively affect their personal materialist and corrupt interests (Black, 2003). Transformational and innovation leaderships are attitudes and attributes contradicting the deification of individualism and institutionalization of bureaucratic practices (Teuke, 2007), which occur in strongly or weakly developed organizational cultures within the South African public sector. Innovative public leadership as muted but not clearly spelt out in the NDP can only become a source of pride and, in some sense, a unique step forward.

3.7

CONCLUSION

The NDP that will undoubtedly set the tone for economic and social development in South Africa acknowledges the erosive effect of corruption on society, economics and policy in the country. Although it sets the context and provides a set of forward-looking steps aspiring to eradicate the scourge of corruption, its technical nature would probably not allow it to enter into socio-psychological or anthropological and organizational details. Hence, the present article puts forward an effort to establish the connections between organizational culture, leadership and the innovation climate in the various institutions fighting corruption. The NDP asserts that overcoming the twin challenges of corruption and lack of accountability in South Africa requires a resilient system consisting of political will, sound institutions, a solid legal foundation and an active citizenry that is empowered to hold public officials accountable.

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Within this context, the plan advocates the creation of a resilient anti-corruption system that can operate freely from political interference and is supported by both the public officials and the citizens, promotes accountability and responsibility of public servants, open information channels to the whole society and the strengthening of judicial governance. Within these parameters, a solid anti-corruption system has to be based on the independence of anti-corruption agencies from the executive and conscientious protection of whistleblowers. Sufficient staff and resources with specific knowledge and skills, special legislative powers, high-level information sharing and co-ordination and operational independence, which entail insulating institutions from political pressure and interference, are thus vital. So is political will to eliminate corruption. Following a brief conceptual analysis of organizational culture and its historical, social and political significance, the relationship between organizational culture and leadership in organizations was outlined with the emphasis on shaping the nature and success of creative efforts and the development of a workable leadership style based on fearlessness, creativity and collaboration. Under such leadership, corruption can be fought through risk taking, engendering innovative approaches inspiring competence and motivation and commitment, justice, loyalty trust and ultimately integrity and unity. The new empirical research presented in the article revealed that only 66 municipal managers and 57 CFOs from the municipalities in the six provinces complied with the Treasury’s minimum competency levels which were published in 2007 and only 40% of municipal managers and 34% of their CFOs met the Finance Minister’s deadline to acquire the appropriate qualifications. This is a confirmation that the road to a capable state and the fight against corruption is still very long and arduous one. Hence, the perpetration of corruption based on greed, need, want, material gratification and knowledge of impunity continues. The position adopted in this article states that there cannot be innovation in collective leadership without solving the political/administrative conundrum, which has been one of the foundations of corrupt practices in the South African public sector. This conundrum exists despite the fact that the South African laws, rules and regulations have been clear on the relationship among politicians and administrators as they prescribe a hierarchical view of leadership with emphasis on the dictates of the New Public Management.

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It has been proposed in the article that the constitutional dictates of the three layers of government can better be served through collective leadership, where the individual leader is obligated to cooperate, and synergize actions through the existing networks that are key to effective service delivery. Such actions are shared among different role players and common, negotiated and agreed upon strategic, tactical and operational imperatives, where the artificial separation between managers and leaders is transformed into an attitude and a ‘way of life’ and ‘transactional leadership’ is through planning and action transformed into a ‘transformational leadership’, synonymous with innovation. In this process of transformation, collective leadership enhances collective vision, strategies and tactics that lead to well-motivated and inspired actions at all organizational levels. Such a collective innovative leadership can become the epicentre of the struggle against power relations and authority, the foundations of corrupt practices. REFERENCES Alban-Metcalfe, J. & Alimo-Metcalfe, B. (2007). Development of a Private Sector Version of the (Engaging) Transformational Leadership Questionnaire. Leadership & Organization Development Journal, 28(2): 104-121. Argyris, C. (1964). Integrating the Individual and the Organisation. New York: Wiley. Black, R. J. (2003). Organizational Culture: Creating the Influence Needed for Strategic Success. London, England, ISBN 1-58112-211-X. Bligh, M. C. (2006). Surviving Post-merger ‘Culture Clash’: Can Cultural Leadership Lessen the Casualties? Leadership, 2: 395-426. Cameron, K. S. & Quinn, R. E. (1999). Diagnosing and Changing Organisational Culture: Based on the Competing Values Framework. Reading, England: Addison Wesley Longman. Charan, R. (2006). The Collective Leadership of Boards. Leader to Leader, 46: 38-40. Gronn, P. (2008). The Future of Leadership. Journal of Educational Administration, 46(2): 141-152.

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Mbanjwa, X. & Yende, S. S. (2014, February 23). Officials Miss the Mark. City Press, p. 8. Cummings, T. G. & Worley, C. G. (2004). Organization Development and Change, 8th Ed., Boston, US: South-Western College Publications. Deal, T. E. & Kennedy, A. A. (1982, 2000). Corporate Cultures: the Rites and Rituals of Corporate Life. Harmondsworth, Penguin Books; Reissue New York, US: Perseus Books. DPSA (Department of Cooperative Governance and Traditional Affairs). (2009). State of Local Government in South Africa. Overall Report National State of Local Government Assessments. Pretoria: Working Documents. DuBrin, A. J. (2010). Principles of Leadership, 6th Ed., Boston, US: Cengage Learning. Harms, P. D. & Crede, M. (2010). Emotional Intelligence and Transformational and Transactional Leadership: A Meta-Analysis. Journal of Leadership & Organisational Studies, 17(1): 5-17. Hartnell, C. A., Ou, A. Y. & Kinicki, A. (2011). Organizational Culture and Organizational Effectiveness: A Meta-Analytic Investigation of the Competing Values Framework’s Theoretical Suppositions. Journal of Applied Psychology (online publication). Hiller, N. J., Day, D. V., & Vance, R. J. (2006). Collective Enactment of Leadership Roles and Team Effectiveness: A Field Study. The Leadership Quarterly, 17: 387-397. King, N. (1990). Modelling the Innovation Process: An Empirical Comparison of Approaches. Journal of Occupational and Organisational Psychology, 65(2): 89-101. Kotter, J. (1998). Cultures and Coalitions. In: Gibson, R. (ed.), Rethinking the Future; Rethinking Business, Principles, Competition, Control and Complexity, Leadership, Markets and the World. London, England: Nicholas Brearly Publishing Ltd. Likert, R. (1970). The Human Organisation. New York, US: Macmillan. Mantzaris, E. A. (2014). Innovative Leadership against Corruption: Can It Succeed in Africa? ACCERUS, University of Stellenbosch, February. McGregor, D. (1960). The Human Side of Enterprise. New York, US: McGraw Hill.

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Mullins, L. J. (2007), Management and Organisational Behaviour, 8th Ed. London, England: Financial Times Prentice Hall. Mumford, M. D. & Licuanan, B. (2004). Leading for Innovation: Conclusions, Issues and Directions. Leadership Quarterly, 15(1): 163-171. Mumford, M. D., Scott, G. M., Gaddis, B., & Strange, J. M. (2002). Leading Creative People: Orchestrating Expertise and Relationships. The Leadership Quarterly, 13: 705750. South African Government: National Development Plan. (2011). A National Vision for 2030. Pretoria: Government Printer. Osborne, S. P. (1998). Naming the Beast: Defining and Classifying Service Innovations in Social Policy. Human Relations, 51: 1133-1155. Parry, K. W. (2002). Leadership, Culture and Work Unit Performance in New Zealand. Paper presented, IFSAM Conference 2002, Gold Coast, Queensland, Australia. Pascale, R. & Athos, A. (1981). The Art of Japanese Management. New York, US: Simon and Schuster. Mantzaris, E. & Pillay, P. (2014). Navigating through the Political/Administration corruption Conundrum: South African Case Studies. African Journal of Public Leadership, 7(2): 17-26. Raelin, J. A. (2005). We the Leaders: In Order to Form a Leaderful Organization. Journal of Leadership and Organizational Studies, 12(2): 18-29. Schein, E. H. (2009). Organisational Culture and Leadership. Hoboken, US: Jossey Bass Publishers. Schin, J. & McClombe, G. E. (1998). Top Executive Leadership and Organisational Innovation: An Investigation of Nonprofit Human Service Organisations. Social Work Administration, 22(3): 1-21. Svara, J. H. (1998). The Politics-Administration Dichotomy Model as Aberration. Public Administration Review, 58(1): 51-58.

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Svara, J. H. (1999). Complementarity of Politics and Administration as a Legitimate Alternative to the Dichotomy Model. Administration and Society, 3(6): 676-705. Svara, J. H. (2001). The Myth of the Dichotomy: Complementarity of Politics and Administration in the Past and Future of Public Administration. Public Administration Review, 61(2): 176-183. Svara, J. H. (2006). Complexity in Political-Administrative Relations and the Limits of the Dichotomic Concept. Administrative Theory & Praxis, 28(1): 121-139. Teuke, M. R. (2007). Creating Culture of Innovation. Oracle, www.oracle.com/us/ corporate/profit/features/ p17andrew-143871.htm> (Assessed 13/1/2014). Van Wart, M. (2003). Public-Sector Leadership Theory: An assessment. Public Administration Review, 23: 214-228. Weber, M. (1947). The Theory of Social and Economic Reform. New York, US: Free Press. Williamson, O. (1975). Markets and Hierarchies, Analysis and Antitrust Implications: A Study in the Economics of Internal Organisation. New York, US: Free Press. Wright, B. E. & Pandey, S. K. (2010). Transformational Leadership in the Public Sector: Does Structure Matter? Journal of Public Administration Research and Theory, 20: 75-89. Yukl, G. (2010). Leadership in Organizations, 7th Ed. New Jersey, US: Pearson.

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TRANSDISCIPLINARY RESEARCH IN

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INNOVATION

INFORMAL SETTLEMENT UPGRADING

Lorraine Amollo Ambole

ABSTRACT Enkanini is an informal settlement in Stellenbosch town, South Africa, which faces the characteristic challenge of poor service provision. This means that inadequate sanitation remains the harsh reality for many Enkanini residents. The outcomes of inadequate sanitation are not only the immediate health risks for Enkanini residents but also the dire environmental consequences that stretch throughout the watershed beyond Enkanini. In recognition of this challenge, a research group from Stellenbosch University is testing a novel sanitation technology, with the intention of improving access to sanitation facilities in Enkanini informal settlement. The group has adopted a transdisciplinary (TD) approach that acknowledges the diverse knowledge sets necessary for the implementation of the sanitation technology. These diverse knowledge sets are represented in the group by the researchers, experts and community members who are working together in the sanitation project in Enkanini. The researchers and experts provide disciplinary knowledge based on their resources and expertise, while the community members offer the very practical and nondisciplinary knowledge about Enkanini, given their lived experience of the setting. The theoretical significance of transdisciplinarity is framed in this chapterr using a social innovation (SI) conceptual model that analyses the innovation process as it is carried out by the TD group. SI is seen as the intent of the TD group – that intent being to improve sanitation in Enkanini. The main contribution of this chapter is this gleaning out of the theoretical significance of a TD approach to upgrading, framed within a SI framework. The sanitation project, which provides the context for this chapter, was ongoing at the time of publication, and so, future changes to the project that cannot be fully captured in this chapter are anticipated as scenarios and recommendations, based on the findings of the current analysis.

4.1

INTRODUCTION

The aim of this chapter is to explore transdisciplinarity as an approach for innovative research in complex informal settlement contexts. Informal settlements in urban areas are

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LORRAINE AMOLLO AMBOLE viewed here as complex contexts due to the unplanned and nuanced nature of their development. Their complexity therefore calls for a research approach that can unravel the characteristic challenges of informality. Transdisciplinarity is presented as one such approach that can unravel informality because it recognizes and embraces complexity while seeking for transformative social change (Hirsch Hadorn et al., 2006; Swilling, 2012; Swilling & Annecke, 2012; Wiesmann et al., 2008). This chapter articulates this argument for transdisciplinarity by using an example of a transdisciplinary (TD) engagement in an actual informal settlement, where an ongoing sanitation project is being carried out through collaboration between researchers, experts and informal settlement dwellers in South Africa. The complexity of the sanitation project emanates from the need for multiple technological and social arrangements that are made even more complicated by the diversity of actors in the project. The specific focus on sanitation in an informal settlement context is in response to the serious inadequacy of functional sanitation systems in informal urban areas in Africa (Schouten & Mathenge, 2010; Eales, 2008). The numerous environmental, health and technical requirements of providing adequate sanitation in urban areas have proven to be unachievable for many African states, where the exponential growth of unplanned urban spaces has far outstripped the pace of sanitation infrastructure provision. On the occasion that sanitation is provided in an informal urban area, then the implemented technologies are often inappropriate or unsustainable (Isunju et al., 2011). Additionally, the large-scale centralized systems of sanitation that have been successful in Western countries since the industrial revolution have generally performed poorly in Sub-Saharan Africa because such systems are incongruent with the informal urbanization patterns in African countries (Oosterveer & Spaargaren, 2010; Nilsson, 2006). This chapter will draw attention to some of the technical and social challenges of providing adequate sanitation in informal urban contexts in Africa using Enkanini informal settlement as a case study. Enkanini is a settlement in Stellenbosch municipality in the Western Cape Province of South Africa. The responsibility of upgrading Enkanini lies with the municipality that has so far installed some basic infrastructure in the settlement. These are the 32 water taps, 80 toilets and a few waste skips, to service some 4204 residents (Enkanini/Kayamandi Household Enumeration report, 2012). Other claims provide much higher population figures for Enkanini: between 8,000 and 10,000 residents (Tavener-Smith, 2012:69). Improving the lives of Enkanini residents requires the provision of services through the upgrading of the settlement. In South Africa, such upgrading is presumably guided by

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the Upgrading of Informal Settlement Programme (UISP) of 2004. In this programme, the South African government had set itself the target to eradicate all informal settlements by 2014 (DOH, 2004), a target that is now far from viable given that informal settlements in South Africa have increased tenfold since 1994 (Donk, 2014). According to Huchzermeyer (2009), the eradication of informal settlements should not have been the government’s aim. Rather, it should have prepared itself for in situ upgrading of informal settlements in accordance with other recommendations in the UISP. In the UISP, the government proposes to engage in incremental interventions that can be done in situ, meaning that residents of informal settlements do not have to be relocated. Relocations are undesirable because they are difficult and expensive to realize (Huchzermeyer, 2009). Furthermore, Abbot (2000) says that in situ upgrading is generally recognized as a primary mechanism to improve the living conditions of informal settlement residents. Elsewhere, Abbot (2002) points out three ways in which in situ upgrading can be done, i.e., holistically, incrementally or through community participation. A holistic approach to upgrading is intensive and comprehensive as it includes the various needs of the settlement. An incremental approach, on the other hand, is stepwise and sector-based. It can thus take advantage of limited resources to improve living conditions gradually through infrastructure provision. The third option of engaging the community seeks to involve and empower informal settlement dwellers in the provision of or agitation for better living conditions. Abbot (2002) criticizes the incremental approach or incrementalism as he calls it, for having a sectoral focus that is not comprehensive. He favours the ‘plano-global holistic’ view to upgrading, where an intense, integrative methodology is adopted through a multiactor, multi-sectoral approach. The author argues well over the benefits of such a holistic approach but also points out that it is expensive and very involving (Abbot 2002). This chapter proposes a mixed upgrading approach that better explains the practical steps taken by researchers from the University of Stellenbosch, who are engaged in various projects in Enkanini. In these projects (on energy, waste and sanitation), the researchers adopted an incremental approach in planning for infrastructure that could be gradually upgraded and linked to conventional services (Swilling et al., 2013). The Ishack project1 exemplifies this approach, where retrofitting and upgrading of homes with solar power are modular, can easily be maintained and are designed to connect to electrical power if the national grid were to arrive in Enkanini. Similarly, the sanitation 1

See http://www.ishackproject.co.za.

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LORRAINE AMOLLO AMBOLE project reported here settled on an onsite sanitation system, into which more toilets could be added. Currently, the system consists of five pour-flush toilets connected via condominial sewerage (shallow, simplified piping) into an anaerobic digester. This would allow the system to respond to the growing acceptability of the new sanitation technology while taking advantage of future funding opportunities to upgrade the system. The ongoing projects in Enkanini have exhibited tangible measures of success, which may mask the difficulty of working with informality. Informality means that uncertainties and controversies are rife. Continued engagement in the volatile context of Enkanini therefore calls for flexibility and continuous innovation through a collaborative and transdisciplinary engagement. This need to continually innovate in Enkanini is explained in this chapter using social innovation (SI) as a lens, given the regard SI has for context and for social change. Realizing social change in informal settlement contexts like Enkanini call for alternatives to the dominant innovation paradigms that have not brought the much needed change for the poor. According to Ramani et al. (2011), mainstream innovations fail to meet the needs of the poor because they neglect the role that social and cultural contexts play in the decision-making of the poor. SI is therefore seen as a relevant discussion that can answer to the need for alternatives in the complex sociocultural environment of informality. For this chapter, SI is this presented as one method within an overarching transdisciplinary methodology.

4.2

METHOD

The Enkanini project offered an opportunity to study a single case study in great depth (Flyvbjerg, 2006; Yin, 2011). Such an in-depth study of a single case provided a nuanced view of the studied context on sanitation, resulting in rich qualitative learning about the complexities of informal settlement upgrading. By getting involved in the Enkanini project, the author obtained a rich and varied perspective of the case study as the implementation process of the sanitation was carried out. This variety is the insider/ outsider views that were gained by adopting an ‘auto-ethnographic’ lens. According to Pohl et al. (2010), an auto-ethnographic lens affords multiple perspectives to the researcher in a TD context, who both informs and is informed by the research process. For this study, the multiplicity of perspectives was captured as highly qualitative data through systematic observation of and participation in the Enkanini sanitation project. These systematic observations resulted in rich social data that were recorded as journal entries, photographs, video and audio records. The collected data were then analysed

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through latent content analysis, which Hseih and Shannon (2005) explain as the search for underlying meaning of content identified in the data. For this chapter, latent content analysis was based on themes that were derived from literature and used as a guide in coding and analysing the collected data. Specifically, concepts and themes from CajaibaSantana’s (2014) SI model were used as coding guides to understand the data. Additionally, concepts from other SI authors and from other bodies of literature were used to further the analysis and explain gaps and contentions in the SI conceptualization with regard to innovation in informal settlements.

4.3

4.3.1

REVIEW

OF

RELEVANT LITERATURE

Empirical Frame: Sanitation and Informal Settlements

A number of reasons are provided for the enduring challenge on sanitation for informal areas. It is said that high density and tenure insecurity are fundamental challenges that confound effort towards basic urban sanitation in African informal areas (Eales, 2008). It is further pointed out that sanitation provision is not given high priority by stakeholders because funding for sanitation in informal urban areas is habitually inadequate (Isunju et al., 2011). In South Africa, sanitation provision for informal settlements has become a highly politicized issue, which has resulted in violent demonstrations in the Western Cape province, in particular (Hlongwane, 2013). There have also been court cases concerning the provision of sanitation in informal settlements, such as in the constitutional court in 2009 and in the Western Cape High court in 2011 (Tissington, 2011). In these cases, attention was drawn towards the right to basic sanitation that the government once stated as the provision of a toilet to each household (Department of Water Affairs & Forestry, 2001). Later, the language was toned down, so that now basic sanitation in South Africa is understood as the accessibility to a toilet (Department of Water affairs, 2012) rather than the actual provision of a toilet per household. The South African government is, however, not unique in its struggle with the political and legal implications of sanitation, given the global push to address sanitation as a basic human rights issue (COHRE et al., 2008). Expressing sanitation as a right is said to move the focus from technical solutions to legislative frameworks that will ensure access to sanitation for all (ibid.). That said, alternative technical solutions for sanitation can play a significant role in informal settlement upgrading if they can be designed for the unique situations of

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LORRAINE AMOLLO AMBOLE unplanned areas. One of those situations is the irregular building patterns that make it difficult and expensive to install standard-sized, trunk sewers that connect to off-site sewerage pants. An alternative to this would therefore be onsite systems that can be gradually connected to off-site centralized sewer plants via simplified sewerage. Simplified sewerage is cheaper and easier to install compared to trunk sewerage because it uses small-diameter pipes that meander around irregular spaces without the need for massive excavation or costly manholes. Instead, this shallower piping that has simplified inspection chambers (rodding eyes) can be installed in backyards and narrow streets (Paterson et al., 2006; Tiley & Peters 2008, Eales, 2008; Mara, 2012). In this way, sewerage infrastructure can be constructed in situ, precluding the need for resettlement. Resettlement is often resisted by informal settlement dwellers anyway, who want to preserve their existing economic and social networks (Govender et al., 2010). The call for innovative technical solutions for informal settlements is therefore taken on in this chapter through the presentation of an alternative sanitation system that has so far proven to be viable.

4.3.2

Theoretical Frame: TD and SI Theories

It is said that TD research affords a new form of science (mode-2 science) that can tackle complex problems because it appreciates non-academic sources of knowledge. Alternatively, monodisciplinary research (mode-0 science) has been vilified for not being able to solve real-world problems because it lacks a pluralist view and has little regard for nonacademic knowledge (Maasen & Lieven, 2006; Pohl et al., 2010; Swilling & Annecke, 2012; Talwar et al., 2011, Max-Neef, 2005). For Pohl et al. (2010), integration between academic and non-academic sources of knowledge can indeed be achieved if boundaries between perspectives and disciplines are blurred. This, however, produces messiness, which has to be unravelled if sustainable solutions are to be realized and transformative social change is to be achieved (Hirsch Hadorn, et al., 2006; Wiesmann et al., 2008: 431-2). Other authors also allude to the difficulties in TD research, where controversial phenomena emerge as actors struggle to make sense of their roles in unclear contexts (Grin et al 2004), a struggle that brings identities into question (Jasanoff, 2004:39). For others, this questioning of identities is in fact valuable for TD work because it allows researchers to deal with issues of power and affect by exposing the positionality of actors through a reflexive approach (Moulaert et al., 2013:5; Haddock & Tornaghi, 2013: 269-70). For Stapele (2013), a self-reflexive approach in research allows a researcher to unpack his or her own subjectivities, so that he or she can shake off the shackles of dominant discourses and uncover alternative positions.

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Taking this advice, this chapter will unpack the collective and individual subjectivities and roles of the actors in the Enkanini case, including that of the author. This will be done by first setting the empirical context of the project (i.e., the technical implementation of the system) followed by the articulation of individual and collective participation in the project. In this way, both the technological and the complex social arrangements of the project will be used to provide a holistic view that is in keeping with the pluralist and multifaceted approach in TD research. Finally, the intersection between TD and SI theory that is explored in this chapter is seen as a major contribution that can provide a better understanding of informality as complex and growing phenomena in African cities.

RESULTS

4.4

4.4.1

Technical Implementation of the Enkanini Sanitation Project

The funding for the sanitation project was provided by the National Research Foundation (NRF) through the University of Stellenbosch and by the Water Research Commission (WRC) of South Africa through Maluti GSM consulting engineers.2 This funding made it possible to install five shared pour-flush toilets that were connected to an anaerobic digester via simplified sewerage in Section E of the settlement in 2013. The anaerobic digester has a reactor volume of 4,050 litres, with an estimated capacity to handle 1,080 litres of effluent per day, and can therefore serve an estimated ten shared toilets (40-50 households). The overflow from the digester is connected to the conventional municipal sewer. The estimate is that the installed system discharges significantly less effluent to the municipal sewer compared to a conventional toilet system for the same number of users, because the effluent is first broken in the digester, thus reducing its volume. Additionally, the biogas produced from the digester provides cooking energy that is currently being used in the experimental phase by one of the informal settlement dwellers involved in the project. Biogas use is safer than paraffin use, which is still prevalent in the settlement. It is also estimated that the cost of installation in the Enkanini project was significantly lower compared with the cost of installing VIP latrines, which would require construction

2

The technical implementation of the pour-flush system in Enkanini is reported in the ‘Pour Flush Trials in the Western Cape, WRC Report No K8/1018/3’ by Maluti GSM consulting engineers, who were responsible for the trials in the case. The technical specifications in this paper are taken from that report.

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LORRAINE AMOLLO AMBOLE over pits. VIP latrines are shown to be one of the more affordable alternative sanitation options for informal settlements (Mels et al., 2009). As a flush system, the pour-flush toilet also uses less water because its bowl slopes steeply towards the small-diameter outlet at 48 degrees to the horizontal. A minimum of 25-mm water seal is provided by the long radius of its P-trap that is currently fabricated from 63-mm diameter PVC fittings. The small volume of water in the water-seal and the gradual bend of the P-trap enable the toilet to flush on one to two litres of water. Regular toilets flush on four to seven litres of water. Currently, users of the pour-flush are encouraged to flush the toilet with grey domestic wastewater that would otherwise find its way into the open drains in the settlement. In 2014, filters will be added to the system to filter the grey water and make it possible to store water in cisterns in the upgraded pour-flush toilets. Also, since toilets can be installed inside the house, there can be substantial cost savings in the structure.

Figure 4.1

The Technical Components of the Pour-flush System in Enkanini

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Mapping Author’s Individual Participation in the Case

Mapping the author’s own participation in the project was possible through the active involvement of the author in the actual implementation process of the project. Using a reflexive approach, the author’s participation is articulated using the three roles of the TD researcher according to Pohl et al. (2010). This articulation points out that the three roles of intermediary, facilitator and reflective scientist are significant themes from TD thinking that have great bearing on the innovation process. Figure 4.2 displays these three roles by mapping them onto the interactions and key milestones in the sanitation project. The mapping exercise of the author’s participation unveils the multifaceted and challenging nature of TD research, which seeks not only academic outcomes but also practical outcomes that can bring about transformative social change. The mapping also highlights the importance of understanding the agency of the researcher in the research process, more so in a research process that is geared towards social change in the real world.

Figure 4.2

Author’s Participation in the Enkanini Sanitation Project (Author’s Construct)

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LORRAINE AMOLLO AMBOLE 4.4.3

SI as a Conceptual Framework for Understanding Collective Participation in the Case

An SI conceptual framework from Cajaiba-Santana (2014) was used to unpack the collective, TD arrangement in the Enkanini sanitation project (Table 4.1). An argument is then made for the expansion and reconfiguration of SI to suit the multifaceted needs of informal settlements. Table 4.1

Analysis of Collective Action in the Case Using SI Concepts Adopted Cajaiba-Santana (2014)

Concepts from SI model by Cajaiba-Santana (2014)

Key findings from the Enkanini sanitation project

Agency

Agent’s positions

Positions • Researchers – academic qualifications and concerns • Engineers – technical requirements and standards, professional standing • Residents – aspirations for better living conditions, employment opportunities Positionality: institutional affiliations, funding, political interests

Reflexivity

Deep self-reflection and systematic observation (Insider/outsider views) Awareness of inequalities and contradictions (race, education, expertise, control of funds)

Communicative actions

Co-design approach: visual communication and participatory techniques (cartoon strip drawing by participants)

New idea

Institutions

Alternative technology: five pour-flush toilets, shallow simplified piping and anaerobic digester. Social arrangements: toilet user groups, sanitation co-operative Enablers

Funding support: NRF and WRC

Constraints

The sanitation co-operative (ESC) became contentious because of disagreements over remuneration

Institutional change

The Enkanini research centre association (ERCA), which is made up of researchers and residents of Enkanini, now continues with the function of supporting the sanitation project among other research projects in the settlement

Legitimated actions

The ERC is a visible manifestation of the co-research activates in Enkanini, recognized by both the University structures and in Enkanini community

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Regular research and community meetings by the ERCA

Intra/Inter/Extra groups

Intra: researchers, experts, co-researchers Inter: supervisors, some municipality officials Extra: university, municipality, Stellenbosch town

Social change

Systematized research relationships between the university and Enkanini

Cajaiba-Santana’s SI model draws from structuration and institutional theories, which explain structure (structuration) and agency (institutional) within social processes. According to the author, these theories cannot, of their own, adequately explain the process of social change. Moulaert and Mehmood (2013:445) hold a similar position in stating that structure and agency are important considerations in SI. The result of Cajaiba-santana’s (2014) thinking is a set of concepts, namely, agency, new idea, institutions and social systems that are interconnected through practices and actions. The concepts from Cajaiba-Santana’s model are able to explain key findings from the case study. However, the implication of some of these key findings requires further emphasis and so their attendant conceptual framings have been expanded. Agency is presented by Cajaiba-Santana (2014) as a concept that articulates agent’s positions. In this chapter, agency is expounded on as positionality and deep self-reflexivity. Positionality offers greater space for unpacking agency by explaining the worldviews, values, capacities and commitments of agents. Discerning positionality is said to be important for understanding the empowering and performative effects of researchers on the SI process (Haddock & Tornaghi, 2013:269-70). This chapter uses this view on positionality to look at the performative, empowering and even the disempowering effects that the agents had on the process. Institutional affiliations and commitments were found to be both empowering and disempowering at different stages of the project. For instance, the funding support provided by research institutions was necessary for the actualization of the project and therefore empowering. The affiliation and commitments became disempowering when they restricted the project’s design. The pour-flush toilet technology, for example, became the only viable option as it was the one being championed by the engineering experts. The political affiliations of Enkanini residents also had an influence on their participation in the project. Overall, it was imperative for the stakeholders to work around these restrictions and take advantage of the available opportunities. This flexible way of working was made possible by an acknowledgement of positionality through deep reflexivity.

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LORRAINE AMOLLO AMBOLE Having expounded on agency in the model, the discussion will now point out certain gaps in Cajaiba-santana’s (2014) model. One such gap is the role of technology in the SI process, which is not emphasized by the author. For Cajaiba-Santana (2014), SI is immaterial because its focus is less on technology and more on capacity building. This chapter, however, argues for a more holistic approach in dealing with complex problems. In this way, technology does play an integral role in the realization of social change, more so in contexts where severe need calls for material provision. In such contexts, characterized by extreme poverty, technological innovation may indeed be essential to improving living conditions. This chapter therefore proposes that technology is key to innovation in an informal settlement. In Enkanini, the engineering and construction experts worked closely with residents, with the aim of building the technical capacity of local operators who could then maintain the system for themselves. Perhaps many sanitation projects in informal settlements fail after piloting (as is the case in Cape Town, see Mels et al., 2009), because technical capacities are not built into the implementation process. The second gap in the model is a meta-theoretical framing for the SI process. What are the underlying agendas that motivate action? In answering these questions, a metatheoretical theme that drives the process can be unearthed. For Jessop et al. (2013:127), a meta-theoretical framing in SI is part of the shared problematization; agents need a shared view of how to address the problem, and this becomes the meta-theory that drives the SI process. A meta-theoretical framing is therefore introduced here as an overarching concept that influences the entire SI process. In the case of Enkanini, a meta-theory was already alluded to earlier as the incremental approach that guided the thinking and methods of the upgrading projects in Enkanini. This incremental approach or incrementalism was adopted as an overarching ethos of how upgrading in informal settlements should take place. Revealing this meta-theory of incrementalism allows for a more realistic and credible presentation of the case study. In this way, the SI process of the case is not seen as overly optimistic or ‘solutionist’ as warned against by Fowler (2013). Neither is it apolitical. Rather, it is presented as a journey towards social change, fraught with the challenges and restrictions of a complex, volatile reality. Consequently, the proposal for a SI conceptual model that can answer to the innovation in an informal settlement is deemed necessary. This new model incorporates the additional concepts of technical practices and meta-theory while expanding into a more

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holistic and adaptive view of SI as a process. McFarlene’s (2009, 2011) thinking on ‘assemblage’ is used here to inform the configuration of an adaptive model. Research in Enkanini has shown that incrementalism is a more viable and flexible upgrading method because it is adaptive and iterative. Other literature confirms this view on incrementalism by defining it as a policy strategy that acknowledges the limits of resources as it adopts a stepwise approach (Weiss & Woodhouse, 1992). Elsewhere, this stepwise, incrementalist approach of ‘muddling through’ according to Kopecka, Santema and Buijs (2010) is comparable to the problem-solving process of design. It is this incremental approach that give change agents a critical, nuanced and reflexive understanding (ibid.), which could be very useful in dealing with complexity. Parallels can be drawn between such views on incrementalism and those on assemblage theory. Just like incrementalism, assemblage is an adaptive approach, whose thinking is emergent and processual (McFarlene, 2011). Assemblage theory has been used to conceptualize the city as an assembled reality that is indeterminate and turbulent (Farías, 2011; Mcfarlene, 2009, 2011). Indeterminacy, emergence and turbulence are nowhere more true than in the ‘unplanned’ reality of informal settlements. Comparisons can thus be drawn between ‘incremental urbanism’ as it is presented by Swilling et al.’s (2013) and Mcfarlene’s (2011) ideas on an assembled urbanism. In Enkanini, the incremental assembling of the settlement is a vivid reality. Residents are continually assembling and disassembling the spatiality and materiality of their settlement to conform to the precarious nature of living on the fringes of a planned Stellenbosch town. For instance, several residents moved their houses from the flooded area in the settlement in the winter of 2013 and reconstructed them outside the defined municipal boundary for the settlement, all in the span of a few days. The frequent fires in the settlement also necessitate the consequent rebuilding of homes. The Enkanini enumeration report shows that over the 12-month period prior to the enumeration process, there were 111 reported cases of fire, a figure that exemplifies the perilous conditions of living in an informal settlement (Enkanini/Kayamandi Household Enumeration report, 2012). Researching and innovating in such a changing environment are a fluid, layered process. In keeping with the language of McFarlene (2009), the process is presented as being nonlinear, distributive and composite. It is intended as a coalition of elements that remain distinctive in a continual process of assembling and disassembling. These elements that make up a composite SI process coalesce around agency, whose power radiates through the layered process that in turn influences agency itself. The result is a radiant, reciprocal relationship that drives the SI process. Its underlying ontology is constructivist, if Farías

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LORRAINE AMOLLO AMBOLE (2011) were to be cited here. Just as the author claims that the world is in the making, so, too, the SI process can be said to be an incomplete process, whose results are known only when they are arrived at. The indeterminancy of SI can be further explained using alternative terms such as ‘social laboratory’ or ‘social experiment’ (Fowler, 2013). In a social laboratory or experiment, social innovators are agile so as to take advantage of emerging opportunities for innovation (ibid.). These terms answer well to the situation in Enkanini where the continual engagement between researchers, experts and community members creates a laboratory for embedding innovation. Cameron (2013:184) alludes to such laboratories in speaking about SI case studies that provide useful lessons on the possibilities for progressive SI. Ultimately, the reconfigured SI model resonates with the findings from the Enkanini case as it acknowledges the importance of not only institutional and social practices but also technical practices. As already argued, a meta-theory has been accorded a significant role as well, given its prominence in the case study. Although this new model is reconstructed from the findings of a single case study, it could nonetheless be useful for similar contexts because it has been triangulated with literature.

4.5

CONCLUSION

This chapter highlights the theoretical significance of a TD approach in the upgrading of informal settlements. This is done using a SI framework that allows the study to unpack the innovation process of the TD team that was involved in the sanitation project in Enkanini informal settlement. The reconfiguration of SI is provided as a scenario for continuous engagement and innovation in informal settlements. From this, the recommendation is that in SI, there is a need to strengthen the agency of co-researchers and other informal settlement dwellers so that they can participate more meaningfully in the project and in bringing about social change in the settlement. The disempowering effects of positionality should also be investigated further in order to anticipate the conflicts that arise from institutional and political affiliations of agents in the SI process. The author will continue to engage in the project and is therefore well placed to influence the realization such recommendations. This chapter has hopefully argued that there is a need for socially responsive innovation, especially so in the case of informal settlements, where social problems are exacerbated by material deprivation and poverty. To tackle such complex social problems, it has been shown that a TD approach may be useful as it allows for a more pluralist view that can take into

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account the multifaceted needs of informality. A better understanding of TD as an approach has been provided through the study of a sanitation case study in an informal settlement. This understanding of TD was articulated using SI as a specific conceptual framework within an overarching TD methodology. SI is thus posited by this chapter as a conceptual framework with which to understand the complex TD approach for informality, given the importance accorded to social contexts in informal settlements. SI has a high regard for social contextualization and can thus explain the innovative engagements and social intricacies at a microlevel. These intricacies have been explained here using Cajaiba-Santana’s SI framework. New concepts have then been introduced into the SI conceptual model to cater for apparent gaps such as the particular need for technical innovation in a deprived context and the need for a meta-theory to guide the SI process. Assemblage theory was then used to rethink the SI process into a more layered, flexible and processual conceptual model, which can answer better to the underserved context of an informal settlement like Enkanini. The hope is that such a reconfiguration and the knowledge presented herein can be of use to the search for sustainable social change in cases of extreme deprivation and want, such as the case with informal settlements. REFERENCES Abbott, J. (2000). An Integrated Spatial Information Framework for Informal Settlement Upgrading. International Archives of Photogrammetry and Remote Sensing, 33(B2; PART 2):7-16. Abbott, J. (2002). An Analysis of Informal Settlement Upgrading and Critique of Existing Methodological Approaches. Habitat International, 26(3):303-15. Cajaiba-Santana, G. (2014). Social Innovation: Moving the Field Forward. A Conceptual Framework. Technological Forecasting and Social Change, 82(0):42-51. Cameron, S. (2013). Introduction: Social innovation experience and action as a lead for research, in Moulaert, F., MacCallum, D., Mehmood, A. and Hamdouch, A. (eds.). The International Handbook on Social Innovation: Collective Action, Social Learning and Transdisciplinary Research. (pp. 183-185) Edward Elgar Publishing. COHRE, WaterAid, SDC, and UN-HABITAT. (2008). Sanitation, A Human Rights Imperative. Geneva: Centre on Housing Rights and Evictions.

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LORRAINE AMOLLO AMBOLE DOH: Department of Housing. (2004). National Housing Programme: Upgrading of Informal Settlements. Donk, M V. (2014). A New Model for Public Participation. Cape Argus. [Online]. Available: Accessed: 1/6/2014. Eales, K. (2008). Partnerships for Sanitation for the Urban Poor: Is It Time to Shift Paradigm? Paper presented at Essay for Symposium on Urban Sanitation. IRC International Water and Sanitation Centre. Delft, the Netherlands. Enkanini (Kayamandi) (2013). Household Enumeration Report. [Online]. Available: [14/12/2013]. Farías, I. (2011). The Politics of Urban Assemblages. City, 15(3-4):365-74. Flyvbjerg, B. (2006). Five Misunderstandings about Case-Study Research. Qualitative Inquiry, 12(2):219-45. Fowler, Alan. (2014). Social Innovation: New Game, New Dawn or False Promise? [Online]. Available: [5/1/2014]. Haddock, S.V. & Tornaghi, C. (2013). A Transversal Reading of Social Innovation in European Cities, in Moulaert, F., MacCallum, D., Mehmood, A. and Hamdouch, A. (eds.). The International Handbook on Social Innovation: Collective Action, Social Learning and Transdisciplinary Research. (pp. 264-273). Edward Elgar Publishing. Hirsch Hadorn, G., Bradley, D., Pohl, C., Rist, S., & Wiesmann, U. (2006). Implications of Transdisciplinarity for Sustainability Research. Ecological Economics, 60(1). Hlongwane, Sipho. (2013). Poor Politics Aside, We Need Faster Service Delivery. Business Day. [Online]. Available: [4/1/2014]. Hsieh, H. & Shannon, S.E. (2005). Three Approaches to Qualitative Content Analysis. Qualitative Health Research, 15(9):1277-88.

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Huchzermeyer, M. (2009). The Struggle for in Situ Upgrading of Informal Settlements: A Reflection on Cases in Gauteng. Development Southern Africa, 26(1):59-73. Isunju, J., Schwartz, K., Schouten, M., Johnson, W., & Van Dijk, M. (2011). SocioEconomic Aspects of Improved Sanitation in Slums: A Review. Public Health, 125(6). Jasanoff, S. (2004). Ordering Knowledge; Ordering Society. In S. Jasanoff (ed.). States of Knowledge: The Co-production of Science and the Social Order (pp. 13-44) Routledge. Jessop, B., Moulaert, F., Lars, H., & Hamdouch, A. (2013). Social Innovation Research: A New Stage in Innovation Analysis? in Moulaert, F., MacCallum, D., Mehmood, A., and Hamdouch, A. (eds.). The International Handbook on Social Innovation: Collective Action, Social Learning and Transdisciplinary Research. (pp. 110-127) Edward Elgar Publishing. Knoetze, Daneel. 3/13/2014. Enkanini: There’ll Be No Voting Here. [Online]. Available: [3/13/2014]. Kopecka, J. A., Santema, S. C., & Buijs, J. A. (2012). Designerly Ways of Muddling through. Journal of Business Research, 65(6):729-39. Maasen, S. & Lieven, O. (2006). Transdisciplinarity: A New Mode of Governing Science? Science and Public Policy, 33(6):399-410. Mara, D. (2012). Sanitation: What’s the Real Problem? IDS Bulletin, 43(2):86-92. Max-Neef, M. A. (2005). Foundations of Transdisciplinarity. Ecological Economics, 53 (1):5-16. McFarlane, C. (2011). Assemblage and Critical Urbanism. City, 15(2):204-24. McFarlane, C. (2009). Translocal Assemblages: Space, Power and Social Movements. Geoforum, 40(4):561-7. Mels, A., Castellano, D., Braadbaart, O., Veenstra, S., Dijkstra, I., Meulman, B., Singels, A., & Wilsenach, J. A. (2009). Sanitation Services for the Informal Settlements of Cape Town, South Africa. Desalination, 248(1):330-7.

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LORRAINE AMOLLO AMBOLE Moulaert, F., MacCallum, D., Mehmood, A., & Hamdouch, A. (2013). General Introduction: The Return of Social Innovation as a Scientific Concept and a Social Practice. In Moulaert, F., MacCallum, D., Mehmood, A., & Hamdouch, A. (eds.). The International Handbook on Social Innovation: Collective Action, Social Learning and Transdisciplinary Research (pp. 1-5) Edward Elgar Publishing. Moulaert, F. & Mehmood, A. (2013). Holistic Resarch Methodology and Pragmatic Collective Action. In Moulaert, F., MacCallum, D., Mehmood, A., and Hamdouch, A. (eds.). The International Handbook on Social Innovation: Collective Action, Social Learning and Transdisciplinary Research. (pp. 442-452) Edward Elgar Publishing. Nilsson, D. (2006). A Heritage of Unsustainability? Reviewing the Origin of the LargeScale Water and Sanitation System in Kampala, Uganda. Environment and Urbanization, 18(2). Oosterveer, P. & Spaargaren, G. (2010). Meeting Social Challenges in Developing Sustainable Environmental Infrastructures in East African Cities, Social Perspectives on the Sanitation Challenge. (pp 11-30). Springer. Pohl, C., Rist, S., Zimmermann, A., Fry, P., Gurung, G.S., Schneider, F., Speranza, C.I., Kiteme, B.; Boillat, S., & Serrano, E. (2010). Researchers’ Roles in Knowledge CoProduction: Experience from Sustainability Research in Kenya, Switzerland, Bolivia and Nepal. Science and Public Policy, 37(4):267-81. Ramani, S.V., SadreGhazi, S., & Duysters, G. (2012). On the Diffusion of Toilets as Bottom of the Pyramid Innovation: Lessons from Sanitation Entrepreneurs. Technological Forecasting and Social Change, 79(4):676-87. Russell, A. W., Wickson, F., & Carew, A. L. (2008). Transdisciplinarity: Context, Contradictions and Capacity. Futures, 40(5):460-72. Schouten, M. & Mathenge, R. (2010). Communal Sanitation Alternatives for Slums: A Case Study of Kibera, Kenya. Physics and Chemistry of the Earth, Parts A/B/C, 35(13). Swilling, M., Tavener-Smith, L., Keller, A., Heyde, V. von der, & Wessels, B.. Rethinking Incremental Urbanism: Co-production of Incremental Informal Settlement Upgrading Strategies. [Online]. Available: [3/14/2014].

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Swilling, M. (2012). Rethinking the Science-Policy Interface in South Africa: Experiments in Co-Production of Knowledge at Different Scales. Paper presented at Berlin Conference on the Human Dimensions of Global Environmental Change. Freie Universitat Berlin. Talwar, S., Wiek, A., & Robinson, J. (2011). User Engagement in Sustainability Research. Science and Public Policy, 38(5), 379-90. Tavener-Smith, L. (2012). Housing: The Challenge of Informal Settlements. In Swilling, M., Sebitosi, B., and Loots, R. (eds.). Sustainable Stellenbosch: Opening Dialogues. (pp. 68-81). AFRICAN SUN MeDIA. van Stapele, N. (2013). Intersubjectivity, Self-Reflexivity and Agency: Narrating about ‘Self’ and ‘Other’ in Feminist Research. Women’s Studies International Forum. Weiss, A. & Woodhouse, E. (1992). Reframing Incrementalism: A Constructive Response to the Critics. Policy Sciences, 25(3):255-73. Wiesmann, U., Biber-Klemm, S., Grossenbacher-Mansuy, W., Hirsch Hadorn, G., Hoffmann-Riem, H., Joye, D., Pohl, C. Zemp. E., (2008). Enhancing transdisciplinary research: a synthesis in fifteen propositions, in Hirsch Hadorn, G., Hoffmann-Riem, H., BiberKlemm, S., Grossenbacher-Mansuy, W., Joye, D., Pohl, C., Wiesmann, U., and Zemp. E. (eds.). Handbook of Transdisciplinary Research. (pp. 433-441). Springer. Yin, R. (2011). Qualitative Research from Start to Finish. Guilford Press. New York.

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INNOVATION

IN

RURAL DEVELOPMENT

SOUTH AFRICA: A CRITIQUE

OF

WITHIN

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SYSTEMS METHODOLOGY Cheryl Mohamed Sayeed, Pregala Pillay and Purshottama Sivanarain Reddy

ABSTRACT Rural development forms a critical part of the development agenda of the South African government as indicated in the National Development Plan. Rural poverty reduction, food security, HIV/ AIDS, migration, and the delivery of basic services are some of the key areas for intervention. These objectives are guided by the global call for good governance, which requires government to perform optimally and the Millennium Development Goals. The issue of rural development is thus a complex one that requires the recognition of the multi-faceted issues that impact on the success and failure of development initiatives. In order to consider the situation of rural development, one thus needs to consider intervention in a broader context. Rural development approaches are increasingly considering the complex nature of rural development and, by so doing, are opting for a systems approach to understand the nature of rural development. Evidence suggests that thinking systemically allows for the recognition of the varying levels of complexity and, as a result, offers policy implementers and communities the opportunity to learn from the process and change. Innovation in rural development through the policy implementation process becomes possible. Within this perspective, innovation in the public sector refers to changes or improvements to policy or the way in which services are rendered towards socio economic development. Thinking systemically provides a platform for understanding such change by providing a tool, a model, whereby complex situations may be easily understood by all those who are affected by the situation. Soft systems methodology (SSM) presents a model to understand situations that are difficult to define and have a large social and political component. This paper provides a critical examination of the use of SSM as a mechanism for understanding the complex nature of rural development. This paper reflects on theoretical evidence and a South African case study. This paper shows that despite its shortcomings, SSM provides opportunity to understand the complex nature of rural development and presents the actors of rural

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development with an opportunity to understand complex situations towards stimulating learning and change and thus innovation.

5.1

INTRODUCTION

There are numerous definitions of the term ‘innovation’ in the literature. These include the definition by the New Oxford Dictionary of English (1998:942) that innovation is “making changes to something established by introducing something new.” While various authors refer to a range of factors that constitute innovation, there is, however, a thread of agreement that innovation is the use of practical tools and techniques that make changes, large and small, to products, processes, and services that result in the introduction of something new for the organization that adds value to customers and contributes to the knowledge store of the organization (Douthwaite, 2002). Innovation as a result amounts to change and requires the development of new methods or the improvement of current ways of achieving organizational objectives. Tidd and Bessant (2009:68) argue that “innovation is more than simply coming up with good ideas” and that rather it is the “process of growing them into practical use.” Essmann (2009:54) goes further in his argument that learning is an essential part of the activities through which innovation becomes possible. From this perspective, innovation within rural development refers to the changes or improvements to policy or the way in which services are rendered. Systems thinking within the context of rural development in South Africa present an opportunity for understanding the situation more effectively through situation modelling. Soft Systems Methodology (SSM) provides a mechanism to model a complex problem situation by improving the understanding of the structure and behaviour of systems. It is the overall objective of this paper to critically examine SSM as a methodology for stimulating innovation in rural development. This paper first examines the framework for innovation in rural development in South Africa. The paper then explores the role of systems thinking in providing a platform for shared understanding and provides an interrogation of SSM as a tool for innovation in rural development. This paper argues that SSM provides an opportunity for understanding the structure and behaviour of systems, and as a result, the authors see SSM as a mechanism by which the complexities of rural development can be understood by the various actors. The paper shows that despite the shortcomings of SSM, it allows one to effect a time and space compression on the systems which set the foundation for understanding the undesired present situation and the desired position. In so doing, the development of a shared understanding allows for learning and sets the foundation for innovation.

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INNOVATION

The development of rural areas did not form part of the objectives of government in South Africa pre-1994. In the post-apartheid period, a plethora of legislative and policy guidelines brought many challenges for rural development in South Africa. Research indicates that accountability, performance, an inability to address the needs of communities (Mohamed Sayeed, 2014); bridging the gap between local municipality and national government programme agendas (Perret 2004:1); the perception that agriculture is the solution to the ills of rural communities (Mohamed Sayeed, 2014); and balancing the power relationships within rural areas (Dlamini, 2010:91) remain contentious issues and contribute to the levels of complexity around socio-economic development. This high level of complexity requires more than simply coming up with good ideas to solve the problem, it also requires a ‘process of growing them into practical use,’ or innovation as described by Tidd and Bessant (2009:68). Essmann (2009:54) calls for an element of learning for effective innovation. This is essential for rural development in South Africa as it creates the potential for the use of practical tools and techniques that make change possible (Douthwaite, 2002). Innovation, within this perspective, is a significant change that takes place through a learning process. Smith (2010) goes further in his argument by adding that the integration of component knowledge, which refers to knowledge about roles and responsibilities that must be performed in order to deliver services, and system knowledge, which refers to knowledge about the way in which all actors within rural development are integrated and linked together, are critical for innovation and change. Component knowledge in this regard requires that implementers of policy have adequate knowledge of the legislative and policy frameworks within which they function, or the rule of law, and that they subscribe to a code of conduct. Systems knowledge requires that they have a holistic understanding of the actors in rural development and how they impact on the rural development processes. It is at the level of systems knowledge that this paper seeks to offer an opportunity for the actors in rural development to understand each situation that they encounter. Before engaging in a discussion regarding systems thinking, it is important to note that Hart, Jacobs, and Mhula (2013:7) argue that innovation in the rural sector of South Africa exists despite little documented evidence to support this. The most common form of innovation within the global rural sector, according to Hartwich and Scheidegger (2010:70), is the benefit from technology transfer which results largely from development programmes where new information or ways of doing things are transferred from the external ‘expert’ to farmers and individuals within rural communities. In this context, the facilitator of the rural development process, or development practitioner, must be

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mindful of the knowledge inherent in that community when introducing innovations from outside the boundaries of the community (Critchely, 1999; Chambers, 1997). As a result, systems knowledge becomes key in effecting real change. This forms an extension of the argument by Chambers (1997), who called for the establishment of a “new professional,” who gives recognition of the different but complementary knowledge and experience in a development relationship between development practitioners and the community (see also Chambers, 1997; Botha & Coutts, 2011:15). While Chambers (1997) did not use the language of systems thinking, he was, even in 1997, making suggestions for improvements to rural development by addressing complexity through a holistic, systems view. The new professional is critical for success in rural development in situations where the solutions to problems are complex or are “subjective, and often impossible to achieve” (Rohs & Navarro, 2008:95). Within South Africa, the 1996 White Paper on Science and Technology introduced the notion of a ‘national system of innovation’ into South Africa’s formal public policy discourse. The White Paper conceptualizes a National System of Innovation as “a means by which a country seeks to create, acquire, diffuse, and put into practice new knowledge that will help that country and its people achieve their individual and collective goals.” While this White Paper sees innovation largely as a technological issue, it sets the scene for a system that focuses on creating and applying knowledge towards social and economic development. The problem, Hart, Jacobs, and Mhula (2013:14-16) argue, is that there is little emphasis on rural innovation, with an assumption that a “one size fits all solution” will work. They further point to the lack of recognition of the role of social innovation and its role in stimulating development within such policy documents. There is further a lack of focus on the roles of bottom up development or the potential positive impact of participation of communities in cultivating creativity in the process of stimulating innovation within rural areas. In 2007, the Organisation for Economic Cooperation and Development (OECD) carried out a review of innovation in South Africa. The review committee recommended a range of strategies to improve innovation; however, no mention was made of social innovation or rural innovation (Hart, Jacobs & Mhula, 2013:18). Within this review, there is a limited mention of the role of innovation within the process of rural development. The review only focussed on how the rural economy and growth in agricultural production can stimulate the economy as opposed to how social and technical innovation can contribute to the improvement in the quality of life of rural communities. This is not sufficient for the promotion of rural development and which, for Hart, Jacobs, and Mhula (2013:19), is considered to be a missing link towards effective development in South Africa. Hart, Jacobs, and Mhula (2013:19) argue that this link can be attributed to the OECDs

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preoccupation with global priorities over local realities. For any real change to be effected within rural areas, it is necessary for those who implement policies and strategies to adopt an integrative strategy whereby the voices of the poor may be heard (Mohamed Sayeed, 2014) largely by adopting participatory methodologies. This, in turn, has the potential to allow for an exchange of information (indigenous knowledge) and scientific knowledge which creates an iterative learning process, which Douthwaite (2002) sees as critical for rural innovation. The Department of Science and Technology sets out a 2008-2018 innovation plan which aims at a knowledge-based economy through five challenge areas, namely: ‘Farmer to Pharma’ value chain strengthening, which emphasizes the desire for South Africa to become a world leader in the biotechnology and pharmaceutical industry by exploiting the country’s indigenous and natural resources; space science and technology development by increasing innovations in the space sciences and the satellite industry, with related improvements in earth observations, communication, engineering, and navigation; ensuring a secure, renewable, clean, affordable, and consistent energy supply to reduce reliance on fossil fuels and to access new markets including the “hydrogen economy”; contributing towards global climate change through monitoring, scenario development, and prediction of changes in Africa and the Southern Ocean; and gaining a greater understanding of human and social dynamics by becoming a social sciences “knowledge hub” in Africa and contributing to understanding the global shifts in social dynamics (DST 2007). *

*

*

*

*

The fifth challenge is most important for this discussion, as it identifies the importance of gaining a greater understanding of the social dynamics within which innovation takes place, which, for rural development, is critical. Furthermore, there is acknowledgement that innovation cannot be understood nor engaged in isolation of the larger environmental context. Rural development in South Africa forms a critical component of the National Development Plan towards 2030. The plan identifies the reduction in poverty and inequality as an opportunity to raise employment and investment. In achieving this milestone, improving the lives of the rural poor is critical and, as a result, requires the adoption of innovative methods to achieve rural development. Marais and Pienaar (2010:105) argue that despite the policy landscape in South Africa changing quite drastically since 1994, implementation has lagged behind with innovation towards rural development being neglected. Hart, Jacobs, and Mhula (2013:12) emphasize this and point out that innovation efforts in rural

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development have been slow partly due to the lack of emphasis on rural innovation in the New Growth Path 2011 and National Development Plan towards 2030, which guide the shape and form of innovation strategies and efforts by government. It is important to note that according to Polcuch, Lugones, and Perano (2005:1), innovation in developing countries occurs mainly through incremental change and dissemination mechanisms. This is no different in South Africa, where Polcuch, Lugones, and Perano (2005:1) indicate that incremental change forms the basis for innovation. Hart, Jacobs, and Mhula (2013:12) reiterate this and argue that this had an impact on the pace of innovation within South Africa. Traditional methods of managing situations based upon control and standardization are not sufficient (Hildbrand & Bodhanya, 2013:2) for dealing with the challenges within rural development. New approaches are needed to deal with the complexities in the rural development environment, and as a result, creative and innovative methods are necessary. Systems thinking provides opportunity to understand innovation more holistically.

5.3

INNOVATION MODELS

FOR

RURAL DEVELOPMENT

There are several innovation models that have shaped rural development. While these are not the focus of this paper, they have developed alongside global responses to food production and the need for change within agriculture. The earliest innovation systems were top-down mechanisms for transferring largely technical and scientific knowledge, which was facilitated through development practitioners. The current dominant paradigm for rural development, which sees participation and learning as key components for effective rural development, is based largely upon the logic of Kurt Lewin’s learning cycle, which, if adapted to an innovation process, recognizes stakeholder participation in the innovation process as opposed to a system where information is simply passed from the expert to the farmer. It must be noted that the assumption here is not that this must be adopted for every situation but that where the role of the beneficiary of innovation or rural community is critical for the potential success of rural development strategies, a learning component must form part of the process. There have been many variations in the way that systems of inquiry have been adopted into the development arena. For rural development, these include Farming Systems Research, Rapid Rural Appraisal, and Participatory Action Research, to mention a few. Systems thinking provides opportunity to understand the rural context more effectively through the systems models.

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SYSTEMS MODELLING

Systems can be modelled in a qualitative and a quantitative manner. The difference is in the tools being used. Qualitative mechanisms use verbal descriptions and causal loop diagrams, while the quantitative methods use equations and flow charts of numbers for explanations. The similarity between the two is that they are part and parcel of the systems thinking arena. It is important to note that the way in which you model a situation will be based on your own set of assumptions. Systems modelling can assist in bringing out different levels of complexity associated with organisations, viz, detail complexity and dynamic complexity. Detail complexity is associated with systems which have many component parts, while dynamic complexity, in which individuals have more problems with, is associated with systems which have cause and effect separated by time and or space (Senge, 1990). These contribute to individual and group perception of a problem situation. Systems modelling allow for an analysis of a situation which takes organizational or situation knowledge from chaos and complexity to simplicity and progress by looking at problems from a systemic perspective, a move away from reductionist thinking.

5.5

SYSTEMS THINKING

There are two schools in systems thinking, viz hard systems, which see the world as a holon (whole), and soft systems, which see the process of inquiry as a holon (whole). Hard problems are characterized by the fact that they can be well defined, that there is a definite solution, and that specific goals can be identified to deal with the problem. Soft problems, on the other hand, are difficult to define and have a large social and political component. Soft problems are better understood as soft problem situations, which can offer opportunity for change. Problems in rural development include ‘hard’ problems that can be solved through little participation by communities and manifest through topdown delivery of services like the provision of water and electricity. ‘Soft problems’ include a host of socio-economic problems that extend to issues related to the adoption of new technologies by small-scale farmers. While the introduction of new technologies itself provides a platform for innovation through the change it suggests, the ability of rural communities to absorb such changes presents a challenge. SSM was developed by Peter Checkland at Lancaster University in the 1960s. Checkland’s methodology is considered to be the most developed of the soft systems methodologies. It sets out to be a problem structuring and solving methodology. SSM attempts to encourage

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learning and allows for the sharing of different views of the problem situation between groups of stakeholders. As a result, it does not set out to solve a pre-defined problem. Senge (1990) emphasizes that thinking systemically is critical to the idea of constant learning within a setting because it offers the individuals concerned an opportunity to consider a new perception of the world and thus the problem situation. Systems thinking thus requires a shift of mind, of seeing how our own actions create the problems we experience, of how we create our own reality, and of how we can change it. For rural development, this means that by thinking systemically, the implementers of policy and the communities themselves need to consider how their actions impact on the situation they are experiencing. Checkland starts out with a fundamental notion that our perceptions of the world are mediated by our ideas and concepts of the world, which themselves arise from our experience of the world. Checkland (1981) argues that the world is interpreted by ideas whose source is the world itself. He argues further that, if we are able to consciously think about our own mental processes, we are able to use our ideas in a methodology to interpret a perceived reality. Systems thinking require that we look at organizations as the social systems that they are and understand them as such (Senge, 1990; Hildbrand & Bodhanya, 2013:2). The logic behind it is that as we become more skilled at understanding the behavioural patterns and cycles that affect a system, the better we will be able to understand them. In other words, as public servants and communities become familiar with the issues that affect rural development, the better they are able to understand the process and those factors that facilitate growth and impede it. Within this perspective, the whole (rural development) is seen as the product of the interaction of the parts (the actors within rural development combined with policy and governance) through emergence. Thinking systemically thus allows one to consider the multi-faceted dimensions that impact on policy implementation and to view government departments as social systems within which the business of ‘government’ goes beyond ‘governing’. Systems thinking calls for a move away from linear cause effect thinking that has been associated with top-down government policy implementation processes of the past. The patterns of activity in the methodology does not imply sequence. One may start with any activity and progress in any direction, while the boundary line is argued to be merely a line between the use of everyday language and systems language (Checkland, 1985). Each of these stages will now be briefly explored.

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5 Figure 5.1

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RURAL DEVELOPMENT WITHIN SOUTH AFRICA: A CRITIQUE OF SOFT SYSTEMS METHODOLOGY

SSM model (Source: Adapted from Rohs & Navarro (2008:96))

1 The problem situation unstructured

7 Action to improve the problem situation

6 Feasible, desirable changes

5 Comparison of 4 with 2 2 The problem situation expressed

3 Root definitions of relevant systems

5.5.1

4 Concept models

4a Formal system concept

4b Other system thinking

STAGE 1 – Problem Situation Unstructured

SSM starts with a process that requires that the ‘real world’ situation and problem is described through in depth perspectives of people to that situation. The problem owner needs to decide that there is a problem and that a review or change needs to be implemented. The problem owner would be the district managers and staff of government departments.

5.5.2

STAGE 2 – Problem Situation Expressed

In Stage 2, the problem owner needs to collect and sort information and provide some description of the situation by looking at the following: Structure of the problem situation and those factors that do not change easily; Processes – here are the procedures that need to be followed to implement policies within the rural area need to be considered; and Issues that are felt by both the community and extension workers need to be explained.

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The aim is to rationalize the situation through identifying the main areas of concern (Rohs & Navarro, 2003:96). Being in the real world, the idea is to develop a picture of the problem situation. This provides impetus for action to improve the situation requiring thinking and debate about the social, political, and cultural issues that impact on the situation (Checkland & Scholes, 1990:7). This reiterates the idea that when using SSM, clarity does not exist about the problem situation until an analysis is conducted. Strategies that can be employed when developing a picture of the problem situation include work observation, interviews, workshops, discussion groups, or the use of rich pictures. Creativity is encouraged at this stage, with emphasis on the use of an unstructured method in developing a picture of the situation.

5.5.3

STAGE 3 – Define Human Activity Systems/Naming of Relevant Systems

Systems thinking emphasizes that the concepts of hierarchy, communication, control, and emergent properties are used to identify relevant systems, as this information may provide useful insights for opportunities for change. Within SSM, these can be logically defined by constructing root definitions, which are then used to generate conceptual models of the selected systems. A root definition is expressed as a transformation process that takes some entity as input, change, or transforms that entity and produces a new form of the entity as output, a prescription for developing transformation processes for change. Each root definition must involve a certain view of the world and must involve the transformation of one input into one output (Rohs & Navarro, 2008:97). Two types of root definition can be identified, viz, issues based definitions and primary task definitions. It is important to draw at least one from each of these categories (Scott, 2005:179). While the formulation of good root definitions is decisive to the creation of the conceptual model, it needs to be tested. Root definitions can be tested against a group of elements known by the mnemonic CATWOE that defines a checklist: C A T W O E

– – – – – –

Customer Actors Transformation process Weltanschauung Owners Environmental constraints

– – – – – –

the victims or beneficiaries of transformation; those who would do T; the conversion of input to output; the worldview which makes T meaningful; those who could stop T; and elements outside the system which it takes as given (Rohs & Navarro, 2008:97).

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“The core of CATWOE is the pairing of transformation process T and the W, the Weltanschauung, or world picture which makes it meaningful. For any purposeful activity, there will always be a number of different transformations, by means of which it can be expressed, these deriving from different interpretations of its purpose” (Checkland & Scholes, 1990:35). CATWOE proposes that one should start with an undesired present situation and develop a vision for this situation in which the transformation process takes one from the present to the desired situation. Once the formulation of root definitions is complete, it is necessary to engage in an activity modelling process. In the building of this conceptual tool, it is important to note that the policy implementer needs to decide on the criteria of change required. It is thus important to defend the logic of the root definitions by asking whether such transformations are possible given the socio-politico environment of rural development and to question whether the key decision makers are the ones who own the problem (Luckett, Ngubane & Memela, 2001:571). In other words, the question must be asked whether their managers have the authority to act on the issue.

5.5.4

STAGE 4 – Conceptual Models

A conceptual model is a human activity model that strictly adheres to the root definition using the minimum set of activities needed to achieve the outcome or change. Unlike a qualitative modelling process, which uses pictures and diagrams, the conceptual model is to be expressed by verbs as is outlines activities to be carried out. The purpose according to Rohs and Navarro (2008:97) is “to have stakeholders involved in the process thinking deeply, creatively, and with a multi-disciplinary perspective, about how things might operate in the future, but without a commitment to actually implement any of the changes.” It is important to note that the construction of conceptual models was originally seen by Checkland (1981) as a formal process. He has since rejected this idea and supports the notion of a process model with a smaller number of steps wherein the model must have enough detail including resource use and performance measures for it to be evaluated but not necessarily with full specification (Checkland & Scholes, 1990:6). Since more than one model can be developed, the team decides on the model that best suits the situation. Different conceptual models representing different viewpoints are then used as basis for debate, which, through an appropriate process, can lead to feasible and desirable change and then into action.

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STAGE 5 – Comparing Conceptual Models with Reality

Comparing conceptual models with reality is back in the real world. Conceptual models are compared to the real world expressed in stage 2 by comparing the conceptual models to the real world description. According to Rohs and Navarro (2008:97), the objective here is to prepare the models to be presented to all stakeholders with the necessary communication mechanisms being prepared. The work at this stage may lead to the reiteration of stage 3 and stage 4. The comparison stage hence allows for the refinement of the model when it has to go back to the conceptualization stage. System thinking is applied here through which an iterative process that combines the perceived role, ideas, and methodology, which shape perceptions about the real world. The real world situation of concern hence produces choices of relevant systems of purposeful activity which may be compared to the perceived real situation resulting in action to improve the situation requiring thinking and debate about the social, political, and cultural issues that shape the problem situation (Checkland & Scholes, 1990:7). There are four ways of doing the comparison. These are the following: 1. Conceptual models – models are used to open up debate about change; 2. Comparing history with model prediction – reconstruction of events in the past and comparing what happened towards understanding failure; 3. General overall comparison – models are examined alongside the expression of the problem situation assembled in stage 2; and 4. Model Overlay – after completing conceptualization based on the chosen root definition, a model is made from what exists. The main aim of comparison is to answer the questions, “Why aren’t we doing it the ideal way? What is the reason for current behaviour? How do we measure to the ideal?” These questions are intended to motivate for change rather than to criticise current practice. The framework below can be used to answer such questions. It is important to note that in SSM, economic rationalism is not considered as the only criterion for management decision making (Luckett & Grossenbacher 2003:147). Instead, it suggests that decisions should be measured against five E’s: Efficacy – does the means work? Efficiency – are minimal resources being used to produce desired outcome? Effectiveness – is the desired outcome being produced? Ethicality – is the action fitting, moral? Elegance – is the result aesthetically pleasing? * * * * *

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STAGES 6 AND 7 – Implementing Feasible and Desirable Change

In stage 6, feasible and desirable changes are identified and discussed and are put into action in stage 7. While the purpose of the comparison stage is to debate about change, the outcome of stages 6 and 7 is the creation and implementation of a system for change. Changing structure and procedure are easier to change than changes to attitude, as these lie entrenched in the world-view held by individuals. Within rural development, this will require that the extension worker monitor and document what changes actually happen. Checkland indicated that the changes must be systemically desirable; in other words, small modifications must cause change to the overall effect of rural development based upon the insight gained through working with SSM. Through these changes, innovation becomes reality. Checkland argued further that the changes must be culturally feasible. For rural development, this is a critical part of the process in order to reach compromise in situations where proposed changes require a change in thinking and practice. It would be necessary for the practitioner to go back and draw on the knowledge gained during the problem expression stage if he or she is to understand how proposed changes might affect and be affected by the community. It is important to note that Checkland sees the implementation stage of SSM as a new human activity, which could restart the SSM process in which the convergence on some of the issues agreed in the early stages will not compromise learning. This requires that the practitioner focus on the skills set within the rural area with regard to SSM and their understanding of the experience which itself provides the impetus for change. The use of SSM in rural development requires that development practitioners assume an objective role in the process in order to allow for subjective responses to be generated. At the same instant, the practitioner has a key role in facilitating the participation of all stakeholders engaging in the modelling process and needs to bear in mind that all participants do not necessarily have equal choice over the decisions that are made. SSM is nevertheless efficient when developing a systems model of a poorly defined and complex problem area. It further provides opportunity to handle complex problems in a non-linear way that facilitates change through learning. SSM presents an opportunity for a bottom-up approach, which incorporates a participatory approach, and acknowledges that indigenous forms of knowledge held by rural communities. As a result, it presents an opportunity for creativity in the approach adopted, allows for learning and thus lays the foundation for innovation. SSM, by its nature, presents a method for social inquiry.

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CASES

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Most of the documented cases of SSM in rural development in South Africa are quantitative models related to information and communication technology. There is, however, an emerging trend to develop qualitative models using SSM to deal with social issues that are critical to rural development. Research undertaken by Smith (2006:256) into the best models for action research among rural famers in South Africa indicates that SSM is a useful methodology in situations requiring strategic thinking, effective implementation and management of rural projects where learning by both the local community and ‘expert’ can be made possible. Smith’s research indicates that while some apprehension may be experienced at the onset, once the actors in the process understand the process of engagement, learning, and the sharing of ideas are made possible, and hence, innovation becomes possible. A study conducted by Dlamini (2010:116-117) into rural housing in the KwaZulu Natal traditional authority areas under the ownership of Ingonyama Trust Board used SSM to assist rural communities to analyse the complex problems being experienced. Dlamini’s aim was to use an action research model to identify the problem situation and outline a useful intervention strategy to overcome the problem(s). Dlamini indicates that SSM assisted in raising sensitive and problematic issues, especially power relationships, and assisted in demystifying them in an effective manner that facilitated learning among participants. In other words, innovation became possible.

5.7

CRITIQUE

Checkland has accepted that the meaning of the dividing line between the real world and systems thinking was more ‘heuristic than theory based’ and that it implies a false dualism which soft systems need to move beyond (Tsouvalis & Checkland, 1996). Checkland’s ‘real world’ could therefore be a socially constructed world in which participants continually negotiate and renegotiate with others their perceptions and interpretations of the outside world (Checkland, 1985). It must be noted that this is problematic, as there is the assumption that all individuals who form part of organizations or systems have equal influence over these interpretations of the real world. Checkland and Scholes (1990) freely admit that there are barriers in the adoption of SSM. The methodological devise of developing relevant systems results in a situation where

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different analysts develop different interpretations. The SSM process is more important than the outcome, as the learning attained through the process has the potential to change opinion, perception and attitude about the situation and in turn stimulates change. The high levels of participation required by SSM assume that all participants are able to equally influence the situation. These high levels of participation are required in order to negotiate new meanings, and thus, the problem arises in determining an appropriate mechanism in order to incorporate conflicting interests. This forms part of the argument by Jackson (1991), who critiqued the work by Churchman, Ackoff, and Checkland and argued that SSM has a limited domain of application. The effectiveness of the inquiry needed depends on the user’s level of comfort with the SSM so that creativity is stimulated in recognizing the different world views. The application of SSM in rural development is dependent on the extension workers’ ability to establish a degree of power over the methodology, which is not necessarily possible. SSM appears to have a preoccupation with control over the processes. Hence, the issues of power and influence in a participatory process need to be carefully considered. This is reiterated by Flood and Jackson (1991), who criticized Checkland on the basis that the process of investigation does not take into consideration these power relations that shape the extent to which meanings are ‘negotiated’. In SSM, negotiations over meanings form a key feature of the use of the methodology, as SSM relies heavily on the skill, experience, and intuition of the analyst in looking at espoused theories versus theories in use as identified by Argyris and Schon (1978). This is reiterated by Checkland (1981), who emphasizes that human beings can always attach different meanings to the same social world. Midgley (1995) and Jackson and Flood (1991) argue that there is no effective methodology that addresses the issue of power. Ulrich (1996) raised questions regarding power relations within the SSM process but offered no solutions. Checkland does recognize that power differentials do exist and encourages a political analysis but does not give any indication what should be done with such an analysis in terms of the identification of hidden conflict within a problem situation. Checkland’s attempt to structure debate about change through the ‘accommodation’ of differing perceptions into interventions made in the real world therefore becomes problematic as the ‘accommodation’ may simply be a reflection of the dominant groups’ perception of the situation. As a result, there is a tendency for SSM to support the status quo rather than present opportunities for emancipation, which was explored as a possibility of systems methodologies by Argyris and Schon (1978). This was reiterated by Flood and Jackson (1991). SSM provides an opportunity to understand the ever-changing, complex nature of rural development and thus presents the actors of rural development an opportunity to consider innovative mechanisms towards the achievement of their goals and objectives.

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This facilitates better understandings by individuals of an organization of the complexity of their situations and how they impact on this complexity. While this facilitates more effective diagnoses of problems and the development of interventions to deal with problem situations, the success of such understandings and intervention are themselves dependent on the existence of a monitoring and evaluation system that makes a more concerted effort at development intervention that is directed and reliant on accountability and transparency as part of the new targets. SSM presents an opportunity to enhance creativity in diagnosing and addressing problems (Molineaux & Haslett, 2001:1). Through SSM, rural communities are offered opportunity to contribute to the framework of ideas and concepts through their descriptions of their perceptions of the situation. These are separate from the way in which the rural development system operates. The logic of SSM, as a result, is aimed at providing a platform whereby change can be facilitated through learning about the situation. SSM is thus not based on taking existing structures as the given determinant of behaviour but rather provides a mechanism that challenges traditional ways of seeing and doing things in order to find accommodation between the different interpretations of the situation at hand. The methodology provides a set of activities required in order to achieve this negotiated position, as well as identify the information and structure required, to support those activities through a method, which facilitates learning. As a result, SSM sets out to be neither a theory generation tool nor a theory testing tool (Rose, 1982). SSM not only allows for learning by the rural community but also presents an opportunity for learning by the development practitioners. This is reiterated by Rohs and Navarro (2008:97-98) that “most faculty involved in teaching, research, or extension excel in a subject matter discipline that does not include training on program development theory, concepts, or related principles, thus the importance of involving people throughout the process may be overlooked. SSM can be used independently or combined with other methods in a pluralist perspective to research.” According to Scott (2005:173), the “SSM approach can be used to provide a context within which community needs may be considered.” As a result, SSM sets the foundation for innovative thinking. Luckett and Grossenbacher (2003:149-150) point to the argument by Von Bulow that: SSM is a methodology that aims to bring about improvement in areas of social concern by activating in the people involved in the situation in a learning cycle, which is ideally never-ending. The learning takes place through an iterative process of using system concepts to reflect upon and

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debate perceptions of the real world, taking action in the real world, and again reflecting on the happenings using system concepts. Despite the shortcomings, the seven-stage analytical process suggested by SSM includes the efficient and spontaneous eliciting and implementation of knowledge. It moves from finding out about the problem to taking action to resolve the problem.

5.8

CONCLUSION

The complex nature of rural development in South Africa requires that implementers of policy adopt methodologies that facilitate effective and efficient policy implementation. SSM offers an opportunity to model the situation and, as a result, offers opportunity to not only understand the world but also, through the process, offers a mechanism for learning and change among the actors of rural development. SSM is thus not a method in the real sense; rather, it attempts to bring together diverse interests even though its openended nature makes it difficult to manage. SSM is unlikely to be a complete success or failure, as it reflects an evolutionary approach through its emphasis on the need for several iterations before any real learning can take place. If not monitored effectively, SSM can too easily ignore environmental and structural determinants and questions of power that mould rural development. Furthermore, while it is naïve to think that everyone can openly discuss problems, perceptions, and needs, SSM does present a platform for conversations between public servants and the recipients of public goods and services and encourages learning within the context of rural development. It is from this angle that SSM provides impetus for learning and change and, as a result, cannot be ignored as a problem-solving tool and as a tool for innovation in rural development. SSM is not suitable for all situations. Rather it needs to be considered as part of the toolbox of skills used to understand the complex nature of rural development. REFERENCES Argyris, C. & Schon, D. (1978). Organisational Learning: A Theory of Action Perspective. USA: Addison Wesley. Botha, C.A.J. & Coutts, J. (2011). Moving Change to the Top of the Agenda – Learning from the On-ground Decision-Makers. South African Journal of Agricultural Extension, 39(1), 1-16.

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Chambers, R. (1997). Whose Reality Counts? London: Intermediate Technology Publications. Checkland, P. & Scholes, J. (1990). Soft Systems Methodology in Action. United Kingdom: John Wiley. Checkland, P. (1981). Systems Thinking Systems Practice. United Kingdom: John Wiley & Sons Ltd. Checkland, P. (1985). Model Validation in Soft Systems Practice. Systems Research, 12(1), 47-54. Checkland, P. (2000). Soft Systems Methodology: A Thirty Year Retrospective. Systems Research and Behavioural Science, 17 (1), 11-58. Critchley, W. (ed). (1999). Promoting Farmer Innovation: Harnessing Local Environmental Knowledge in East Africa. RELMA Workshop Report No 2. Kenya: Regional Land Management Unit. Department of Science and Technology (DST). (2007). Innovation towards a Knowledge based Economy: Ten Year Plan for South Africa (2008-2018). Pretoria: DST. Dlamini, N. (2010). The Impact of Rural Housing Development in South Africa: A Case Study of Isimahla in Ugu District Municipality. A dissertation submitted in partial fulfilment of the Degree of Master of Commerce in project Leadership and Management. University of KwaZulu Natal. Douthwaite, B. (2002). Enabling Innovation: A Pracitical Guide to Understanding and Fostering Technological Change. London: Zed Books. Essmann, H.E. (2009). Toward Innovation Capability Maturity. PhD Thesis. Stellenbosch: Stellenbosch University (Unpublished). Flood, R.L. & Jackson, M.C. (1991). Creative Problem Solving: Total Systems Intervention. Chichester: Wiley. Hart, T., Jacobs, P., & Mhula, A. (2013). Review of South African Policy Strategy 1994 – 2012: Innovation for Rural Development. RIAT Concept Paper 3. HSRC.

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Hartwich, F. & Scheidegger, U. (2010). Fostering Innovation Networks: The Missing Piece in Rural Development? Rural Development News, 1, 70–75. Hildbrand, S. & Bodhanya, S. (2013). The Potential Vvalue of the Viable System Model as a Managerial Tool. Management Dynamics, 22(2), 2-15. Jackson, M. (1991). Systems Methodology for the Management Sciences. New York: Plenum. Luckett, S. & Grossenbacher, K. (2003). A Critical Systems Intervention to Improve the Implementation of a District Health System in KwaZulu–Natal. Systems Research and Behavioral Science. Special Issue: Systems Thinking for Social Responsibility, 20(2), 147-162. Luckett, S., Ngubane, S., & Memela, B. (2001). Designing a Management System for a Rural Community Development Organization Using a Systemic Action Research Process. Systemic Practice and Action Research, 14(4), 517-542. Marais, H.C. & Pienaar, M. (2010). Evolution of the South African Science, Technology and Innovation System 1994 – 2010: An Exploration. Journal of Science, Technology, Innovation and Development, 2(3), 82-109. Midgley, G. (1995). Mixing Methods: Developing Systemic Intervention. UK: University of Hull. Mohamed Sayeed, C. (2014). Good Food Security Governance amongst Extension Workers in KZN: A Public Administration Perspective. A thesis submitted in fulfilment of the requirements for the degree of Doctor of Administration (Public Administration). School of Management, IT and Governance: University of KwaZulu Natal. Mohamed Sayeed, C. & Pillay, P. (2013). Assessing South Africa’s Food Security Strategy through a Good Governance Lens. Politeia, 32 (2), 84-104. Molineaux, J. & Haslett, T. (2001). The Use of Soft Systems Methodology as a Tool for Creativity. Paper presented at the Annual Conference of the Australia and New Zealand Systems Society, Perth, WA. Oxford Dictionary of English. (1998). English Dictionary. England: Oxford University Press.

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Perret, S. (2004). Matching Policies on Rural Development and Local Governance in South Africa: Recent History, Principles, and Current Challenges. Paper presented at the workshop on “Local Governance and Rural Development”, organized jointly by GTZ and the University of Pretoria, Post Graduate School for Agricultural and Rural Development. Polcuch, E.F., Lugones, G., and Peirano, F. (2005). Innovation in Developing Countries: Characteristics and Measurement Priorities. Technology Policy Briefs, 4(1), 1-12. Maastricht: United Nations University Institute for New Technology. Rohs, F.R. & Navarro, M. (2008). Soft Systems Methodology: An Intervention Strategy. Journal of International Agricultural and Extension Education, 15(3), 95-98. Rose, G. (1982). Deciphering Social Research. London: Macmillan. Scott, L. (2005). Unpacking Developmental Local Governance Using Soft Systems Methodology and MCDA Tools. Orion, 21(2), 173-195. Senge, P. (1990). The Fifth Discipline. New York: Doubleday. Smith, D. (2010). Exploring Innovation, 2nd ed. Berkshire, USA: McGraw-Hill Education. Smith, H.J. (2006). Development of a Systems Model Facilitating Action Research with Resource-Poor Farmers for Sustainable Management of Natural Resources. Dissertation submitted in fulfilment of the requirements for the PhD degree in Sustainable Agriculture in the faculty of Biological and Agricultural Sciences, Centre for Sustainable Agriculture: University of the Free State. Tidd, J. & Bessant, J. (2009). Managing Innovation: Integrating Technological, Market and Organizational Change, 4th ed. Chichester: Wiley. Tsouvalis, C. & Checkland, P. B. (1996). Reflecting on SSM: The Dividing Line between ‘Real World’ and ‘Systems Thinking World’. Systems Research, 13(1), 34-35. Ulrich, W. (1996). A Primer to Critical Systems Heuristics for Action Researchers. United Kingdom: University of Hull.

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WHAT STRUCTURAL FACTORS INFLUENCE PUBLIC SERVICE DELIVERY? LESSONS LEARNED FROM A

STUDY

OF

SWISS MUNICIPALITIES

Reto Steiner, Claire Kaiser and Lukas Reichmuth

ABSTRACT Local governments are an important provider of public services. Decentralization, which is often supported by international organizations, has become an important reform strategy in many countries in recent decades. An analysis of the influence of structural variables on local public service delivery can be helpful to determine what tasks can be provided at the local tier of government and what organizational structures are most suitable. This article therefore investigates the question of what structural factors influence the provision of local services. Switzerland is selected as the unit of research. In Switzerland, one-third of public spending is done at the local level, showing the significance of local public service delivery. This article draws data from the Swiss Local Authorities Monitoring, a survey of all 2,324 Swiss municipalities that has been conducted in 2009/2010. Using regression analysis, the article indicates that structural variables influence public service delivery. We can therefore learn how structures should be designed to help municipalities perform better.

6.1

INTRODUCTION

Local authorities are a significant player in providing public services. During the last decades, decentralization has been an important reform strategy in many countries, usually supported by international organizations. Traditional arguments suggest that efficiency and quality gains in the provision of public services are achieved through decentralization along with greater expectations for accountability and responsiveness. However, Robinson (2007) warns that there are also dangers involved in decentralization, for example, local administrations could be understaffed, which can potentially lead to poorer public service provision.

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LUKAS REICHMUTH

To decide what tasks can be provided at the local tier of government and what organizational structures are most suitable, the influence of structural variables on local public service delivery need to be analyzed. The main research question of this article is, therefore, as follows: what structural factors influence the provision of public services at the local level? We draw on survey data taken from a longitudinal survey from the year 2009/2010 by the highest ranked local bureaucrats in Switzerland, which serves as a prime example of a decentralized state. Approximately 70 per cent of the total expenditures are being spent at the local level. Swiss municipalities carry out a wide range of tasks. Therefore, we were able to analyze the service provision in seven task categories. The article is structured as follows. First, after a review of the existing literature, possible structural factors are suggested, and six corresponding hypotheses are proposed. Second, the methodological steps of the analyses are explained. Third, the general situation of Swiss municipalities is presented in brief, followed by a presentation and discussion of the empirical results.

6.2

THEORETICAL BACKGROUND

AND

HYPOTHESES

The existing literature in the broad field of public service delivery efficiency at the local tier of government follows two main research directions (Afonso & Fernandes, 2008). One branch focuses on the question of whether or not local governments should contract out public services and only guarantee their provision. Good governance in this setting is linked to cutting the cost of service delivery. Many studies in this field focus on a single service area. Waste collection, among other services, is prominently investigated (i.e., Dijkgraaf & Gradus, 2003; Bel & Miralles, 2003; Antonioli & Filippini, 2002; Callan & Thomas, 2001; McDavid, 2001). Another branch focuses on overall government efficiency; researchers identify good local governments where input and output relationships are most favorable (e.g., Kalb et al., 2012; Geys & Moesen, 2009; Borge et al., 2008). These two research approaches then inevitably lead, e.g., to questions regarding the optimal allocated resources, the size of the local governing body or its organizational structure. This article pursues a different angle in the discussion of public service delivery efficiency. Rather than identifying efficient local governments, we investigate what structural factors might be beneficial when organizing public service provision. Literature addressing which factors influence public service delivery is scarce. Although focusing on performance improvement, Boyne (2003) states that there exist only vague theories that identify variables believed to influence public service provision. In his rigorous review, he

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recognizes five broader categories (resources, regulation, market structure, organization and management), of which, in the end, partially because of the limited number of studies, only resources and management appear to have a clearly significant influence on service provision. However, single studies in the other three categories also sometimes show a significant influence on service delivery. Only when service delivery is analyzed together with other studies within the same category is the direction of influence offset, and thus, it remains unstable. Thus, the assumption that these variables still might influence service delivery cannot be fully rejected. To identify structural factors that influence public service delivery, we test the three most commonly theorized factors (size, resources and economic level) and add a fourth dimension, culture, to the analysis. In the remainder of this chapter, we first present theoretical arguments and then subsequently propose one or more hypotheses for each of the four factors. Size: The question of whether size influences municipalities’ performance has a long tradition (Avellaneda & Gomes, 2015). Amalgamation reforms in many countries follow the argument that larger municipalities are more cost-efficient. They argue that economies of scale mean that a small municipality can benefit from merging into a bigger one. Boyne (1992) identifies three cost-saving mechanisms. Larger municipalities benefit from administrative synergies, greater purchasing power and a greater scope when acquiring sophisticated technical equipment. However, Allan (2003:76) critically notes that many international researchers link larger municipalities with less economical spending. This circumstance could stem from coordination needs that arise within the municipalities. Nevertheless, size as a possible influencing factor should be further investigated. In the data set, municipal secretaries were asked about the extent to which they perceived that their municipalities had the capacity to provide certain public services. Our hypothesis is that, at least to a certain threshold, a municipality can profit from an economy of scale effect. Following this argument, larger municipalities should then encounter less difficulty when providing public services. In contrast, De Borger and Kerstens (1996) link population density and efficiency, arguing that the less densely populated a region is, the less efficiently public services are provided. Density as a second possible factor should be further analyzed. We thus arrive at the following two hypotheses: H1: The more populated a municipality is, the less the difficulty it encounters when providing public services. H2: The more densely populated a municipality is, the less the difficulty it encounters when providing public services.

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Resources: Our hypothesis is that municipalities with greater relative administrative resources1 face less difficulty in public service provision because they have more specialized and probably better trained staff. Additionally, executive resources2 could also influence service provision. Many small municipalities do not have fully professional executives; they are so small that their executives are only paid part-time. We expect that municipalities with fewer executive resources will encounter more difficulty in public service provision because there is less leadership in such municipalities. Below are the two hypotheses: H3: The greater a municipality’s administrative resources are, the less the difficulty it encounters when providing public services. H4: The greater a municipality’s executive resources are, the less the difficulty it encounters when providing public services. Economic level: Another possible influence on public service provision is the municipality’s economic level. The argument is that wealthier municipalities are under less pressure to spend efficiently and that they provide more services than poorer municipalities. A number of researchers report that wealthier municipalities do indeed show less efficiency (Spann, 1997; De Borger & Kerstens, 1996; Silkman & Young, 1982; Kitchen, 1976). In contrast, Gimenez and Prior (2003) found no significant difference between the efficiency levels of wealthier Spanish municipalities. Because there are considerable differences in the economic levels of Swiss municipalities, this could potentially influence public service delivery. We argue that wealthier municipalities have more resources to provide public services and should therefore encounter less difficulty, no matter how efficiently they provide the services. H5: Wealthier municipalities encounter less difficulty in public service delivery.

1

Administrative resources (per 1,000 residents): Administrative staff in FTE Number of residents  1; 000

2

Executive resources (per 1,000 residents): Size of Executive in FTE Number of residents  1; 000

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Cultural context: Because Switzerland has four official languages, it could be researched whether municipalities from the French- and Italian-speaking regions self-assess greater difficulty in providing public services than do German-speaking municipalities. Most studies in the field of public service provision focus on municipalities within the same cultural context. Researchers restrict their fields of study to one country or language region because in these cases, input and output factors are easily compiled and comparable. A good example for that is Belgium. Surprisingly, no studies on Belgium exist that explain differences in public service provision based on whether municipalities are located in the Flemish or Walloon regions of the country. De Borger et al. (1994:356) admit in their footnotes that in an earlier version of their work, regional factors were included in the analysis. However, because they were unable to stringently explain the differences, they later dropped this factor due to the heated political discussion on regional issues. We will consider the cultural context factor in our analysis. We argue that German-speaking municipalities face fewer difficulties in providing public services because they have been more influenced by the New Public Management concepts from Anglo-Saxon countries and have therefore improved the steering and performance of their service provision. Additionally, direct democracy is common in the German-speaking municipalities, which encourages these administrations to adapt more directly to the needs of their citizens and to make service provision more efficient. H6: German-speaking municipalities face fewer difficulties when providing public services. 6.3

METHODOLOGY

This article is based on data from the Swiss Local Authorities Monitoring. This is a longitudinal written survey of all 2,324 Swiss municipalities that has been conducted regularly every five years since 1988. For this article, we chose the most recent survey, which was administered in the year 2009/2010 and had a response rate of 58 per cent. The highest ranked bureaucrats in the municipalities (called municipal secretaries) were questioned about the financial condition of their municipality, the structure of their administration and any political and administrative reforms they had instituted. Additionally, through self-assessment, top-level bureaucrats were asked to rate how their municipality performed in the 30 most important policy areas. The secretaries could assess whether their municipalities had no performance limits, whether any limits were in sight or if they had been reached or exceeded.

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LUKAS REICHMUTH

For the empirical part of the article, regression analysis was conducted to test the hypotheses and determine what structural factors influence the municipalities’ performance using task fulfillment performance as a dependent variable and various structural variables as independent variables. In a first step, the 30 task areas were examined individually. In a second step, seven groups of tasks were formed (education, social welfare, government and administration, security, promotion of economic development, infrastructure and culture). In a third step, an overall index of the 30 task areas considered in the study was built. This overall index of performance limits is calculated using the average values of the municipalities’ responses for the 30 task areas. This index can thus vary between 1 (no performance limits), 2 (performance limits in sight), 3 (performance limits reached) and 4 (performance limits exceeded). The main characteristics of the variables used in the article are provided in Appendix 1; the descriptive statistics and details on the operationalization can be found in Appendix 2.

6.4

TASKS

OF THE

SWISS MUNICIPALITIES

For a better understanding of the article, the general situation of the Swiss municipalities is presented in brief. In Switzerland, municipalities are part of the 26 cantons that form the Swiss federal state. They are under cantonal supervision, and it is left to the cantons to organize the municipalities and determine their tasks (Friederich et al., 1998:11 et seq.). Under the cantonal laws, municipalities can select an appropriate structure and administrative organization, levy taxes and independently fulfill those tasks that do not lie within the jurisdiction of the cantons or the federal government (Linder, 1999:156 et seq.). The municipalities are characterized by their smallness, their manifold responsibilities and their relatively large degree of autonomy (Ladner, 2008:1). The territorial structure is quite heterogeneous and small-scaled. The 2,324 Swiss municipalities each have a median population of 1,214 inhabitants and a mean of 3,163 (Federal Statistical Office, 2013). The relatively large amount of autonomy of Swiss local authorities is evident in the fact that the municipalities obtain 70 per cent of their gross income by means of their own financial resources. In no other European country is the transfer of resources from the superordinate state to the local authorities lower than in Switzerland (Council of Europe, 1997:25). The municipalities fulfill the tasks that are defined by communal, cantonal and federal politics. Because of Switzerland’s federal structure, the tasks carried out by the municipalities

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vary from canton to canton. The following tasks are usually fulfilled by the municipalities (Steiner & Kaiser, 2013): Education: kindergarten, primary school, secondary school Welfare and health: social welfare, home care nursing services, retirement homes, tasks concerning social insurance Provision and disposal: water, sewage, waste, electricity Transport: public transport within the municipality Buildings: land use planning, building police, land- and townscape preservation, road and path networks, sports infrastructure, cultural events and issues Internal organization: appointment of authorities, organization of the administration, human resource management Financing: budgeting and accounting, managing communal assets, fixing tax rate Municipal police: fire, traffic, factory inspectorate Citizenship: granting local citizenship to foreign residents * *

* * *

*

* * *

During the last decade, the Swiss cantons reorganized the repartition of tasks between the cantonal and communal levels. The new system of fiscal equalization and the division of tasks between cantons and the confederation (NFE), which came into effect in 2008, also acted as a trigger for clarifying the responsibilities between the cantons and the municipalities. It is striking that in recent years, tasks have shifted from the communal to the cantonal levels, justified by the cantons' greater proficiency and stronger financial power and the argument that smaller municipalities may no longer be able to adequately fulfill their tasks (Steiner & Kaiser, 2013).

6.5

EMPIRICAL RESULTS

To examine the hypotheses, the analysis of the empirical data is structured as follows. First, the influence of the structural variables on overall task fulfillment is observed using an overall index. Then the different task groups (education, social welfare, government and administration, security, promotion of economic development, infrastructure and culture) are examined separately. To learn more about the influence of structural factors such as size, region, economic level and resources, a regression analysis was conducted to predict overall task fulfillment (Table 6.1). The prediction model using the overall index shown in Table 6.1 is not statistically significant, F (15, 264) = 0.981, p < 0.01. R2 is 0.053, which means that the model accounts for 5.3 per cent of the variation in the dependent variable, i.e., the overall service delivery

105

Population density

106 .135

.055 .138

- No change in earnings vs. earnings .075 decrease

Communal debt: .054 - No change in debt vs. debt increase

.030

.031

- No tax rate change vs. tax reduction

.019 Earnings: - No change in earnings vs. earnings increase

.074

.032

Tax rate: - No tax rate change vs. tax increase

.057

.038

.024

.047

.155**

Position in the cantonal realignment .002

Finances

Administrative resources (per 1000 residents)

Executive resources (per 1000 residents)

.061

.153**

-German vs. Italian

.008

.118

.187***

Difference Overall Index 2005 and 2009

.044

.018

.008

.099

.071

.035

.065

.091

.071

.177***

.080

.019

.155*

.010

.003

.050

.036

.066

.012

.081

.164***

.133**

.147**

.084

Education Culture 2009 2009

.070

.128

.181*

.048

.073

.005

.008

.073

.285***

.018

.090

.060

Infrastructure 2009

.098

.023

.004

.065

.098

.078

.006

.091

.082

.031

.016

.010

Economic Development Promotion 2009

.144*

.020

.165*

.133*

.056

.022

.027

.062

.205***

.107

.001

.063

Security 2009

.000

.008

.095

.019

.025

.050

.003

.036

.198***

.180***

.072

.074

Government and Administration 2009

.017

.066

.088

.022

.044

.019

.068

.038

.131**

.002

.084

.052

Social Services 2009

AND

Human resources

.052

.061

Language region: -German vs. French

Region

.052

Overall Index 2009

β

Structural Characteristics of Municipalities’ Performance Limits in Switzerland

Population size

Size

Table 6.1 RETO STEINER, CLAIRE KAISER LUKAS REICHMUTH

0.053

Note: * p < .05, ** p < .01, *** p < .001

R

2

Perception of municipal autonomy

.038

.042

Affected by the financial and economic crisis

Autonomy

.126

- No change in debt vs. debt decrease

0.080

.017

.070

.044

0.091

.043

.113

.072

0.082

.039

.008

.157*

0.117

.069

.009

.131

0.044

.026

.047

.128

0.124

.093

.022

.207**

0.109

.086

.051

.121

0.040

.005

.068

.058

6 WHAT STRUCTURAL FACTORS INFLUENCE PUBLIC SERVICE DELIVERY? LESSONS LEARNED FROM A STUDY OF SWISS MUNICIPALITIES

107

RETO STEINER, CLAIRE KAISER

AND

LUKAS REICHMUTH

performance. Although the influence is rather small, we can see that the structural factors do make some difference in how a municipality is able to fulfill its tasks. Whether a municipality is located in the German- or Italian-speaking regions of Switzerland is significant, but the remaining independent variables are not statistically significant. Next, the task area of education is studied. The model (Appendix 5) is statistically significant, F (15, 264) = 1.759, p < 0.001, and accounts for 9.1 per cent of the variation in the dependent variable. A statistically significant influencing factor is whether a municipality is located in the German- or the French-speaking regions of Switzerland. The other factors in the model are not statistically significant. The results show that municipalities in the French-speaking region of Switzerland reach performance limits in education less often. Regarding cultural public service delivery, the overall model is not statistically significant, with F (15, 264) = 1.574, p < 0.001, and it accounts for 8.2 per cent of the variation in the dependent variable. However, the location of the municipality significantly affects public service provision. Compared with German-speaking municipalities, Italian- and Frenchspeaking municipalities encounter more difficulty in providing cultural public services (the respective values are 0.164*** and 0.133**). In addition, density as a structural factor affects the delivery of cultural public services. More densely populated municipalities perceive greater difficulty in providing public services. Although to a less significant extent, changes in municipal debt also influence cultural service provision. Interestingly, it does not matter whether the debt increases or decreases – the respective values are nearly identical (0.155* and 0.157*). The other structural factors in the model are not statistically significant. Examination of infrastructure as an important municipal task showed that the model is statistically significant, with F (15, 260) = 2.286, p < 0.005. The model accounts for 11.7 per cent of the variation. Being located in the Italian-speaking part of Switzerland strongly influences municipal service delivery. These municipalities encounter significantly more difficulty in providing infrastructural services compared with their German-speaking neighbors. The value of 0.285*** is the highest value in the entire model, and it therefore indicates that many Italian-speaking municipalities face infrastructural problems. The only other significant value demonstrates that municipalities that benefit from increased earnings encounter less difficulty in providing infrastructural public services ( 0.181*). In the field of economic development promotion, no significant values are observed. The model accounts for only 4.4 per cent of variation, with F (15, 264) = 0.673, p < 0.001. None of the proposed structural factors appear to influence whether municipalities encounter difficulties in economic development promotion.

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For the next group of tasks, security, the model accounts for 12.4 per cent of the variation, with F (15, 251) = 2.359, p < 0.005; it is statistically significant. Italian-speaking municipalities again encounter more difficulty in providing public services compared with German-speaking municipalities. The value of 0.205*** is the third highest significant value and is significant at the 1 per cent level. The two financial factors – ‘tax reduction’ and ‘increased earnings’ – indicate that municipalities that benefit from newly gained financial resources encounter less difficulty in providing public security services. The corresponding values are 0.133* and 0.165*, respectively. However, mixed results are observed when the debt level has changed during the last four years. More difficulties in providing public security services occur when debt increased or decreased. The latter effect is stronger and more robust, as the values are 0.144* and 0.207**, respectively. The model for government administration accounts for 10.9 per cent of the variation, with F (15, 261) = 2.137, p < 0.01; it is also statistically significant. Only the two regional factors significantly influence the provision of government services. Whereas the Frenchspeaking municipalities faced performance limits less frequently, the Italian-speaking municipalities faced more of these limits in providing government services. The values are comparably strong, 0.180*** for the French-speaking and 0.198*** for the Italianspeaking municipalities. The last group of tasks incorporates the delivery of social services. The model is not statistically significant, with F (15, 264) = 0.731, p < 0.001. Again, only being located in the Italian-speaking region of Switzerland affects the provision of social services. These municipalities face performance limits earlier compared with German-speaking municipalities, with a corresponding value of 0.131**. The models were tested for multicollinearity. VIF tests and tolerance statistics indicate that there is no cause for concern regarding multicollinearity (all VIF values are less than 10, the average VIF value is not substantially greater than 1, and the tolerance is above 0.2 in all cases (Field, 2009: 241 et seq.)).

6.6

DISCUSSION

When viewing these results, there are relatively weak connections between the proposed structural factors and the dependent variable. A number of explanatory factors come to mind. First and most importantly, municipalities are social constructs. They are relatively independent in deciding which public services should be provided and what level of

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AND

LUKAS REICHMUTH

quality is expected by their citizens. Although there are some mandatory public services across Switzerland, the extent to which municipalities provide the different public services varies considerably. This circumstance stems mostly from the cantonal municipal laws, which define the autonomy of the municipalities according to the Swiss constitution and also form the very different characteristics of the Swiss municipalities. For a comparably small country, the range of municipalities from an international financial hub such as Zurich, with 400,000 residents, to small rural municipalities such as Corippo, with 17 residents, is extensive. All municipalities have the same rights within a canton. Second, citizens’ preferences set the level of expected public services in a municipality. When there is a lack of financial resources, citizens must decide if they want more services and are willing to pay higher taxes or if they prefer the present services at lower costs. Therefore, it is not surprising that the citizens in smaller municipalities may not ask for very high levels of public services and are more easily satisfied. The fact that more densely populated municipalities encounter more difficulty in providing public services in the cultural area is a striking example. In other words, cities reach or exceed performance limits, but less densely populated, mostly rural municipalities encounter fewer or no problems in that area. This circumstance can be explained by the fact that, for example, theaters as a cultural service are mostly built in cities or regional centers. The adjacent, more rural municipalities do not need to build their own theaters because their citizens can attend theaters only a short distance outside of their municipality. Because the citizens of the small, less densely populated municipalities do not require high levels of service provision, the municipalities face no limits in providing this service. It is recognized that municipalities centered around large cities profit to a certain extent from services provided by the city. Partial internalization of these costs takes place through the cantonal realignment systems. A similar argumentation applies when observing changes in the municipalities’ debt situations. For cultural as well as security tasks, neither decreased nor increased debt benefited the provision of public services in any area. The former circumstance may be explained by the fact that in economically strong times, citizens’ demands for new or better public services increase considerably. Thus, administrations are faced with additional tasks that in turn could test their performance limits in a particular area. In contrast, when a municipality faces increased debt, citizens may not request additional services. However, even the required minimal level of public service delivery may prove to be challenging for a financially struggling municipality. Municipalities in the Italian-speaking region encounter considerably greater difficulties across nearly all service areas. The French-speaking municipalities, however, do not

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encounter more challenges than the German-speaking municipalities. For both government and administrative issues as well as education tasks, French-speaking municipalities even have significantly fewer problems. Cultural factors appear to play only a minimal role. The Italian-speaking region of Switzerland faces relatively high unemployment because of the competition from lowpaid workers who come from Italy. Additionally, the mountainous areas of the canton present a challenge. These factors may lead to the problems confronted by these municipalities and likely not the different cultural contexts per se. In summary, in the first hypothesis, we argued that a more populated municipality faces fewer difficulties in providing public services. We argued that these municipalities could be profiting from an economy of scale effect. However, as shown above, this is not the case. In contrast, more populated municipalities may need to cover certain extra burdens because they function as regional centers. H1 is therefore rejected. We hypothesized in H2 that a more densely populated municipality would face less performance limits. Based on the results, this hypothesis can be neither supported nor rejected. However, there are indications that less densely populated, mostly rural municipalities are not more likely to face difficulties in the provision of public services because they only provide limited services to their citizens. In H3 and H4, we argued that administrative or executive resources may strengthen municipalities and therefore lead them to encounter fewer difficulties in providing public services. Based on the results, both hypotheses can be rejected. Administrative and executive resources appear to have no significant influence on public service delivery. In H5, we argued that wealthier municipalities encounter fewer difficulties. The argumentation was that with additional resources, certain tasks could be more easily fulfilled. Based on the results, this could only be partially supported. Only with security tasks was an indication that wealthier municipalities face fewer challenges in providing public services. Wealthier municipalities are faced with increasing demands for new and better public services. In the last hypothesis, we argued that the cultural context plays a significant role, and this is only partly supported by our empirical work. Italian-speaking municipalities face more challenges, but the reason for this finding is likely not the culture per se but the difficult economic conditions in the canton of Ticino. After having analyzed four structural factors, we can only offer partially significant results in a few areas. What are the reasons for this lack of significance? First, it is evident that the self-assessment of difficulties in service provision is not an ideal measurement tool. This

111

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AND

LUKAS REICHMUTH

type of data says nothing about the actual quality of the public services nor does it specify where the difficulties stem from: is it because the citizens have unusually high expectations for certain services, or is it because municipalities cannot provide even basic service levels? Either way, the survey data are not necessarily consistent with underlying structural factors, which, in turn, render significant results impossible to achieve. A possible second factor could be in the choice of a linear regression analysis. A structural factor such as size may influence public service provision nonlinearly rather than linearly. Boyne (2003) suggests that there might be a threshold beyond which very small and large municipalities are increasingly ineffective because of their small size or managerial overhead, respectively. What can practitioners and policy-makers take away from this article? Most importantly, structural factors such as size, administration, and financial resources might not play such an important role in municipalities’ public service provision. Smaller municipalities might aim for a niche in which only a basic level of public services at low(-er) costs is provided to citizens. This differentiation between municipalities only confirms Tiebout’s model of ‘voting by feet’, in which citizens move to municipalities where their needs are best satisfied, be it a surplus of public services at a higher price or a basic level at minimal cost. It should be noted, though, that the central governments must approve certain structural differences between the municipalities to create competition. Realignment systems between municipalities should be limited to guarantee that all municipalities can provide at least a minimal level of public services.

6.7

CONCLUSION

Simple slogans such as ‘bigger is better’ play an important role when governments attempt to convince parliaments and citizens that structural reforms at the local tier of government are necessary. Our study of the Swiss municipalities shows that such technocratic mono-causal explanations do not reflect the conditions found in the municipalities. Some municipalities face challenges in providing public services, but they can be found in very different settings. Internal capacities, financial resources, and the cultural context may all play a role, but these are only some of the influences. It may be that citizens in poorer neighborhoods have lower expectations and are therefore satisfied with the level of services offered by their municipality. This would be in accordance with Tiebout’s model of ‘voting by feet’, which says that municipalities compete with each other, leading to differences in municipalities being supported by citizens whose needs are satisfied. Only

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arguments of distributional justice would therefore justify enforced structural reforms by the central government. REFERENCES Afonso, A. & Fernandes, S. (2008). Assessing and explaining the relative efficiency of local government. The Journal of Socio-Economics, 37 (5), pp 1946-1979. Allan, A.M. (2003). Why smaller councils make sense. Australian Journal of Public Administration, 62 (3), pp 74-81. Antonioli, B. & Filippini, M. (2002). Optimal size in the waste collection sector. Review of Industrial Organisation, 20 (3), pp 239-252. Avellaneda, C.N. & Gomes, R.C. (2015). Is small beautiful? Testing the direct and nonlinear effects of size on municipal performance. Public Administration Review, 75 (1), pp 137-149. Bel, G. & Miralles, A. (2003). Factors influencing privatisation of urban solid waste collection in Spain. Urban Studies, 40 (7), pp 1323-1334. Borge, L-E., Falch, T. & Tovmo, P. (2008). Public sector efficiency: the roles of political and budgetary institutions, fiscal capacity and democratic participation. Public Choice, 136 (3-4), pp 475-495. Boyne, G.A. (1992). Local Government Structure and Performance: Lessons from America? Public Administration, 70, pp 333-357. Boyne, G.A. (2003). Sources of Public Service Improvements: A critical review and research agenda. Journal of Public Administration Research and Theory, 13 (3), pp 367-394. Callan, S. J. & Thomas, J. M. (2001). Economies of scale and scope: a cost analysis of municipal solid waste services. Land Economics, 77 (3), pp 548-560. Council of Europe (1997). Local Finance in Europe, No. 61. Strasbourg: Council of Europe Publishing.

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De Borger, B. & Kerstens, K. (1996). Cost efficiency of Belgian local governments: a comparative analysis of FDH, DEA and economic approaches. Regional Science and Urban Economics, 26, pp 144-170. De Borger, B., Kerstens, K., Moesen, W., & Vanneste, J. (1994). Explaining differences in productive efficiency: An application to Belgium municipalities. Public Choice, 80 (3/4), pp 339-358. Dijkgraaf, E. & Gradus, R. H. J.M. (2003). Cost savings of contracting out refuse collection. Empirica, 30 (2), pp 149-161. Federal Statistical Office [FSO] (2013). Amtliches Gemeindeverzeichnis der Schweiz, Angekündigte Änderungen 2013, Ausgabe vom 26.03.2013. Neuenburg: The Statistical Encyclopedia. Field, A. (2009). Discovering Statistics Using SPSS. London/Thousand Oaks/New Delhi/ Singapore: SAGE Publications. Friederich, U., Arn, D. & Wichtermann, J. (1998). Neubildung Politischer Gemeinden im Kanton Schaffhausen. Überlegungen zu einer Optimalen Gemeindegrösse und zu Vor- und Nachteilen von Gemeindefusionen. Bern: Mimeo. Geys, B. & Moesen, W. (2009). Measuring local government technical (in)efficiency in Flemish municipalities: an application and comparison of FDH, DEA and econometrics approaches. Public Performance and Management Review, 32 (4), pp 499-513. Gimenez, V.M. & Prior, D. (2003). Evaluacion frontera de la eficiencia en costes. Aplicacion a los municipios de Cataluna. Papeles de Economia Espanola, 95, pp 113-124. Kalb, A., Geys, B., & Heinemann, F. (2012). Value for money? German local government efficiency in a comparative perspective. Applied Economics, 44 (2), pp 201-218. Kitchen, H. M. (1976). A statistical estimation of an operation cost function for municipal refuse collection. Public Finance Quarterly, 4 (1), pp 56-76. Ladner, A. (2008): Die Schweizer Gemeinden im Wandel: Politische Institutionen und lokale Politik. Lausanne: IDHEAP.

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Linder, W. (1999). Schweizerische Demokratie. Institutionen, Prozesse, Perspektiven. Bern, Stuttgart, Wien: Haupt. McDavid, J. C. (2001). Solid-waste contracting-out, competition, and bidding practices among Canadian local governments, Canadian Public Administration, 44 (1), 1-25. Papst Pius XI. (1931). Enzyklika Quadragesimo Anno. URL: , accessed: 10.10.2013. Robinson, M. (2007). Does decentralisation improve equity and efficiency in public service delivery provision? IDS Bulletin, 38 (1), pp 7-17. Silkman, R. & Young, D. R. (1982). X-Efficiency and state formula grants. National Tax Journal, 35 (3), pp 383-397. Spann, R. M. (1997). Public versus private provision of governmental services. In T.E. Borcherding (Ed.), The Source of Government Growth (pp 71-89). Durham: Duke University Press. Steiner, R. & Kaiser, C. (2013). Die Gemeindeverwaltung. In A. Ladner, J.L. Chappelet, Y. Emery, P. Knoepfel, L. Mader, & N. Soguel (Eds.), Handbuch der öffentlichen Verwaltung in der Schweiz (pp. 149-165). Zürich: NZZ Libro.

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APPENDIX 1

MAIN CHARACTERISTICS

Categories Dependent variables

Independent variables

OF

VARIABLES USED

Variable

IN THE

ANALYSIS

Year

Sources

1. Performance limits (overall index)

2009/2010

Survey of Swiss local secretaries

2. Performance limits (education)

2009/2010

Survey of Swiss local secretaries

3. Performance limits (culture)

2009/2010

Survey of Swiss local secretaries

4. Performance limits (infrastructure)

2009/2010

Survey of Swiss local secretaries

2009/2010 5. Performance limits (promotion of economic development)

Survey of Swiss local secretaries

6. Performance limits (security)

2009/2010

Survey of Swiss local secretaries

7. Performance limits (government and administration)

2009/2010

Survey of Swiss local secretaries

8. Performance limits (social services)

2009/2010

Survey of Swiss local secretaries

9. Population size

2009

Federal Statistical Office

10. Language region

2009

Federal Statistical Office

11. Executive resources

2009/2010

Survey of Swiss local secretaries

12. Administrative resources

2009/2010

Survey of Swiss local secretaries

13. Position in the cantonal realignment

2009/2010

Survey of Swiss local secretaries

14. Tax rate change

2009/2010

Survey of Swiss local secretaries

15. Change in communal earnings

2009/2010

Survey of Swiss local secretaries

16. Change in communal debt

2009/2010

Survey of Swiss local secretaries

17. Affectedness by the financial and economic crisis

2009/2010

Survey of Swiss local secretaries

18. Perception of municipal autonomy

2009/2010

Survey of Swiss local secretaries

116

APPENDIX 2

DESCRIPTIVE STATISTICS AND OPERATIONALIZATION OF VARIABLES USED IN THE ANALYSIS

Variables

Description/ Operationalization

N

M

SD

Min

Max

1. Performance limits (overall index)

3579

0.6

0.8

0.0

3.3

Mean performance limits (PL) in 31 task areas: 1=no PL; 2=PL in sight; 3=PL reached; 4=PL exceeded

2. Performance limits (education)

3580

0.5

0.8

0.0

4.0

Mean performance limits (PL) in education tasks: 1=no PL; 2=PL in sight; 3=PL reached; 4=PL exceeded

3. Performance limits (culture)

3580

0.5

0.7

0.0

4.0

Mean performance limits (PL) in cultural tasks: 1=no PL; 2=PL in sight; 3=PL reached; 4=PL exceeded

4. Performance limits (infrastructure)

1391

1.4

0.5

1.0

3.8

Mean performance limits (PL) in infrastructure tasks: 1=no PL; 2=PL in sight; 3=PL reached; 4=PL exceeded

5. Performance limits (promotion of economic development)

3580

0.4

0.8

0.0

4.0

Mean performance limits (PL) in promotion of economic development: 1=no PL; 2=PL in sight; 3=PL reached; 4=PL exceeded

6. Performance limits (security)

1307

1.5

0.7

1.0

4.0

Mean performance limits (PL) in security tasks: 1=no PL; 2=PL in sight; 3=PL reached; 4=PL exceeded

1392 7. Performance limits (government and administration)

1.4

0.5

1.0

4.0

Mean performance limits (PL) in government and administrative tasks: 1=no PL; 2=PL in sight; 3=PL reached; 4=PL exceeded

8. Performance limits (social services)

3579

0.5

0.8

0.0

4.0

Mean performance limits (PL) in social tasks: 1=no PL; 2=PL in sight; 3=PL reached; 4=PL exceeded

9. Population

2596

2957.0 10425.9 18.0

365132.0

Municipal population

10. Language region: German vs. French

2596

0.3

0.5

0.0

1.0

Dummy variable (0=municipality in the German-speaking region; 1=municipality in the French-speaking region)

Language region: German vs. Italian

2596

0.1

0.3

0.0

1.0

Dummy variable (0=municipality in the German-speaking region; 1=municipality in the Italian-speaking region)

117

APPENDIX 11. Executive resources

548

31.4

101.6

12. Administrative resources

790

943.2

13. Position in the cantonal realignment

1319

14. Tax rate: No tax rate change vs. tax increase

0.0

2173.9

Number of executives (FTE) divided by the number of residents (per 1,000 residents)

2016.0 0.0

46121.1

Number of administrative staff (FTE) divided by the number of residents (per 1,000 residents)

0.8

0.8

0.0

4.0

Position of the municipality in the inner cantonal realignment (transfer payments): 0=net payer; 1=net recipient

1408

0.1

0.3

0.0

1.0

1=tax rate increased between 2005 and 2009; 0=all else

1408 Tax rate: No tax rate change vs. tax reduction

0.5

0.5

0.0

1.0

1=tax rate decreased between 2005 and 2009; 0=all else

1368 15. Earnings: No change in earnings vs. earnings increase

0.7

0.5

0.0

1.0

1=earnings from income and wealth taxes increased between 2005 and 2009; 0=else

1368 No change in earnings vs. earnings decrease

0.2

0.4

0.0

1.0

1=earnings from income and wealth taxes decreased between 2005 and 2009; 0=else

16. Communal debt: 1365 No change in debt vs. debt increase

0.3

0.4

0.0

1.0

1=communal debt increased between 2005 and 2009; 0=all else

Communal debt: 1365 No change in debt vs. debt decrease

0.5

0.5

0.0

1.0

1=communal debt decreased between 2005 and 2009; 0=all else

17. Affected by the financial and economic crisis

1345

0.9

0.3

0.0

1.0

Whether the municipality was affected by the financial and economic crisis: 0=not affected; 1=affected

18. Perception of municipal autonomy

1365

4.6

1.8

1.0

10.0

Perceived municipal autonomy on a scale from 1 (=no autonomy at all) to 10 (=a great deal of autonomy)

Note: M=mean; SD=standard deviation; Min=minimum; Max=maximum.

118

APPENDIX STRUCTURAL CHARACTERISTICS OF MUNICIPALITIES’ PERFORMANCE LIMITS IN SWITZERLAND (DEPENDENT VARIABLE: OVERALL PERFORMANCE LIMIT INDEX)

3

β

B

SE B

1.253

0.169

Population

-1.040E-06

0.000

-0.052

Population density

4.588E-05

0.000

0.061

Language region: - German vs. French

-0.065

0.083

-0.052

- German vs. Italian

0.526

0.212

0.153**

Executive resources (per 1,000 residents)

-0.001

0.001

-0.061

Administrative resources (per 1,000 residents)

1.288E-05

0.000

0.024

Position in the cantonal realignment

0.001

0.037

0.002

Tax rate: - No tax rate change vs. tax increase

-0.048

0.101

-0.032

- No tax rate change vs. tax reduction

-0.029

0.064

-0.031

Earnings: - No change in earnings vs. earnings increase

0.019

0.098

0.019

- No change in earnings vs. earnings decrease

0.091

0.114

0.075

Communal debt: - No change in debt vs. debt increase

0.057

0.092

0.054

- No change in debt vs. debt decrease

0.118

0.084

0.126

Affected by the financial and economic crisis

0.067

0.098

0.042

-0.009

0.015

-0.038

Constant Size

Region

Human resources

Finances

Autonomy Perception of municipal autonomy Note: R2 = 0.053. *p < 0.1, **p < 0.05, ***p < 0.01.

119

APPENDIX STRUCTURAL CHARACTERISTICS OF MUNICIPALITIES’ PERFORMANCE LIMITS IN SWITZERLAND (DEPENDENT VARIABLE: DIFFERENCES IN THE OVERALL 2005 AND 2009 PERFORMANCE LIMIT INDEXES)

4

β

B

SE B

0.228

0.282

Population

-6.228E-06

0.000

-0.187***

Population density

0.000

0.000

0.118

Language region: - German vs. French

-0.016

0.137

-0.008

- German vs. Italian

0.985

0.388

0.155**

Executive resources (per 1,000 residents)

0.001

0.001

0.047

Administrative resources (per 1,000 residents)

-5.054E-05

0.000

-0.057

Position in the cantonal realignment

0.036

0.060

0.038

Tax rate: - No tax rate change vs. tax increase

.190

.168

.074

- No tax rate change vs. tax reduction

0.045

0.106

0.030

Earnings: - No change in earnings vs. earnings increase

-0.233

0.166

-0.135

- No change in earnings vs. earnings decrease

-0.111

0.193

-0.055

Communal debt: - No change in debt vs. debt increase

-0.246

0.153

-0.138

- No change in debt vs. debt decrease

-0.069

0.139

-0.044

Affected by the financial and economic crisis

0.185

0.162

0.070

-0.007

0.025

-0.017

Constant Size

Region

Human resources

Finances

Autonomy Perception of municipal autonomy Note: R2 = 0.053. *p < 0.1, **p < 0.05, ***p < 0.01.

120

APPENDIX STRUCTURAL CHARACTERISTICS OF MUNICIPALITIES’ PERFORMANCE LIMITS IN SWITZERLAND (DEPENDENT VARIABLE: PERFORMANCE LIMITS IN EDUCATION)

5

β

B

SE B

1.127

0.280

Population

6.391E-07

0.000

0.019

Population density

0.000

0.000

-0.080

Language region: - German vs. French

-0.372

0.138

-0.177***

- German vs. Italian

0.415

0.352

0.071

Executive resources (per 1,000 residents)

-0.002

0.001

-0.091

Administrative resources (per 1,000 residents)

5.842E-05

0.000

0.065

Position in the cantonal realignment

-0.034

0.061

-0.035

Tax rate: - No tax rate change vs. tax increase

-0.183

0.167

-0.071

- No tax rate change vs. tax reduction

-0.154

0.106

-0.099

Earnings: - No change in earnings vs. earnings increase

0.013

0.162

0.008

- No change in earnings vs. earnings decrease

0.037

0.188

0.018

Communal debt: - No change in debt vs. debt increase

0.080

0.152

0.044

- No change in debt vs. debt decrease

0.113

0.139

0.072

Affected by the financial and economic crisis

0.307

0.163

0.113

-0.018

0.025

-0.043

Constant Size

Region

Human resources

Finances

Autonomy Perception of municipal autonomy Note: R = 0.091. *p < 0.1, **p < 0.05, ***p < 0.01. 2

121

APPENDIX STRUCTURAL CHARACTERISTICS OF MUNICIPALITIES’ PERFORMANCE LIMITS IN SWITZERLAND (DEPENDENT VARIABLE: PERFORMANCE LIMITS IN CULTURE)

6

β

B

SE B

0.791

0.219

Population

-2.220E-06

0.000

-0.084

Population density

0.000

0.000

0.147**

Language region: - German vs. French

0.218

0.107

0.133**

- German vs. Italian

0.744

0.274

0.164***

Executive resources (per 1,000 residents)

-0.001

0.001

-0.081

Administrative resources (per 1,000 residents)

8.106E-06

0.000

0.012

Position in the cantonal realignment

0.050

0.047

0.066

Tax rate: - No tax rate change vs. tax increase

-0.071

0.130

-0.036

- No tax rate change vs. tax reduction

0.060

0.083

0.050

Earnings: - No change in earnings vs. earnings increase

-0.004

0.126

-0.003

- No change in earnings vs. earnings decrease

-0.017

0.147

-0.010

Communal debt: - No change in debt vs. debt increase

0.217

0.119

0.155*

- No change in debt vs. debt decrease

0.194

0.109

0.157*

Affected by the financial and economic crisis

-0.017

0.127

-0.008

0.012

0.020

0.039

Constant Size

Region

Human resources

Finances

Autonomy Perception of municipal autonomy Note: R = 0.082. *p < 0.1, **p < 0.05, ***p < 0.01. 2

122

APPENDIX STRUCTURAL CHARACTERISTICS OF MUNICIPALITIES’ PERFORMANCE LIMITS IN SWITZERLAND (DEPENDENT VARIABLE: PERFORMANCE LIMITS IN INFRASTRUCTURE)

7

β

B

SE B

1.530

0.167

Population

-1.196E-06

0.000

-0.060

Population density

6.714E-05

0.000

0.090

Language region: - German vs. French

-0.022

0.081

-0.018

- German vs. Italian

1.094

0.229

0.285***

Executive resources (per 1,000 residents)

-0.001

0.001

-0.073

Administrative resources (per 1,000 residents)

4.485E-06

0.000

0.008

Position in the cantonal realignment

-0.003

0.036

-0.005

Tax rate: - No tax rate change vs. tax increase

-0.113

0.100

-0.073

- No tax rate change vs. tax reduction

-0.044

0.063

-0.048

Earnings: - No change in earnings vs. earnings increase

-0.189

0.098

-0.181*

- No change in earnings vs. earnings decrease

-0.156

0.114

-0.128

Communal debt: - No change in debt vs. debt increase

0.075

0.090

0.070

- No change in debt vs. debt decrease

0.123

0.083

0.131

Affected by the financial and economic crisis

0.015

0.096

0.009

-0.017

0.015

-0.069

Constant Size

Region

Human resources

Finances

Autonomy Perception of municipal autonomy Note: R = 0.117. *p < 0.1, **p < 0.05, ***p < 0.01. 2

123

APPENDIX STRUCTURAL CHARACTERISTICS OF MUNICIPALITIES’ PERFORMANCE LIMITS IN SWITZERLAND (DEPENDENT VARIABLE: PERFORMANCE LIMITS IN PROMOTION OF ECONOMIC DEVELOPMENT)

8

β

B

SE B

0.952

0.336

Population

-4.026E-07

0.000

-0.010

Population density

2.323E-05

0.000

0.016

Language region: - German vs. French

0.077

0.165

0.031

- German vs. Italian

0.556

0.421

0.082

Executive resources (per 1,000 residents)

-0.002

0.001

-0.091

Administrative resources (per 1,000 residents)

6.462E-06

0.000

0.006

Position in the cantonal realignment

-0.088

0.073

-0.078

Tax rate: - No tax rate change vs. tax increase

0.294

0.200

0.098

- No tax rate change vs. tax reduction

0.118

0.127

0.065

Earnings: - No change in earnings vs. earnings increase

0.009

0.194

0.004

- No change in earnings vs. earnings decrease

0.056

0.226

0.023

Communal debt: - No change in debt vs. debt increase

0.207

0.182

0.098

- No change in debt vs. debt decrease

0.237

0.167

0.128

Affected by the financial and economic crisis

-0.148

.195

-0.047

0.013

0.030

0.026

Constant Size

Region

Human resources

Finances

Autonomy Perception of municipal autonomy Note: R2 = 0.044. *p < 0.1, **p < 0.05, ***p < 0.01.

124

APPENDIX STRUCTURAL CHARACTERISTICS OF MUNICIPALITIES' PERFORMANCE LIMITS IN SWITZERLAND (DEPENDENT VARIABLE: PERFORMANCE LIMITS IN SECURITY)

9

β

B

SE B

1.645

0.221

Population

1.607E-06

0.000

0.063

Population density

1.330E-06

0.000

0.001

Language region: - German vs. French

-0.177

0.109

-0.107

- German vs. Italian

1.002

0.297

0.205***

Executive resources (per 1,000 residents)

-0.001

0.001

-0.062

Administrative resources (per 1,000 residents)

-1.893E-05

.000

-0.027

Position in the cantonal realignment

-0.017

0.048

-0.022

Tax rate: - No tax rate change vs. tax increase

-0.110

0.129

-0.056

- No tax rate change vs. tax reduction

-0.159

0.084

-0.133*

Earnings: - No change in earnings vs. earnings increase

-0.224

0.130

-0.165*

- No change in earnings vs. earnings decrease

-0.032

0.151

-0.020

Communal debt: - No change in debt vs. debt increase

0.201

0.119

0.144*

- No change in debt vs. debt decrease

0.252

0.109

0.207**

Affected by the financial and economic crisis

0.048

0.128

0.022

-0.029

0.019

-0.093

Constant Size

Region

Human resources

Finances

Autonomy Perception of municipal autonomy Note: R = 0.124. *p < 0.1, **p < 0.05, ***p < 0.01. 2

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APPENDIX STRUCTURAL CHARACTERISTICS OF MUNICIPALITIES' PERFORMANCE LIMITS IN SWITZERLAND (DEPENDENT VARIABLE: PERFORMANCE LIMITS IN GOVERNMENT AND ADMINISTRATION)

10

β

B

SE B

1.433

0.191

Population

-1.700E-06

0.000

-0.074

Population density

6.116E-05

0.000

0.072

Language region: - German vs. French

-0.256

0.093

-0.180***

- German vs. Italian

0.868

0.262

0.198***

Executive resources (per 1,000 residents)

0.000

0.001

-0.036

Administrative resources (per 1,000 residents)

-1.632E-06

0.000

-0.003

Position in the cantonal realignment

0.033

0.041

0.050

Tax rate: - No tax rate change vs. tax increase

-0.043

0.114

-0.025

- No tax rate change vs. tax reduction

-0.020

0.071

-0.019

Earnings: - No change in earnings vs. earnings increase

-0.112

0.112

-0.095

- No change in earnings vs. earnings decrease

0.011

0.130

0.008

Communal debt: - No change in debt vs. debt increase

0.000

0.103

0.000

- No change in debt vs. debt decrease

0.129

0.094

0.121

Affected by the financial and economic crisis

0.093

0.109

0.051

-0.024

0.017

-0.086

Constant Size

Region

Human resources

Finances

Autonomy Perception of municipal autonomy Note: R = 0.109. *p < 0.1, **p < 0.05, ***p < 0.01. 2

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APPENDIX STRUCTURAL CHARACTERISTICS OF MUNICIPALITIES’ PERFORMANCE LIMITS IN SWITZERLAND (DEPENDENT VARIABLE: PERFORMANCE LIMITS IN SOCIAL SERVICES)

11

β

B

SE B

1.033

0.230

Population

-1.408E-06

0.000

-0.052

Population density

8.488E-05

0.000

0.084

Language region: - German vs. French

-0.004

0.113

-0.002

- German vs. Italian

0.609

0.289

0.131**

Executive resources (per 1,000 residents)

-0.001

0.001

-0.038

Administrative resources (per 1,000 residents)

4.922E-05

0.000

0.068

Position in the cantonal realignment

0.015

0.050

0.019

Tax rate: - No tax rate change vs. tax increase

0.091

0.137

0.044

- No tax rate change vs. tax reduction

-0.027

0.087

-0.022

Earnings: - No change in earnings vs. earnings increase

0.123

0.133

0.088

- No change in earnings vs. earnings decrease

0.108

0.155

0.066

Communal debt: - No change in debt vs. debt increase

-0.025

0.125

-0.017

- No change in debt vs. debt decrease

0.073

0.114

0.058

Affected by the financial and economic crisis

0.147

0.134

0.068

-0.002

0.021

-0.005

Constant Size

Region

Human resources

Finances

Autonomy Perception of municipal autonomy Note: R2 = 0.040. *p < 0.1, **p < 0.05, ***p < 0.01.

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COMPARATIVE HEALTH REFORMS INDIA,

AND

IN

BRAZIL,

SOUTH AFRICA:

A RESEARCH AGENDA James Warner Björkman There is nothing a government hates more than to be well-informed for it makes the process of arriving at decisions much more complicated and difficult. (John Maynard Keynes, cited in Skidelsky 1992, volume 2:620) ABSTRACT The chapter summarizes a 2013 scoping project predicated on the author’s publications since 1990 on comparative health reforms (Björkman & Altenstetter 1998; Björkman & Mathur 2002; Björkman et al. 2011; Björkman & Venkat Raman 2013; Björkman & Nemec 2013). Among reforms investigated are those in the delivery of services, generation of resources, and financing. Reforms of health services are prompted by concern about costs and efficiency as well as about responsiveness and equity. They seek to integrate care, to reallocate services across levels of care, and to strengthen primary care, including giving it more responsibility for public programs. Some reforms focus on quality by introducing a range of initiatives at all levels. Others are linked to NPM strategies that blur the boundaries between the public and private. The more effective reforms have been aligned with adjustments in resource generation and financing.

7.1

INTRODUCTION

It is crucial for health systems and funders to know where best to allocate resources. Ministers of Health and leaders of health systems need tools to prepare for challenges. Decisions about national and subnational health systems in urban and rural areas require that many criteria be taken into account such as cost, access, quality, effectiveness, equity, and feasibility. These criteria stem from different disciplines that seek to inform decisions about the organization and rationing health care because no single concept exists that

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JAMES WARNER BJÖRKMAN incorporates all criteria. Comparisons generate opportunities to assess criteria in different locations and under different situational conditions. It is as important to know what arrangements do not work well in national health systems as to know about those that do. The stated goals of any health system seek to improve the level of health, the fair distribution of health, responsiveness, protection against social and financial risk, and efficiency – all within the feasibility of available building blocks like the healthcare workforce, information, technology, medical products, and financing. An extensive range of need and capacity characterizes complex multi-layered societies in Brazil, India, and South Africa. By mapping criteria as well as results in comparable contexts, comparisons develop the field of priority setting by providing decision-makers with well-grounded rationales for selecting health interventions that are both feasible and affordable. The chapter summarizes a scoping project predicated on the author’s publications since 1990 on comparative health reforms (Björkman and Altenstetter 1998; Björkman and Mathur 2002; Björkman et al. 2011; Björkman and Venkat Raman 2013; Björkman and Nemec 2013). Among reforms investigated are those in the delivery of services, generation of resources, and financing. Reforms of health services are prompted by concern about costs and efficiency as well as about responsiveness and equity. They seek to integrate care, to reallocate services across levels of care, and to strengthen primary care, including giving it more responsibility for public programs. Some reforms focus on quality by introducing a range of initiatives at all levels. Others are linked to NPM strategies that blur the boundaries between the public and private. The more effective reforms have been aligned with adjustments in resource generation and financing. Reforms of resource generation seek to secure the right mix of human resources, fixed capital, and technology. Human resource policies are developed against a background of staff shortages and seek to match skills to new types of service delivery, to give increased emphasis to primary care and public health, and to ensure quality through continuing education and certification. The generation of infrastructural resources has undergone less extensive reform; examples include the use of private financing initiatives to construct hospitals and the encouragement of public-private partnerships. Reforms of financing have been the most apparent due to concern about the costs of health care and their impacts on government budgets. Challenges to solidarity and sustainability have been met with reforms of revenue collection and pooling of risk through social insurance while efficiency has been tackled by reforms of purchasing.

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Financial reforms have involved the introduction of health insurance plus attempts to shift the burden of financing to individuals through copayment or complementary insurance; they have also sought to strengthen links between revenue collection and expenditure by decentralizing responsibilities. Issues such as fragmentation of funds and adverse risk selection are addressed by regulation, improved mechanisms for public pooling of risk, and the creation of dedicated health promotion funds. Different arrangements exist in how funds are raised, pooled, and used for health care; this mix determines the efficiency and equity of health systems. In low-income countries, a major – often the primary – financing mechanism is payment out-of-pocket at the point of service, which is the most inequitable system for the financing of health care. Private health insurance caters to the rich and to people at low risk of being ill. To avoid inequity, balanced population pools allow persons at low risk of illness to subsidize those requiring more health care. Disadvantaged populations must be targeted in terms of both their inability to make contributions and the challenges related to their accessing of care. There is no correct level of health system investment; societies choose how as well as how much to invest. However, the weight of evidence makes it clear that societies investing in health care systems as part of societal efforts to enhance health and wealth can achieve societal wellbeing. The following sections review the significance of health care in public policy, forms of policy interventions, the merits of comparative enquiry in health reforms, the contextual backgrounds of three stratified societies, and an operational area for research: leadership in public-private partnerships for the delivery of health services.

7.2

FOCUS

ON

HEALTH

AS A

PIVOTAL POLICY ISSUE

“The rise of the South is unprecedented in its speed and scale. Never in history have the living conditions and prospects of so many people changed so dramatically and so fast” (UNDP 2013). These achievements are attributable to sustained investment in health care, education, social programs, and engagement with an increasingly interconnected world. Justification for the focus on health reforms is an axiomatic policy issue. An axiom is a premise so evident as to be accepted as true without controversy. Axioms relevant to health policy and health reform include: Health is valued in and of itself Health is central to wellbeing and wealth Health reflects the progress of society; measures of social development include health Healthier people are more productive * * * *

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JAMES WARNER BJÖRKMAN

*

* * * * *

* *

* *

Despite competing demands for resources, societies choose how as well as how much to invest in health systems Better health reduces demands on health care now and in the future Health and wealth reinforce each other; health systems are a catalyst for both Health systems support healthier and more economically active societies Health systems create societal wellbeing by promoting equity and responsiveness Explicit strategies for improvement work best if they reflect the burden of disease and risk factors, combining prevention and cure accordingly Health systems go beyond health care; they work across sectors Policy reforms work best if they address the whole system of health in all policies, not just services delivered by the health sector itself Health reforms work best if they draw on comparative evidence about their impact Health system performance measurement captures what is happening and what can be done better

A health system combines three elements: delivery of health services, both personal and population-based; activities to enable the delivery of health services, specifically resource generation and finance; activities that influence what other sectors do which is relevant to health, even if their primary purpose is not health. This definition emphasizes that the scope of health systems extends beyond health services and especially beyond medical care. Health policymakers are under enormous pressure about financial sustainability and cost containment. While the resources available in society are finite, health systems are not a drain on those resources but an opportunity to invest in the health of the population and in economic growth. A set of mutually reinforcing and dynamic relationships inextricably link health systems, health, and wealth. Reforms of health services delivery are often prompted by concerns about costs and efficiency but also reflect concerns about responsiveness and equity. They seek to integrate care, to reallocate services across levels of care, and to strengthen primary care, including giving it more responsibility for public health programs. Some reforms focus on quality by introducing a range of initiatives at all levels. Others are linked to New Public Management strategies that blur the boundaries between the public and private. The more effective reforms have been aligned with adjustments in resource generation and financing. Reforms of resource generation seek to secure the right mix of human resources, fixed capital, and technology. Human resource policies are developed against a background of

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staff shortages and typically seek to match skills to new types of service delivery, to give increased emphasis to primary care and public health, and to ensure quality through continuing education and certification. The generation of infrastructural resources has undergone less extensive reform; examples include the use of private financing initiatives to construct hospitals and the encouragement of public-private partnerships. Investment in new technologies, particularly pharmaceuticals, has been shaped by health technology assessment, regulatory measures, and the promotion of generic products. Reforms of financing have been the most apparent due to concern about the costs of health care and their impacts on government budgets as well as to the leverage that funding offers for improving the delivery of health services. Challenges to solidarity and sustainability have been met with reforms of revenue collection and the pooling of risk through social insurance while efficiency has been tackled by reforms of purchasing. Financial reforms have involved the introduction of health insurance, particularly in Eastern Europe and the Balkans, and attempts to shift the burden of financing to individuals through co-payments or complementary insurance, as well as to strengthen links between revenue collection and expenditure by decentralizing responsibilities. Issues of fragmentation of funds, adverse risk selection, and funding for public health have been addressed by regulation, improved mechanisms for public pooling of risk, and the creation of dedicated health promotion funds. Funding for long-term care, however, remains a challenge. The concept of universal coverage requires access for all people to appropriate health services at an affordable cost. The object of universal coverage is based on equity in financing whereby households contribute to financing the health system on the basis of their ability to pay. While the goal of universal coverage is widely accepted, its realization depends on organizational mechanisms that allow financial contributions to a health system to be collected efficiently from different sources, that pool these contributions so that the risk of having to pay for health care is shared by all and not borne by each individual, and that use these contributions to purchase or provide effective health interventions. Different arrangements exist in how funds are raised, pooled, and used for health care; this mix determines the efficiency and equity of health systems. Unfortunately, in poor countries, a major – often the primary – financing mechanism is payment out-of-pocket at the point of service, which is the most inequitable system for the financing of health care. Private health insurance caters to the rich and to people at low risk of being ill. To avoid inequity, balanced population pools must allow for persons at low risk of illness to subsidize those requiring more health care. Poorer and disadvantaged populations must

133

JAMES WARNER BJÖRKMAN be targeted in terms of both their inability to make contributions and the challenges related to their accessing of care. The capacity for appropriate control and regulation is a central issue. While the mechanics of risk-rated or income-based contributions are important, perhaps more important is the question of how the pooled funds are used to purchase services. The way providers are paid is a key determinant of the efficiency of any system for financing health care. Unregulated health insurance combined with unregulated fee-for-service payments to providers is a recipe for increasing costs and inefficiency. Equity and regulatory challenges invoke a strong role for government with respect to insurance institutions – whether private, public, or parastatal. Government must ensure that insurance institutions develop according to social needs and not become so entrenched that they oppose universal coverage or efficient equitable processes for revenue generation, pooling, and purchasing of services. The challenge of managing this balance through regulation will determine the success of equitable and efficient systems for financing health care. The capacity to measure health system performance has recently increased, albeit from a low starting point. Information technology (if successfully implemented) can facilitate data collection and analysis and allows better scrutiny of costs, outputs, and outcomes. However, the way information is marshaled and presented can be improved, particularly by integrating findings with mechanisms for governance. If performance measures are to improve performance, then information must be readily accessible at the level where decisions are made. Evaluation systems must be designed to take basic data, interrogate them, and present them for different audiences so that both patients and planners can find what they need when they need it and in good time. Achieving this objective is not straightforward, particularly given the need to track a range of functions and to link inputs and outputs. Selecting indicators that are valid, reliable, and (crucially, if they are to guide management action) responsive to change is vital, but very challenging. There have been attempts to combine disparate indicators into a single composite index to show overall performance, but these have not been successful. Such efforts do succeed, however, in highlighting the importance of transparency. They also touch on the value of intermediate or instrumental objectives in identifying (and measuring) progress towards ultimate goals. Well-chosen and defined indicators, provided that they are specific and amenable to action, can map how far a function is moving along a critical pathway and help to identify the steps that are to be taken to improve performance.

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Policymakers need to take an active role in ensuring that performance measurement is embedded in governance systems. This means aligning it with the political context and providing for the integration of financing mechanisms, market structures, and regulation. The combination of these factors will support the achievement of health system goals and the managing of any trade-offs among them. Health systems are responsible not just for assessing performance but ultimately for ensuring that performance measures lead to better performance. There is no correct level of health system investment; societies choose how as well as how much to invest. However, the weight and range of evidence makes it clear that societies should invest in health systems as part of societal efforts to enhance health and wealth and to achieve societal wellbeing. Policymakers can allocate more resources for the health sector – provided that performance measurement systems are in place to demonstrate that investments are being used efficiently and to good effect.

7.3

POLICY INTERVENTIONS

AND

HEALTH SERVICES

The scope and implementation of health services are often debated, particularly whether provisioning should be universal or selective. Technical dimensions of this debate relate to issues of affordability, priorities, and the degree to which moral hazard is a concern in policy design. Its ideological dimensions include whether people have a set of global rights and are entitled to social protection to secure those rights or whether individuals and households should take responsibility for their own welfare. The choice between targeting and universalism responds to the fundamental question of a polity’s values and the responsibilities of all its members. Policy regimes, of course, are rarely universal or purely based on selective targeting; they lie on a continuum between the two extremes and follow globalized trends. During the 1960s and 1970s most states leaned toward universalistic policies but in the 1980s the balance shifted from welfare to workfare. Economic adjustment was preferred while health care expenditures were thought to detract from stabilization and therefore curtailed in order to keep fiscal deficits in check. In the 1990s, policies were redesigned to narrow the scope of recipients by targeting benefits. These policies used ‘safety nets’ for those who faced short-term market failures. Although safety nets were seen as temporary, it became evident that these measures are insufficient to deal with the problems generated by economic adjustment.

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JAMES WARNER BJÖRKMAN Policies focused on poverty developed during the early 21st century that began with promulgation of the Millennium Development Goals. These policies focused on targeting through projects specifically aimed at the poor or indirectly through support to sectors that are likely to benefit the poor more than the well off. Together with the emphasis on poverty, there was renewed emphasis on efficiency as a policy objective. Theories of decentralization and New Public Management were seen as instrumental in establishing a clear relationship between inputs and outputs within the health sector as well as delimiting tasks, costs, and benefits. These trends renewed the public’s interest in targeted policies as they appeared to respond to two interrelated problems: the failure of universal social policies to reach the poor (especially in education and health) and the failure of the social protection systems in place to provide effective cushion mechanisms during crises. During recent decades, central and provincial governments in South Africa, Brazil, and India have launched projects to deliver health care services. Schemes include vouchers for pregnant women (for prenatal advice from auxiliary nurses to birth delivery), social franchising through reproductive health clinics, social marketing for condoms and other birth control technologies, mobile vans for diagnostic services at the doorstep, and cash incentives for mothers after delivery. Private partners – nongovernmental organizations and community-based organizations – have been contracted to provide health services in slums and rural areas in the form of grants-in-aid and health camps. Similarly, schemes to monitor drug adherence in anti-retroviral rollouts as well as to care and support AIDS patients are conducted in collaboration with private sector partners. The shift from universal coverage to targeting has impacted on how health policy is perceived in the context of developing countries. In Brazil, universal and targeted social policies coexist. Its 1988 Constitution promulgated health and education services as universal social rights; their provision is the responsibility of each state and of inter-municipal consortia. To support this model of welfare, the central government established a targeted education policy called Bolsa Escola that paid poor families a monthly amount as long as their children attended school. Evaluations demonstrate that Bolsa Escola has been successful in reaching poor communities although there are critiques about its complexity and its difficulties at the local level. In 2003, President Lula da Silva merged Bolsa Escola with several other targeted programs into a single program – renamed Bolsa Família – in order to increase coverage and move towards a more universal social policy. The Ministry of Social Development now describes Bolsa Família as a universal right that is available to all who need it. In Brazil everyone is entitled to access the universal health system although those who can afford to pay for a private health plan usually do so. Middle and upper strata have private

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health plans and health insurance so one-third of the population rarely uses the public health system where medicine is provided free in health units or at low cost through public pharmacies. However, despite the theory, medications are often in short supply or absent altogether. In recent years, lawsuits have multiplied over guarantees for medicines to individual patients. For the poor in Brazil, the largest out-of-pocket expenditures for health care are for drugs and medicine rather than health services per se because the latter are free. Evaluations of cash-transfer programs found that the money received by poor families (over 11 million people currently receive cash-transfers) is used to purchase food, clothes, and medicines. Likewise, Brazil provides assistance for HIV/AIDS through public health units where medicine is free for all patients. While NGOs are active in the health sector with educational, political, and advocacy perspectives, they rarely deliver health services because the poor are assisted through public health units. A theme for comparative enquiry is the role of health services in reducing poverty at household level. Issues include factors that facilitate or hinder access to health interventions – including values, educational level, race, religion, and availability of services – as well as factors that promote or restrict the quality of service delivery such as type of service (public or private or mixed). Education, values, religion, and race affect access to and utilization of health services and their economic effects at household level. Brazil has conducted studies of how health care services and interventions in education have promoted not only economic but also human development. Bolsa Família is a cash-transfer program with stern conditionalities for utilizing services in health care and schools. Like the capability approach, an intersectoral approach explores relationships among population, health services, and development.

7.4

MERITS

OF

STUDYING COMPARATIVE HEALTH REFORMS

Recent decades have seen an expansion of comparative studies about health reforms. In OECD countries the aftermath of the oil crises and the economic stagflation of the 1970s, combined with growing realization about the changing demographic composition of aging populations plus a shift in ideological thinking about the role of the state, prompted a reassessment of arrangements for health and welfare. Pressured to come up with new ideas, policymakers began to look elsewhere for new policy solutions. Since the USSR imploded in 1991, its successor states as well as many non-OECD countries have paid increasing attention to thematic analyses of particular policies such

137

JAMES WARNER BJÖRKMAN as markets in health care; changes in payment for medical services; the rise of a quality assurance movement; equity in health care finance, consumption and outcomes; efforts to categorize health care systems; setting priorities and rationing health care; etc. Among these countries are the so-called ‘rising powers’ collectively known as BRICS – three of which share similarities in terms of complex social stratification that span the continuum from wealth to poverty. Brazil’s new constitution in 1988, India’s decision in 1991 in favor of liberal competitive practices, and South Africa’s democratic transition in 1994 – all provide a basis for the exploration of theoretical and practical issues in analyzing and comparing health care systems and their reforms. At its core, any proposal for reform seeks to modify the way in which arrangements are organized. Reform seeks to change ‘form’ and, in so doing, to re-arrange the distribution of costs, benefits, and valued resources. In the health sector, three issues regularly appear among proposals for reform – issues of cost, access, and quality; there are proposals for reforms in financing (revenue and expenditure), reforms in services (who gets what, when, where, how), and reforms in assurance about the quality of those services. As a guide for comparative enquiry, reform is defined as shifts in decision-making power over the allocation of resources and the distribution of financial risks in health care funding between as well as within public and private sectors. Entrenchment of health care at the core of social policy has consequences because financial pressures are generated by expanding demand for health services as well as by the influence of the medical profession that controls their terms and quality. Whatever else may characterize national systems for health care, their design and reform entail cost-control measures accompanied by mechanisms to secure the cooperation of health care professionals. What determines the health of the population in any country? The answer, of course, varies depending on who is being asked. The general public normally points to the critical role of doctors and hospitals, if not in promoting health then at least in combating ill health. Public health professionals often adopt a more holistic account that emphasizes the many determinants of health beginning with wealth (or the lack thereof) and extending through a long list of factors including diet, level of physical activity, occupation, and the environment, to name only a few. But what determines the determinants of health? More precisely, for the health determinants that are subject to individual and collective choices, what determines what is done or not done? While the list of determinants of health determinants is long and complex, some are subject to collective action in the form of politics and public policy. In other

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words, by what they do as well as what they fail or choose not to do, governments can and do have a significant impact on the health of populations. Policies and program choices have an effect on wealth, water, and air quality, on levels of literacy and education, on transportation and on nutrition. In turn, each of these factors and many others has an impact on the health of the population. In focusing on health determinants, the emphasis shifts from the planning, funding, and delivery of health services per se to a wider range of economic, environmental, social, and political forces that have an impact on the health of individuals and of broad populations. Public health professionals who are interested and concerned about population health become active on a range of fronts in an effort to address the many determinants of health. Some of these efforts are directed at health promotion broadly defined where the target of an intervention is either the general public or specific subsets of the population. Other efforts are directed at policy and program choices that affect the health of populations. In the latter case, efforts are made by the public health community to persuade policymakers who have power to make policy choices that directly or indirectly influence population health. These efforts arise from the observation that policy and program choices about education, employment, and environmental protection potentially have an impact on the health of populations. Decisions about national health systems require that many criteria be taken into account such as cost, access, quality, effectiveness, equity, and feasibility. These criteria stem from diverse disciplines that aim to inform decisions about the organization and rationing of health care because a single concept that incorporates all criteria does not yet exist. Among the values of comparative research are opportunities to assess criteria in different locations and under different situational conditions. While compiling knowledge, it is important to know what arrangements do not work well in national health systems as to know about those that do. While the field of enquiry is vast, this proposal for a macro-view of health reforms focuses on the requirements of healthy public policy and the role of evidence (especially disciplined scientific evidence) in the development of such policy reforms. The goal is to understand how the comparative experiences of three countries can provide a critical account of reforms that changed the delivery of health care and their impact on populations. It seeks to build a bridge between the world-view of health sciences and the world-view of policy sciences in order to provide insights into how policy gets made and thereby offer guideposts to those who wish to develop and promote viable health policies.

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JAMES WARNER BJÖRKMAN In order to advise about health policies that ensure access to quality services at sustainable costs, what do we need to know about how policy gets made in respective countries? How and where is evidence most effectively used? What experiences shed light on appropriate ways to organize health services as well as whether these experiences, contextualized within countries of origin, can be adapted elsewhere? By focusing on excessive detail, there is a tendency to lose sight of the forest in favor of the trees, bushes, and undergrowth, but without empirical grounding in the latter, the forest may never be properly understood – much less helpful elsewhere. An example is the comparative experience in Brazil, India, and South Africa with HIV/AIDS and the deployment of anti-retroviral drugs to stabilize the autoimmune system. In 1988, Brazil formally recognized the right to health in its Constitution and made health policy a central theme in the intergovernmental delivery of services. When ARVs became available in the 1990s for the treatment of HIV/AIDS, the Brazilian government used its emphasis on the right to health in order to increase access to these pharmaceuticals and provide universal treatment to HIV-positive people in the country. After a conflict with large pharmaceutical companies about compulsory licensing for the local production of generic ARVs, Brazil became the first country to offer free ARV treatment to people living with AIDS (Fourie 2013). Like Brazil, India is a prominent manufacturer of ARVs and other generic pharmaceuticals. Their transnational coalition compelled the World Trade Organization to amend the previous rights to trade-related intellectual property. Subsequently, with funding through PEPFAR and the Global Fight against AIDS, TB, and Malaria, South Africa rolled out equivalent treatment. While the ARV story needs explication, it provides leverage for understanding how different countries have dealt with a common issue. Policymaking is undoubtedly a complex, non-linear, incremental, and messy process. Many factors influence policymaking including context (political election cycles, the state of the government’s finances, etc.) as well as the values and ideologies of policy-makers themselves. Even the term ‘policy-maker’ is not necessarily clear as policymakers include politicians, civil servants, political advisors, system managers who sit in Ministries of Health, other central government departments, national agencies, parliamentary and executive bodies, local governments, and so forth. Moreover, multiple stakeholders (not just policymakers) influence the policy process. Civil society organizations such as advocacy and interest groups as well as the media can critically influence policy. Analyses must synthesize a range of inputs and information in order to provide viable lessons about policy reforms.

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CONTEXTUAL BACKGROUND ON STRATIFIED SOCIETIES: BRAZIL, INDIA, AND SOUTH AFRICA

Originally known as BRIC before the inclusion of South Africa in 2010, BRICS is the acronym for an association of five national economies – Brazil, Russia, India, China, and South Africa – all of which are developing or newly industrialized countries that, until recently, were characterized by fast-growing economies with significant influence on regional and global affairs (OECD-EU 2011; UNDP 2013; Lancet 2009, 2011, 2013). In methodological terms, comparative enquiry allows research on selected variables within a diverse context. While Brazil, India, and South Africa differ in size and per capita income, all are stratified societies with extensive inequalities. Each is a country with both First and Third World attributes. The research question concerns reforms of public policies about how health services are delivered and with what consequences. World GDP in 2012 was estimated to be US$ 72 trillion of which the BRICS account for US $15 trillion – slightly less than the United States. China’s GDP is more than the other four combined so, as the outlier, China is not included in the current study. For other reasons, Russia will not be included either. Interestingly, however, based on available data, China’s GINI index worsened from 41 in 2007 to 48 five years later while the Russian index has been stable at 41±1 since 2001.

Table 7.1

Background data on five BRICS (2012) plus the USA for comparison Population (millions)

GDP USD (trillions)

GDP USD per capita

GDP (PPP) Growth rate GINI per capita (%) index#

Brazil

201

2.7

11,300

$13,623

1.3*

52

China

1354

8.2

6,000

$9,161

7.8

48

India

1210

1.8

1,500

$3,829

5.4

35

Russia

143

2.0

14,000

$17,708

3.6

41

S. Africa USA

52 312

0.4 16.2

7,500 51,750

$11,375 $51,704

2.6 2.2

64 45

# World Bank and CIA indices averaged to the nearest whole integer * During 2003-2008 Brazil averaged 4.2% growth

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JAMES WARNER BJÖRKMAN The GINI index measures the distribution of income among a country’s inhabitants. It is only as accurate as the data produced by a country on its income and gross domestic product (GDP). Ranging between 0 and 1, this coefficient describes the gap between the rich and the poor. A low GINI index indicates a more equal distribution with 0.0 corresponding to complete equality; higher GINI coefficients indicate more unequal distribution with 1.0 corresponding to complete inequality (one person has all the income and everyone else has zero income). GINI coefficients can be used to compare income distribution over time, thus making it possible to see if inequality is increasing or decreasing independent of absolute incomes. Despite gaps in the data, Table 7.2 presents variations in the GINI indices of the five BRICS.

Table 7.2

Brazil

Changes in GINI index among BRICS* 1994 – 1997

2002 – 2005

2007 – 2010

2011 – 2012

61

57

55

52

47

45

48

China India

38

37

34

35

Russia

38

40

40

41

South Africa

59

63

64

* World Bank and CIA indices averaged to the nearest whole integer

Data from household statistics reveal that income inequalities in all BRICS countries are greater than OECD averages (Ivins 2012:3). Between the early 1990s and the late 2000s, China, Russia, and South Africa experienced increases in income inequality while inequality decreased in Brazil and, to a lesser extent, in India. The societies under study are characterized by social stratification as well as considerable inequality in per capita income, infant mortality rates, and years of life expectancy. Social inequalities in Brazil, India, and South Africa are a challenge for systems that seek to deliver health services that are both equitable and cost effective. Although differing in population as well as rates of economic growth, the three countries are comparable in terms of democratic polities as well as policy goals. Of research interest is how they arrange their resources in order to deliver sustainable services.

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7 Table 7.3

COMPARATIVE HEALTH REFORMS

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Social data on BRICS (2012)

Country

Literacy

Years life expectancy

Infant mortality (per 1000 births)

Mortality of children below five (per 1000 births, 2010)

Brazil

94

75

21

19

China

92

73

16

18

India

74

64

46

63

Russia

99

70

7

12

South Africa

86

51

43

57

Brazil’s GINI index improved dramatically from 61 in 1998 to 52 in 2012, India’s index improved marginally from 38 in 1997 to 35 in 2012, and South Africa declined sharply from 59 in 1994 to 64 in 2012. Differential rates of economic growth may account for the trend lines in relative inequality but policies of social inclusion or exclusion are probably more important. Ironically, China seems to have reversed its former balance between social protection and economic growth while trends in Brazil and India are toward higher social inclusivity. South Africa, on the other hand, has the poorest record across all indicators – social and economic. Table 7.4

Government Expenditures on Health (2012) (US dollars) Government spending on health (% of total government expenditures)

Health expenditure per capita in 2009 USD (baseline: constant 2005 USD)

Country

GDP (billions)

Government spending (billions)

Brazil

2,696

847

5.9

940

China

8,227

2,031

12.1

310

India

1,825

281

3.7

130

Russia

2,022

414

8.5

1040

S. Africa

384

95

11.4

860

Source: Ivins 2012:8

In South Africa, an initiative is underway to rollout universal health insurance in selected districts of each province – a process scheduled over 14 years. Harrison (2010:38-40) provides a schematic account of processes and options for organizing, financing, and delivering health care through National Health Insurance. However, no empirical research has (yet) been identified that examines these procedures – an area that requires immediate attention.

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JAMES WARNER BJÖRKMAN 7.6

LEADERSHIP FOR HEALTH REFORMS PARTNERSHIPS

THROUGH

PUBLIC-PRIVATE

Research can focus on leadership in politics, administration, and organizational life. Based on an ability to motivate people, leadership is the art of motivating people to move toward a goal they don’t yet see and that may never be fully actualized but nonetheless provides an orientation for collective action. A leader sees a problem that needs to be fixed or a goal that needs to be achieved. It may be something that no one else can see or something that no one else wants to tackle. The goal has the full attention of the leader who addresses it with single-minded determination, usually (though not always) with a clear target in mind. This ‘big picture’ provides a new vision that makes other people ask: “why didn’t I think of that?” Many people see things that should be done, things that should be fixed, great steps that could be taken. What differentiates leaders from ordinary folks is that they act. They take the steps necessary to achieve their vision. Whether a passion for an idea, an inner sense of drive, or some sense of commitment, these motivate leaders to advance their vision despite obstacles or opposition by others who say that something can’t be done for any number of excuses. A leader perseveres and moves forward. Several theories exist that seek to explain or account for what sets leaders apart from other people (Bass and Bass 2008; Yukl 2006). According to the ‘great man’ theory, some people are born with these characteristics. Others develop them while they improve as leaders. And some have these characteristics thrust upon them by rising to the occasion despite expectations. Alternatively, a sociological contextual perspective on leadership argues that leaders are subject to the collective will of a community. They can lead only as far as people are inclined to follow. They are bounded by custom, tradition, culture, and rules. Between the ‘great man’ and ‘contextual’ perspectives on leadership lies the role of reconstructive leaders – those who listen to their context but also add ‘value’ in terms of redefining problems and of persuasively proposing novel ways to address those problems. Therefore leadership is a balance between what must be and what might be, between the constraints of a contextual environment and the possibilities of a vision of the future that adds value to citizens and citizenry. In game theory, the choice is between win-win situations (as a ‘rising tide lifts all boats’) and zero-sum situations (in which some lose while others win). Although there is no magic formula, a combination of characteristics contributes to effective leadership. In terms of personality traits, a leader projects such integrity that people believe she or he is pursuing a vision because it is the right thing to do (Zaccaro 2007). Leaders

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encourage others to implement a vision and to do it right. Beyond the personal traits of a leader, specific skills include effective communication, motivation, and planning. A leader’s communication skills move people to work toward the goal that the leader has chosen and motivate everyone to contribute so all do their best to achieve the leader’s goal. In metaphoric terms, a leader knows (or learns) how to ‘push the right buttons’. Without getting bogged down in details, a leader has a plan to achieve the goal that keeps everyone moving together toward the goal. Leaders dream dreams and refuse to let anyone or anything get in the way of achieving their dreams. They are realistic but unrelenting, polite but insistent. They constantly and consistently drive toward their goals through strategies and tactics to maximize resources and skills effectively and efficiently. In the 21st century, despite the Millennium Development Goals and hopes for the future, current history is characterized by massive poverty and global inequality. It is estimated that the top five percent of individuals in the world receive one-third of world income and the top ten percent get one-half while the bottom five and ten percent get 0.2 and 0.7 percent respectively. Hence the ratio between the income of the richest and the poorest five percent of people in the world is 165. In practical terms, the richest people earn as much in about 48 hours as the poorest people earn in a year. Beyond concern for economic inequality, challenges linked to global trends include the world financial crisis, climate change, and global warming, ecological degradation that causes near-apocalyptic natural disasters such as floods, droughts, earthquakes, tsunamis and hurricanes, political and military conflicts, and incipient pandemics such as HIV/ AIDS, SARS, and avian influenza. These macro-societal trends are challenges to public leaders in the context of governance. Good leaders guide governments of nation-states to perform effectively for their citizens. They deliver security for the state and for the person through a functioning rule of law, education, health, and a framework conducive to economic growth. To enhance the contribution of people, leaders focus on stimulating learning and growth as well as on coordination and control. In order to incorporate relevant inputs from their context, leaders scan the environment and encourage innovation and renewal. For organizational purposes, leaders create controls to ensure compliance and accountability as well as rules to ensure action in accordance with legal and legitimate expectations. For performance enhancement, leaders motivate and inspire others for performance as well as direct all efforts and resources towards optimal performance (Aardema 2004).

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JAMES WARNER BJÖRKMAN The delivery of social services through public policies depends on leaders coming together as interdisciplinary teams. Given the multiple factors that shape public policy, leaders deploy skills through many professions. Changes are driven by the market, by environmental constraints, by global competition, yet only through dynamic leadership can professions reach a position to guide these transformations at all levels of governance. Since leadership is the ability to persuade others to follow willingly, a leader influences a group of people towards a specific result without depending on formal authority. Leaders are recognized by their capacity to care for others, by their clear and consistent communication, and by a commitment to persist in the face of adversity. Public-private partnerships provide an example of leadership in health reforms at the local level where services are directly delivered.

7.7

CONCLUDING OBSERVATIONS

Countries in Africa, Asia, and Latin America have made substantial progress in establishing health infrastructure and improving health status indicators, yet often neglect health care services for deprived sectors of their populations. The situation is particularly severe among poor and socially marginalized communities that depend on the public health system for health services. Deficiencies in public health systems in terms of lack of capacity and insufficient resources force the poor to seek health care in an unregulated private sector at exorbitant costs, often borrowing money or selling assets (land, cattle, even children) to pay for such services. India, for example, has one of the world’s highest levels of private out-of-pocket financing (67%) with debilitating effects on the poor. It is estimated that one-third of Indians who are hospitalized fall below the poverty line because of hospital expenses. The inequities in the health system are aggravated by the fact that public spending on health in India has never exceeded one percent of GDP. India’s private sector, on the other hand, has expanded over the years, due partly to failures of the public health system and partly to recent policies of liberalization that opened opportunities for entrepreneurs. Almost nine-tenths of all health expenditures are out-ofpocket and paid to the private sector that accounts for 93% of all hospitals, 85% of doctors, 80% of outpatients, 64% of hospital beds and 57% of inpatients. Although unregulated and inequitable, the private sector is widely perceived to be easily accessible, better managed and more efficient than its public counterpart. There is realization that, given respective strengths and weaknesses, neither the public nor the private sector alone serves the best interests of the health system. Collaboration with the private sector in terms of public-private partnership can improve accessibility and equity (by moderating economic impacts on the poor) as well

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as efficiency, accountability, and quality of the entire health system. The public and private sectors gain from one another through the exchange of resources, technology, knowledge and skills, cost-efficiency, and even respective public image. In recent years governments at all levels have been experimenting with strategies to encourage partnerships with the private sector in order to deliver a range of health services such as outpatient primary care, super-specialty surgical care, reproductive health services, HIV/AIDS care and support, treatment of communicable diseases, etc. These services are delivered under different models of partnership such as contracting (both contracting-in and contracting-out), social marketing, franchising, joint ventures, vouchers, hospital autonomy, health cooperatives, social insurance, mobile clinics, and telemedicine. Different models are useful under different circumstances. Thus far social marketing, mobile clinics, vouchers, contracting (management of health facilities), and mobilization of community-based organizations have emerged as the predominant forms of partnership for providing health services. When documenting in-depth case studies of public-private partnership in India, Venkat Raman and Björkman (2009, 2013) found that partnerships benefit poor and marginalized sections of the population because they reduce direct payment for services to the private sector. Vouchers (service coupons), social marketing, mobile facilities, and franchised clinics were more effective in providing health services than other partnerships models. Access to services at a private facility was more acceptable than cash incentives available by using services at a government facility. There were also problems of performance monitoring, definition of the poor, long waiting periods for patients, and lack of supplementary services like post-neonatal care. While partnership initiatives have multiplied, evidence remains scanty about the role of leaders in the origin of partnerships as well as their impact on ameliorating the economic consequences for the poor. There has been little research on evidence-based policy or discussion about the merits and demerits of various forms of private partnership in providing services. Likewise evidence is scarce about how subsidies, grants, or other payment systems impact on the poor beyond the scope of services. Issues like household savings, preference for cash benefits (incentives) over service benefits, impact of subsidies on government budgets, health outcomes (reduced rates of infant and maternal mortality), management capacity of government agencies, and impact of centrally sponsored funds need to be documented. Innovations such as the role of newly created cadres of health volunteers, the creation of round-the-clock health centers, and the provision of incentives merit in-depth study and analysis.

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JAMES WARNER BJÖRKMAN Against this background, comparative research is proposed with the following objectives: Report on evidence from experiences in South Africa, India, and Brazil with types of public-private partnerships in the provision of health care services as well as their contribution to meeting public health goals Compile and review formal policy statements promoting public-private partnerships. Conduct case studies of innovative public-private partnerships in the provision of health services in South Africa, India, and Brazil Evaluate the impact of services provided under partnerships in measurable social and economic benefits for poorer sections of society Identify policy options about the role of private sector participation in the provision of health services to the poor and the needy *

* *

*

*

REFERENCES Aardema, H. (2004). Verbindend leiderschap. Den Haag: Elsevier Overheid. Bass, B.M. & Bass, R. (2008). The Bass handbook of leadership: Theory, research and managerial applications, 4th edition. New York: The Free Press. Björkman, J.W. & Altenstetter, C. (1998). Editors. Health policy. Cheltenham: Edward Elgar. Björkman, J.W., Van Eijbergen, R., Minderman, G. & Bekke, H. (2011). Editors. Public leadership and citizen value. The Hague: Eleven International Publishing. Björkman, J.W. & Mathur, K. (2002). Policy, technocracy and development: Human capital policies in India and the Netherlands. Delhi: Manohar Publishers. Björkman, J.W. & Nemec, J. (2013). Editors. Comparative health reforms in central and eastern Europe: Options, obstacles, limited outcomes. The Hague: Eleven International Publishing. Björkman, J.W. & Venkat Raman, A. (2013). Public-private partnership in health care delivery: Context, outcomes and lessons in India. In: G. Minderman, A. Venkat Raman, F. Cloete & G. Woods. (Eds.), Good, bad and next in public governance: The winelands papers 2012 (pp. 13-38). The Hague: Eleven International Publishing. Central Intelligence Agency (CIA). (2014). www.cia.gov/library/publications/the-worldfactbook/.

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Fourie, P. (2013). Turning dread into capital: South Africa’s AIDS diplomacy. Globalization and health 9:8 (www.globalizationandhealth.com/content/9/1/8). Harrison, D. (2009). An overview of health and health care in South Africa 1994-2010: Priorities, progress and prospects for new gains (discussion document commissioned by the Henry J Kaiser Family Foundation to help inform the national health leaders’ retreat, Muldersdrijft, 24-16 January 2010). Ivins, C. (2012). Inequality matters: BRICS inequalities fact sheet. Rio de Janeiro: Centro de Estudos e Pesquisas – BRICS (www.bricspolicycenter.org). OECD-EU Database on Emerging Economies and World Bank, World Development Indicators. (2011.) Divided we stand. At: http://dx.doi.org/10.1787/888932535432. UNDP. (2013). Human development report – The rise of the south: Human progress in a diverse world. New York: United Nations Development Program. Venkat Raman, A. & Björkman, J.W. (2009). Public-private partnerships for health care in India: Lessons for developing countries. London: Routledge. Venkat Raman, A. & Björkman, J.W. (2013). Case studies in India on the delivery of health services to the poor through public-private partnerships. New Delhi: India Office, UK Department for International Development. Yukl, G.A. (2006). Leadership in organizations. Upper Saddle River, New Jersey: PrenticeHall. Zaccaro, S.J. (2007). Trait-based Perspectives of Leadership. American Psychologist, 62, 6-16. RELEVANT LITERATURE Adesina, J. (2007). Social policy and the quest for inclusive development: Research findings from sub-Saharan Africa. Social Policy and Development Program Paper No.33. Genera: United Nations Research Institute for Social Development. Barrientos, A., Hulme, D., & Shepherd, A. (2005). Can social protection tackle chronic poverty? The European Journal of Development Research, 17, 8-23.

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JAMES WARNER BJÖRKMAN Barros, A.J.D., Victoria, C.G., Cesar, J.A., Neumann, N.A. & Bertoldi, A.D. (2005). Brazil: Are health and nutrition programs reaching the neediest?” Reaching the poor with health, nutrition and population services: What works, what doesn’t, and why (pp. 281-306). Washington DC: The World Bank. Bishop, K., Lisa Sainsburg, L., & Thompson, S. (2012). Working guide to international comparisons of health. Canberra: Australian Institute of Health and Welfare. Britto, T. 2005. Trends in the development agenda of Latin America: An analysis of conditional cash transfers. Brasilia: Ministry of Social Development (mimeo). Evans, D.B., Carrin, G., & Evans, T.G. (2005). The challenge of private insurance for public good. Bulletin of the World Health Organization, 83, 2. Evans, R.G., Barer, M.L., & Marmor, T.R. (1994). Why are some people healthy and others not? The determinants of the health of populations. Piscataway, New Jersey: Transaction Publishers. Fafard, P. (2008). Evidence and healthy public policy: Insights from health and political sciences. Quebec, Canada: National Collaborating Centre for Health Public Policy (www. ncchpp.ca). Figueras, J., McKee, M., Lessof, S., Duran, A., & Menabde, N. (2008). Health systems, health and wealth: Assessing the case for investing in health systems. Copenhagen: WHO Regional Office for Europe. Gilson, L., Doherty, J., Lake, S., McIntyre, D., Mwikisa, C., & Thomas, S. (2003). The SAZA study: Implementing health financing reform in South Africa and Zambia. Health Policy and Planning, 18, 31-46. Gwatkin, D.R. & Ergo, A. (2011). Universal health coverage: Friend or foe of health equity? The Lancet, 377, 2160-2161. Heunis, C., Engelbrecht, M., Kigozi, G., Pienaar, A., & Van Rensburg, D. (2009). Counselling and testing for HIV/AIDS among TB patients in the Free State: Fact-finding research to inform intervention. Bloemfontein: Centre for Health Systems Research and Development, University of the Free State.

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Kouzes, J. & Posner, B. (2007). The leadership challenge. San Francisco: Jossey-Bass. Lancet Editorial. (2013). Banking on the BRICS for Health? The Lancet, 381(9873), 1158. See also its series on South Africa (2009), India (2011), and Brazil (2011). Lustig, N., Lopez-Calva, L., & Ortiz-Juarez, E. (2013). Declining inequality in Latin America in the 2000s: The cases of Argentina, Brazil and Mexico. World Development, 44, 129-141. Mayosi, B.M., Lawn, J.E., Van Niekerk, A., Bradshaw, D., Abdool Karim, S.S., & Coovadia, H.M. (2012). Health in South Africa: Changes and challenges since 2009. The Lancet (http://dx.doi.org/10.1016/SO1406736(12)61814-5). McDonald, D. & Ruiters, G. (2012). Editors. Alternatives to privatization: Public options for essential services in the global south. New York: Routledge. Mkandawire, T. (2005). Targeting and universalism in poverty reduction. Social Policy and Development Paper No.23. Geneva: United Nations Research Institute for Social Development. Nabyona, J., Desmet, M., Karamagi, H., Kadama, P., Omaswa, F., & Walker, O. (2005). Abolition of cost-sharing is pro-poor: Evidence from Uganda. Health Policy and Planning, 20, 100-108. Preker, A.S. (2004). Voluntary health insurance in development: Review of its role in the Africa region and other selected developing country experiences. Washington DC: The World Bank. Sidelsky, R. (1992). John Maynard Keynes: A biography. London: Macmillan. Smith, P., Mossialos, E., & Papanicolas, I. (2008). Performance measurement for health system improvement: Experiences, challenges and prospects. Copenhagen: WHO Regional Office for Europe. Van Rensburg, H.C.J. (2012). Editor. Health and health care in South Africa, 2nd edition. Pretoria: Van Schaik Publishers.

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JAMES WARNER BJÖRKMAN Vandemoortele, M., Bird, K., du Toit, A., Liu, M., Sen, K. & Soares, R.V. (2013). Building blocks for equitable growth: Lessons from the BRICS. London: Overseas Development Institute. Working Paper 365. Venkat Raman, A. (2005). Health sector reforms in India: Challenges and options. In S.K. Tuteja (Ed.), Management Mosaic (pp. 227-262). New Delhi: Excel Books. Victoria, C.G., Vaughan, J.P., Barros, F.C., Silva, A.C., & Tomasi, E. (2000). Explaining trends in inequities: Evidence from Brazilian child health studies. The Lancet, 356, 10931098. World Health Organization and the Public Health Agency of Canada. (2008). Health equity through intersectoral action: An analysis of 18 country studies. Geneva: World Health Organization.

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SECTION B

ACTIVE CITIZENSHIP AND NGO GOVERNANCE

8

HOW

TO

CO-OPERATE

LESSONS LEARNED

WITH

FROM THE

STAKEHOLDERS: NETHERLANDS

Arno Geurtsen and Ans Verstraeten

ABSTRACT Municipalities all over the world are faced with numerous complex challenges, such as corruption, crime prevention, childcare and elderly care. Municipalities are not able to face these challenges on their own. They should interact with relevant stakeholders to face these challenges. Stakeholder theory provides insights in the ways a municipality can interact with their stakeholders. Municipalities have many stakeholders with different and even conflicting stakes. In this complex multiple stakeholder environment, not living up to the expectations of stakeholders may cause a loss of legitimacy. Therefore, the main research question in this chapter is ‘how should a not-for-profit organization manage the (raised) expectations of their stakeholders? What are the consequences when expectations are not met?’ In order to answer this research question, a theoretical model is developed, linking trust, legitimacy and reputation to expectations. The findings show certain awareness about the importance of stakeholder expectations among the organizations. Most organizations find it hard to take all expectations into account. The most important lessons in dealing with stakeholder expectations are the importance of a clear mission statement and keeping promises.

8.1

INTRODUCTION

Municipalities all over the world are faced with numerous complex challenges such as corruption, crime prevention, childcare and elderly care. In the past 30 years, central government has changed its position towards non-profit organizations. Also, various disruptive innovations with enormous impact emerged. These two major trends have ensured that, in 2014, addressing complex challenges requires a totally different approach. An important development, since the 1980s, is the decentralization of duties and responsibilities to municipalities and other not-for-profit organizations. As a consequence, these

155

ARNO GEURTSEN

AND

ANS VERSTRAETEN

organizations were no longer dependent on the detailed rules and regulations of central government. From that moment on, not-for-profit organizations were more or less free to choose their own directions. Another trend is the emergence of disruptive innovations. These innovations appear more often and have a major influence on the product and service delivery of organizations. The introduction of digital storage in combination with search engines has reduced the value of libraries, travel agencies and other types of intermediaries. People prefer to search their own information at the time and place they prefer. They do not always want to wait for services until the supplier is ready to deliver. When a supplier is an obstacle, people will try to find an alternative. Not-for-profit organizations have responded to these innovations by setting up digital service counters for their customers, for instance, declaring an offence, requesting documents or disclosure of personal changes. Citizens in one specific Dutch municipality can collect their passport at a supermarket. In other parts of the Netherlands, passports must be picked up in the town hall, often within certain limited hours. Another innovative development that municipalities are faced with is social media. People comment on the service delivery of organizations when they want to. Suppliers try to regulate these comments, but many people share their opinions with others on Facebook or Twitter. A municipality may choose to participate in the interaction on social media. The trends and developments emphasize the importance of stakeholder interaction. Municipalities might have lost track on their original stakeholders due to the size of the organization. In order to stay legitimate, not-for-profit organizations became aware that they should interact with their stakeholders, because central government no longer decides what the organizations should or should not do. Furthermore, the distance between the municipality and the citizens is reduced by the mentioned innovations, and expectations of citizens rise regarding services of a municipality. This stakeholder interaction is mainly focused on the product and service delivery and the (strategic) choices the organization makes (Dart, 2004:416). Interacting with stakeholders in such an intense way is not a common practice for every notfor-profit organization. It is impossible to act on all the needs of every single stakeholder.

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FROM THE

NETHERLANDS

The organization should therefore assess citizen’s expectations in order to be able to decide on how to act upon these expectations. A municipality can adjust their service level to meet the needs of all stakeholders. Also they could try to temper the expectations of citizens. A municipality may also choose to act as a typical bureaucratic organization and just follow the rules they have established for themselves without taking into account the opinions of the stakeholders. The citizens are part of the complex challenges (corruption, child care, elderly care) a municipality must address. Therefore, a municipality should interact with relevant stakeholders to tackle their complex task. When a not-for-profit organization does not operate in line with stakeholder opinions, it might lose its legitimacy. In the Netherlands, the following incidents illustrate the importance of taking notice of stakeholder opinions: Examination fraud on a school for secondary education; school is closed (2013). Low quality of examinations at a university of applied science; 30% of the students discontinued their studies (2010). Housing corporation exploiting a large cruise ship; total change of rules and regulations housing corporations (2010, 2013). High salary of executive of a charity organization; drop in donations (2009). Senior official of a municipality has given construction companies a preferred position; civil servant was fired, integrity assessment and reporting of corruption were in the media (2014). * *

*

* *

Each incident described above has affected the organization. Trust decreased, and stakeholders decided to vote with their feet. Or the competence of the organization was called into question, and as a result, students decided not to finish their studies. In one of the incidents, the organization was not allowed to continue their activities, meaning they lost their legitimacy. Considerable research is focused on the stakeholder interaction process. In order to deliver the proper products and services, a municipality should determine the expectations of its stakeholders. Also, municipalities should manage these expectations, because not all expectations can be included in the mission-statement and objectives. Therefore, the main research question in this chapter is: how should a not-for-profit organization manage the (raised) expectations of their stakeholders? What are the consequences when expectations are not met?

157

ARNO GEURTSEN

AND

ANS VERSTRAETEN

Stakeholder interaction is used by organizations to incorporate the stakeholder’s opinions about the organization. In day-to-day life, stakeholders assess an organization’s performance. The concepts of trust, reputation and legitimacy are elements which play an important role in the stakeholders’ assessment of the organization. Therefore, expectations are related to the concepts of legitimacy, trust and reputation of the not-for-profit organizations in this research. In order to answer the main research question, a theoretical model is developed on managing expectations, linking trust, legitimacy and reputation. This model is developed through empirical research in various branches. The findings of this research can be used as handles for municipalities. In the first part of this chapter, the theory underlying stakeholder expectations and the concepts of trust, reputation and legitimacy are described. A model visualizing the concepts in relation to expectations is presented. At the end of the theoretical part, managing expectations and the consequences when expectations are not met will be described from a theoretical point of view. Furthermore, the methodology and the findings will be presented. The chapter concludes with the lessons learned and recommendations for further research.

8.2

THEORETICAL BACKGROUND

Stakeholder interaction is of no use if a not-for-profit organization does not take the input of stakeholders seriously (Bryson, Quick, Slotterback & Crosby, 2013:27). According to Fassin (2012:83), it is the responsibility of the organization to consider the expectations of the stakeholders. This makes sense because otherwise stakeholder interaction is just symbolic (Wellens & Jegers, 2013:12). Therefore, stakeholder expectations must be taken into account to become a successful organization (Bourne, 2008:1). Trust and reputation explain the ideas and beliefs of stakeholders. Legitimacy is focused on the degree of competence of an organization. Stakeholders only interact with a notfor-profit organization if they trust it and only when the organization delivers the expected services and products and makes the right decisions. From a theoretical point of view, stakeholder expectations and the concepts trust, reputation and legitimacy are presented in order to define a theoretical framework.

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8 8.2.1

HOW

TO

CO-OPERATE

WITH

STAKEHOLDERS: LESSONS LEARNED

FROM THE

NETHERLANDS

The Expectations of Stakeholders

Stakeholders can have expectations about the performance, output and outcomes of a not-for-profit organization. Expectations constantly change over time and are subject to contextual elements (Van de Walle & Bouckaert, 2003:908). They differ per organization and are difficult to assess. The assessment of these expectations regarding the not-forprofit organizations is very important, because not living up to them will lead to distrust in the organization, loss of reputation and finally loss of legitimacy. Stakeholder theory can easily be coupled to the equity theory, because both are focused on expectations (Hayibor, 2012:222). According to this theory, stakeholders determine their expectations by the outputs and outcomes they receive from the organization related to their input. The received outcomes are compared to the outcomes other stakeholders receive. According to the equity theory, stakeholders expect a fair and equitable trade off. The fairness is assessed by comparison of their own inputs and outputs to inputs and outputs of others. The theory is not clear about the elements of output and outcome. Hayibor (2012:224) states that these can differ per stakeholder. Bridoux and Stoelhorst (2013:114) state that the organization should apply a ‘fair treatment’– policy towards its stakeholders. Fair treatment means equity, equality and need (Bridoux et al., 2013:114). Bridoux et al. (2013:108) distinguish two types of stakeholders: reciprocators and selfregarding stakeholders. Their expectations are different. The reciprocator expects a fair treatment for all stakeholders and assesses behaviors on a moral dimension. The selfregarding stakeholder is only looking at its own interest and interprets behaviors along the effectiveness dimension. These soft elements, which a stakeholder takes into consideration, relate to the concept of trust.

8.2.2

Trust

The first concept presented is trust. The basis for interaction between an organization and a stakeholder is trust (Van de Walle et al., 2003:909). “Trust can comprise interpersonal behavior, confidence in organizational competence and expected performance, and a common bond and sense of goodwill” (Bryson et al., 2013:30). A stakeholder will interact with a not-for-profit organization if it is trustworthy in the eyes of the stakeholder. A trustworthy organization does what it says it is going to do. Therefore, the organization must act benevolent and upright and must also be seen as a

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competent partner. These concepts need some clarification. A not-for-profit organization is benevolent when it is organized to do good things for their citizens; it is considerate, decent and benign. With upright, it is meant that a not-for-profit organization is in accord with what is right and ethical. Being competent is a less emotive concept, and for a not-for-profit organization, it means that it has the skills to accomplish its purposes. Not every organizations gives substance to concepts of benevolence and integrity in the same way. Every situation or context can lead to a different assessment of benevolence and integrity. Because of this, explaining what the organizations considers benevolent or decent becomes important. The competence of an organization seems to be similar to the outcomes in the equity theory of Hayibor (2012:227). Balser and McClusky (2005:297) also state the importance of ability in meeting expectations when they emphasized the consistency between actions and expectations. The actions should be aligned around a common vision.

8.2.3

Reputation

The reputation of an organization gives an indication of the degree to which expectations of stakeholders are met (Fombrun & Shanley, 1990:235). Traditional theory on reputation was focused on the difference between organizations. A good or bad reputation is determined by ranking the organizations on several aspects (Fombrun et al., 1990:244). Fombrun et al.’s (1990:244) research reveals what contributes to a positive reputation of for-profit-organizations. The attributes are based on information available for stakeholders: profitability, products and service, leadership, workplace environment and social responsibility (Fombrun et al., 1990:244). These attributes are difficult to apply in a not-for-profit context. For not-for-profit organizations, another definition of reputation is more applicable. Reputation can be described as the outcome of history and the sum of stories about the organization among its stakeholders. It is a combination of trustworthiness and consistent public policies (Luoma-aho, 2007:128). When stakeholders look at an organization, they have beliefs about the activities and the behavior of that organization. For example, many people expect something different from a university hospital than a regular hospital regarding their competence. Stakeholder expectations regarding the benevolence and integrity of a university hospital or a regular hospital tend to be the same. They expect a hospital to treat people well and do no harm.

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To designate the reputation of not-for-profit organizations, attributes have to be used that can be interpreted by the stakeholders of the not-for-profit organizations. The categorization of Davies et al. (2004:136) used subjective indicators to characterize the reputation of not-for-profit organizations. Davies et al. (2004:127) distinguished more qualitative aspects of reputation related to the manufacturing process. These aspects describe the features of a not-for-profit organization: Agreeableness

Enterprise Competence Chic Ruthlessness

A friendly, open, pleasant and straightforward organization. The organization is concerned, reassuring, supportive, honest, sincere and trustworthy. The organization is cool, trendy and young; does up-to-date things; and is innovative, daring and extrovert. A competent organization is ambitious and wants to achieve things. The organization is rather technical, secure and hardworking. A chic organization is not only charming, stylish and elegant but also prestigious, exclusive and refined. It could be snobby and elitist. A ruthless organization is rather arrogant and aggressive. It is also authoritarian, inward-looking and controlling.

The aspects mentioned are not contextual; every organization is able to embrace these aspects in some way. In order to give the aspects more meaning to stakeholders, they should be attached to the activities of the organizations. To be more precise, the aspects should be labeled to the so-called public value1 that the organization wants to create. When an organization wants to be a high-end achiever, their stakeholders should believe that the organization is chic. When an organization wants to act in a friendly way, the stakeholders should label the organization with the term agreeableness. These examples show that the mission statement and public value are important determinants for the expectations of stakeholders, because they are raised by the organization. The essence of the difference between both organizations lies in the reputation that is given to an organization. The main features of an organization can be analyzed with the categories of Davies et al. However, it is not possible to fill them in. A reputation is determined by the stories stakeholders tell each other. These stories are fed by experiences and expectations. The expectations are formed due to the fact that stakeholders frame organizations, despite the fact that stakeholders do not possess 100% information to judge

1

Public value can be described as the value the organization adds to the public and what is valued by the public. This differs per organization (Benington & Moore, 2010).

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an organization (Bitektine, 2011:165). Bearing this in mind, it becomes very important to know how the organization is labeled and which consequences do the stakeholders expect. So, a tentative conclusion can be that the expectations from stakeholders are established from the moment the organization is labeled with a reputation.

8.2.4

Legitimacy

The theory of institutional change presented by Greenwood, Suddaby and Hinings (2002:59-61) can give a more comprehensive picture of a competent organization. Greenwood et al. (2002:59-61) describe the different phases an institution undergoes when a fundamental change occurs. The different phases eventually lead to the restoration of the cognitive legitimacy of the institution. Suchman (1995:582) describes cognitive legitimacy as a kind of “taken-for-grantedness,” the organization is a necessity for society. In addition to the cognitive legitimacy, there are two other forms of legitimacy. These are also used in the phases Greenwood describes. These two forms relate to the direct needs and interests of stakeholders (pragmatic legitimacy) and the choices made and whether outcomes are desirable (moral legitimacy). Greenwood et al. (2002:64) present the transformation KPMG has undergone from a traditional Dutch accountancy firm into a global consultancy firm. This is taken-forgranted by all stakeholders. In essence, an organization has to determine its core business. Having established what this is, the organization can start interacting with its stakeholders. The paper of Greenwood et al. (2002:60) seems to acknowledge the way the organizational legitimacy is determined. Disruptive innovations, social upheaval or changes in the legislation may lead to disparities in the expectations of the stakeholders and the activities that an organization wishes to undertake. If the organization no longer lives up to its legitimacy, it can lead to severe consequences and even institutional changes.

8.2.5

Theoretical Framework

The concepts described above show that they are related to the expectations of stakeholders. The theory also shows there is a relationship between these concepts. These relations are visualized in a comprehensive model (Figure 8.1).

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Theoretical Framework

Trust

Expectations

Reputation

Legitimacy

In this model, the linkages between trust, legitimacy and reputation are presented. The aspects defining these three concepts have impact on the expectations of stakeholders. Trust is determined by benevolence, integrity and competence. Reputation is determined by comparing past experiences and future expectations of the individual organization with other organizations. And legitimacy is established by the direct and indirect needs of stakeholders. The expectations of stakeholders are determined by the degree to which the individual organization is capable of fulfilling the direct and indirect needs of the stakeholder in a benevolent, upright and competent way. Once the expectations are determined, they should be managed.

8.2.6

Managing Expectations

The objective for understanding and managing expectations is to maintain a supportive relationship and to alleviate the consequences of not meeting expectations (Bourne, 2010:1002). When the stakeholder interaction arrangement and the stakeholders’ expectations are clear, communication is the means to manage the expectations. One important factor of effective communication is the credibility of the message, often as a result of a trustworthy reputation (Bourne, 2010:1016; Mahon & Wartick, 2003:27). Effective communication as a means of managing expectations can be used to change stakeholders’ perceptions and to adjust expectations to reality and make them achievable (Bourne, 2010:1017). Luoma-aho (2013:248) describes stakeholders’ expectations in a Finnish healthcare authority organization. Two methods of dealing with stakeholders’ expectations were introduced: ‘fix or fit’ approach. The fix approach means adapting the organization

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towards the expectations of the stakeholder. The fit approach tries to change stakeholders’ expectation to the organization. For most issues, management chooses the ‘fix’ approach for meeting expectations. In case of unrealistic expectations, the “fit” approach, with the aid of communication, was seen as the best solution (Luoma-aho, 2013:249). Besides, communication framing is used to change the beliefs of stakeholders around an issue, person or organization (Mahon et al., 2003:30). Bridoux et al. (2013:109-110), on the other hand, discussed two different approaches to influence stakeholders (Table 8.1). The main assumption of both approaches is that all stakeholders care about fairness. Table 8.1

Fairness and Arm’s Length Approach Fairness approach

Arm’s length approach

Interaction with stakeholders

Based on fairness considerations

Based on bargaining power

Organizational practices in dividing created value and interpersonal treatment

Open, honest exchange of relevant information Resolve problems through collaboration

Use of secrecy and information asymmetry Resolve problems through confrontation, playing stakeholders off against each other to weaken bargaining position

Formal contracts

Not very detailed, rely on trust and self-enforcement of social sanctions Standards and requirements relatively poorly defined

Detailed performance Standards and requirements, economic and legal sanctions,

Duration relationship

Long lasting

Short-term

Contribution to value creation Reciprocal stakeholder

Self-regarding stakeholder

Consistency

Fair practices to all

Treat differently

Managerial tasks

Listening, taking opinions into account, explaining decisions

These two approaches relate to the concept of trust. A not-for-profit organization that uses the fairness approach cannot just perform certain actions such as forced layoffs. In the perception of the stakeholder, the organization may not be considered to be trustworthy. Stakeholders’ expectations should also be managed regarding the stakeholder interaction process. The way of interaction should meet the expectations of the stakeholder. When

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informing the stakeholder, the organization needs to know if the stakeholder does not expect other interaction, such as consulting, involving or empowering. The same goes for the intention of empowering the stakeholder while the stakeholder expects information. In both cases, there certainly is a misfit in meeting expectations (Bryson et al., 2013:27). In case of a misfit between performance and behavior of organizations and expectations of stakeholders this may have consequences.

8.2.7

Consequences When Expectations Are Not Met

In order to deliver the proper products and services, a not-for-profit organization should establish the expectations of their stakeholders. They also should manage these expectations, and the differences between reality and expectations. Once an organization is doing something that is not in line with expectations, trust will disappear and legitimacy will be at stake. Depending on the visibility of the organization and the severity of the disorder, there will be actions by stakeholders. Hayibor (2012:224) states that a stakeholder undertakes action depending on the fairness in the relationship. Fair is equal treatment compared to others. According to the expectation theory, a stakeholder is more likely to act against an organization if a highly valued outcome is at stake. A stakeholder will interact if he expects that his desired outcomes will be realized with this interaction. When an organization is not credible, trust will be harmed, and the stakeholder will act if betrayal is at hand (Caldwell, Davis & Devine, 2009:107). According to Hayibor (2012:224), dissatisfied stakeholders such as employees, owners and customers will switch to another organization. In addition, they take into account the costs associated with the change. These costs can not only be of an economic nature but also appear as the loss of a long commitment and benefits associated with the connection to the organization.

8.3

METHODOLOGY

The research focuses on educational organizations as an example for other not-for-profit organizations such as municipalities and hospitals. The research followed a qualitative approach, consisting of a questionnaire and interviews.

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Until now, data from 25 vocational organizations and one secondary organization in the Netherlands are gathered. A questionnaire is used containing questions regarding the following: stakeholder expectations effect of stakeholder expectations on the organization impact of incidents on the legitimacy of the organization * * *

Six executives of educational organizations have been interviewed to elaborate on their dealing with stakeholder expectations. For the interviews, a structured questionnaire is used containing questions regarding the following: determining the expectations of stakeholders examples on how to deal with expectations communication about trust

* * *

Stakeholders have different stakes and different expectations regarding products, services and choices of the organizations. When stakeholders look at an organization, they have ideas about that organization (reputation, framing). The categorization of Davies et al. (2004:136) is used to operationalize expectations of stakeholders. The theory on expectations and the related concepts have been the basis for the questionnaire and the interviews. The central theme in the questionnaire and the interviews were the expectations. Therefore, it was possible using a content analysis to link the results to the elements of trust, legitimacy and reputation.

8.4

FINDINGS

The results of the questionnaire and the interviews are presented along the concepts described in the theoretical part of this chapter. The combined results of the survey and the interviews should give an answer to the central research question. The main research question is: How should a not-for-profit organization manage the (raised) expectations of their stakeholders? What are the consequences when expectations are not met?

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Elements of Trust in Relation to Expectations

The executives of the vocational organizations were asked whether they use the words competence, integrity and benevolent in their communication to reveal if they communicate about trust. The interviewees stated that their organizations do not use these words explicitly to indicate that they are trustworthy. Two organizations used competence and honest in their communication. Above all, storytelling and behavior are used to show the stakeholder that an organization is trustworthy. In the interviews, it emerged that organizations find it hard to encourage stakeholders into interaction with them.

8.4.2

Elements of Reputation in Relation to Expectations

In terms of the categorization of Davies et al. (2004:136), the vocational organizations state that their stakeholders expect them to be competent and agreeable. No indications have been found that these elements are changed in the course of time. Vocational organizations state that their stakeholders expect the organization to be competent providers of education. This means, for example, that they expect the organization to reduce the number of dropouts. In the Netherlands, this is an important issue. About 10 years ago, 71,000 students left school without a diploma. In 2013, the number was 27,950. A competent organization also means that students are able to find a proper job after graduation. As described in the theoretical part of this chapter, the activities of the organization must be connected to the aspects of reputation to give them meaning. According to the findings, to determine the expectations of stakeholders, topics are discussed with them. These topics are operational and relate to the core business of the organization: providing education.

8.4.3

Elements of Legitimacy in Relation to Expectations

Stakeholders determine the basis for the legitimacy of an organization and have expectations accordingly. During the interviews, incidents are addressed that could jeopardize the continuity of the organization. This clarifies whether the organization is aware of the

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impact of incidents on its legitimacy. Additionally, the concept of guilt is raised. If stakeholders believe the organization is to blame for an incident, then that affects the stakeholders’ judgment on the legitimacy of the organization. According to the vocational organizations, a declining number of students, bad image, many dropouts, targets of government and declining budgets are the major incidents that affect their continuity. They have not mentioned any potential scandals on which stakeholders take actions that adversely affect their reputation and legitimacy. On the subject of guilt, one interviewee indicated that guilt was not an issue. This finding is remarkable because there is much research on the effects of incidents and scandals on legitimacy. Stakeholders can blame the organization when they believe the organization is responsible. Early School Leaving (ESL) is seen as a responsibility of the vocational organizations. Separately, the organizations appeared unable to solve this problem. A stakeholder might blame the vocational organization. In this example, several organizations and their stakeholders addressed this social issue satisfactorily. The question of culpability was not asked, and no adverse consequences for the reputation and legitimacy emerged.

8.4.4

Managing Expectations

The findings show certain awareness among the organizations that stakeholder expectations are important. Most organizations find it hard to take all expectations into account. The interviewed executives believe that they are able to determine what the stakeholders really expect. The expectations of stakeholders have resulted in changes in the curricula, types of education and internships. Business organizations are responsible for this, because they have an enormous impact on the vocational organizations. The vocational organizations also interact with organizations responsible for the supply of students, in order to accustom these students successfully. These results illustrate that most vocational organizations adapt their business when they deal with stakeholder expectations, therefore using the ‘fix’ approach. The interviewees all indicate that they use different approaches for different stakeholders. According to the ideas of Bridoux et al. (2013:109-110), one might conclude that the vocational organizations use an arm’s length approach to influence stakeholders.

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Consequences When Expectations Are Not Met

The second part of the main research question concerns the consequences when expectations are not met. Given the assumption that not meeting expectations will affect the reputation and legitimacy and eventually the trust in the organization, examples are searched for with a content analysis. For example, a vocational organization has not been able to meet the expectations of the industry, with which it has a longstanding relationship. As previously stated, most vocational organizations choose to adapt their organization to stakeholder expectations. If the vocational organizations had met the expectations of the industry by adapting their curriculum, then they would not have met the obligations of the government concerning the provision of internships. Failure to comply with the legislation may have consequences that endanger the legitimacy of the vocational organization. When the vocational organization does not meet the expectations of the industry, the industry will arrange the required training themselves. As a consequence, a student will receive additional training when he starts working. Not only the industry but also the students might start doubting the reputation of the school or even its legitimacy. According to the expectation theory, industry and the vocational organization discussed the situation described above. For the industry, this has led to a desired result because the vocational organization began providing courses in consultation with the sector.

8.4.6

General Findings

All organizations have a clear view of the stakeholders with whom they interact to learn about their expectations. In most cases, this list of stakeholders is established intuitively. Two organizations carried out an analysis with the aid of a theoretical model. The interviews revealed that in most situations, whether expectations have been met or not, there has been contact with stakeholders about the issue at hand. According to those interviewed, stakeholders whose expectations are substantiated barely responded. If they responded, then the reaction was positive about the involvement because of a commonly shared issue.

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DISCUSSION

In the theoretical part of the chapter, it was described how the expectations are determined by the willingness of stakeholders to interact with the organization, if the organization operates in a trustworthy, upright manner and is seen as a competent organization. An organization is regarded competent when it operates in a manner which is in line with the reputation the organization is given. When a not-for-profit organization is labeled as a municipality, its stakeholders have ideas about the reputation, which influence their expectations. Organizations can influence this labeling by having a clear mission statement. With a mission statement, the organization can distinguish itself from others. Managing expectations of stakeholders should not be limited to determining the expectations. To avoid undesirable consequences, it is also important to show that the organization is able to keep its promises. Stakeholders do not expect fraud with data from a university, financial fraud of a housing corporation, dishonest acts or unfair treatments. Managing expectations is a difficult issue for not-for-profit organizations regardless what kind of not-for-profit organizations they are. Every not-for-profit organization has to deal with expectations, and every not-for-profit organization has the same vagueness surrounding its public value. This means that every organization has to be very precise about what to expect. We are not convinced that most organizations are aware of this. Most organizations consider a mission statement to be important, but it is not their habit to include all stakeholder opinions.

8.6

LESSONS LEARNED

The combination of theory and the results of the research can be translated into recommendations for municipalities and how they should deal with the expectations of stakeholders. It is interesting to see that certain opinions are more important than others. This means that certain stakeholders play a more important role than do others in setting expectations. The opinions of these stakeholders are not only important in setting the expectation but also when the municipality starts acting. When the municipality does not live up to expectations, it maybe has to adjust its operations.

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Also, a municipality is supposed to act in a way it promised. This might be seen as a normal way of doing things, but this is not normal for a municipality. A municipality, like other not-for-profit organizations, does not have a clear-cut goal like a profit organization. It is much easier to implement a certain profit margin than to implement a certain non-monetary value. Because of this, managing expectations becomes a difficult task, because a municipality can easily make a mistake. The most important lesson in dealing with stakeholder expectations is the importance of a clear mission statement. With this mission statement, it is made clear to the stakeholder where the public value will be created, and what the stakeholders of the municipality may expect of the municipality.

8.7

SUGGESTIONS

FOR

FURTHER RESEARCH

It is impossible to interact with every stakeholder separately due to the fact there are too many stakeholders surrounding a not-for-profit organization. An organization would have to invest too much in order to assess the expectations of stakeholders. On the other hand, when an organization does not live up to the expectations, in some cases, it might lose its legitimacy. It is not clear when an organization loses its legitimacy. In the past, incidents occurred that have no serious consequences. However, there also have been incidents that have severe consequences. When does an incident have consequences for a not-for-profit organization? Are there certain boundaries that should be taken into account? The framework within which an organization can act is important to an organization. Not knowing its limits might lead to uncertainty as to what the organization is allowed and not allowed to do. When an organization has to account for every decision, it becomes impossible to operate; there is no licence to operate. It is almost certain that every stakeholder has an opinion about what is acceptable and what is not acceptable. In earlier research, the important aspects for the reputation of certain organizations have been assessed. For example, reliability was the most important issue for charities. Reliability is linked to the percentage of donations that is spent on the primary goal of the charity-organization. Many incidents occurred regarding charities and other not-for-profit organizations, and every incident is more or less related to acting in a proper way. Unfortunately, it is not known when an organization crosses the line. To further explore the boundaries of the acceptable, it is necessary to do action research on this topic.

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REFERENCES Balser, D. & McClusky, J. (2005), Managing stakeholder relationships and nonprofit organization effectiveness. Nonprofit Management and Leadership, 15(3): 295-315. Benington, J. & Moore, M. H. (2010), Public value: theory and practice: Palgrave Macmillan. Bitektine, A. (2011), Toward a theory of social judgments of organizations: The case of legitimacy, reputation, and status. The Academy of Management Review (AMR), 36(1): 151-179. Bourne, L. (2010), Why is stakeholder management so difficult? Paper for the Congreso Internacional en Gerencia de Proyectos, 22-24 september 2010. Bourne, L. & Walker, D. (2008), Project relationship management and the Stakeholder Circle. International Journal of Managing Projects in Business, 1(1): 125-130. Bridoux, F. & Stoelhorst, J. (2013), Microfoundations for stakeholder theory: Managing stakeholders with heterogeneous motives. Strategic Management Journal, 35: 107-125. Bryson, J.M., Quick, K.S., Slotterback, C.S. & Crosby, B.C. (2013), Designing public participation processes. Public Administration Review, 73 (1): 23-34. Caldwell, C., Davis, B., & Devine, J. (2009), Trust, faith, and betrayal: Insights from management for the wise believer. Journal of Business Ethics, 84: 103-114. Dart, R. (2004), The legitimacy of social enterprise. Nonprofit Management and Leadership, 14(4): 411-424. Davies, G., Chun, R., Da Silva, R. V., & Roper, S. (2004), A corporate character scale to assess employee and customer views of organization reputation. Corporate Reputation Review, 7(2): 125-146. Fassin, Y. (2012), Stakeholder management, reciprocity and stakeholder responsibility. Journal of Business Ethics, 109: 83-96.

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Fombrun, C. & Shanley, M. (1990), What’s in a name? Reputation building and corporate strategy. Academy of Management Journal, 33(2): 233-258. Greenwood, R., Suddaby, R., & Hinings, C. R. (2002), Theorizing change: The role of professional associations in the transformation of institutionalized fields. Academy of Management Journal, 45(1): 58-80. Hayibor, S. (2012), Equity and expectancy considerations in stakeholder action. Business & Society, 51(2): 220-262. Luoma-aho, V. (2007), Neutral reputation and public sector organizations. Corporate Reputation Review, 10(2): 124-143. Luoma-aho, V. (2013), Expectation management for public sector organizations. Public Relations Review, 39: 248-250. Mahon, J.F. & Wartick, S. L. (2003), Dealing with stakeholders: How reputation, credibility and framing influence the game. Corporate Reputation Review, 6(1): 19-35. Suchman, M. (1995), Managing legitimacy: Strategic and institutional approaches. Academy of Management Review, 20(3): 571-610. Van de Walle, S. & Bouckaert, G. (2003), Public service performance and trust in government: the problem of causality. International Journal of Public Administration, 26(8): 891-913. Wellens, L. & Jegers, M. (2013), Effective governance in nonprofit organizations: A literature based multiple stakeholder approach. European Management Journal, 32(2): 223-243.

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NON-PROFIT ORGANIZATIONS RELEVANT TO THE DECENTRALIZATION OF CENTRAL GOVERNMENT? Goos Minderman

ABSTRACT The Netherlands has the biggest non-profit sector in the world: education, social housing, healthcare, culture and social services are all organized in thousands of private trusts or foundations. In the last 20 years, internal supervisory boards were created to ensure checks and balances within the organizations and to ensure good governance (including stakeholder management and risk management). The central government has retreated more and more, giving more space and power to the private entities. Thus, government makes the internal supervisory boards more important in the governance of these entities, balancing the management, internal and external stakeholders, clients and the greater public value of the service delivery. Internal supervisory boards seem to have developed from distant non-executives without any serious interference in the organization – which was one of the causes of incidents like bankruptcy, fraud and lowering of the level of quality of service – into focused, critical friends with a strong social awareness of their duties. An enormous change in the number of managers that was fired and hired since 2007 was the result. The question is whether we can define the role of these supervisory boards, what the consequences of such a definition is for the governance of the organization and the governance of the sector of service delivery as a whole and in doing that discovering, the added value of internal supervision in the decentralization of central government. The conclusion of this research is that under circumstances, the internal supervisory boards can constructively add to the decentralization of central government.

9.1

INTRODUCTION

This chapter aims to contribute to the analysis of the governance of non-profit organizations in the context of the Netherlands, the country with the largest non-profit sector in the world. More specifically, the chapter focuses on supervision by supervisory boards of

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GOOS MINDERMAN foundations and trusts for education (schools, universities), healthcare (hospitals), social care and social housing. The topic is relatively young: most of the supervisory boards started in the 1990s as a result of decentralization from government. That also explains the relatively small number of research papers in this field until now. The lack of academic attention may also result from the fact that this so-called third sector is a field without a clear discipline. As public administration as a field of research only focuses on the public sector, and business administration and management sciences are merely focusing on private corporate organizations, the third sector falls in between disciplines, and hence, academic literature about this field is limited. The topic of governance of non-profit organizations has gained much more importance. During the last decade, the oversight or control from government on the production of public values and public goods by non-profit organizations diminished as a direct result of the more liberal policies of new public management and decentralization. This stepping back of national government also meant that no legislation on the governance of the non-profit organizations was developed. The question how supervision on the executive board of a non-profit organization has to be/should be organized was left unanswered, and many different practices emerged. By now, the issue of the governance of non-profit organizations has caught the attention of a few researchers in social sciences. The research methodology started very basic and consisted of an extensive literature research, expert group meetings and a survey among practitioners. Using an initial literature research (published as a book?), a discourse within the group of specialized researchers and practical experts was sought: a monogram was published, and 25 researchers and practitioners reacted on the book. During the process, the methodology became less basic: the monogram (literature research) was presented with a very clear opinionated closing chapter in order to start a much broader discussion between experts and practitioners. The expert groups all consisted of practitioners trying to justify their own ideas and views on their own behaviour. The same went for the survey: only the involved group itself was addressed. However, the involvement of a large group of members of supervisory boards of non-profit organizations in the research was new: they had never been asked so intensely about their experiences and ambitions, and they had never participated in the formulation of dilemmas, questions and quotes that provided the content of the survey. It proved fruitful: the survey gave ground to many ideas and concepts on ‘good supervision’ in the nonprofit sector. It seems that the whole project had many aspects of interpretative research.

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As forementioned, the social importance of the research lies especially in the fact that it concerns a large and still growing sector in service delivery. The data gathered during the research are of great importance in a period when the Dutch government is starting to regulate these supervisory boards without knowing what issues are at stake in practice. Over 600 supervisors concluded in the surveys on the limits of their responsibility, leaving a part of the supervision to…to whom? The conclusion of the described research is that the internal supervision of non-profit organizations is – however broad intended – only limited: the supervisory board cannot oversee the complete value creation of the organization’s service delivery, at least not beyond the scope of its own organization. The supervisory board cannot oversee the efficiency and accountability of the system or any consequences outside of their own local or regional context. The same goes – on the other hand – for government: specific local issues cannot be a national or regional government responsibility; equity and equality demand that equal organizations are treated equally by the legislator. The chapter closes with the idea that the two forms of supervision – local supervisory boards and national governmental boards – should work together and divide the supervision in an intelligent way. That suggestion is a new hypothesis: a basis for new research and discourse.

9.1.1

Decentralization to Non-Profit Organizations

Decentralization from central government is mostly done in two different ways: decentralization to local or regional government and privatization. Both forms of decentralization have their advantages and disadvantages (Donahue, 1989; Cheema & Rondinelli, 2007). In the Netherlands, these two forms of decentralization have also been realized, since the so-called Lubbers governments in 1982. Prime Minister Lubbers started a fivepoint program of which decentralization was one next to privatizations, deregulation, evaluation and monitoring (‘heroverweging’) and the reducing of the government staff (annually 2 % which was almost never realized until 2010) (Parliament papers, 19821983). The decentralization was aimed at two different groups of organizations: regional and local government on the one side and non-profit organizations on the other side. In this sector, schools, healthcare, social housing organizations, welfare and cultural organizations were actively involved in service delivery of public (or non-profit) goods on a high standard of quality. Almost all of those organizations are private entities, not aimed at spreading profit among stakeholders or shareholders, comparable with trusts, foundations or associations. This quasi-market or quasi-government situation poses some very complex questions on the governance of these organizations and on the governance of

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GOOS MINDERMAN competitive areas as education or healthcare as a field. This chapter focuses on one part of this complexity: the role and development of internal supervision by small boards of people who have an important role in the checks and balances of these organizations and are not appointed by the organization nor by the government nor by any owners or any democratic mechanism. The primary function of the supervisory board is to supervise the management of the non-profit organization. The idea behind these new supervisory boards in the non-profit sector is that they can contribute in strengthening the administration and supervision of such organizations and constitute a body that can, for example, manage possible conflicts with stakeholders (Van Besouw & Noordman, 2005).

9.1.2

Defining Non-Profit Organizations

Defining non-profit organizations in international research is mainly done by the John Hopkins research project on non-profit organizations (Salomon, Anheier, List, Toepler, Sokolowski & Associates, 2004). Their definition of non-profit is constituted by six elements. A non-profit organization is a (1) formally constituted (2) non-governmental or privately characterized organization that (3) does not distribute profits to shareholders (if any), is (4) self-governing (it has a governing board) and (5) has some degree of voluntary involvement of participants. The organization is (6) not religious characterized. For the Dutch situation, this definition needs some comments and alterations. All of the Dutch organizations are formally constituted and have a legal entity by private law (criteria 1and 2). Foundations and trusts do not distribute profits although the organizations do make a profit most of the time because they have to add sources to reserves for the future (criterion 3). In recent discussions, the Dutch government dropped the idea of non-profit organizations that do distribute profits to (financing) stakeholders to privatize the investments in healthcare foundations or trusts (Parliament paper, 20112012). This discussion is now not elaborated on, but it is an interesting discussion to introduce a sort of semi-profit organizations. All the entities have a board (criterion 4) that has a certain freedom of strategy of course, depending on the government subsidies they want to ensure if they want to do so. The fifth element is also to distinguish the nonprofit organizations form of government: the criteria of a degree of voluntary involvement of participants. In the Dutch situation this applies formally speaking for the participants as patients, students, tenants and clients. The voluntary part is the freedom of choice between schools, hospitals or social housing corporations. The voluntary element does not or hardly focuses on the professionals in these organizations: the architects, the teachers or the doctors. The last criterion (6) – not being religious of character – also

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needs an extra explanation in the Dutch context since most of the schools or social initiatives originate for a large part from church initiatives who wanted to take care of Protestant or Catholic education or welfare for the poor. This so-called pillarization of society in the Netherlands, where non-profit services were strictly divided by church boundaries, is the main reason of the large non-profit sector in the Netherlands (Kickert, 2004). However, the pillarization seems mostly history, and the religious denominations are hardly distinguishing the services (although children on Protestant or Catholic schools do have extra focus on their religion next to their usual work as math, reading, etc.). So reshaping the definition of the Hopkins project towards the Dutch situation at present is not needed if we put the different elements into the specific Dutch context. We are talking about a very large group of very professional – and mostly well-funded by government – institutions like schools, universities, hospitals, other healthcare institutions, social housing organizations, social welfare organizations and culture and art organizations. They are mostly organized in foundations or trusts: no ownership and no shareholders but started by individuals or groups (churches) as a civil initiative (Van der Ploeg, 2010). Every entity has a board or ruling body, and tenants, students and patients are in principle free in choosing the institution they want or need.1 Although a lot of the organizations were initiated from a religious background, it does not make them a church.

9.1.3

The Importance of the Non-Profit Sector

The non-profit sector in the Netherlands is the largest in the world: the same Hopkins project as mentioned above estimates the sector on 670.000 full-time jobs in 2002, being 12,6 % of the labour market of the country (Salomon et al., 2004:35, Burger & Dekker, 1998). These figures, dating from the late 1990s, are acknowledged in 2001 (Burger & Dekker, 2001) and more recently by Donders and Gradus (2011:250), based on the research of Kuhry (2007). With these numbers, one could also say that the non-profit sector is filling about 90 % of the whole public and non-profit sector. Or, to put it otherwise, the non-profit sector is 1,5 times bigger than all levels of government in the Netherlands combined. In financial terms, the budget of the non-profit sector in the Netherlands is around 15 % of the GBP. The average of the Hopkins comparative research between 22 countries in mostly Western countries is around 6 % (Salomon et al., 2004). 1

This is true in principle although an important movement of mergers in the 1990s has brought some forms of monopoly. Especially in social housing, many regions have only one single organization: if you want to rent a social funded house in a certain village, it might be in practice a monopoly.

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9.1.4

Romenia

Finland

Japan

Austria

Spain

Germany

France

UK

Australia

USA

Israel

Belgium

14 12 10 8 6 4 2 0

Ireland

Size of non-profit sector (% of labour market), Hopkins research (Salomon et al., 2004).

Netherlands

Figure 9.1

The Research Project

The research project on the internal supervisory boards in non-profit organizations in the Netherlands started with a book introducing many strategic, economical, legal and governance questions around these supervisory boards (Minderman, 2012). Strange enough, although the country has the largest non-profit sector, the research on governance on this sector was very limited and never before combined. The book tried to open up a discussion on the issue of internal supervision as an aspect that – due to the growing responsibilities as a result of further decentralization – needed attention in academic spheres. The book gave an overview on the history, important governance issues and open research questions on the issues. It also tried to summarize the existing recent qualitative and quantitative research. The main line was that after the start of decentralization in 1982, it took more than 25 years to start a real discussion in politics and society on the questions of good governance of the sector. It also argues that the rise in the number of supervisory boards since 1994 and the social emancipation of the boards are directly connected with the withdrawal of central government service delivery. Or, to put it otherwise, supervision from the government was very slightly and never explicitly transferred to the internal supervisory boards of the organizations. The book concluded with the main added values of internal supervisory boards. Parts of these arguments are presented in Chapter 2 of this book. To encourage the discussion, more than 30 academics and practitioners were invited to express their views and ideas on the issue of the internal supervisory boards. This part of

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the project was done by asking them to react on the first book by writing a chapter in a second one. A very large number of issues were added to the ideas of the first book, and many different angles were explored. The result was a second book, late 2012 (Minderman, van den Berg & Goodijk, 2012). The summary of those views and ideas is presented in Chapter 3. The third phase was a series of so-called round-table conferences. Six groups with 10 to 15 different internal supervisors gathered for six evenings around a selection of six themes. During these sessions – that will be elaborated later in this chapter – dilemmas were discussed. The central question at every dilemma was to formulate a common ambition on the issue: what does the internal supervisor see as good supervision? The group of supervisors formulated their ambitions in a Declaration of Good Supervision (Minderman, van den Berg, Bikker-Trouwborst, van Marle, Simons, Somers & Spetter, 2013). 9.1.5

Non-profit Organizations Are Much Older Than Their Supervisory Boards

For a good understanding, one has to distinguish two different elements: the non-profit organizations and their supervisory boards. Non-profit organizations are as old as Rome (and probably before). In the context of pre-World-War Europe, they were to be found in most legislations in Europe and the Americas (Hopt & van Hippel, 2010). The organizations existed in a great multitude in the Netherlands as well, even more growing in numbers after the war. The organizations also had functions – education, welfare, health, etc. – but in the post-war politics, these tasks became more and more government funded and government regulated. The Dutch ministry of education was known for its regulations by which they accepted different invoices for curtains in primary school classrooms on the sunny side and different invoices for the shadow side of the building: the quality of the service was to ensure the same level of conditions, and curtains on the sunny side fade more quickly. This way of regulating and financing the non-profit sector turned in the early 1980s, when decentralization to the executive boards of the organizations started. With the growing power of the executive boards, the issue of checks and balances was raised, which resulted in the legitimization of the supervisory boards. So supervisory boards are relatively new. They were introduced as checks and balances for the executive board in the early 1990s: the legislation for the foundations did not even open the possibility of having supervisory boards. Their position was firstly organized in the constitution and bylaws of the organizations themselves. Later, sectorial legislation demanded the supervisory boards – as was regulated in the commercial corporate

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GOOS MINDERMAN enterprises – that represented the shareholders to balance the power of the executive management of the company. Although the corporate governance was of a complete different context and origin, the tendency to copy this supervisory board to another – the non-profit – sector was very powerful in the era of New Public Management. The awareness that copying was not enough for a good balance of power in a non-profit organization is only very recent (see below). Supervisory boards in foundations or trusts are not mentioned in the Dutch Civil Code, as the bodies of legal entities normally are, but fragmented ruled in many different sector legislations in healthcare, education, social housing, etc. Their powers and instruments are mostly found in the constitution of the organization itself. The powers are – generally speaking – the appointing and firing of the executive management and approving the budget, the accounts, the strategy, the funding and the mergers. The members of the board are appointed by themselves: the first board by the first deed and the official registration. After that, the appointing is a question of cooptation. In recent years, the process of appointing new members has been professionalized with public profiles of the board and its members, external independent head hunters to assist, much more possibilities to apply because of adverts in newspapers and public accountability of the board itself in the annual report. This is not always the case everywhere yet, but the process is ongoing (Blokdijk & Goodijk, 2011; Minderman, 2012; Nobelen, 2012). Most supervisory boards have between five and seven members. It is said by the associations of supervisory board members that they spend around 150 hours a year on this activity, which is not their main job. The law limits the number of membership to five per person (so-called Irrgang legislation 2012) and limits the payment of the members to a maximum of 5 % of the CEO salary (7,5 % for chairs of the supervisory board), which is a maximum of around 12.000 euro at the largest organizations in the country.2

9.2

THE GOVERNANCE OF THE INTERNAL SUPERVISORY BOARDS IN THE NETHERLANDS

As pointed out before, the supervisory boards became very popular in different sector legislations in the early 1990s. Before that, in the early 1980s, the Dutch government started a five-piece plan in 1982 of which decentralization and privatization were two of the five central targets. Decentralization to the already existing non-profit organizations was a combination of both and gave power to already existing entities, boards and 2

For example, MBO richtlijn vergoeding raden van toezicht MBO, Woerden December 2012.

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management. Gradually, these local decision makers got more responsibility to run their own school, housing corporation or hospital. In the following paragraph, the evolution of the non-profit sector and the internal supervisory boards will be deliberated on.

9.2.1

Decentralization by Central Government

Central government is no longer able to provide solutions for the complex issues of society (Putters, Meurs & Schulz, 2007). Therefore, the structure of public service had to change (Osborne & Gaebler, 1992). Combined with the need for a substantial reduction in state expenditure (Minderman, 2000), this process will result in the transfer of powers and responsibilities from central government to other organizations in society (Kooijman, 2003; Rhodes, 1997). This development received further impetus as a result of the – rightly or wrongly – tarnished image of central government (Ringeling, 1993; Habermas, 1989) and the reduction in confidence in administrators and politicians (Benn & Dunphy, 2007; Kamarck, 2003). To a greater or lesser extent, the trend towards decentralization has been occurring in almost all Western countries (Kamarck, 2003) and is still continuing, for example, in the direction of citizen-centred governance (Hartley, 2005). Decentralization has been an established government policy in the Netherlands since the coalition agreement of 1982: decentralization, deregulation, liberalization and privatization and reduction of the government apparatus are recurring themes (see all coalition agreements between 1982 and 2007). However, in contrast with the United States and the United Kingdom (Talbot, 2001), the process has not been particularly ideologically motivated. Also, the mentioned decrease in trust in administrators and government was less explicit in the Netherlands, where a relative high level of trust remained (SCP 2002; Dagevos & Gijsberts, 2007). In the Netherlands, the movement has above all been prompted by the need for financial reductions: an attempt, in itself successful, to reduce the government deficit of approximately 11 % (Minderman, 2000) to zero puts the Netherlands in the top four countries reorganizing their budget (Bovaird & Löffler, 2005). In the course of the past 25 years, a series of different coalition governments have, each in their own way, contributed to this; sometimes the emphasis has been on market forces (SER, 2005), sometimes establishing on quango-like public services (Nota verantwoord zelfstandigen, 1994) and sometimes the non-profit sector or the so-called middle ground. Decentralization caused the already complicated non-profit field to become even more complex (Kummeling, Duikersloot, Schagen, Minderman, & Zijlstra, 1999). As early as 1995, the Dutch Supreme Audit Council concluded that each of the 186 public quangos had its own organization and supervisory regime (Algemene Rekenkamer,

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GOOS MINDERMAN 1995). This process has continued since then, as a result of which, the transparency of the public service has virtually disappeared. Decentralization can clearly be seen in almost all sectors in the Netherlands (Minderman, 2007; Zuurmond, 2006). The process has been accompanied by a consensus-oriented discussion between all concerned, one of the core values of Dutch administration (Bovens, ’t Hart, & Guy Peters, 2001). Decentralization is clearly visible in the transfer of responsibility for acquisition and maintenance of school buildings to schools in higher and vocational education and in primary and secondary education to both schools and municipalities (Zoontjes, 1999). The system of government subsidies for schools based on strictly regulated declaration forms and cost centres has been replaced by a system of lump sum funding, allowing school administrators a far greater degree of freedom. Terms and conditions of employment are no longer regulated centrally but by associations of employers and employees. Teaching methods and programs are characterized by ever greater degrees of freedom and have moreover long been protected by the Dutch Constitution that stipulates the freedom of education as a social right. For the non-profit sector, the decentralization had four institutional consequences (Minderman, 2008). First of all, decentralization leads to scale increases in virtually every part of the public sector. This development has been relatively modest in primary education, where the number of schools declined from 8.145 in 1995 to 2.237 in 2005; in vocational education, the numbers are 400 and 47, respectively. In higher education, 400 polytechnics changed into 57 in less than eight years. In the housing sector, only 468 of the 880 housing associations that existed in 1980 remain due to mergers, while in water management, the number of water management authorities has been drastically reduced from 678 in 1977 to 27 in 2007. Secondly, decentralization leads to the discussion about normative good management and good supervision. This resulted in the emergence of governance codes, codes of conduct concerning good administration and good supervision that attempt to provide standards for relations within an organization. These codes have encouraged thinking in terms of basing external legitimation on cooperation with other public services. Such codes have been introduced in all the parts of the housing sector, in healthcare, in education, in the cultural sector and in the charity sector.3 For secondary education, a proposal is in progress. Generally they cover the issues of transparency of the organization and its administration, preventing conflicts of interest (integrity), and professionalization 3

See, for example, Besouw and Noordman (2005).

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of management and internal supervision. These three primary elements of the codes consistently give rise to discussion about what good management and supervision is, which in itself is already important and valuable (Minderman, 2005; Minderman, 2007). Codes in the Netherlands are all very similar (Van Besouw & Noordman, 2005) and are relatively conservative in the sense that they above all address operational aspects of the organizations (Minderman, 2005). Examples from other countries, such as those based on the report of the Langlands Commission in the United Kingdom, go much further, providing for supervisory bodies responsibilities for ensuring the quality of the services delivered (Standards Public Services, 2004). The third and for this chapter most relevant consequence was the introduction of a twotier management structure in non-profit organizations. The traditional single-tier management structure of non-profit organizations in the Netherlands has been transformed – in less than 20 years – to a two-tier structure with separate executive and supervisory boards. The executive boards with decision-making powers are subject to control and scrutiny by an independent supervisory board, almost always consisting of volunteers with specific knowledge and experience which are operating at a certain distance from the organization (Minderman, 2007). Supervisory boards are sometimes imposed with some force by law or by the sectorial organization, for example, the governance code for vocational education. Associations of supervisors have been set up in almost all sections of the non-profit sector to inform and professionalize internal supervisors: the association of supervisors in the sector for healthcare (NVTZ), the association VTW for the housing associations and the VTOI for education. In the Netherlands, the two-tier model is traditionally associated with the larger commercial companies: in corporate law, companies are required to have an internal supervisory board of directors acting as an internal independent body supervising the executives. The fourth consequence is the quest for legitimation of the policy and performance of the non-profit organizations, leading to a focus on new stakeholders (outside the central government). Non-profit organizations have an inherent problem with legitimation. They are not legitimated by profits or legislation. Osborne and Gaebler (1992) seek this legitimation in concepts such as commitment and confidence, paying particular attention to social aspects and moral and personal standards. In other words, its legitimation is neither profit nor power but ultimately the production of public value. A less active central government produces not only a strengthening of thinking in terms of social production but also other less tangible forms of legitimation through collaboration. The choice of stakeholders or partners is thus of strategic importance because the organization makes itself dependent on them. Various theories seem to make efforts to produce ever

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GOOS MINDERMAN larger groups of people and organizations that are connected with a particular policy area or institution. This broad definition of stakeholdership seems to be in line with the advocates of multi-stakeholder processes: Hemmati (2002) believes that what counts is involvement in an organization or policy problem, in combination with the voluntary decision of the stakeholder to act as a stakeholder. Stakeholdership should not be seen simply as a public relations exercise (Benn & Dunphy, 2007). Where social issues are at stake, a real commitment to work out and implement solutions and monitoring results is essential (Rukato & Osborne, 2001). Collaboration must be legitimated by societal motives. Concluding that the whole issue of stakeholder management is a very strategic one that is raised in the same decentralization flow (decentralization demands social legitimization more than government approvals), it is quite clear that new enthusiastic internal supervisory boards took this issue to create a position within the organization, which were traditionally focused on government rulings instead of public value. Successful critical cooperation and legitimizing accountability require innovative quality policies, openness concerning, conflicting or diverging interests of organizations (reconciliation), creativity and flexibility (Benn & Dunphy, 2007). It is the networks of organizations dominated by these concepts that can ensure the legitimation of the quality and distribution of public services (Saward, 2005). Clearly the possibility for the new supervisory boards to gain influence on the organization without interfering in the details of the administration was there. To summarize the emancipation of supervisory boards in the context of the Dutch situation, decentralization of the central government towards these private organizations was (and is) a standard policy for about 20 years. The local checks and balances were put upon the shoulders of the supervisory boards who had the possibility to gain strength in the organization by opening up the organization for stakeholders and putting them in a very important position on the strategic questions of stakeholder policies (quality, performance, etc.).

9.3

DEBATING SUPERVISORY BOARDS

On the background of this development, more than 30 academics and practitioners were asked to reflect on the role and the position of the supervisory boards. The group of reflecting authors consisted of 15 academics (coming from VU University Amsterdam (6), TiasNimbas Business School of the University of Tilburg (2), University of Delft (1),

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Nyenrode Business University (3), University of Amsterdam (1), Erasmus University of Rotterdam(2)), seven specialized management consultants coming from five different companies with a stark focus on strategic consultancy in the non-profit sector and nine representatives of the several associations of members of supervisory boards.4 These views and analysis have been edited, put together in a book, independently reviewed by Goodijk (Minderman, van den Berg & Goodijk, 2012) and debated during the presentation of the book. Board members themselves were excluded: their views, ideas, dilemmas and ambitions are dealt with in another part of the project and in the following chapter. On the issue of the question of this chapter – is the internal supervision relevant for decentralization? – six aspects can be concluded from this debate: A. The supervisory board has the function of an (critical) employer of the executive, the managers. B. The supervisory board adds – or could add – value to the system of public service delivery. C. The supervisory board adds to the (social, public or formal) accountability and the stakeholder management of the organization, so the organization is more involved in the society and therefore more effective. D. The supervisory boards can add to the system of accountability, especially on aspects of soft controls (organization culture, behaviour and the process of management), more effectively than the government could do. E. The supervisory board can more effectively supervise the area of integrity of the management and the organization. F. The supervisory board disciplines the management and the organization in all sorts of working processes. These six aspects will be elaborated on below.

4

The members of supervisory boards all have their sectorial professional associations that negotiate on legal and financial matters with the government, lobby for more understanding and organize courses and seminars for the professionalization of their members. In the research project, the Dutch Association of supervisors in Education VTOI (2000 members in 2013), Social Housing VTW (1800 members), Healthcare NVTZ (3500 members) and the Center for Professionalization of supervisors and commissioners (NKCC) were participating. All associations together – also non-participating – represent around 40% of all supervisors (around 18.000 in total). The difference representatively is big: almost all supervisors in larger hospitals and social housing are members of these associations, while in smaller care organizations and primary education, only a minority is a member.

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GOOS MINDERMAN A. The Role of the Employer of the Executive Board/Managers In most of the organizations, the supervisory board has the power to appoint and fire the executive management of the organization. With this right, they are the employer. It is given to the board for three reasons. The first reason is quite simple: if the supervisory board did not fulfil the employers role, who would? Not the central government in whose line of decentralization, the appointing, evaluating, firing, etc., of the managers of more than 5000 local non-profit organizations are in no way fitting or feasible. Also not the local government, who is in many cases one of the most important stakeholders of the organization but by far not the only one. The second reason is not very difficult as well: how can a supervisory board supervise if the ultimate sanction – firing – is not in their hands but with another organization? Nobelen (2012:132) states that in practice, this role is not yet well formulated and well executed: supervisors find it hard to evaluate and to determine salaries or when they have to end the role of the executive manager. In his view, the supervisory boards are in this aspect the last resort of the organization. That is why he concludes that the supervisory board is the highest ranking body of the organization. Both board and management have different responsibilities but share the same goals and views on strategy (2012:131). B. The Contribution to the System of Public Service Delivery. Paardekooper and Ter Braak (2012:318) argue that in the context of the public sector service delivery and in the social context of the organization, the responsibility of the supervisory board and the management is much broader than is formulated. The boards and managers of schools have a responsibility for the well functioning of the educational sector: the connection between school types and levels. And even further, they need to reflect on the system, improve it or get the improvement on the agenda of politicians and legislators. Decentralization means the responsibility (a moral duty) of participation in the sector for the betterment of the sector as a whole. In the same line of arguing, Mertens (2012:47) argues that with this large group of supervisory boards, a coherent policy on social needs between the many organizations and actors is almost impossible. As he sees it, the linking with local and central government seems to be lost. Mertens, being the former Inspector General for education and later Dutch transport and infrastructure for many years, underlines the importance of a good contact between the internal supervisory board and the external – mostly national and governmental – inspectorates. In that way, Goodijk points out that the whole issue of a governance or supervisory network is not enough explored or formulated (2012:318).

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C. Involvement in Society by Strategic Stakeholder Management and Accountability Supervisory boards, being only connected with the organization on a very limited scale, depend a lot on the information of the management in their decision-making and debates. To balance this one-sided information from the persons they are supervising, all sorts of information from various (internal and external) stakeholders are very important – information from the staff, the patients, the tenants, the pupils, the students, the teachers, the doctors, the nurses, the local government, the professional organizations with whom the organization works with, the inspectorates, the independent rating organizations, the specific assessment organizations, etc. (Buchholtz & Carroll, 2009). By involving other parties in the judgment of the management and the process of service delivery, different levels of involvement from these parties in the organizations are formed. A network of stakeholders expressing and formulating needs, expectations, wishes, ideas, results, complaints, assessments and judgments is slowly formed around the organization. And, vice versa, the organization does the same towards many partners in the chain or the context they are working in. This activity can solve the democratic gap of the non-profit sector, especially if the system of supervision is better linked with government inspectorates and some last-resort instruments of the government for the cases that supervisory boards fail (Jak, 2012:163). In a context of well-formed checks and balances between management, stakeholders, supervisory board, inspectorates and government, cooperation is needed and accountability – financial and nonfinancial – is selfevidently developing. In this network and dynamic context, the role of the supervisory board is a very strategic one: together with the management, they determine which organizations are primary stakeholders and how to organize the cooperation and accountability with them. And how does one deal with the other stakeholders and who are needed in all sorts of activities as well? The board is explicitly involved in these strategic deliberations (Strikwerda, 2012:63) and prevents the ‘stand-alone situation’ of an organization who is only internally focused at production processes. The external focus is needed for every non-profit organization, but a good implementation of the supervisory board has been pushed in the good direction (Nobelen, 2012:129). In many sectors, the opening up to external partners with a well-formulated stakeholder management is developing (Blokdijk & Goodijk, 2011 & 2012; Minderman et al., 2013). Together with the opening up to partners is the development of the diversity of the members of supervisory boards (Goodijk & Blokdijk 2011 & 2012; de Melker & Verleg, 2012:309).5

5

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GOOS MINDERMAN D. Accountability and Soft Controls Supervisory boards are much closer to the management and the organization than the government or other organizations and can therefore focus on different aspects. Government can examine the yearly accounts and reports and do inspection visits, but the role is of course limited. Partner organizations can work with the organizations on a daily basis, but that also shapes a certain loss of independency. The need for serious integral internal supervision is underlined by Koelewijn, Gerards, Buiting, Kerssies and Van Essen (all 2012). Putters and Van de Veerdonk (2012) plead for explicit focus on behaviour of management, the culture of the organization and the space for professionals (teachers, doctors) in the main processes. Supervision is more than compliance and accountability, and the so-called soft controls (Aardema, 2005) are a very important aspect of the working of the non-profit organization. There is always a sort of ‘dead angle’ in the mirror of relations between the formal accountability formats and the human relations in and around the organizations (Vulpenhorst, 2012). E. Supervising Integrity Integrity is – just as mentioned above – more than good accountability and good compliance. The conviction that an organization is honest and open and that fraud or corruption is not taking place is – like above – also an assessment of the organizational culture and people’s behaviour (Karssing & Jeurissen 2012; Heres & Van der Wal, 2012). Integrity asks for a constant dialogue on dilemmas, responsibilities and responsiveness. Managers and supervisory boards are seen as role models (Cozijnsen, 2012). And the moral standard is comparable with public leaders (Heres & Van der Wal 2012:231). The risk management on integrity is generally seen as one of the core tasks of supervisory boards (Minderman et al., 2013, Cozijnsen & Vulpenhorst, 2012:221). Risk management is not only translated into financial risks but also in terms of strategic risks like the lack of a sound policy or strategy (what are we doing with the public needs and the public budget? (Gerards, 2012:275)). In almost all non-profit sectors, integrity codes an codes of conduct are formulated, reformulated and discussed. The ‘comply or explain’ rule that is part of all these codes on good governance offers more and more a smaller possibility for ‘explaining the non-compliance’. F. Disciplining the Management (And the Organization) As argued before (Minderman, 2012), the role of the supervisory board can be disciplining. If the board keeps up a publicly high profile of integrity, it will limit the eagerness of

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the management to cross that line to avoid problems with the employer. A moral and integrity standard is already mentioned above (Heres & Van der Wal, 2012:231), but the disciplinary ‘radiance’ of a supervisory board can be very important (Hettema & Du Burck, 2012:297). If the board demands clear formats on information, the management will do the same in the organization. If the board clarifies – with the management – its most strategic points in the service delivery, it will help in the focus of the organization. If the board does not accept pushing forward of deadlines, the organization will have a more organized process. Summarizing this phase of the research project, 28 academics and practitioners have made clear that in their view, supervisory boards can contribute to decentralization to non-profit organizations on these six aspects. 9.4

9.4.1

THE AMBITIONS

OF THE

SUPERVISORY BOARDS

Involving Supervisors into the Debate

What do the supervisors want themselves? What is the ambition of the members of supervisory boards? How do they see their tasks and responsibilities and how will they contribute to the success of this decentralization? What are their ambitions? Supervisors themselves played a leading role in the next phase of the project. The aim was to find and formulate the ambition that members of supervisory boards have and the limits of supervision for which they would want to be held accountable for, placed in the context of a decentralizing government. The project is mainly based on qualitative research methods, although the results were tested among a larger group of members of supervisory boards by using a qualitative research method (a survey). Members of supervisory boards were asked to participate in so-called round-table conferences, open and mostly unstructured discussions focussing around a main theme with small groups of 10 to 15 people. The previous research, books and interviews with representatives of associations of members of supervisory boards (VTOI, VTW, NVTC and NKCC – see p. 11) lead to six central themes: Information: obtaining the right information needed to exercise proper supervision and the supervising strategy Governance codes: handling or dealing with governance codes (‘comply or explain’) and standardizing supervision Legitimacy: the legitimacy issue of the organization and the supervisory board and the stakeholders they should be accountable for *

*

*

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*

*

*

Coordination of supervision: the balance between internal and external supervision and dealing with tensions that might occur The role as employer at a distance: maintaining a good relationship with the board while still being able to ask critical questions Operational and risk management: the role and the extent to which the supervisory board needs to be involved in the (primary) process and/or strategy to be able to keep proper supervision

These themes formed the starting point for the discussions – one for each theme – with a diverse group of supervisory board members per session. A total of 51 persons (27 males and 24 females), representing several functions within supervisory boards in education (36), healthcare (13), social housing (9), childcare (4) and other non-profit organizations like culture or charity (10), participated in this project.6

9.4.2

The Result: The Declaration of Ambitious Supervision

The participants in the six meetings agreed on a declaration: a pamphlet in which they expressed their ambitions. A group of six supervisors formulated the text with assistance of the research group. In this paragraph, the declaration is summarized. It contains the following four aspects: 1. I aspire an open, proactive, critical and trusting relationship with the board. I also want to be in a position where I have access to a plurality of information and I take early action in my role as an employer. With this statement, the supervisor is free to gather information from internal and external stakeholders, inspectorates and other parties. Supervisors can also force the management into organizing this information on a cyclical base. Although the supervisory board is the employer of the management, there is enough trust between the two boards to work on different information positions. 2. I want a social commitment as supervisor and am actively and structurally accountable to internal and external stakeholders. The board sees itself as the keeper of the quality and accessibility of the service delivery. They formulate this as a relevant 6

Each session has been recorded and transcribed into a combined report. After analysing the results, four key values could be distinguished. To make sure that they truly represented the participants and to eliminate the scientific interpretation of the results, a final session was organized where a small representation of the project’s participants could make alterations in the formulation of these four key values. This resulted in the declaration of ambitious supervision that was presented publicly, in a conference with over 100 interested participants with backgrounds in politics, governmental organizations, non-profit organizations, associations of supervisors and supervisors themselves.

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3.

4.

9.4.3

IS INTERNAL SUPERVISION

IN

DUTCH NON-PROFIT ORGANIZATIONS RELEVANT TO THE DECENTRALIZATION OF CENTRAL GOVERNMENT?

social role that results in social accountability on what the supervisory board is doing. I want to fully monitor and have a thorough understanding of the risks and control measures. In addition, I accept a wide accountability and some responsibility. Risk management and an integrated management control cycle is the core focus of the supervisory board. It involves the financial and nonfinancial data that is relevant for the decision-making in the organization. I want to monitor with a combination of expertise, experience, feelings, selfconfidence and I want to devote myself to an effective formation of the supervisory board. I aspire to the continuing professional development of myself and the supervisory board as a whole, through training and intervision, regarding expertise, attitude and behaviour. The question of training is quite new: mostly supervisory jobs were taken by a limited (former) political group. With the rise of the numbers of supervisors (up to around 20.000 supervisors), a new group of supervisors came into office. Training and professionalization became an important issue.

Support among Other Members of Supervision Boards

To see if the declaration is supported by a larger audience, a survey was conducted among the members of two associations of supervisors (education and social housing). In total, 3200 people were asked to join the survey. The question however was not posed directly and separately to them, but was formulated among others news and facts in monthly newsletters of these associations. The result is that the response was relatively low; however, still 603 (429 men, 174 women) supervisors responded in less than two weeks. The results do not give more than an indication: a response of less than 20 % is hardly representative for the complete population. They represent a total of 828 supervision functions in Dutch non-profit organizations. About one third of the population has an experience of less than four years; two thirds has an experience of eight years or less. For around 55 %, the current supervisorship is the only one they practice. Around 8 % of the respondents have four or more memberships of supervisory boards. Forty-nine per cent of the respondents have a supervisory role in the sector of education, 10,3 % in the sector of healthcare and 27,5 % have a seat in a supervisory board of a housing corporation. Around 13,1 % have supervisory roles in many different sectors, including the corporate sector. The four key values were divided into 24 separate statements regarding parts of the declaration in order to verify them among such a large group. A selection of eight of these 24 statements illustrates the support for the most important parts of the declaration:

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GOOS MINDERMAN Figure 9.2

Support of the Declaration (a selection of eight of 24 statements) (Minderman et al., 2013:53-75).

I want annual self-evaluations on the supervisory board, with input of internal and external stakeholders,

75%

Riskmanagement is the core business of the supervisors

94%

I want to be accountable, approachable and communicative for the acts, attitude and policy of the management.

85%

I want to be accountable to society of I do in the supervisory board.

92%

I want to formulate a independant view on supervision and I communicate that with management & stakeholder

88%

I want a annual or bi-annual meeting with the inspectorate of the govern ment about their views and results concerning the organisation. I want to be informed by internal and external stakeholders, even separately from the management. If I have to I go look for information myself.

53%

82%

I want to form constructive checks and balances to the management

89% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

9.4.4

Conclusion

The members of the internal supervisory boards that participated in this project gave their views regarding the future shaping of their function and the role of the supervisory board as a whole in terms of behaviour and attitude. Although the declaration is not representing all Dutch internal supervisory board members, a survey with a response of more than 600 members shows that the declaration is widely accepted among them. The declaration shows that quite a large group is willing to accept the challenge of a growing responsibility as a consequence of the decentralization. In the debates and the declaration of the supervisors, a high ambition towards a professional supervisory role is expressed. The declaration, which seems to be supported by a great group of supervisors, can be summarized as following: Supervisors have the ambition to be or become an independent role in the non-profit organization, guarding the continuity and quality of the production and values of these organizations, on behalf of society. *

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*

*

* *

IS INTERNAL SUPERVISION

IN

DUTCH NON-PROFIT ORGANIZATIONS RELEVANT TO THE DECENTRALIZATION OF CENTRAL GOVERNMENT?

Supervisors take their role as employer of the management, including the supervision on more soft aspects of management very seriously. Supervisors acknowledge explicitly the need for multi-stakeholder involvement to ensure and increase the quality of service delivery of their organization. Risk management is seen as one of the core businesses of the supervisory board. Supervisors are open and willing to permanent training and reflection on their own behaviour.

To conclude this paragraph, the aspects of contribution to decentralization as formulated by the debate described in paragraph 3 are highly supported by a large group of supervisors. New empirical research should focus on the representatively of this survey.

9.5

CONTEXT

OF THE

RESEARCH: NEW LEGISLATION

Since 2007, the legislator in the Netherlands has been active in trying to position the supervisory boards in the non-profit sector. Before 2007, in specific or sector legislation, the boards were introduced without clear responsibility or tools: in 1994, the boards became compulsory in the organizations for social housing (BBSH, 2005). In 1995, the boards were introduced in the organizations for vocational education (WEB, 1995). But these introductions did not define their role or responsibility. In 2007, the proposal for a law on social entrepreneurship was introduced (Parliament Papers: 2007-2008). This – initially – new legal entity differed from all other entities by two connected bodies: a representation of stakeholders (clients, professional chain partners and others) who could directly contact the board of supervisors with advise. If the stakeholders would feel neglected, they could go to court. In this concept of internal governance, a small glimpse of the role of the supervisory board was formulated: why give stakeholders access to supervisors if they had no important role in the organization? It was even suggested that the supervisors were appointed by the representation of the stakeholders. Alas, the proposal never had a parliament discussion because of a political crises, change of government and the withdrawal of the proposal. Since then, other parts of the non-profit sector introduced the boards but without being very clear about filling the gap of the responsibilities, tasks and powers.7 A code of

7

See, for example, Good Governance in primary and secondary education, published 2010 (Stbl. 80 and 282).

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GOOS MINDERMAN conduct of the sectors of primary and secondary education – to be written by the association of managers of the schools – was introduced to fill this gap. Recently, the Dutch Government became more active and introduced the proposal for legislation ruling on supervisory boards.8 With that, the government reacted on the report of the Halsema committee, the committee that was asked to formulate the principles for good government in the non-profit sector and underlined the growing responsibility of supervisory boards and the need to position these boards in a better way through legislation. The government introduced private liability of supervisors: if the supervisory board does not act well, then the members are liable for claims on their private finances. The proposal does not formulate exact norms of good supervision: supervisors have to act in the interest of the organization (article 9a). The letter of clarification of the government does underline the growing importance of the supervisory boards and the need to position them well within the organization as independent supervisors of the management. So although the legislation is still very vague, the importance of the supervisory boards is ruled in new legislation. It seems that the government is also moving in the direction of underlining the growing responsibility of the boards, without formulating it.

9.6

WRAPPING UP

UNTIL

NOW

The above-described project results in part of the answer on the research question of this chapter. After years of decentralization, non-profit organizations carry an important responsibility in service delivery in the public sector. With this decentralization, a new governance problem arose: how to create relevant checks and balances within these organizations that are not regulated by politics or markets. Copied from the corporate sector, the supervisory board in a setting of a two-tier-model was implemented for education, social housing, welfare and healthcare. After a long period of orientation, there seems to be a clearer view on the tasks and responsibilities of the boards between most of the academics in the Netherlands and with a large group of supervisors. If – and this ‘if’ seems essential – all supervisory boards follow the ideas of the declaration, the boards could step into oversight bodies of central government. The assessment of management, the contextuality of the strategy, the supervision of the stakeholder management and the supervision on integrity are probably more effectively done by a nearby

8

See: Internet consultation of the proposal at .

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supervisor than a distant bureaucracy. The fact that the government is suggesting that this is not done enough at the moment, but that it is seen as necessary that the boards will act in this way, says that there seems to be a consensus that the role and responsibilities of the board are becoming more and more clear. In that role, they can have an important function in the decentralization of central government: taking over the specific assessment of management and performance of the individual organization. Is internal supervision in Dutch non-profit organizations relevant to the decentralization of central government? What are the advantages, dilemmas and challenges? The answer is that in the development of decentralization, the internal supervisory boards have become more and more important: The supervisory boards perform of supervision on the management and the performance of the organization that is much more contextual, precise and much more looking at so-called ‘soft’ aspects of management (behaviour, culture, attitude, etc.) as central government can or could do. There seems to be growing a consensus about the normative way of supervising the non-profits: academics, the supervisors themselves and – less clear – the government point into the same direction. *

*

These two statements seem to direct in the answer that supervisory boards are relevant for decentralization. REFERENCES Algemene Rekenkamer (1995). Jaarverslag 1994. Parliament Paper II, 1995–1996, 24 130, nr. 2. Aardema, H. (2005, November 18) Stille Waarden [Oration Open University]. Heerlen, The Netherlands. Benn, S. & Dunphy, D. (2007). New forms of governance: changing relationships between corporates, government and community. In S. Benn & D. Dunphy (Eds.), Corporate governance and sustainability, challenges for theory and practice (pp. 9-35). London/New York, England/NY: Routlegde. Besouw, S.M. van & Noordman, Th.B.J. (2005). Non-profit governance, zicht op de stand van zaken. Delft, The Netherlands: Eburon.

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GOOS MINDERMAN Blokdijk, G.M.M. & Goodijk, R. (2011). Zorgtoezicht in ontwikkeling. Naar een betere balans tussen controle en strategisch partnerschap? The Hague, The Netherlands: Nationaal Register. Blokdijk, G.M.M. & Goodijk, R. (2012). Toezicht binnen onderwijsinstellingen: Onderzoek naar samenstelling, werkwijze en functioneren van raden van toezicht in het onderwijs. The Hague, The Netherlands: Nationaal Register. Bovaird, T. & Löffler, E. (2003). Public management and governance. London/New York, England/NY: Routlegde. Bovens, M., ’t Hart, P. & Guy Peters, B. (Eds.). (2001). Success and failures in public governance, a comparative analysis, Cheltemham/Northampton, England: Edgar Elgar. Buchholtz, A.K. & Carroll, A.B. (2009). Business and society. Ethics and stakeholder management (7th ed.). Mason, OH: South Western Cengage Learning. Buiting, M. (2012). Toekomst van toezicht in de zorg. In G.D. Minderman, R. Goodijk, & S. van den Berg (Eds.), Waar is de raad van toezicht? Deel II: Een bundel van visies en ideeën (pp. 269-274). The Hague, The Netherlands: Boom/Lemma. Burger, A. & Dekker, P. (1998). De grootste non-profitsector ter wereld. ESB, 83(4181), 944-946. Burger, A. & Dekker, P. (Eds.). (2001). Noch markt noch staat; De Nederlandse nonprofitsector in vergelijkend perspectief. The Hague, The Netherlands: Social and Cultural Planbureau of the Netherlands. Cheema, S.S. & Rondinelli, D.A. (Eds.). (2007). Decentralizing governance: emerging concepts and practices. Washington, DC: Brookings Institution Press. Cozijnsen, A.J. (2012). Betrouwbare raden van toezicht creëren vertrouwen: Betrouwbaar handelen synchroniseren met gedragscodes. In G.D. Minderman, R. Goodijk, & S. van den Berg (Eds.), Waar is de raad van toezicht? Deel II: Een bundel van visies en ideeën (pp. 193-203). The Hague, The Netherlands: Boom/Lemma. Dagevos, J. & Gijsberts, M. (Eds.). (2007). SCP-publicatie 2007/27, Jaarrapport integratie 2007, The Hague, The Netherlands: Sociaal en Cultureel Planbureau.

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Donahue, J.D. (1989). Privatization decision: public ends, private means. New York, NY: Basic Books. Donders, J. & Gradus, R.H.J.M. (2007). Toegang tot de collectieve sector. The Hague, The Netherlands: SDU. Eijk–van Heslinga, H. van (2010). Themaonderzoek Diversiteit in Raden van Commissarissen. Rapportage ten behoeve van de monitoringscommissie Governancecode Woningcorporaties. Hilversum, The Netherlands: Aedes. Gerards, J.J.G. (2012). Een laag dieper. Graven naar resultaat- en risicofactoren die de kwaliteit van het functioneren van het intern toezicht beïnvloeden. In G.D. Minderman, R. Goodijk, & S. van den Berg (Eds.), Waar is de raad van toezicht? Deel II: Een bundel van visies en ideeën (pp. 275-295). The Hague, The Netherlands: Boom/ Lemma. Habermas, J. (1989). The structural transformation of the public sphere. Cambridge, MA: MIT Press. Hartley, J. (2005). Innovation in Governance and Public services. Public Money en Management 25(1), 27-34. Hemmati, M. (2002). Multi-stakeholder processes for governance and sustainability. London, England: Earthscan. Heres, L., & Wal, Z. van der (2012). Wil de ethische toezichthouder nu opstaan? In G.D. Minderman, R. Goodijk, & S. van den Berg (Eds.), Waar is de raad van toezicht? Deel II: Een bundel van visies en ideeën (pp. 221-237). The Hague, The Netherlands: Boom/Lemma. Hettema, P.J.A.M. & Du Burck, T. (2012). De governancecode in het onderwijs: papieren tijger of stimulans tot actief toezicht? In G.D. Minderman, R. Goodijk, & S. van den Berg (Eds.), Waar is de raad van toezicht? Deel II: Een bundel van visies en ideeën (pp. 297308). The Hague, The Netherlands: Boom/Lemma. Hopt, K.J. & Von Hippel, Th. (Eds.). (2010). Comparative corporate governance of nonprofit organizations. Cambridge, MA: Cambridge University Press.

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GOOS MINDERMAN Jak, N. (2012). Het intern toezicht door de raad van toezicht, verantwoordingsarrangement vanuit democratisch perspectief. In G.D. Minderman, R. Goodijk, & S. van den Berg (Eds.), Waar is de raad van toezicht? Deel II: Een bundel van visies en ideeën (pp. 163174). The Hague, The Netherlands: Boom/Lemma. Kamarck E.C. (2003). Government innovations around the world. Cambridge, MA: Ash Institute for Democratic Governance and Innovation. Karssing, E. & Jeurissen, R. (2012). Naar dialogisch integriteitsbeleid. In G.D. Minderman, R. Goodijk, & S. van den Berg (Eds.), Waar is de raad van toezicht? Deel II: Een bundel van visies en ideeën (pp. 205-219). The Hague, The Netherlands: Boom/Lemma. Kerssies, A. & Essen, H. van (2012). Randvoorwaarden voor goed intern toezicht in woningcorporaties. In G.D. Minderman, R. Goodijk, & S. van den Berg (Eds.), Waar is de raad van toezicht? Deel II: Een bundel van visies en ideeën (pp. 253-267). The Hague, The Netherlands: Boom/Lemma. Kickert, W.J.M. (2004) History of governance in the Netherlands: continuity and exceptions. The Hague, The Netherlands: Reed-Elsevier. Koelewijn, J. (2012). Governance van pensioenfondsen: Raad van toezicht mag wel blaffen, maar bijten? In G.D. Minderman, R. Goodijk, & S. van den Berg (Eds.), Waar is de raad van toezicht? Deel II: Een bundel van visies en ideeën (pp. 145-162). The Hague, The Netherlands: Boom/Lemma. Kooijman, J. (2003). Governing as governance. London, England: Sage. Kuhry, B. (2007, May 8). Profile of the Dutch non-profit sector [presentation at the Dutch Central Planning Institute (Centraal Planbureau)]. The Hague, The Netherlands. Kummeling, H.R.B.M., Duikersloot, A.P.W., Schagen, J.A. van, Minderman, G.D., & Zijlstra, S.E. (1999). Verkenningen van verantwoordelijkheid, onderzoek naar ministeriële verantwoordelijkheid voor het toezicht op zelfstandige instellingen op het terrein van het onderwijs. Deventer, The Netherlands: Kluwer. Meijerink, M.H. & Minderman G.D. (2005). Naar een andere publieke sector: hybriditeit en een andere wijze van publieke taakvervulling. The Hague, The Netherlands: SDU.

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Melker, N. de & Verleg, B. (2012). Toezichthouders zijn niet van gisteren: Profiel toezichthouder van de toekomst 3.0. In G.D. Minderman, R. Goodijk, & S. van den Berg (Eds.), Waar is de raad van toezicht? Deel II: Een bundel van visies en ideeën (pp. 308315). The Hague, The Netherlands: Boom/Lemma. Mertens, F. (2012). Landelijk en lokaal toezicht, over subtiele vormen van convergentie. In G.D. Minderman, R. Goodijk, & S. van den Berg (Eds.), Waar is de raad van toezicht? Deel II: Een bundel van visies en ideeën (pp. 47-61). The Hague, The Netherlands: Boom/ Lemma. Minderman, G.D. (2000). Tweede Kamer en rijksfinanciën. The Hague, The Netherlands: Boom Juridische Uitgevers. Minderman, G.D. (2005). Nieuwe impulsen voor Public Governance en Public Control. TPC 3(4), 46-49. Minderman, G.D. (2007). Intern toezicht in de sector van beroeps- en volwasseneneducatie (bve). In G.D. Minderman (Ed.), Governance in het onderwijs: een nieuwe balans (pp. 15-30). The Hague, The Netherlands: SDU. Minderman, G.D. (2008). De duurzame meerwaarde van de controller. In R.H.J.M. Gradus, G.D. Minderman, G.Tj. Budding, & C.A. van Egten (Eds.), De waarde van de public controller, een mirror of excellence (pp. 151-160). The Hague, The Netherlands: SDU. Minderman, G.D. (2012). Waar is de raad van toezicht? The Hague, The Netherlands: Boom/Lemma. Minderman, G.D., Goodijk, R. & Berg, S. van den (2012). Waar is de raad van toezicht? Deel II: Een bundel van visies en ideeën. The Hague, The Netherlands: Boom/Lemma. Minderman, G.D., Berg, S. van den, Bikker-Trouwborst, G., Marle, E. van, Simons, P., Somers, M., & Spetter, E.M. (2013). Waar is de raad van Toezicht? Deel III: De Verklaring van Ambitieus Toezicht. The Hague, The Netherlands: Boom/Lemma. Minister of Security and Justice (2014). Internetconsultatie wetsvoorstel bestuur en toezicht verenigingen en stichtingen [Internet consultation of legislative proposal]. Retrieved from: .

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GOOS MINDERMAN Nobelen, P. (2012). Aspecten van de positionering en evaluatie van raden van toezicht. In G.D. Minderman, R. Goodijk, & S. van den Berg (Eds.), Waar is de raad van toezicht? Deel II: Een bundel van visies en ideeën (pp. 129-143). The Hague, The Netherlands: Boom/Lemma. Nota verantwoord zelfstandigen (1994). Rapportage van de commissie Sint, Verantwoord verzelfstandigen, Parliament Paper II, 1994–1995, 21 042, nr. 15. Osborne, D. & Gaebler, T. (1992). Reinventing government: how the entrepreneurial spirit is transforming the public sector. Reading, MA: Addison-Wesley. Paardekooper, C. & Braak, H. ter (2012). Publiek bestel en raden van toezicht. Hoe verweesde instellingen (weer) te transformeren tot ‘onze’ instellingen. In G.D. Minderman, R. Goodijk, & S. van den Berg (Eds.), Waar is de raad van toezicht? Deel II: Een bundel van visies en ideeën (pp. 27-44). The Hague, The Netherlands: Boom/Lemma. Parliament Paper, TK 1982-1983, 17 555, nr. 7, p. 12. Parliament Paper, TK 2007-2008, 32 003. Parliament Paper, TK 2011-2012, 33 168, nr. 3. Ploeg, T.J. van der (2010). Nonprofit organizations in the Netherlands. In K.J. Hopt & Th. Von Hippel (Eds.), Comparative corporate governance of non-profit organizations (pp. 26264). Cambridge, MA: Cambridge University Press. Putters, K., Meurs, P.L., & Schulz, J.M. (2007). Van government naar governance in hybride sectoren. In G.D. Minderman (Ed.), Governance in het onderwijs: een nieuwe balans (pp. 97-117). The Hague, The Netherlands: SDU. Putters, K. & Veerdonk, S. van de (2012). Voorbij de governancecode: Inzicht in de handelingen en afwegingen van toezichthouders. In G.D. Minderman, R. Goodijk, & S. van den Berg (Eds.), Waar is de raad van toezicht? Deel II: Een bundel van visies en ideeën (pp. 99-115). The Hague, The Netherlands: Boom/Lemma. Rhodes, R.A.W. (1997). Understanding governance, policy networks, governance, reflexivity and accountability. Maidenhead, England: Open University Press.

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Ringeling, A. (1993). Het imago van de overheid. The Hague, The Netherlands: VUGA. RMO (National Council for Societal Development) (2000). Social Agenda 2002-2006. The Hague, The Netherlands: Author. Rukato, H. & Osborn, D. (2001, April 28-29). ‘Count us in. Count on us’, Cochair’s summary, UNED Forum. Multi-stakeholder Processes: Examples, Principles, Strategies. [International Workshop]. New York, NY. Salomon, L.M., Anheier, H.K., List, R., Toepler, S., Sokolowski, W., & Associates. (2004). Global civil society: dimensions of the non-profitsector. Baltimore MD, John Hopkins Center for Civil Society Studies. Saward, M. (2005). Governance and the transformation of political representation. In J. Newman (Ed.), Remaking governance, people, politics and the public sphere (pp. 179-196). Bristol, England: The Policy Press Bristol. SCP (National Social Economic Council of the Netherlands) (2002), Sociaal Cultureel rapport 2002, De kwaliteit van de quartiare sector, The Hague. SER (National Social Economic Council of the Netherlands) (2005). Ondernemen in de Publieke sector. The Hague, The Netherlands: Author. Standards Public Services - Independant Commision for Good Governance in the Public Services (2004). Foundation standards for good governance in the public services. London, England: CIPHA & Rowntree. Strikwerda, H. (2012). De raad van toezicht en de strategie van de instelling. In G.D. Minderman, R. Goodijk, & S. van den Berg (Eds.), Waar is de raad van toezicht? Deel II: Een bundel van visies en ideeën (pp. 63-82). The Hague, The Netherlands: Boom/Lemma. Talbot, C. (2001). UK Public Services and Management (1979 – 2000) Evolution or revolution? The international journal of public sector management 14(3), 281-303. Vulpenhorst, L. (2012). De dode hoek van woningcorporaties. In G.D. Minderman, R. Goodijk, & S. van den Berg (Eds.), Waar is de raad van toezicht? Deel II: Een bundel van visies en ideeën (pp. 237-252). The Hague, The Netherlands: Boom/Lemma.

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GOOS MINDERMAN Zoontjes, P.J.J. (1999). Inleiding tot de onderwijswetgeving. Heerlen/Goirle, The Netherlands: Elsevier/Open University. Zuurmond, J., (2006). Governance in het onderwijs: de stand van zaken. Het Nederlands Tijdschrift voor Onderwijsrecht en onderwijsbeleid, 2006(4), 203-208.

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10

REIGNITING ACTIVE CITIZENSHIP

IN

SOUTH

AFRICAN LOCAL GOVERNANCE: THE ROLE THE

OF

THIRD SECTOR

Ntuthuko Mchunu and Francois Theron

ABSTRACT The South African government sees active citizenship as a vehicle to strengthen local government as a developmental space. The role played by civil society organisations (i.e. the third sector) in the fight against apartheid demonstrates the strength of an active citizenry in local spaces for democratisation, community building and resilience. However, in the post-1994 democratic dispensation, activism has been challenged by passive citizenry at a time when it is needed to strengthen local democracy. This dilemma relates to a lack of capacity for the third sector to champion service delivery initiatives. Planning frameworks, including the National Development Plan (2011), recognise that active citizenship is central to the attainment of a developmental vision, but the third sector seems unable to utilise the invited spaces opened by the State. In this regard, third sector organisations need to be rooted among the poor to be able to reignite active citizenship that will lead to citizen participation and deepening of democracy. For this to be realised, four conditions must be met: (i) an enabling environment, (ii) active citizenship, (iii) advocacy and (iv) capacity building.The chapter adopted an analytical, theoretical and exploratory methodology. Besides reviewing international literature, it analyses the concept of the third sector and explores its practical experiences in South Africa during the pre- and post-apartheid era. The authors draw from secondary data including previous research, participatory observation and the outcomes of participatory workshops with government officials during facilitation of programmes on citizen participation. The chapter concludes with a participation/engagement model that comprises the State, third sector, market, donors and citizens.

10.1

INTRODUCTION

The third sector is often credited for having played a role in bringing about democracy (Friedman & McKaiser, 2012; Habib & Kotze, 2002:3). The apartheid state’s hostility

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NTUTHUKO MCHUNU

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towards the (black) third sector did not deter its struggle but instilled active citizenship (Good Governance Learning Network (GGLN), 2013). Collective efforts of civil society organisations amplified their voice which led to the demise of apartheid (Swilling & Russell, 2002:3; Neocosmos, 2007:48). Democracy raised hopes for the marginalised in that the manipulative participatory approaches (Cooke & Kothari, 2001) that characterised the apartheid regime’s tenure are replaced by empowering participation approaches. The participation approaches were expected to open up grassroots spaces and the third sector to “enter and engage in participatory arenas” (Cornwall & Coelho, 2007:9). However, in reality, the democratic participatory arenas (National Economic Development and Labour Council, Integrated Development Plans, Ward Committees and Community Development Workers, etc.) are far from ideal. These often reinforce a top-down approach that alienates the citizens from decision-making processes; hence, the citizens shun them and invent their own spaces (social movements and popular protests) for participation (Van Donk, et al., 2008; Mchunu & Theron, 2013; Mubangizi & Theron, 2011; Municipal IQ Municipal Hotspots, 2012). Policy frameworks, like the White Paper on Reconstruction and Development (1994), ushered in the Reconstruction and Development Programme which located civil society at the centre of service delivery. The Non-profit Organisations Act (1997) sought to create an enabling environment for the third sector to thrive. This promise of a ‘developmental local government’ (DLG) proved to be brief as it was replaced by a Growth Employment and Redistribution (GEAR) programme which requires that the State is responsive to the needs of the market. In this macroeconomic neoliberal policy, citizens are seen as ‘users and consumers’, whose ability to gain access to basic services is dependent on their ability to pay (Edigheji, 2003:4; Tseola, 2012). The exclusion of social partners in deciding on the above policy signalled a move away from the principles of DLG, people centred development and participatory governance (Harrison, 2008:327; Korten, 1990:67) which goes against the principles of the IAP’2 core values, Manila Declaration (1989) and the Batho Pele Principles (White Paper on Transforming Public Service Delivery, 1997). Participatory governance is seen as the means to overcome governmental deficits (Van Donk,2012), reduce information gaps, build consensus around policy, encourage accountability and transparency and enhance the credibility and sustainability of public services (Edigheji, 2003:2). Participatory governance is biased towards ensuring social

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inclusion of marginalised groups in decision-making (CIVICUS, 2006:4). In this regard, the current stalemate in local governance defeats the ideals of DLG which stresses a need for the government to be in partnership with public organisations (RSA, 1998). The solution to this stalemate as Cornwall (2008:40) argues is to pursue a rights-based approach. Grounding the rights-based approach to human rights legislation brings an ethical dimension to the participation process in that it calls for the sharing of resources and for the marginalised to assert their rights on those resources (Cornwall & Musembi, 2004:1417; Theron & Mchunu, 2013; Hickey & Mohan, 2005). While the focus is on the State and the market to deliver DLG in the form of a partnership, an important role of the third sector is overlooked as the sector that could mediate between the State and the market. The questions that need to be answered are: (i) How do we reignite active citizenship that will allow the third sector to reclaim its space and to play its role in the delivery of basic services? (ii) What role can the third sector play to strengthen local democracy in pursuit of a DLG vision with the potential to reduce poverty, unemployment and inequality? (iii) How can the third sector become a platform for participation? (iv) What role can the State and the market play to strengthen the role of the third sector in service delivery? (v) What participation/engagement model can enhance the third sector’s role in service delivery and foster active citizenship?

10.2

CONTEXTUALISING

THE

SOUTH AFRICAN THIRD SECTOR

Civil society activities need to be understood within the context of the pre-/post-1994 era which was characterised by an ‘adversarial-collaborative dichotomy’ (Habib, 2003:3). While the pre-1994 era suppressed the (black) civil society voice, the post-1994 era sought to open up democratic participatory arenas to unlock active citizenship. The question is whether this ideal has been realised in South Africa in the light of escalating popular protests (Van Donk, 2013:10-14). Since democracy, there has been realignment of the third sector in an attempt to address the legacy of apartheid, neoliberal tendencies and to define the role of the sector in a democratic space (Gorgens & Van Donk, 2011:119). In this democratic space, the adversarial-collaborative dichotomy is evident in the manner in which government policies are introduced: the introduction of the RDP involved the participation of civil society, while GEAR was unilaterally introduced by government which gave rise to social movements such as the Western Cape Anti-Eviction Campaign, Anti-Privatisation

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Forum, Soweto Electricity Crisis Committee and Abahlali Basemjondolo (Ranchod, 2007:4; Habib, 2004:8). The Coalition on Civil Society Resource Mobilisation (CCSRM, 2012:12) states that although some of these movements have engaged in violent protests and popular uprisings which exposed the plight of the poor, they have been unable to effect meaningful policy changes. This realignment did not only bring to the fore questions about the role civil society ought to play in strengthening local democracy but what civil society is and what civil society means for democracy and effective government. However, the State forgets that civil society is considered to be a partner in deepening democracy. In fact, the strength of a country’s civil society is often used as a measure to determine the strength of democracy (Habib, 2004; Friedman & McKaiser, 2012). South Africa’s civil society is diverse and varies in character and in purpose. Habib (2004:8) and Swilling and Russell (2002:11) distinguish three civil society organisation strands: (i) a development orientation; non-governmental organisations (NGOs) that are sophisticated and mostly urban based that have a reach beyond their immediate geographical (office) base; (ii) survival/welfare orientation, faith and community-based organisations, charities and traditional informal types of organisations that are rooted in communities they serve; and (iii) oppositional/independent civil society organisations, those who seek to hold those who are in power to account such as the social movements. The State’s conception of civil society organisations is problematic in that it excludes social movements that utilise a confrontational approach to governance. Is this conception similar to the apartheid regime’s modus operandi? If so, Neocosmos (2007:48) assertion that “… civil society is better understood as a domain of politics over which the State attempts to exercise its hegemony” becomes plausible. Von Holdt (2012:17) cautions against an emerging narrative post-1994 which seeks to categorise ‘good’ vs. ‘bad’ citizens, ‘good citizens’ being those who work within the invited spaces of participation while ‘bad citizens’ are those that engage in violent, destructive protests. This narrative is flawed in that it fails to consider the poor performance of the State-sponsored participatory approaches via invited spaces (see GGLN, 2013). Friedman and McKaiser (2012:13) caution that membership of a civil society organisation should be open to everyone who wishes to participate. In other words, civil society needs to be understood as a platform for participation, a ‘conduit’ to improved service delivery and democratisation. It includes any formation through which citizens associate to engage with the State, from trade unions and business associations to grassroots

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organisations of the poor, and NGOs, including social movements. Therefore, the success of a civil society organisation in deepening democracy needs to be judged by its ability to influence, direct, control and own decision-making processes, not by its relationship with the State (Mchunu & Theron, 2013:105-128). These different conceptions of civil society explain why Kendall and Knap (1996:18) describe the third sector as a ‘loose and baggy monster’. Though it is not the intention of this chapter to enter into conceptual debate, the defining features of civil society organisations is that they are operating outside the State and the market, and a common thread that holds them together is that they exist in public life; they also exist to promote public good (Habib, 2004:2). In other words, civil society organisations act as a bridge between the State and the market. Etzioni (1973:315) refers to this role as the ‘third way’. The post-1994 version of the third sector needs to be understood within the context of “vigorousness, effectiveness and shallowness” (Friedman & McKaiser, 2012:15). The vigorousness of the third sector is shown by the fact that organisations are able to influence government policy, for example, the Treatment Action Campaign succeeded in persuading the government to change its stance on the provision of antiretroviral drugs to human immunodeficiency virus and AIDS patients. It is shallow in the sense that the third sector is not deeply rooted among the poor, e.g. the unemployed and particularly those who are outside formal employment who are not represented by the third sector (Friedman & McKaiser, 2012:15). This therefore shuts them out of the participatory arena which leaves them with no option but to invent own spaces of participation for their voice to be heard. The effectiveness of the sector is demonstrated by the ability of the organisations to hold the State to account which was non-existent during apartheid. Third sector activity is either encouraged or constrained by four strands as identified by the Good Governance Learning Network (2011): (i) dissatisfaction among the public that manifests in popular protests. These protests are attributed to, among others, nonresponsiveness of municipal councillors and the citizen’s increasing awareness of their rights (Gorgens & Van Donk, 2011; Nleya, 2011). Protests present a challenge to the third sector in that they are no longer sporadic; (ii) shortcomings of the State-sponsored invited spaces of participation alienate the citizens from decision-making and programme/project implementation processes; (iii) the election of the new administration (2009) and the split in the ruling party, reshuffle in government departments and tensions between the alliance partners have resulted in changes in State-civil society relations; and (iv) global economic recession has resulted in changing patterns in funding the third sector.

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Other challenges that affect the ability of the third sector to be a platform for participation are according to Friedman and McKaiser (2012:7): (i) the brain drain caused by leadership of civil society that has joined government, which weakened the sector, and (ii) the relationship between the State and the sector was not clarified. The reluctance of some civil society organisations to work with the State can prove to be detrimental to them in the light of an enabling environment; (iii) civil society organisations are not rooted among the poor. By mobilising the grassroots, the sector will not only improve its credibility but will also ‘force’ the government to take the sector seriously (Friedman & McKaiser, 2012:7). What characterises the effectiveness of the third sector is the distance between the State and the latter. Political distance encourages vibrancy in the third sector which has the potential to bring about local democracy as shown by the civil society organisations of the 1980s (Neocosmos, 2007:48; CCSRM, 2012:12). On the other hand, partnering the State could be beneficial as long as the sector upholds its value commitment. The sector needs to rise above politics and focus on “building social cohesion, trust, tolerance, civic participation and cooperation” (CIVICUS, 2013:44).

10.3

THE ROLE OF GOVERNANCE

THE

THIRD SECTOR

IN

BUILDING DEMOCRATIC LOCAL

A notion of the third sector is emerging which sees it as an intermediary between the State, market and donors and propels it to be the realm within which human rights are realised (Neocosmos, 2007:49). It also emerges as a bridge between the citizenry, the State, the market and the donors where it becomes a platform for active citizenship that has the potential to democratise local government. It is therefore not surprising that the Organisation for Economic Co-operation and Development (OECD, 2011:35) calls for rethinking of traditional ways of public service delivery to co-production with the third sector to innovate in order to bring about democratic governance that has the potential to construct a responsive local government that meets basic needs, eradicates poverty and empowers the public to realise their potentials for local self-governance. Moreover, it has to be noted that co-production between the State and the third sector is not a panacea for the challenges of public services provision. Verschuere, Brandesen and Pestoff (2012:1101) identify three shortcomings: (i) insider/outsider dynamics, accessibility of service provision to a specific group where other users are excluded; (ii) equity issues, wealthier, better educated citizens taking a leading role to the exclusion of large numbers of citizens who are most in need; and (iii) accountability, who can the users hold accountable when the users themselves are part of the service delivery process? Similarly,

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to sustain co-production of public services, provision involves not only merely the third sector’s participation but for it to have the rights to be the partners in designing, commissioning, delivering and evaluating service provision (Pestoff, 2013:21). In the light of the above challenges, how do we reignite the third sector to become a platform for active citizenship? Can the third sector guide citizens to enable them to influence, direct, control and own decision-making processes and service delivery initiatives? In this regard, the authors argue that the third sector cannot thrive without the following: (i) an enabling environment, (ii) active citizenship, (iii) advocacy and mobilisation and (iv) capacity building for the sector (World Bank, 2014).

10.3.1

An Enabling Environment

The government has made strides in adhering to the principles set out by the Open Forum for Civil Society Organisations Development Effectiveness (CIVICUS, 2013:19) that provides five principles of minimum standards that together form a definition of an enabling environment for civil society organisations (CSOs): (i) democratic political and policy dialogue. NEDLAC was established with a chamber catering for the third sector. There has been legislation that promotes collaboration with the State on policy implementation and service delivery (Habib, 2004:6). (ii) Respect for human rights obligations. The Constitution (RSA, 1996) protects the rights of citizens and there are mechanisms to enforce these rights. (iii) CSO’s as actors in their own right. The Non-profit Act (1997) seeks to achieve this. (iv) Accountability and transparency. Although legislation requires that the activities of the State has to be transparent and accountable, the levels of public protests indicate that it is lacking on this front. (v) Enabling financing. Institutions such as the National Development Agency (NDA) and the Lottery Commission were established to provide funding to the third sector (Habib, 2004:6). In addition, an enabling environment is one where (i) the legal and regulatory framework ensured that apartheid laws have been repealed by laws allowing free participation in protest activity; (ii) public attitudes, trust, tolerance and participation have been prioritised; (iii) corruption is addressed; and (iv) communication and information technology opens up more and alternative vehicles for participation. Not only the State should be responsible for the creation an enabling environment, but the third sector can contribute by taking steps to improve their legitimacy, transparency and accountability as well as building networks among themselves to amplify their voice (CIVICUS, 2013:12; World Bank, 2014).

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Active Citizenship

The National Development Plan (2011) recognises that active citizenship is a prerequisite for improved service delivery and strengthening of local democracy in that it states that the State cannot merely act on behalf of the people; it has to act with the people (Van Donk, 2013:11-12). The enabling environment for active citizenship that is reminiscent of the civil society organisations of the 1980s which is demonstrated by the National Union of Metalworkers of South Africa (NUMSA) resolves to form a united front that will coordinate struggles within the workplace and communities in a way similar to the UDF of the 1980s. The task of this front will be to fight for the implementation of the Freedom Charter and to be an organisational weapon against neoliberalism such as the NDP (2011). In the same vein, forty civic organisations have come together to build a ‘platform for social justice and accountability’, called ‘Awethu! A people’s platform for social justice’. This grouping is intended to connect individual voices and reclaim the South African government from political and economic elites (Patel, 2013).The founding document of Awethu “bemoans a hollowing out of democracy in South Africa, unemployment, inequality and corruption”.

10.3.3

Advocacy and Mobilisation

The third sector shows an inability to challenge the elite to bring about transformation in the lives of the marginalised (Hickey & Mohan, 2005:14). Besides the struggles of the grassroots that are led by organisations that are unable to participate in the national policy debate, these organisations are not rooted among the poor and consequently have no impact on policy-making priorities (Friedman & McKaiser, 2012:19). In this regard, third sector advocacy should “align participatory approaches with rights based agenda and bring together the key elements of a citizenship-based approach that stresses political engagement at local, national and international level” (Hickey & Mohan, 2005:14; GGLN, 2013). If this fails, citizens are left with no option but to invent their own spaces as a result of a lack of an “advocacy planning approach” (Tseola, 2012:161). The advocacy planning approach seeks to ensure equal access for the impoverished in terms of quality and quantity, as the approach itself seeks to mobilise resources to new social objectives or a realignment of existing objectives. Here, options for co-produced planning partnerships between the State, the third sector and other role players can be prioritised (Krishna, 2003: 361-371; Brandsen & Prestoff, 2006: 493-501).

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With regard to strategic options to co-produce, Tseola’s (2012:161) advocacy planning approach is related to the third sector approach (Etzioni, 1973). The third sector organisations are mainly preoccupied in seeking new ways of delivering public services through civil society participation in governance, so that the active citizenry can drive the delivery of public services. Sibanda (2011:815) argues that “third sector organisations are not only seen as offering choice and responsiveness in service delivery, but also as providing opportunities for general trusts, civic virtue and social capital through participation in community and public life”. These approaches are synonymous with a ‘bottom-up’ approach to development in the sense that they are people centred. They guarantee that participation will provide scope for the public to influence, direct, control and even own development processes. The third sector has the potential of circumventing the shortcomings of the invited spaces of participation that tend to reinforce the top-down approach (Pieterse, et al., 2008:7; Mchunu, 2012:158; Harrison, 2008:327).

10.3.4

Capacity Building

For Swanepoel and De Beer (2011:26), capacity building means the strengthening of personal and institutional ability to undertake tasks. According to De Beer (1997:21), capacity building “rests on the premise that people can lead their own change processes”. This can be achieved by adopting a learning-process approach, aimed at capacitating the beneficiaries of development to take control of their own development (Korten, 1980:502 in De Beer, 1997:21). This calls for collaboration through co-production between local beneficiaries of development and authorities via structures like municipal Integrated Development Plans. According to Mohaneng (2000:135), capacity building comprises three components: (i) provide access to information and knowledge, social mobilisation and the material and financial resources required for participation by the public in decisions that affect their lives and (ii) make productive resources available to the underprivileged, equitable distribution of economic resources and access to land and financial resources. In this way the negative effects, emanating from the imbalances of the past are minimised and the citizens realise their potential. Of significance is that the capacity-building process must accommodate the variety of societal, economic and cultural differences found in a particular local, meaning-giving context. (iii) Capacity-building relates to the effectiveness of both administrative and institutional structures (Bryant & White, 1982:15). This

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means that a political structure (say, a municipality) must be responsive to the needs of the public and the theoretical ideals of DLG and IDP.

10.4

STRATEGIES LEVEL

FOR

THIRD SECTOR INNOVATION

AT

LOCAL GOVERNANCE

The role played by civil society organisations in the fight against apartheid has been replaced by a passive citizenry at a time when active citizenship is most needed to strengthen good local governance. This relates inter alia to a lack of capacity for the third sector to champion service delivery initiatives (GGLN, 2011; 2012; 2013). The struggle for survival has forced the third sector to move away from their traditional modes of operation. As in America, the third sector in South Africa has seen a shift from their voluntaristic past towards greater professionalism and expanded civic activism towards deeper commercialism and the market (Salmon, Geller & Newhouse, 2012:1). Naidoo (2010:42-46) provides strategies for innovation: 1. Do more with the same resources. Third sector organisations should consider programme/project mergers and where possible organisational mergers. 2. Eradicate silos. Working in silos creates barriers and prevents organisations from making the most of their capacity networking. 3. Introduce accountability. This must be capacitated at every level, not only among donors, State and markets but also among communities they serve. The sector needs to strive to create opportunities for funding that has not previously been considered. 4. Redefine success at every level. As organisations are pressured to demonstrate success, the value system tends to be compromised. Internal checks and balances and a focus on objectives and the flexibility to shift strategies are essential. Organisations need to balance between obligation to donor and community. 5. Reduce transactional costs of the resourcing relationships. The donors need to streamline partnership agreements and monitoring and reporting requirements and to reduce transaction costs and the administrative burdens on both donors and CSOs that have partnerships with multiple donors. 6. Aggregation resources for generic purposes through the sector. Donors and governments, in the interest of maximising their investments, should fund shared generic resources. This will reduce operating budgets and funding organisational running costs

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Transnationalised intelligence for better local practice. Global organisations tend to share best practice across borders. Locally based organisations should form coalitions. Organisations should become learning organisations (Senge et al., 1994). Deliberative platforms should be formed to share best practice. Break down the barriers within civil society. CSOs need to learn to work together irrespective of their area/sector of operation, be it an NGO, NPO, social movement, etc. Collectively, they need to amplify their voice to influence policy-making.

8.

IN

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Following the above, Salmon et al. (2012:2) call for a ‘renewal strategy’ that will clarify the sector’s core values including their preservation and advancement across the third sector. In this regard, the South African third sector has developed an Independent Code of Governance for the non-profit sector. This process was triggered by the King III Code’s unilateral drafting and imposition of the code without the participation of the third sector. An independent code was drafted that reflected the values upon which sector organisations are established and the realities in which the sector operates (South African Institute for Advancement, 2012). This code acknowledges the importance of other codes, including the Department of Social Development NPO Code which is similar to the Independent Code of Governance for the non-profit sector, the King III Code and the South African NGO Coalition Code, in so far as they may be relevant to particular organisations (South African Institute for Advancement, 2012:1). Based on the above, the principles for the third sector are: 1. Fidelity to purpose – the resources, energies and activities of the organisation must be devoted to promoting its public benefit purpose and not to some personal or private objective. 2. Altruism and benevolence – as the third sector organisation is set for public benefit purpose, its actions must be motivated by reasons consistent with that purpose. 3. Integrity – it is their responsibility to demonstrate integrity and to require that persons who act on its behalf live up to these expectations. 4. Optimising resources – funds/resources must be put to use in a responsible manner. 5. Conflict of interest and self-dealing – it should avoid conflict of interest. 6. Equality and non-discrimination – it should be bound by rights, duties and obligations set out in the South African Constitution (1996). In terms of the Promotion of Equality and Prevention of Unfair Discrimination Act (2000), the board must take steps to prevent unfair conduct.

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Democracy and empowerment – it should ensure that employees are fairly treated, adequately represented and appropriately consulted and that a culture of participatory decision-making is encouraged. Independence and impartiality – a public benefit purpose implies that all eligible beneficiaries must be treated equally and fairly, without special favour or prejudice (South African Institute for Advancement, 2012:1).

Besides a requirement for a written, voluntary commitment and undertaking of compliance from the board of the organisation, the code does not spell out the code enforcement measures. The code regards the responsibility of the board as critical in ensuring accountability and transparency and lists the constituencies the organisation is accountable to. These core values also speak to the core values of participation as propounded by IAP2, the Manila Declaration (1989) and the Batho Pele principles (RSA, 1997) in that they advocate development that is centred at grassroots. Following the above contextualisation, and in summary, the authors suggest a partnership engagement model for the third sector. The model depicts the third sector as the bridge between the State, citizens, market and donors. The third sector becomes a platform for deliberation between the partners. Through this co-produced engagement, each partner has a role to play in dealing with the democratic deficit. The State needs to lead by enacting policy and legislation that will provide an enabling environment for the third sector to champion service delivery. The third sector needs to implement programmes/ projects in an efficient manner to improve service delivery by expanding access to public services. The market needs to provide necessary resources, including funding and technology for effective functioning of the third sector. Citizens need to be active citizenry (GGLN, 2013) and swell the ranks of the third sector to provide muscle for social capital. The donors need to provide funding to the third sector. This dynamic, interactive process (depicted in the model) stands a better chance in achieving a collective impact that will improve service delivery, provide empowering participation channels, reduce violent protests, improve policy and legislation and bring about political stability. The ideal situation would be where service delivery is enabled through co-production among the State, third sector driven, market reinvigorated and community based, indeed a P3 (Participatory Planning Partnership) in which all participants stand to gain.

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Figure 10.1

IN

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A Partnership Engagement Model (PEM) for the Third Sector COLLECTIVE IMPACT Authentic participation channels Improved legislation & policies Improved service delivery Less violent protests Political stability

DONORS

COMMUNITY

Philanthropists International donors Individual donors

Grassroots Unemployed Youth & women Rural people

THIRD SECTOR

Active citizenship Advocacy Efficiency & effectiveness Value commitment Deliberative democracy Enabling environment

STATE

MARKET Financial resources & funding Technological advancement

Enabling legislation & policy Tax incentives Grant funding

10.5

CONCLUSION

This chapter has argued that the third sector is rooted among the poor and that it can reignite active citizenship. This can lead to empowering citizen participation and deepening democracy at a local government level in South Africa, as well articulated by the GGLN (2013). It is critical for the third sector to mobilise grassroots support, particularly the unemployed and marginalised as this will not only improve the sector credibility but will also compel the State to take the sector seriously as a partner in democratising local government.

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The sector needs to guard against missing strategic potential as a result of persistent pessimism. The current constraints presented by neoliberalism should be treated as an opportunity by the sector. The sector could look at contracting the State by being the implementers of IDP programmes/projects as well as selling their knowledge by providing training that will close the skills gap in the public sector, thus establishing a P3. For as long as citizens are dissatisfied with the State’s service delivery mechanisms, the third sector is best placed to implement programmes/projects. This means that the sector needs to identify ways to achieve their goals in the broader political realm and in society beyond the formal political arena and not view direct access to the State as the sole criterion for success; e.g. they should invent their own spaces that they own, on their own terms. The partnership engagement model should act as guide on how the partners should engage towards the attainment of active citizenship, democratic and good local governance and the ideals of DLG. The third sector, if properly resourced and supported, can become a vibrant platform for a P3 that will enable citizens to influence, direct, control and own local decision-making processes and service delivery initiatives. REFERENCS Brandsen, T. & Pestoff, V. (2006). Co-production, the Third Sector and the delivery of public services. An introduction. Public Maangement Review, 8(4):493-501. Bryant, P.A., & White, L.G. (1982). Managing development in the Third World. Boulder: Westview Press. CIVICUS (2006). CIVICUS participatory governance programme: Concept note 20062008. [Online] Available: . (Accessed: 20 August 2011). CIVICUS (2013). Governments failing to create favourable conditions for civil society. The civil Society Index World Alliance for Citizen Participation media=civicus.org@ mail167.wdc02.mcdlv.net. Coalition of Civil Society Resource Mobilisation (CCSRM) (2012). Critical perspectives on sustainability of the South African civil society sector. Johannesburg: Jacana Media.

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Cooke, B., & Kothari, U. (Eds.). (2001). Participation: The new tyranny? London: Zed Books. Cornwall, A. (2008). Democratising engagement. What can UK learn from international experience? London: Creative Commons. Cornwall, A., & Coelho, V. (Eds.). (2007). Spaces for change? The politics of citizen participation in new democratic arenas. London: Zed Books. Cornwall, A., & Musembi, C.M. (2004). Putting the right-based approach into perspective. Third World Quarterly, 25(8), 1415-1437. De Beer, F. (1997). Participation and community capacity building. In S. Liebenberg & P. Stewart (Eds.). Participatory development management and the RDP (pp. 21-33). Cape Town: Juta. Edigheji, O. (2003). State society relations in post-apartheid South Africa: the challenge of globalisation on cooperative governance. In G. Mhone & O. Edigheji (Eds.). Governance in the new South Africa: the challenge of globalisation (pp. 69-113). Harare: Sapes. Etzioni, A. (1973). The third sector and domestic missions. Public Administration Review, 33(4), 314-323. Friedman, S., & McKaiser, E. (2012). Civil society and the post-Polokwane South African state: assessing civil society prospects of improved policy engagement. Johannesburg: Centre for the Study of Democracy. Good Governance Learning Network (2011). Recognising community voice and dissatisfaction. Perspectives from civil society on local governance in South Africa. Cape Town: Isandla Institute. Good Governance Learning Network (2012). Putting participation at the heart of development// Putting development at the heart of participation. Perspectives from civil society on local governance in South Africa. Cape Town: Isandla Institute. Good Governance Learning Network (2013). Active citizenship matters. Perspectives from civil society on local governance in South Africa. Cape Town: Isandla Institute.

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Gorgens, T. & Van Donk, M. (2011). Taking stock at the crossroads: reflecting on the role of the NGO sector in enabling and supporting participatory local governance in a time of crisis. In Good Governance Learning Network. Recognising community voice and dissatisfaction (pp. 118-132). Cape Town: Isandla Institute. Habib, A. (2003). State-civil society relations in the post-apartheid South Africa. In J. Daniel, A. Habib & R. Southhall (Eds). State of the nation: South Africa 2003-2004 (pp. 227-241). Johannesburg: HSRC Press. Habib, A. & Kotze, H. (2002). Civil society, governance and development in the era of globalisation. Unpublished manuscript. Harrison, P. (2008). The origins and outcomes of South Africa’s Integrated Development Plans. In M. Van Donk, M. Swilling, E. Pieterse & S. Parnell (Eds.). Consolidating developmental local government. Lessons from the South African experience (pp. 321337). Cape Town: UCT Press. Hickey, S., and Mohan, G. (2005). Relocating participation within a radical politics of development. Development and Change, 36(2), 237-262. International Association for Public Participation (IAP2). Public participation core values and public participation toolbox. . Kendall, J. & Knap, M. (1996). The voluntary sector in the United Kingdom. Manchester: Manchester University Press. Khan, F. & Cranko, P. (2002). Municipal-community partnerships. In S. Parnell, E. Pieterse, M. Swilling, & D. Wooldridge (Eds.), Democratising local government: The South African experiment (pp. 262-275). Cape Town: UCT Press. Korten, D. C. (1990). Getting to the 21 first century: Voluntary action and the global agenda. West Harford: Kumarian Press. Krishna, A. (2003). Partnerships between local governments and community-based organisations: Exploring the scope for synergy. Public Administration and Development, 23, 361-371. Manila Declaration (1989). The Manila declaration on people’s participation and sustainable development. Philippines: ANGOC.

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Mchunu, N.A. (2012). The link between poor public participation and protests: The case of Khayelitsha. MA Thesis. School of Public Leadership. Stellenbosch: Stellenbosch University. Mchunu, N.A. & Theron, F. (2013). Contextualising protests: The case of Khayelitsha. Administratio Publica, 21(2), 105-128. Mohaneng, T. (2000). Community development and empowerment. In F. De Beer & H. Swanepoel (Eds.). Introduction to development studies (pp. 124-137). Cape Town: OUP. Mubangizi, B., & Theron, F. (2011). Inculcating public leadership for citizen value: reflecting on Public Administration curricula. Administratio Publica, 19(1), 33-50. Municipal IQ Municipal Hotspots (2012). A worrying peak in service delivery protests. Press Release, 6 June 2012. Naidoo, K. (2010). Development dialogue. Boiling point - can citizen action save the world? Development Dialogue, Sweden. National Development Plan (NDP) Vision 2030 (2011). The Presidency, Pretoria: Government Printers. Neocosmos, M. (2007). Development, social citizenship and human rights: Re-thinking the political core of an emancipatory project in Africa. Africa Development, XXXII (4), 35-70. Nleya, N. (2011). Linking service delivery and protests in South Africa: An exploration of evidence from Khayelitsha. Africanus 41(1), 3-33. OECD, (2011). Together for better public service. Partnering with citizens and civil society. Paris: OECD. Patel, K. 2013. People have power: Awethu, Daily Maverick, 29 November 2013. Pestoff, V. (2013). Collective action and sustainability of co-production. Paper presented at the ECPR General Conference-Where Next? Bordeaux, France, 5-7 September 2013.

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Pieterse, E., Parnell, S., Swilling, M. & Van Donk, M. (2008). Consolidating developmental local government. In M. Van Donk, M. Swilling, E. Pieterse & S. Parnell (Eds.). Consolidating developmental local government. Lessons from the South African experience (pp. 1-23).Cape Town: UCT Press. Ranchod, K. (2007). State-civil society relations in South Africa: some lessons from engagement. Centre for Policy Studies. Johannesburg: South Africa. Republic of South Africa (1994). White Paper on Reconstruction and Development. Pretoria: Government Printers. Republic of South Africa (1996). Constitution of the Republic of South Africa. Pretoria: Government Printers. Republic of South Africa (1997a). Non-profit Organisation Act. Pretoria. Government Printers. Republic of South Africa (1997b). White Paper on the Transformation of the Public Sector. Pretoria: Government Printers. Republic of South Africa (1997c). White Paper on Transforming Public Service Delivery. Pretoria: Government Printers. Republic of South Africa (1998). White Paper on Local Government. Pretoria: Government Printers. Republic of South Africa (2000). Promotion of Equality and Prevention of Unfair Discrimination. Pretoria: Government Printers. Salmon, L.M., Geller, S.L., & Newhouse, C.L. (2012). What do nonprofits stand for? Renewing the nonprofit value commitment. John Hopkins Listening Post Communiqué, 22,1-23. Senge, P.M., Kleiner, A., Roberts, C., Ross, R., & Smith, B. (1994). The fifth disciplines fieldbook: Strategies and tools for building a learning organisation. London: Routledge. Sibanda, M.M. (2011). Civil society participation in government: re-examining the third sector in global perspective. Journal of Public Participation, 46(1.1), 814-833.

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South African Institute for Advancement (2012). The independent code of governance for nonprofit organisations in South Africa. Cape Town: The Working Group. Swanepoel, H. & De Beer, F. (2011). Community development. Breaking the cycle of poverty (5th edition). Cape Town: Juta. Swilling, M. & Russell, B. (2002). The size and scope of the nonprofit sector in South Africa. School of Public and Development Management. Johannesburg: Centre for Civil Society. Tseola, J.P. (2012). Theorising a democratic developmental state: Issues of public service delivery planning and violent protests in South Africa. Journal of Public Administration, 47(1), 161-179. Van Donk, M. (2012). Tackling the ‘government deficit’ to reinvigorate participatory local governance. In GGLN, Putting participation at the heart of development/Putting development at the heart of participation (pp. 12-27). Cape Town: Isandla Institute. Van Donk, M. (2013). Citizenship as becoming. In GGLN, Active citizenship matters. Perspectives from civil society on local governance in South Africa (pp. 10-18). Cape Town: Isandla Institite. Verschuere, B., Brandsen, T., & Pestoff, V. 2012. Co-production: the state of the art in research and the future agenda. Voluntas, 23(4), 1083-1101. Von Holdt, K. (2012). Advancing active citizenship: A citizen academy as a means to strengthen local democracy? Discussion paper and round table report. Cape Town: Isandla Institute. World Bank (1996). World bank participation sourcebook. Washington: World Bank. World Bank (2014). Strategic framework for mainstreaming citizen engagement in World Bank group operations. Washington: World Bank.

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PUBLIC ADMINISTRATION Ayad Al-Ani

ABSTRACT Information produced by citizens could be the essence of a public administration that seeks to reinvigorate its capabilities lost during the neo-liberal period. In the current model, the citizen expects services in return for taxes paid. When the services do not meet expectations, the ‘participation’ is often limited to a protest/voice or exit. In the nowemerging new view of government, administration in its various forms reaches into the virtual space, capturing the motivation and talents of citizens, which have been so far neglected by the private and public sectors, forming a ‘cognitive surplus’. This surplus of ideas and talents is now integrated into the processes of policy formulation and service delivery using modern social media tools and virtual platforms. This co-option – which in the digital world is often achieved with negligible transaction and marginal costs – can be used to solve collective problems at the community, state, national and international levels: The ability to tap the cognitive surplus becomes part of a country’s political and economic competitive advantage and shows a way out of the dilemma of ‘post-democracy’, which describes the dependency of politics on the private sector. As the desire (or rather need) for utilising the cognitive surplus continues, we can expect the administration system to evolve into a kind of partner state that supports activities of its citizens by providing data, applications and interaction spaces as they compete and collaborate with the traditional economic and administrative sector by using various forms of the selfgoverning and self-organising peer-to-peer (P2P) approach that has been successfully implemented in the open software community. Therefore, services must not ultimately be delivered by state organisations, but rather platforms must be provided to allow for the self-organised interaction of citizens to solve their pressing issues. In times of financial hardship, these models seem to make even more sense.

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INTRODUCTION

The argument developed here is that new forms of collaborations between citizen producers could be useful or even at times better in delivering public services and also possibly cover needs not addressed today. The beleaguered and strained state could use these new forces and must open and remodel its institutions and policies to direct, encourage and stimulate the cognitive surplus to fulfil this role. This cooperation and co-option of the cognitive surplus will, however, adversely affect its potential political participatory capabilities, but P2P collaborations could add cohesion to the society, through shared experiences and collective practices on the community level.

11.2

FORCES

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DISRUPTIVE INNOVATIONS

The transformations that are occurring in our societies have their root in the globalisation and technisation/digitisation of the economy (Fuhr, 2005). These changes lead to a different understanding of the roles of the state, the citizens, and the fabric and cohesion of society.

11.2.1

The Limited State

The efficient and effective organisation of public administration is restricted for two main reasons: the structural limitations of the classical hierarchical Max Weber model aggravated by neo-liberal conceptions of the role of the state and the financial meltdown that occurred in 2008/2009. Hierarchies do not seem to cope with the expectations of a complex world. Breaking down information and work into smaller bits and bytes leads to institutional performance that is lacking in its ability to act efficiently, responsively, flexibly and innovatively. Trying to put the small work packages together again, designing and governing complex programs through a command hierarchy is almost impossible in a complex environment.1 Even worse, hierarchies do not make good use of the capabilities of their workforce, let alone the talents and motivations of their customers/citizens. Hierarchies have a tendency to select and use only certain aspects of the talents and motivations of individuals and

1

For an early but still impressive critique, see Marglin (1974). On the ‘limits’ of organisation despite his positive views on hierarchy (‘nature loves hierarchy’), see Arrow (1974).

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neglect the rest.2 With an awareness of these limitations, or specifically, of the often poor performance of government agencies, the neo-liberal model has argued for cutting back the role of the state and allowing market mechanics to take its place. However, market processes cannot fully substitute public action and public goods. Thus, over the last 20 years, the role of the state has been increasingly diminished, through the systematic cutting back of its capabilities for development and service delivery, leading observers to describe the current situation of government as being ‘post-democratic’. This phenomenon describes a weak government that cannot act on behalf of the citizens but is left to the mercy of market forces, which exert influence and co-opt state activities to serve their interests (Crouch, 2004). The increasingly weakened capabilities of the state reveal themselves even in developed nations, as western governments suddenly appear incapable of effectively implementing complex programs (i.e. ‘Obamacare’, ‘Energy Transition’ in Germany). The final blow for the state in the Western Hemisphere came with the financial crisis, which required the state to save the market, through the public takeover of market debts, restricting its future capabilities even further.3

11.2.2

Peer-to-Peer Collaboration as a New Force of Production

Given that the talents and motivations of individuals (employees and citizens) have often been excluded by hierarchies, individuals can now use social media to do more for themselves, by themselves or with others (Benkler, 2006: 8). Using digital devices, the individual can act as a free producer, as a peer, to produce, enrich and redistribute information, thus creating a new social (and political) relationship coined ‘peer-to-peer’ production. This P2P process of collaboration uses existing technologies and assets (smartphones, computers, technical infrastructure, cars, rooms, etc.) and available time at negligible marginal costs to engage in production processes, creating ‘non-exclusive’ goods, commons, that are available to anybody for free.4 A new scheme of production is

2 3 4

For this problematic selective inclusion process, which rejects ‘unwanted aspects’ of the personality but always gets too little of the wanted traits (commitment, quality, etc.), cf. Neuberger (2000: 500). For a summary of this discussion, cf. Al-Ani (2013). Nobel laureate Elinor Ostrom (1990) reintroduced the commons into the economic sphere. Writing before the Internet era, she came short of describing that the commons in the information technology era are something rather different than the commons used to govern natural resources as described in her groundbreaking work. These new information commons are not affected by the “tragedy of the commons” (Hardin 1968), for instance. The value of the information commons created through P2P processes is not diminished by use, but on the contrary enhanced by it: it is governed “(…) by a Comedy of the Commons, or using a similar metaphor, producing a Cornucopia of the Commons. This is so because of the network effect, which makes resources more valuable the more they are used” (Bauwens, 2005). With the advancement of technology, Ostrom later noticed this as well: “(…) open access to information is a horse of a much

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AYAD AL-ANI emerging, one that cannot be explained by the current logic of microeconomics and macroeconomics, as non-profit motivations and inclusive property rights are used. In addition, current systems of resource allocation are obsolete in this sphere. In a hierarchy, our superiors decide; in the market, prices decide; in a democracy, ‘we’ decide. However, “(…) where resources are abundant, as they are with immaterial knowledge, code, and design, which can be copied and shared at a marginal cost, they are truly unnecessary” (Bauwens, 2012). Clearly, these P2P relationships have a different collaboration and governance logic. Individuals select, by themselves, work packages they are truly interested in and work when and as much as they like/can. Of course, this is not a nonhierarchical world, but in contrast to traditional organisations, its hierarchies are fluid and tend to be used to ensure participation (rather than exclusion). Furthermore, with individuals governing themselves, less management overhead is necessary. In “the old model for coordinating group action requires convincing people who care a little to care more” (Shirky, 2008: 181). In the P2P model, the experiences of open software organisations have been very instructive: The mechanisms of self-selection and self-governance avoid this problem in the sense that the work effort is an individual choice and the great number of participants balances the various levels of input, “(…) so that people who cared a little could participate a little, while being effective in aggregate” (ibid). There are many impressive examples of P2P production besides the well-known success stories (Linux, Mozilla and Wikipedia), and this mechanism has now entered into the public sphere, creating public goods.5 Even more fascinating is that the state, along with private companies, is now scrambling to use these P2P processes: co-opting processes and peers in a myriad of shapes and variations.6 In their former role, citizens only had the possibilities of revolting (voice), leaving (exit) or – as public goods are often delivered

5

6

different color than open access to land or water (…). With distributed knowledge and information the resource is usually nonrivalous” (Hess/Ostrom, 2011: 13). Bollier (2004) notices, “Librarians, who are trying to protect free access and circulation of knowledge. Scientists, who are trying to preserve their foundational traditions of openness, collaboration and free inquiry. Creative artists in music, film and other fields who realize that culturally compelling creativity depends upon their ability to use prior works and collaborate with others. Media reformers, who are trying to reclaim the public airwaves for public benefit, whether through open spectrum commons or auctions. Indigenous peoples, who are trying to retain some measure of cultural sovereignty by preventing Big Pharma and other commercial predators from appropriating their traditional knowledge and art. Online user communities, who wish to protect their ability to communicate among themselves without the impediments of market transactions”. For this co-option movement and resulting hybrids often labelled Netarchies, see Al-Ani (2013: 223) and Bauwens (2012). In Germany, almost 19 % of all companies cooperate with the ‘crowd’ in one way or another, integrating peers into the value creation process of the firm (Al-Ani et al., 2014). From a total population perspective, 55 % of all males and 44 % of females are involved in political or economic participatory activities ranging from petitions, political networks, to product development and configuration (Send/Schildhauer, 2014).

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by a monopoly – accepting the unsatisfying level of services. Now, a new strategy is available: “To resist is to create!” (Holloway, 2005: 25) or in other words, to utilise available P2P production processes, talents and resources of peers to create or enrich public services – a new way to produce is emerging. “By this I mean: a new way to produce anything and everything, whether it is software, food, or cities. What once required rigid organisations and a society defined by the mentality of hierarchies, we are discovering now (and in many cases re-discovering) how to do through free association of peers” (Bauwens, 2012).

11.2.3

The Peer and the Multitude

The vacuum of the retarding state is now filled to some extent by P2P collaborations and processes. The attractive innovative power and problem-solving and product-enrichment capabilities of P2P are the target of a co-option strategy by private and public organisations. This rise of the importance of the individual and corresponding new collaboration schemes also reflects a deeper transformation of the societal constitution. Conventional thinking of a societal fabric consisting of classes, ethnical groups, is being challenged by a more individualistic perception of the ‘multitude’. “The multitude is composed of innumerable internal differences that can never be reduced to a unity or a single identitydifferent cultures, races, ethnicities, genders, and sexual orientations; different forms of labor; different ways of living; different views of the world; and different desires. The multitude is a multiplicity of all these singular differences” (Hardt/Negri: XIV). Unanswered for some time was the question of how this multitude of individuals unites and cooperates. With the understanding of P2P, the picture becomes clearer: The individual can now use P2P to unite for a specific purpose, making use of the ‘general intellect’ (Virno, 2008) or the cognitive surplus (Shirky 2010). The multitude is a multitude of thinkers and producers that can use new relationships and technologies to collaborate. This collaboration, however, is by no means comparable to former loyalties defined by ethnic or ideological adherence. It is transient, rather tied to a specific topic and timeline associated with the topic. Thus, examples of citizens’ use of platforms that address certain public issues in Germany show that these technologies allow for a selective and timespecific inclusion of citizens (Der Standard, 2012: 9). Once the specific task of the platform/collaboration is fulfilled, members exit to seek new tasks.7

7

“(…) individuals can do more in loose affiliation with others, rather than requiring stable, long-term relations (…)” (Benkler, 2006: 9). For the specific characteristics of political collaboration platforms (large, small, long-lived and short-lived), cf. Anheier/Nassauer (2012: 17).

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THE NEW ROLE

OF

CITIZENS

Social-media-enabled collaboration and available skills give citizens the option of participating in the production process of government tasks. The citizens in their role as free producers begin to be more interwoven into the process of service delivery. The community evolves into a community of contributors that create commons of knowledge, software or design. Public policies can be influenced – at least to some extent – by citizens. Although this process of adding a discussion level to state services seems to have its limitations, on a local level, at least, the impact is more obvious.

11.3.1

Citizens as Producers of Public Services

With the increased usage of social media tools, citizens who formerly could not cooperate with one another suddenly have the chance to reach out to likeminded peers in order to do more for themselves and for others. Perhaps for the first time in human history, collaboration becomes ‘deinstitutionalised’: Permission from institutions is no longer necessary to seek and establish working relationships with other citizens. The individual turns into a producer and into a networked ‘DIY citizen’: “DIY means taking matters into your own hands, not leaving it for others to do it for you” (Ratto/Boler, 2014: 2). Enabled by technology, this concept seems to take up pace. Gilding (2011: 251), who evaluated social services performed by peers, came to the conclusion: “What these examples show is that people have stopped talking and started acting”. This is due to the fact that the production model of P2P is clearly geared to directly tapping into the intrinsic motivation and talents of the citizens, in other words the cognitive surplus, in a very efficient way. Moreover, ubiquitous collaboration technology seems to compensate for a missing infrastructure in developing countries and might trigger a development process unseen.8 Of course, the integration of peers into the process of delivering public services can have many shades and variations. An emerging pattern, however, seems to be that in return for market or product information provided, citizens contribute information to the service provider, who uses this to further enrich its services and learning content. A very impressive example is the use of open agriculture solutions in Africa. Here (mainly private or NGO), producers of agricultural services provide information and learning content to the citizens/customers, who in turn send feedback, adding further value to the services (see Table 11.1). Furthermore, using the virtual platform, peers interact not only with the provider but also with other peers. A typical mixture of peer-to-peer and 8

Smartphone coverage in Southern Africa is almost higher than in parts of Europe, and these devices are used as computational tools (Fox, 2011).

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Agricultural Applications/Platforms in Africa. Source: IT News Africa (2013)

Rural eMarket Developed for rural Africa, Rural eMarket is a simple yet powerful solution to communicate market information, using smartphones, tablets or computers. The use of appropriate ICT solutions can improve transparency and access to market information and transform the livelihoods of rural populations. Esoko Esoko is Africa’s most popular magic platform for tracking and sharing market intelligence. It links farmers to markets with automatic market prices and offers from buyers, disseminates personalised extension messages based on crop and location and manages extension officers and lead farmers with SMS messaging. FarmerConnect The FarmerConnect Platform is a cloud-based and mobile-enabled platform that delivers personalised agricultural extension services and text/audio information intelligence in local languages to smallholders and farmers who otherwise do not have access to or cannot comprehend information from traditional sources. Such services helps them stay connected with the information and aiding agencies on a daily basis, increase their yields/incomes, and reduce hunger, poverty and malnutrition. FarmerConnect, in a nutshell, hosts a one-stop market place for agricultural communities, including service seekers (Farmers), service enablers (Government, NGO and Private agencies) and service providers (Agronomists, Markets Trackers, Weather Stations etc.). M-Shamba M-shamba is an interactive platform that provides information to farmers through the use of a mobile phone. M-shamba utilises the various features of a mobile phone, including cross-platform applications accessible in both smartphones and low-end phones, and SMS to provide information on production, harvesting, marketing, credit, weather and climate. It provides customised information to farmers based on their location and crop/animal preference. Farmers can also share information on various topics with each other. Mshamba is currently being used by 4000 rice farmers in Kenya to help them adopt new technologies in rice farming. Mobile Agribiz Mobile Agribiz (mogribu.com) is a Web and SMS mobile application that helps farmers decide when and how to plant crops, select the best crops for a given location using climate and weather data and connect to the available market. It helps connect farmers to buyers and helps them to source important, relevant information (e.g. how to plant crops, how to use fertilisers) and necessary data aggregates (e.g. weather, crop pricing) from various sources. Farmers can easily connect with customers by sending an SMS with their phone number, information on goods, prices and quantities for sale. This information is plotted into a map on servers, enabling customers to see farmers’ information, the goods they are selling and their quantities and location and make a connection. AgroSim AgroSim is a valuable tool for decision-making in agricultural projects. It works primarily on data collected online and provides a virtual representation of the different stages of crop growth and development as would be the case in reality. It is an event simulator able to anticipate the quality and quantity of the productivity of a desired crop by taking into account data related to seed, soil, hydraulic climate, geography, macroeconomy and the demographic of the targeted area.

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amAgriculture Developed by Access.mobile, amAgriculture is an analytical tool that helps agribusinesses understand underlying business trends, manage transactions, cut costs, increase revenues and mitigate risk. Core product features include agricultural input data collection and management, agricultural output data collection and management and transactional data tracking from agent transactions with farmers in cooperatives/networks. Farming Instructor Farming Instructor is a mobile app that provides online and offline agricultural information (text, speeches and animations) to farmers and their communities. The application is created specifically to inspire youth and all other groups in the society to have the passion to engage in agriculture as a means to self-employment. With this app, the user or farmer can source all the necessary information related to agriculture, as well as share and comment on other farming tips and advice.

company-customer relationships emerges. Other examples, such as the Ushahidi platform, resemble more a classical P2P relationship: an open source platform provided for free, as a commons, which allows peers to collaborate to collect and analyse information about security issues (Anheier/Korreck, 2013: 106). We can also observe that some public institutions begin the use of platforms to collect voluntary peer resources and to direct them to areas that have limited access to metropolitan services.9

11.3.2

Peers and Policy Formulation

The most obvious impact of social media is its capacity to mobilise voices cheaply and quickly. This has been demonstrated by the use of social media for the purposes of political mobilisation and even political resistance (Shirkey, 2011). With the use of smartphones and the like, virtually everybody can become a sender of information and has a propensity to influence opinion in one way or another. In Europe, the development of a new constitution in Iceland, which used the participation of the crowd, and in Germany, the opening of some law-making processes to interested contributors, demonstrates limited but successful experiments.10 These examples show how the traditional system of government has introduced parts of the P2P logic to increase its capacity to find

9

See the example of Chicago and its online platform www.ChicagoShovels.org. that directs voluntary services to elderly and disabled residents living in areas the municipal services do not reach easily after snowfalls (Mickoleit, 2014: 45). 10 For a summary of German open-policy formulation experienced mainly at the communal level, see, for instance, the platform provided by the Bertelsman Foundation (http://www.beteiligungskompass.org/). For the general slow adaptation of digital strategies by OECD governments using social media mainly as tools for communication, see Mickoleit (2014).

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solutions to issues and, ultimately, also enhance the legitimacy of these solutions via crowd participation. The German example demonstrates how the original system of law making has been amended by introducing a further – virtual – member of the law-making body, serving as an interface to the crowd (see Figure 11.1).11 Figure 11.1

The Crowd Acting as a Virtual 18th Member of a Law-Making Special Committee of the German Parliament (Bundestag). Source: Fischalek (2012).

The early hopes, however, that some kind of liquid democracy or electronic democracy would emerge and pave the way for a deliberative democracy (Habermas, 1998), or at least for a discussion layer guiding and reflecting capitalist mechanisms (Brown, 2010), have not yet materialised. There may be several reasons for this: The deliberative process is seen by many as not being effective enough to influence politics. The arena of deliberation, or the ‘political periphery’ as described by Habermas, is too far away from the real decision-making at the ‘political centre’: “Deliberative democracy relegates the role of citizens to discussions only indirectly related to decision making and action. The reality of deliberation is that it is toothless” (Noveck, 2009: 37). In practice, as it often seems to turn out, civic talk is largely disconnected from power. “It does not take account of the fact that in a web 2.0 world ordinary people can collaborate with one another to do extraordinary things” (ibid). *

11 For the example of Iceland’s new constitutions and its final failure, see The Guardian (2013) and Schwarz (2013). For the use of social media in US election campaigns, see Shirfy (2004).

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*

*

*

Not only is the political influence of deliberation limited, it is often clear what needs to be done. Thus, action to change things is more pressing than discourse, as recent interviews from Occupy movement members revealed: “One interviewee states that it is almost too trivial to formulate global problems Occupy is concerned with, because they [are] the same topics [that have been] moving people [for] decades: environmental destruction, war, lacking possibilities of democratic participation, an unjust world order, putting profits before people, a disrespect of human rights, drastic cuts in education and social services, to name the most prominent ones. There is no need to come up with specific topics, since there are enough pressing issues as it is” (Anheier/Nassauer, 2012: 26). Peer-to-peer collaboration in itself is not democratic, but rather meritocratic: The status of its participants is tied to their output performance only. The outputs need not be produced in a democratic, organised manner, but rather by the right producers, as the Peer-to-Patent project revealed. Here, peers acting as experts were asked to evaluate patents. As it turned out, not masses of peers and talents were needed for that evaluation, but rather point skills: “The excitement of modern collaborative environments (call it Web 2.0 or what you will) lies in the hope of bringing the masses on board to create something collectively. Hundreds of thousands, it is thought, can be not only consumers but producers. But more often than you’d think, what you need is not hundreds of thousands, but just five or ten people who know best” (Oram, 2007). There are few examples of the rule of the many. Even in democratic systems, we are more accustomed to the rule of delegates. Thus, the involvement of the multitude the Athenian way has few examples and seems difficult to achieve. Our political culture is ill equipped to deal with a broad understanding of citizen participation. Rather, “(…) the devaluation of citizenship is an integral component of a ‘successful’ modern democracy; not a failure to be corrected by technical means” (Varoufakis, 2014). Effectively, “(…) e’democrats will be facing the task not simply of involving more people in deliberations regarding policy making but, more ambitiously, of deploying new technology as a part of a broader political intervention whose purpose is to reinvent the political sphere” (ibid). We do not seem to have tools yet that allow for the deliberation of complex issues. Rather, we seem to use liquid democracy tools to ask ready-formulated questions, which are not stimulating enough. Furthermore, traditional political institutions are lacking the experience to generate attention and resonance for political topics.12

12 See the examples of Swiss political parties and their restricted use of Web tools to connect with the crowd in Kruse (2010).

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In summary, the effects and impact of P2P on political participation seem rather modest or mixed at this stage. This is most obvious at the level of nation state institutions (Mickoleit, 2014). Here, the necessity for individuals and P2P to collaborate with existing political institutions (parliaments, parties) in order to obtain political legitimisation clearly sets limits to the potential of enhanced participation. The complexity of aggregating social preferences and the consequent separation of decision-making and deliberation – connecting citizens mainly to the latter – are obvious restrictions.13 But if we shift our view from nation states to cities, things suddenly become possible that seemed impossible (P2P Foundation, 2014). Unlike nation states which are often engaged in competitive zero-sum games, the prevailing relationships in cities are based on communication, trade, transportation and culture. Cities are inherently pragmatic rather than ideological. Thus, the institutional frame of cities seems more suited for P2P, as Benjamin Barber argues: “They collect garbage and collect art rather than collecting votes or collecting allies. They put up buildings and run buses rather than putting up flags and running political parties. They secure the flow of water rather than the flow of arms. They foster education and culture in place of national defense and patriotism. They promote collaboration, not exceptionalism” (ibid). It can then be argued that collaboration by peers to produce public products and services even if mainly focused on the city or community level is by itself fostering new social and ultimately political relationships, giving a more specific meaning to the phrase “to resist is to create”.14 This does not exclude the possibility for enhanced political participation in the traditional system. It rather sets a trajectory for a

13 For the ‘impossibility’ of aggregating social orders and its grave consequences for democracy, see Arrow (2012: 59): “(…) the only methods for passing from individual tastes to social preferences which will be satisfactory and which will be defined for a wide range of sets of individual orderings are either imposed or dictatorial”. The consequences were clear limitations of political participation: "Voting, from this point of view, is not a device whereby each individual expresses his personal interests, but rather where each individual gives his opinion of the general will” (ibid: 85). 14 In this context, P2P is a more collective strategy than individual market action, and its underlying values and practices are a political statement in itself: “Peer to peer has indeed to be seen as an object oriented sociality, where person-fragments cooperate around the creation of common value. What connects individuals who participate in open and shared knowledge, software or design projects is the ability to connect their own ends, with some transcendental collective goal (building a universal operating system, constructing a universal free encyclopedia, constructing an open source car, etc.). In peer projects, individuals aggregate a particular passionate pursuit into a collective project. This is important, because whereas in individualist market visions the invisible hand indirectly creates public benefit (at least in theory and ideology), in peer to peer the intentionality of the collective project is integrated in the effort itself. Contributors to Wikipedia or Linux do not see the end result as an indirect result of individual transactions, but as the result of a particular social design which harmonizes individual effort and the collective goal, with the integration of both seen as non-contradictory. This gives peer to peer relationality a strong collective aspect, which was absent in the previous individualist epoch” (Bauwens, 2010).

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AYAD AL-ANI transitional process that could start with increased self-organisation of peers to deliver public goods and services, leading to more participatory and inclusive political institutions later on, once these collaborations consolidate and claim their share of political power.15

11.3.4

The Emerging Partner State

The aforementioned examples of collaboration may now lead to a new role of the state: a state that rather enables and empowers the social creation of value by its citizens. It protects the infrastructure of P2P cooperation and the creation of commons: The state evolves into a manager of a ‘marketplace’, stimulating, enabling and organising the assets of the country – the abilities and motivations of its citizens – in an efficient manner. The state will use modern devices and digital platforms to do this. By providing the prerequisites of peer production, the strategy of the state changes: Instead of providing the services all by itself, a strategy that encourages and enables peer production becomes relevant. “Can we imagine a new compact between government and the public, in which government puts in place mechanisms for services that are delivered not by government, but by private citizens? In other words, can government become a platform?” (O’Reilly, 2009: 65). We can already observe that some states and nations are embarking on, or rather trying out, this kind of role. An interesting project to be cited in this context is the FLOK project of Ecuador, which aims at elaborating ways towards an ‘open economy’ (see Figure 11.2). Clearly, in order to stimulate peer production, a set of enabling practices are needed.

15 This consolidation process may have already commenced according to some observers: “Look closely and you will see a messy, uncoordinated, bottom-up movement struggling to assert itself. Just below the radar of mainstream media, a teeming constellation of constituencies — internet users, environmentalists, librarians, academics, media reformers, software programmers — is beginning to talk about the commons. This gathering movement is at once an activist phenomenon, a proto-political philosophy and a cultural outlook. It sees the commons as a means to create wealth while honoring social equity and ethical values, an achievement that continues to elude the neoliberal mainstream. (…) At the moment, the wildly disparate threads of this movement have not been woven together. That, in part, will be a primary mission of OntheCommons.org — to give these many voices a forum; to showcase noteworthy fronts of activism and analysis; to puzzle through problems; and to bring together a new community united by some core values, a new story, and exciting new initiatives” (Bollier, 2004). Of course, traditional political parties could also serve as possible ‘poles’ for consolidating these new forces (Friedrichsen, 2015: 21). For the upcoming conflict between these new horizontal powers and the traditional power elite, see Wallerstein (2013).

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Figure 11.2

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Open Knowledge Society Project of Ecuador. Source: FLOK Society (Free/Libre Open Knowledge Society) (http://floksociety.org/).

The peer is a typical knowledge worker. This implies that access to learning content is crucial to peer productivity, allowing the knowledge worker to retrieve learning contents for free, on demand, preparing him/her for the next task. The impact of digitalisation on education is already impressive and will have a massive impact on society and the economy. Suddenly, the Edupunk way of learning becomes attractive and possible: a strategy of individuals who can have access to online education free of charge in order to create meaningful products in the net.16 This strategy is already available to anybody who has access to the Web and understands the language of the content.17 Already, major universities – sometimes behaving as commoners – are spreading their content via digitals outlets all over the world, as, for example, the edx.-platform of Harvard and MIT (edx.org). On a smaller scale, the above examples of agricultural solutions have demonstrated that peers can also learn from other peers (lateral learning) and will in turn produce learning content while acting as peers.18 The role

16 The term was coined by Jim Groom in a blog in 2008, cf. Al-Ani (2014: 12). 17 Even language problems are not the ultimate restriction, as the experiments of Mitra et al. (2005) with slum children in India have clearly demonstrated. The concept also showed that digital learning needs to be complemented with some sort of moral support and coaching (which can be delivered by P2P online as well, as the example of British ‘grannies’ supporting Indian students online showed: http://grannycloud.wordpress.com/). 18 The important effects of lateral learning are described by Rifkin (2011: 244-8).

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AYAD AL-ANI of the state should here embark on a non-elitist learning strategy and open up learning content for anybody for free.19 Peers not only need personal skills. In order to produce or enrich products, access to designs – often protected by copyrights – is necessary.20 Clearly, copyrights are the most visible battleground between the traditional economy and the P2P sphere.21 Here, the state should propose the use of peer property rights that ensure that peer products remain free and accessible. In addition, the means for reproducing infrastructure (tools, hardware and software) must be given.22 Here, for instance, relatively inexpensive 3D printers provided by the public will be helpful in reproducing parts of complex scientific tools (Open Source Lab): “Working replicas of expensive scientific equipment could be made for a fraction of conventional costs using cheap 3D printers, possibly saving developing world labs thousands of pounds each time” (The Guardian, 2014). Peers already provide design plans for almost any agricultural tools (Open Ecology) to be reproduced using simple and available tools.23 Eventually, the state could provide libraries for all kinds of relevant products to be downloaded by peers: “This regime of open, shareable knowledge would move away from the idea of privatized knowledge accessible only to those with the money to pay for copyrighted and patented knowledge. The system could be adapted for education, science, medical research and civic life, among other areas” (Bollier, 2014). Of course, the data produced by the state must be opened up as well and be accessible to anybody, thereby increasing the availability of relevant data for market transactions, product design and delivery. All these prerequisites and contents will be delivered through physical infrastructure (IT, telecommunication), which needs to be open and accessible to the public at minimum possible cost. Also, the state could support and provide virtual platforms that people use to collaborate, as, for instance, demonstrated by the ‘meetup’ platforms that enable

19 For the ‘Edupunk Guide to Education’, a manual supported by the Bill Gates foundation, see Kamenetz (2010) and (2011). For new strategies of universities: Al-Ani (2014). For sub-Saharan Africa, see the results of the Tessa program of the Open University, which aimed at giving teachers access to teaching content using smartphones (http://www.open.ac.uk/about/open-educational-resources/oer-projects/tessa). 20 See here, for example, the successful fight of Brazil and civil society organisations for AIDS drug patents. The Brazilian Administration used P2P mechanisms to mobilise civil support for the cause (FischerLescano/Teubner, 2004: 1027f.). 21 See here the work of Lessig (2004). 22 See here the example of reproducing hardware using the Raspberry Pi hardware assembling kit (http://www. raspberrypi.org/). 23 Open Source Ecology provides “Open Source Blueprints for Civilization. Build Yourself. We’re developing open source industrial machines that can be made for a fraction of commercial costs, and sharing our designs online for free. The goal of Open Source Ecology is to create an open source economy – an efficient economy which increases innovation by open collaboration” (http://opensourceecology.org/).

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citizens to communicate about relevant events and also to collaborate to solve issues of mutual interest.24 Finally, it must be clear that the peer also needs some kind of social and financial support. The peer production of common value requires civic wealth and strong civic institutions, something that is often overlooked. The partner state that is complementary to P2P production is not a minimal or retarding state concept. On the contrary, it is based on the best of the welfare state, i.e. solidarity mechanisms, education and open access to almost everything (Bauwens 2012). Thus, if P2P is to be used as a producer of public services, a kind of transfer mechanisms or basic income programmes (like the Brazilian Bolsa Familia program) must be in place to enable this production.

11.5

CONCLUSION

As states struggle to finance/deliver meaningful services to their citizens, providing platforms and stimulating self-organisation of citizens as producers seem a prudent strategy. This cooperation strategy is by no means an easy process, as both entities (P2P and hierarchy) use very different governance mechanisms (i.e. self-governance vs. top-down orders). Furthermore, the danger for P2P is that it could be sooner or later disintegrated or strangled by traditional market und hierarchy mechanisms.25 On the

24 “Meetup is a platform for people to do whatever they want with. A lot of them are using it for citizen engagement: cleaning up parks, beaches, and roads; identifying and fixing local problems” (O’Reilly 2009: 65). In addition, a number of policies will frame the effective and efficient use of these platforms: “(1.) Issue your own open government directive. (2.). (…) create a simple, reliable and publicly accessible infrastructure that ‘exposes’ the underlying data” from your city, county, state, or agency. Before you can create a site like Data.gov, you must first adopt a data-driven, service-oriented architecture for all your applications (…). (3.) “Build your own websites and applications using the same open systems for accessing the underlying data as they make available to the public at large (4.) Share those open APIs with the public, using Data.gov for federal APIs and creating state and local equivalents. For example, cities such as San Francisco (DataSF.org) and Washington, D.C. (Data.DC.gov and Apps.DC.gov) include not only data catalogs but also repositories of apps that use that data, created by both city developers and the private sector. (5.) Share your work with other cities, counties, states, or agencies. This might mean providing your work as open source software, working with other governmental bodies to standardize web services for common functions, building a common cloud computing platform, or simply sharing best practices. (…). (6.) Don’t reinvent the wheel: support existing open standards and use open source software whenever possible. (…) Figure out who has problems similar to yours, and see if they’ve done some work that you can build on. (7.) Create a list of software applications that can be reused by your government employees without procurement. (8.) Create an ‘app store’ that features applications created by the private sector as well as those created by your own government unit (see Apps.DC.gov). (9.) Create permissive social media guidelines that allow government employees to engage the public without having to get pre-approval from superiors. (10.) Sponsor meetups, code camps, and other activity sessions to actually put citizens to work on civic issues” (O’Reilly, 2010). 25 A process that is already observable with large corporations co-opting political NGOs (Dauvergne/Lebaron, 2014).

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AYAD AL-ANI other hand, traditional hierarchies will also seek to incorporate P2P structures and mechanisms in order to capture the benefits of the cognitive surplus and will thus also transform themselves step by step into hybrids making better use of decentralised and self-governing work collaborations while retaining central hierarchical functions. P2P could, in addition, benefit from this collaboration as the often self-centred motivations of peers are now being coupled with needs of communities. This enhanced customer orientation of P2P will further add to its relevance and political legitimisation. It will, therefore, make much sense for public institutions to reform their institutions and tools to establish this opening towards P2P networks and to direct and enable them to work on relevant issues of the society. Acting as a platform, public entities could seek cooperation with P2P and encourage further self-organisation of citizens. Open government data, open education and the usage of Open Source systems with standardised interfaces towards the public are policies that are already taking shape and would in totality generate this platform function. We can at this stage only speculate about the political effects of these new social collaboration schemes that will be interwoven into the public services delivery. As these collaborations reflect new egalitarian, collective and self-governing relationships, it is not altogether absurd to assume that these relationships will alter the political fabric and institutions, even if they initially focus on service delivery at the community level. For the state, two possible scenarios arise: The state could begin to support this transformation process and seek a corporation with P2P making use of these networks by directing and encouraging them to solve relevant tasks. Or else, if the state will not move, it will be moved by myriads of P2P collaborations who will not wait any longer for a cooperation and take the matter into their own hands:26 “Where governments fail to or are slow to use those platforms to improve and deliver public services, people and organisations step in and pressure for change. The impacts of ‘bottom-up’ processes tend to increase where social media are combined with online petitions, mobile applications, open (government) data analytics, crowd-funding initiatives, and collective ‘offline’ actions such as protests” (Mickoleit, 2014: 3).These collaborations could then unite and form political positions leading to larger structures competing with the traditional settings.

26 This situation has already been depicted by commentators observing the (possible) reaction of younger people to the ongoing crisis in the West “The hope is that these young people will eventually leave the house when the economy perks up, and doubtless many will. Others, however, will choose to root themselves in their neighborhoods and use social media to create relationships that sustain them as they craft alternatives to the rat race. Somewhere in the suburbs there is an unemployed 23-year-old who is plotting a cultural insurrection, one that will resonate with existing demographic, cultural and economic trends so powerfully that it will knock American society off its axis”(Salam, 2010).

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REFERENCES Al-Ani, A. (2013). Widerstand in Organisationen, Organisationen im Widerstand. Virtuelle Plattformen, Edupunks und der nachfolgende Staat. Wiesbaden: Springer VS Verlag. Al-Ani, A. (2014). Edupunks und neue universitäre Strukturen In: Keuper, F./Arnold, H. (Eds.): Campus Innovation - Education, Qualification and Digitalization. Berlin: Logos, pp. 111-129. Al-Ani, A./Stumpp. S./Schildhauer, T. (2014). Crowd Studie 2014: Die Crowd als Partner der deutschen Wirtschaft. HIIG Workingpaper 2/2014. Online available: (20 January 2015). Anheier, H./Korreck, S. (2013): Governance Innovations. The Governance Report 2013. Oxford: Oxford University Press, pp. 83-116. Anheier, H.K./Nassauer, A. (2012). The Swarm Intelligence. Mapping Subterranean Politics in Germany. Country Report Germany. Working Paper. Berlin. Arrow, K. (1974). The Limits of Organization. New York: W.W. Norton & Company. Arrow. K. (2012). Social Choice and Individual Values. Mansfield Centre: Martino Publishing. Bauwens, M. (2005). The Political Economy of Peer Production. ctheory.net, 12 Jan. 2005. Online available: (5 May 2012). Bauwens, M. (2010). Peer-to-Peer Relationality. The City and Anonymity. Online available: (25.September.2012). Bauwens,M. (2012). Blueprint for P2P Society: The Partner State & Ethical Economy. Online available: (10 March 2014). Benkler, Y. (2006). The Wealth of Networks. How Social Production Transforms Markets and Freedom. New Haven: Yale University Press. Bollier, D. (2004). The Commons as a Movement. Commons Magazine (onthecommons. org) (8 Nov. 2004). Online available: (1 June 2012).

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AYAD AL-ANI Bollier, D. (2014). The FLOK Society Vision of a Post-Capitalist Economy. Online available: (10 March 2014). Brown, M. T. (2010). Civilizing the Economy. A New Economics of Provision. Cambridge: Cambridge University Press. Crouch, C. (2004). Post-Democracy. Oxford: Polity. Dauveregne, P./Lebaron, G. (2014). Protest Inc. The Corporatization of Activism. Cambridge: Polity. Der Standard (2012). Die Bürger müssen eingebunden werden. Gisela Erler, in BadenWürttemberg Staatsrätin für Bürgerbeteiligungen, über die “Politik des Gehörtwerdens”, intelligentes Beteiligen und Minderheiten als Sensoren. 6 Nov. 2012, 9. Fischaleck, F. (2012). Demokratie reloaded. In Politik und Kommunikation, 2/2012, pp. 12-13. Fischer-Lescano, A./Teubner, G. (2004). The Vain Search for Legal Unity in the Fragmentation of Global Law. The Michigan Journal of International Law, Vol. 25, Summer 2004, 1000-1046. Fox, K. (2011). Africa’s Mobile Economic Revolution. Half of Africa’s One Billion Population Has a Mobile Phone – and Not Just for Talking. The Power of Telephony is Forging a new Enterprise Culture, from Banking to Agriculture to Healthcare. Online available: (28 Feb. 2014). Friedrichsen, M. (2015). Neue politische Kommunikation durch Medienwandel. In: Friedrichsen, M./Kohn, R.A. (Eds.). Digitale Politikvermittlung. Wiesbaden: Springer VS Verlag, pp. 9-24. Fuhr, H. (2005). Constructive Pressures and Incentives to Reform: Globalization and Its Impact on Public Sector Performance and Governance in Developing Countries. In: Hodges, R. (Ed.) Governance and the Public Sector. Cheltenham, 525-549. Gilding, P. (2011). The Great Disruption. New York: Bloomsberry Press.

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Habermas, J. (1998). Faktizität und Geltung. Beiträge zur Diskurstheorie des Rechts und des demokratischen Rechtsstaats. Frankfurt/M.: Suhrkamp. Hardin, G. (1968). The Tragedy of the Commons. Science, Vol. 162, No. 13, December 1968, pp. 1234-1238. Hardt, M./Negri, A. (2004). Multitude. War and Democracy. The Age of Empire. New York: Penguin Books. Hess, C./Ostrom, E. (2011): Introduction: An Overview of the Knowledge Commons. In: Hess, C./Ostrom, E. (Eds.). Understanding Knowledge as Commons. Cambridge (MA): MIT Press, pp. 3-27. Holloway, J. (2005). Change the World without Taking Power. The Meaning of Revolution Today. London: Pluto Press. Kamenetz, A. (2010). Edupunks, Edupreneur, and the Coming Transformation of Higher Education. White River Junction: Chelsea Green Publishing. Kamenetz, A. (2011). The Edupunk’s Guide to Education. To a DIY Credential. Online available: , (10 Nov. 2012). Kruse, P. (2010): Rechts, Links, Mitte – Raus! Vom politischen Wagnis der Partizipation. Interview von Ulrike Reinhard. In: Heuermann, H./Reinhard, U. (Eds.). Reboot_D – Digitale Demokratie. Oldenburg: whoiss, pp. 44-59. Lessig, L. (2004). Free Culture - The Nature and Future of Creativity. London: Open Source Press. Mickoleit, A. (2014). Social Media Use by Governments: A Policy Primer to Discuss Trends, Identify Policy Opportunities and Guide Decision Makers. OECD Working Papers on Public Governance, No 26, OECD Public Publishing. Online available: (1 April 2015). Mitra, S./Angwal, R./Chatterjee, S./Jha, R.S./Kapur, R. (2005). Acquisition of Computing Literacy on Shared Public Computers: Children and the “Hole in the Wall”. In: Australasian Journal of Educational Technology, Vol. 21, No. 3, 407-426.

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AYAD AL-ANI Neuberger, O. (2000). Individualisierung und Organisierung. Die Wechselseitige Erzeugung von Individuum und Organisation durch Verfahren. In: Ortmann, G./Sydow, J./ Türk, K. (Eds.). Theorien der Organisation. Wiesbaden: VS Verlag, pp. 487-522. Noveck, B.S. (2009). Wiki Government. How Technology Can Make Government Better, Democracy Stronger, and Citizens More Powerful. New York: Brookings. O’Reilly, T. (2009). Government 2.0.: Its All About the Platform. In: Heuermann, H./ Reinhard, U. (Hrsg.). Reboot_D – Digitale Demokratie. Oldenburg, pp. 60-67. O’Reilly, T. (2010). Government 2.0.: Its All About the Platform. Innovations, Vol. 6, No. 1, 2014, pp. 13-40. Oram, A. (2007). In Search of Micro-Elites: How to Get User-Generated Content. Online available: (18 May 2012). Ostrom, E. (1990): Governing the Commons. The Evolution of Institutions for Collective Actions. Cambridge: Cambridge University Press. P2P Foundation (2014). Benjamin Barber on City Based Global Governance. Online available: (1 April 2015). Ratto, M./Boler, M. (Eds.) (2014). DIY Citizenship. Critical Making and Social Media. Cambdridge: MIT Press. Rifkin, J. (2011). The Third Industrial Revolution. How Lateral Power is Transforming Energy, the Economy, and the World. New York: Palgrave Macmillan. Salam, R. (2010). The Dropout Economy. Time Magazine Special, 11 March 2010. Online available: (20 October 2012). Schwarz, T. (2013). Island: Die Crowdsourcing-Verfassung ist gescheitert. In Netzpiloten. Online available: (3 April 2015).

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Send, H./Schildhauer, T. (2014). Online Mitmachen und Entscheiden. Partizipationsstudie 2014. Online available: (3 April 2015). Shirky, C. (2008). Here Comes Everybody. The Power of Organizing without Organizations. New York: Penguin Books. Shirky, C. (2010). Cognitive Surplus, How Technology Makes Consumers into Collaborators. London: Penguin Books. Shirky, C. (2011). The Political Power of Social Media. Communications Technology Will Help Promote Freedom - but it Might Take a While. Foreign Affairs, Vol. 90, No. 1, January/February 2011, pp. 28-41. Sifry, M. L. (2004). The Rise of Open-Source Politics. Online available: ( 19 May 2012). The Guardian (2011). Mob Rule: Iceland Crowdsources its Next Constitution. Online available: , (10 Oct. 2012). Varoufakis, Y. (2014). Can the Internet Democratise Capitalism? Online available: , (1 March 2014). Virno, P. (2008). Grammatik der Multitude. Vienna: Turia & Kant. Wallerstein, I. (2013). Structural Crisis. Or Why Capitalists May No Longer Find Capitalism Rewarding. In: Wallerstein. et al (Eds.). Does Capitalism Have a Future? Oxford: Oxford University Press, pp. 9-35.

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SECTION C GROWTH, ECONOMIC DEVELOPMENT AND RISK MANAGEMENT

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LOCAL ECONOMIC DEVELOPMENT: AN INGREDIENT FOR

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Sam Koma

ABSTRACT This chapter examinees the implementation of local economic development policy in the developing countries, primarily focusing on South Africa. Local economic development in the developing countries has the potential to help address the perennial problems manifested through low economic growth rates and high unemployment and poverty levels facing the majority of the population. For the purpose of this chapter, local economic development serves as a cardinal element for the boosting of local economies and thereby addresses high levels of poverty, unemployment and inequalities facing the majority of the South African population and, more importantly, ensures global competitiveness and the integration of the South African economy within the global economic context.

12.1

INTRODUCTION

Local municipalities around the world face, to varying degrees, the same problems of inequality, unemployment and growing poverty levels and limited provisioning of basic services to local communities (Horn & Lloyd, 2001:59). These realities are aggravated by international trends and new realities such as urbanisation, the technological revolution and globalisation and the increasingly competitive environment globally. The impact of these factors on the economies of cities and towns, in general, and South African towns in particular, is not an exception (Development Bank of Southern Africa, 2000:26). Municipalities have a key role in coordinating and promoting local economic development (LED). Municipalities can neither simply focus on providing local services and developing infrastructure nor limit their involvement with the private sector to regulation through imposing planning restrictions and environmental management rules. Thus, municipalities have become critical role players in the investment decisions of private sector organisations. Many of the important variables that determine whether a private company decides to invest in a particular area are the responsibility of municipalities.

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SAM KOMA These include access to development land, the local transport and communications infrastructure, serviced sites, specialised waste disposal facilities, access to trained staff, educational facilities and housing and recreational amenities to attract and retain skilled staff. In the highly competitive developed economies, LED has become a core activity with a significant impact on the local economy and employment. LED policy should balance the need for attracting investment with the needs of local communities. The private sector requires a competitive advantage through reduced production costs and enhanced social and physical infrastructure. The municipality should promote this while protecting the environment, stimulating employment and implementing poverty alleviation strategies (Development Bank of Southern Africa (DBSA) 2000:29-30).

12.2

CONCEPTUALISING LOCAL ECONOMIC DEVELOPMENT (LED)

Mokale and Scheepers (2006:134) note that local economic development means more than economic development in poverty alleviation as it connotes a process of improving the economic dimensions of the lives of communities in a municipal area. The purpose of local economic development is to build up the economic capacity of a local area to improve its economic future. It is a process by which public, business and non-governmental sector organisations work collectively to create conducive environment for economic growth and job creation. Local economic development offers a municipality, the private sector, the not-for-profit sectors and the local community to work together and aims to enhance competitiveness and thus encourage robust economic growth that is inclusive (Malefane, 2008:160). Helmsing and Egziabher (2005:1) consider LED to be a process in which partnerships between municipalities, NGOs, community-based organisations and the private sector are forged to manage existing resources, to create jobs and to stimulate the economy of a well-defined territory. The International Labour Organisation (2006:2) defines LED as representing a participatory process that encourages partnership arrangements between the main private and public stakeholders of a defined territory, enabling the joint design and implementation of a common development strategy, by making use of the local resources and competitive advantage in a global context, with the final objective of creating decent jobs and stimulating economic activity. Thus, local economic development principally requires a multi-sectoral approach which depended on the solicitation of input, resources and ideas from various stakeholders

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including municipalities in order to ensure local economic growth, job creation opportunities and poverty alleviation. Rabie (2011:209) argues that the objectives of the LED strategy will invariably vary depending on the rational driving of the formulation of the strategy. There are two dominant approaches to LED, namely, the community-led development and marketled approaches. In sub-Saharan Africa, LED has often become identified with selfreliance, survival and poverty alleviation rather than participation in the global economy. LED is associated with what is more appropriately referred to as community development. These pro-poor LED strategies are basically about achieving social rather than economic goals. They address important problems but tend to primarily focus on shortterm survival issues and on remedial action for alleviation of social problems, leaving many of the economic issues that affect these countries almost untouched (RodriguezPose and Tijmstra, 2005:5). In the context of South Africa, Rabie (2011:241) notes that the various LED policies differ fundamentally in terms of what LED entails and what the focus of LED efforts should be, ranging from a facilitative governance approach, where everything the municipality does has an economic impact, to a specialised LED approach where municipalities should develop focal strategies and interventions that provide specialised support to the private sector and local communities to ensure that the competitive advantage of the area is fully exploited in an inclusive, sustainable and robust manner. The LED approach of the policies transcends from community-driven development as prevalent in developing countries to market-driven development practised in developed countries. Therefore, it can be deduced that the primary focus of LED is economic with its outcomes being job creation and economic growth, while its secondary focus is on community development encompassing poverty alleviation. In this regard, where market development is the main reason for LED, the objectives of the strategy are aimed at ensuring business survival, attracting investment and increasing local profits. The ultimate goal of a market development strategy is to stimulate increased economic growth in the locality. In market development strategies, the private sector often takes the leading role in drafting and implementing the LED strategy. While where the rationale for LED is driven by community development objectives, the outcomes invariably lead to poverty alleviation, skills development and others. For South Africa currently faced with the highest levels of unemployment, it is therefore crucial that the content of the LED strategies should embrace both the community development and market development approaches.

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SAM KOMA 12.3

ROLE

OF THE

DEVELOPMENTAL STATE

The academic discourse on the developmental state is replete with literature contributed by various scholars on the subject: for instance, Johnson (1983), Leftwich (1995), Huff (1999), Mkandawire (2001), Gelb (2006), Jahed and Kimathi (2007), Edigheji (2009), Maserumule (2009) and Nzewi and Kuye (2009). Mkandawire (2001:420) contends that the term developmental state does not only apply to those that have attained economic growth but also includes states that attempt to deploy both administrative and political resources to the tasks of economic development, yet are not able to grow as a result of external factors such as bad luck and miscalculation. He denounces the comparison of states in Africa with developed ones as well as the sense of despondency that this comparison has brought. In the African context, any state that develops an appropriate institutional structure in order to spark growth merits recognition as a developmental state. African states should determine what works for them, informed by their circumstances rather than emulate the East Asian models unchanged. According to Turok (2010:499), a developmental state exhibits three important features. Firstly, they are capable of planning and making long-term strategic decisions beyond pragmatic responses to political pressures and problems as they emerge. Secondly, they have the analytical capacity to separate the causes of problems from their symptoms and their consequences. Thirdly, they have organisational capacity to focus on the underlying issues for more tangible outcomes. The primary objective of the developmental state tends to be employment creation. Such states should also be capable of early action in anticipation of difficulties and of minimising the risks of problems occurring or reaching unmanageable proportions. A priority in countries like South Africa is to shift the economic development path in a more inclusive and dynamic direction. It is not sufficient to expand the output of the existing structure and reproduce its deficiencies or to enrich a narrow section of the previously disadvantaged population through administrative and legal mechanisms. Thus, the diagnostic report that was published by the National Planning Commission headed by Minister Trevor Manuel in 2011 was a first attempt to generate a broader understanding of the underlying causes and symptoms of the problems facing the South African developmental state. This report allowed the broader civil society, labour, business, government institutions and members of the public to engage and deliberate on the plausible solutions that eventually informed the development of the National Development Plan which is now in the public domain (Koma, 2014:7).

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Sustained economic success emanates from linking financial rewards to productive activity and long-term performance. The other feature of a developmental state is the promotion of change informed by boldness and concerted effort on the part of the government. The government endeavours to act on a sufficient scale and with collective weight to influence established growth trajectories. It views the economic impact of all its interventions and understands how state procurement, regulation and services can boost or negatively impact on the creation of jobs. Different parts of the state are aligned in order to ensure that the powers of the state as an investor, purchaser, employer, regulator and provider of infrastructure and services yield consistent results. For example, in the urban setting, it is important to connect policies for housing, transport, land use and basic services in order to contain low-density sprawl and to create more inclusive and efficient cities (Turok & Parnell, 2009, in Turok 2010:500). In the employment domain, linking schools, colleges, job advisory services and employers together can ensure the integration and mobility of people into work and make the labour market function more effective (Turok 2010:500). Failure to integrate and coordinate state plans and actions means that the development agenda may be undermined by contradictory state actions and speculative tendencies in the private sector wanting for easy returns. Integrated actions enable the state to initiate change and not simply to accommodate trends and respond to events as they unfold. Developmental states invest in the release of locked economic potential, encourage enterprise development and make better use of neglected resources such as labour and land. They intervene to improve and develop the market by creating financial institutions to provide risk capital, encouraging long-term business decisions and improved management and stimulating productive activity in places that may have been spontaneously identified (Sen 2009). The logic goes beyond compensating for market inefficiencies and promoting welfare schemes in isolation from economic opportunity. It is about building the human capabilities and culture to support a resilient and dynamic economy (Sen 2009; Evans 2009; Turok 2010:500). Flowing from this background, it is pertinent to state that the interventionist focus of the developmental state is not only confined to the economic domain but also extends to other important terrains such as public infrastructure investment and public service delivery in order to ensure that there is integrated and consistent implementation of state plans aimed at delivering high economic growth, investment rates and employment creation.

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SAM KOMA Edigheji (2009:60) asserts that there is no one formula for constructing a developmental state. The South African developmental state is based on the adaptation of some elements of the Asian developmental states especially with respect to the central development planning that produced the National Development Plan in 2012. It should be borne in mind that in every historical epoch, developmental states have been constructed to respond to specific contextual developmental challenges. In doing so, they have drawn important lessons from other experiences, adapting these to address their particular context. Most developmental states, especially in Asia, are highly interventionist and protectionist, have strong state capacity and political leaders who are highly nationalistic and patriotic and, as a result, have the political will to drive through the development agenda. They are highly innovative; put measures in place to address the adverse conditions affecting the poor and make a huge investment to enhance human capabilities; create conditions for high economic growth rates; have a sufficient degree of national autonomy in policy making; and give specific primacy to public policy in areas of health, education, social welfare and land reform. These are the factors that have largely contributed to the successes of the Asian developmental states (Edigheji 2009:61-62). According to Mayende (2009:53), a developmental state, through using its planning systems and bureaucratic capacity, crafts policies and programmes that are aimed at ensuring high levels of economic growth, equitable distribution of wealth, reduction in levels of poverty and inequality and development, in general, for the benefit of all citizens. A disciplined and patriotic bureaucracy, characterised by high levels of technical, managerial and programme implementation capacity and professional conduct, is a fundamental requirement for an effective developmental state. Butler (2009:63) asserts that developmental states do not merely allocate resources; they also mobilise them to finance investment and growth. In order to gather all resources, the public sector can contribute to national investment, while government non-investment spending must remain tightly curtailed and a restrictive budgetary policy must therefore remain. A successful developmental state does not merely develop good policies that help an economy to grow. It also has the capacity to implement and administer them, to maintain an effective machinery of government and to protect and develop a culture of honesty and high performance in the public sector. Many of the fast-growing developmental states of East Asia such as Japan and South Korea are known for the effectiveness of governmental administrative systems, the high quality and calibre of senior managers trained and motivated (Butler 2009:136).

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Economic growth 1994-2012

Year

Growth (%)

1994

3.2

1995

3.1

1996

4.3

1997

2.6

1998

0.5

1999

2.4

2000

4.2

2002

3.7

2003

3.1

2004

4.9

2005

5.0

2006

5.4

2007

5.1

2008

-1.7

2009

3.5

2010

4.5

2011

3.2

2012

2.3

Statistics South Africa (2008; 2012)

For the purpose of this chapter, it can be argued that for the South African developmental state to deliver on its electoral and constitutional obligations related to the promotion of social and economic development and poverty alleviation, there ought to be strategies put in place to propel growth measured in terms of gross domestic product (GDP), per capita income and domestic and foreign investments. The state should intervene in the economy to counter the neo-liberal ideology that promotes the minimalist role of the state in the economy in favour of the market. The success of the developmental state hinges on the bureaucratic and managerial capacity of the senior managers in the public sector including municipalities to shape and drive the development agenda aimed at delivering on the expectations and needs of the poor, marginalised and unemployed sectors of the

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SAM KOMA population. This requires the ability on the part of senior managers to formulate longterm economic development plans and strategies and effectively implement them. The involvement of the broader civil society, business and labour organisations, non-governmental organisations and members of the public is cardinal to the development of these long-term economic development plans and strategies.

12.4

SOUTH AFRICA’S ECONOMIC SITUATION

South Africa is a middle-income country and, more importantly, is endowed with mineral resources such as gold, platinum and coal. South Africa exhibits a diversified economy manifested by the contribution of various industries to the gross domestic product notably mining, financial services, government and community services, trade, agriculture, manufacturing, construction, transport and telecommunication sectors. A critical examination of South Africa’s economy clearly reveals that growth measured in terms of gross domestic product (GDP) has been stagnant particularly from the mid-1970s to the later part of the 1980s. The new democratic government that assumed political power in 1994 inherited a weakened national economy as a result of an array of factors including a global economic crisis, global competition especially in the manufacturing sector, disinvestment and job loss largely affecting unskilled labour, owing to the use of capital intensive technologies. Since 1994, the country has enjoyed positive but quite low levels of economic growth, and this is depicted in the table that follows. Average real growth of around 3,1% per annum has translated after population growth into around 1,1% growth per capita GDP per year. South Africa’s post-apartheid growth has been mostly jobless growth; the number of people employed in formal nonagricultural employment fell substantially between 1994 and 2000 (Butler 2009:56). The South African economy has become increasingly diversified over the years. In the late nineteenth century, mining and agriculture dominated the economy. However, South Africa became progressively a manufacturing economy, with manufacturing surpassing other sectors by the mid-twentieth century. Services have achieved huge significance during the past four decades. The country entered the twenty-first century being a reasonably diversified and robust economy, dominated by the tertiary (services) sector (66% of output) with the secondary sector (including manufacturing) accounting for 20% and the primary sector for only 10% (Du Plessis & Smit 2007).

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Manufacturing, finance and government are the three biggest industrial categories. The fastest growth in recent years has been in transport, communications, financial institutions, insurance business services and real estate. Despite this diversification, some scholars argue that resources remain at the heart of the economy. While mining itself accounts directly for a little over 5% of the GDP, there are strong relationships between mining and sectors such as electricity, non-metallic mineral products, iron and steel industries, fertilisers, pesticides, chemicals and the petroleum industries. The mineral-energy complex still accounts for a fifth or even a quarter of the output of the economy (Fine & Rustomjee 1996).

12.5

OVERVIEW

OF

LED POLICY DEVELOPMENT

IN

SOUTH AFRICA

The South African LED approaches towards planning LED have traditionally been strongly influenced by the experiences of Britain and the United States. South Africa followed the World Bank LED model, where a substantial body of literature on the subject has appeared (Harrison & Naidoo 1999). The historical evolution of LED policy in South Africa has been marked by the formulation of several significant policy documents in the early 1990s (Nel 2000). In 1994, the private sector think tank, the Urban Foundation, now the Centre for Development and Enterprise, prepared a policy document which strongly reflected and advocated the adoption of Western European and North American LED experience. By contrast, in 1995, the South African National Civic Organisation published their own strategy document which advocated community-based dimensions of LED (Nel 1995). In 1996, the National Business Initiative, in collaboration with the RDP Ministry, published an LED manual which straddles both community-oriented strategies and neoliberal principles of independent policy action (Nel 2000). Since 1995, policy leadership in developing a national framework for LED has been assumed by the Department of Cooperative Governance and Traditional Affairs (formerly the Department of Provincial and Local Government) which has produced a series of policy statements. The legislative and policy context for LED has been shaped by several key pieces of legislation. Firstly, the 1996 Constitution recognises the significance of local government in the statement that a municipality must structure and manage its administration and budgeting and planning processes to give priority to the basic needs of the community. Secondly, the 1998 White Paper on Local Government conceptualises the notion of developmental local government which is defined as local government committed to working with citizens and groups within the community to find sustainable ways and means to meet their social, economic and material needs and improve the quality of their

257

SAM KOMA lives. Thirdly, the Local Government Municipal Systems Act 22 of 2000 made the pursuit of Integrated Development Planning (IDP) a compulsory activity for municipalities and legislated a number of key LED functions and responsibilities (Van der Heijden 2008). Rabie (2011:240) argues that following the 2009 national elections and the resultant change in ministries and government structure, the functions of the former Department of Provincial and Local Government were conferred on the Department of Cooperative Governance (Cog). The new department issued the COG turnaround strategy (2009) to overcome service delivery problems in the local government sphere. With regard to LED, it gives municipalities the responsibility of developing an LED support programme that works with Ward Committees in facilitating ward-based economic planning and delivering at least one economic product per ward (Cog, 2009:38). A problematic area evident in the various LED policies relate to delineation of roles and responsibilities among the different spheres of government and agencies. Rabie (2011:242) states that, at times, local government is seen as the main driver, with national and provincial government providing support and aligning to Integrated Development Plans. Sometimes, municipalities are not in the forefront, but are seen as an implementing extension of national government priorities in the local sphere. This confusion within the policy framework places municipalities in a predicament as they are expected to turn around current service delivery and governance problems and simultaneously embark on complex and sophisticated economic planning that will enhance their localities in the context of provincial and national spatial and economic development strategies. This is presented in the absence of dedicated financial resources for LED at the discretion of the municipality (Rabie 2011:242). The conclusion from this analysis is that the contradictions between and within documents will probably result in municipalities adopting LED strategies that may render little result but provide reading material for the Auditor General and possibly avoid audit qualifications (Rabie 2011:242). International best practice research indicates that municipalities, in collaboration with the local community, are in a favourable position to recognise local economic development potential and devise appropriate strategies to realise this potential. However, in communities and local municipalities where capacity and knowledge constraints exist, this assumption that local knows best becomes questionable. The scope of leadership in municipalities is also restricted by the legislative framework within which this role is undertaken. South Africa’s Constitution stipulates the independent authority of each sphere of government, but cooperative government at the same time implies a centrally driven, unitary state (Rabie 2011:258).

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Although the national government has put in place various policies and guidelines underpinning the implementation of LED in South Africa, the implementation process continues to be fraught with difficulties and challenges. The Report on the Strategic Review of Local Government in South Africa presented to the Minister of Cooperative Governance and Traditional Affairs in 2009 offers numerous challenges related to LED policy implementation pertaining inter alia to: The need for national government to provide clarity as to the meaning of LED, especially to guide small town and poorer municipalities The need for greater integration and cooperation between both LED stakeholders and sector departments involved in implementing LED The appropriate scaling of LED Revitalising the role of provinces in LED Closing the gap in LED practice between that in large cities and in small towns and poorer municipalities The need to disseminate good practice in LED The significance of improving the profile of LED and for greater professionalisation of LED The importance of building LED networks and of sustainable knowledge platforms as a means to enhance high-level systemic learning The capacity challenge of training professional staff and careers in LED The LED funding challenge Improving economic data for understanding local economies and for LED planning (Report on the Strategic Review of Local Government in South Africa 2009:3) *

*

* * *

* *

*

* * *

Currently, most of the small local municipalities are unable to operationalise LED in their Integrated Development Plans as LED is considered in isolation from the Integrated Development Planning process that mainly focuses on service delivery and infrastructure issues. As a result, most Integrated Development Plans contain limited analysis of the economic potential and competitiveness of local economies and strategies that could be employed to tap into the economic potentialities of the municipalities. This situation is also exacerbated by the existing policy confusion in terms of the content of the national LED Policy Frameworks and Guidelines which tend to vacillate between the concepts of welfare focus versus economic focus. The absence of policy leadership by the national government with respect to articulation of the main focus of LED tends to generate misunderstandings and misconceptions of local economic development on the part of the implementers.

259

SAM KOMA The need for greater synchronisation on policy development and implementation pertaining local economic development also appears to be missing. For example, on the one hand, the Department of Trade and Industry is among others responsible for Regional Industrial Development (that impacts on LED) and also provides policy support, capacity building in the area of LED planning, partnership building and facilitation of implementation of LED. On the other hand, the Department of Co-operative Governance also has a separate unit dedicated to LED programmes. Most municipalities tend to interact with the latter department on issues related to LED policy implementation due to its strategic mandate focusing primarily on municipal programmes. The delineation of roles and responsibilities coupled with inter-organisational relations for national, provincial and municipalities can enhance the efficacy of LED policy implementation. The limited capacities of LED staff in most municipalities impacts on the implementation of local economic development objectives. This results in the use of private consultants. LED policy implementation hinges on municipal staff that is in possession of relevant skills and competences including but not limited to economic analysis, project planning and management and monitoring and evaluation. This view is also expressed clearly in the Report on the Strategic Review of Local Economic Development in South Africa, 2009.

12.6

STRATEGIES

FOR

BUILDING LOCAL ECONOMIES

There are a number of important strategies that could be employed to propel and sustain local economies in the context of developmental local government. Some of these strategies require effective inter-organisational and intergovernmental relations to be realised and while others rely on allocation of adequate resources, creativity and proper planning. 12.6.1

Integrated Development and Service Delivery

Infrastructure development, service delivery, municipal financial viability and local economic development are not mutually exclusive concepts. They are interdependent, and government, especially municipalities, should develop strategies and management practices that take a holistic and integrated approach. Coordinated structural planning within the context of the Integrated Development Planning process offers the potential to link local economies and accelerate growth directly by public-private sector investment and through facilitating the strategic development of competitive advantage. To facilitate and achieve this, more rigorous long-term planning through cooperative government (Intergovernmental Relations Framework Act 2005) and in accordance with national spatial

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planning, guidelines are required. Long-term planning and research should be the basis for understanding local economies better, aligning economic strategies throughout government and building the competitiveness of the municipal regions (DPLG National Framework for Local Economic Development 2006). Thus far, endeavours have been made to align government’s development planning by introducing development planning instruments in each sphere of government, that is, the national spatial development framework (NSDP), the provincial growth and development strategy (PGDS) and the Integrated Development Plan (IDP) for national, provincial and local governments, respectively. Theoretically, these planning instruments are meant to flow into one another with the one informing the other. For instance, the PGDS should in part reflect the harmonisation of growth trajectories of all municipalities in a given province, as per their IDPs. The current generation of provincial PGDS and IDPs in the respective provinces throughout the country appear to be moving in tandem with each other (Nkwinika 2010:228). The Integrated Development Plan identifies local economic development as a crosscutting and interdisciplinary part of municipal operational planning (Malefane, 2008:131). Local economic development is an integral part of the broader strategic plan (IDP) in a municipality. The formulation of LED strategies in the municipal sphere is informed by the Integrated Development Plan adopted by the municipal council. The IDP precedes the LED plan and strategy shaped by a municipality. 12.6.2

Public Investment and Enterprise Development

Turok (2008:196) argues that public investment in productive capacity and services which provide an economic return such as housing and electricity, as opposed to welfare spending, will mean that there will be returns on investment. This will safeguard macroeconomic balances and ensure that development is sustainable. This investment will also generate further growth through demand for electrical goods, furniture, household goods, paint and other consumables, which can be produced locally. Municipalities need to prepare industrial and commercial sites with basic infrastructure in order to attract businesses to the area (Bertlesmann Foundation and World Bank’s Cities Initiative 2002:35). A well-developed built environment is more attractive for businesses wanting to locate, expand or settle its employees and owners in the locality. Small-medium-sized enterprises are dependent on good supportive infrastructure for growth (Rogerson 2004:24-25). Programmes and projects may include improving key

261

SAM KOMA roads, railways, airports, ports, sites and buildings, water, sewerage, energy and telecommunications systems and crime prevention equipment (Rabie 2011:305). The World Bank Primer advises that since these projects involve considerable expense, it is imperative that municipalities prioritise infrastructure investments according to the need, potential for cost recovery and opportunities for leveraging additional resources (Bertlesmann Foundation and World Bank’s Cities of Change Initiative 2002). 12.6.3

Local Economic Development Agencies

The concept of a development agency is an approach for generating jobs in local communities using local knowledge and mechanisms. It involves strategic planning and research, using available tools and resources and building partnerships among different spheres of government, the private sector and the non-profit sector. The primary objectives of these agencies are to promote and develop economic potential on a local and regional basis by building on the unique competitive strengths of each region’s economy and assets; to leverage public and private resources for development opportunities; to foster the innovative thinking and entrepreneurial activity which support and drive economic growth; and to manage the spatial organisation of the area in a socially efficient manner and through the use of public land and targeted private projects in particular (Patterson 2008:28). Development agencies have been created as alternative institutions to promote public-private partnerships that will advance the ideals of economic development in the area (Xuza 2007:120). Local economic development agencies, as municipal entities, are established either in a district or a local municipality. In South Africa, these agencies are a new invention to counteract the excessive dependence of municipalities on national and provincial economic initiatives that are invariably inconsistent with the needs and aspirations of local communities and often appear locally irrelevant. Local economic development agencies are set to respond to socioeconomic challenges, growing concern over economic growth and development, poverty and the poor performance of municipal sector departments in economic development. Their economic development mandate is founded on the premise that traditional municipal structures cannot optimally respond to the socioeconomic challenges in local communities (Malefane & Khalo 2010:138).

12.7

CONCLUSION

This chapter commenced with a reflection on the justification of local economic development in the context of the developing countries. South Africa is defined and regarded

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as a developmental state, implying that local economic development is but one important instrument at the disposal of the state to realise its strategic social and economic development imperatives. It is also apparent that the impetus that informs the drive for a South African developmental state that can promote growth and development hinges on the capacity of the top bureaucrats to effectively discharge their responsibilities. It is pertinent to state that local economic development remains the sine qua non for economic development, poverty alleviation and employment creation in the developing countries. It is apparent that the effectiveness of LED strategies hinges on Integrated Development Planning and service delivery; the availability of physical infrastructure such as transportation, electricity, roads, water and sanitation; and enterprise development. REFERENCES Bertlesmann Foundation and World Bank’s Cities of Change Initiative. (2002). Local economic development. A Primer for developing and implementing local economic development strategies and action plans. Butler, A. (2009). Contemporary South Africa. 2nd Edition: Hampshire: Palgrave Macmillan. Department of Co-operative Governance and Traditional Affairs. (2009). Report on the State of Local Government in South Africa. Pretoria. Department of Provincial and Local Government: National Framework for Local Economic Development (2006-2011). Pretoria: DPLG. Development Bank of Southern Africa (DBSA) (2000). Building Developmental Local Government: Development Report. Halfway House: South Africa. Du Plessis, S. & Smit, B. South Africa’s growth revival after 1994. (2007). Journal of African Economics, 16 (5): 668-704. Edigheji, O. (2009). A developmental state in Africa. New Agenda. Third quarter. Evans, P. (2009). Constructing the 21st century democratic state. New Agenda. 36: 6-13. Edighegi, O. (Ed). (2010). Constructing a democratic developmental state in Africapotentials and challenges. Human Sciences Research Council: Cape Town.

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SAM KOMA Fine, B. & Rustomjee, Z. (1996). Political Economy of South Africa. Johannesburg: Witwatersrand University Press. Gelb, S. (2006). A South African developmental state: what is possible? (online) Available from: (Accessed 6 November 2007). Harrison, P. & Naidoo, J. (1999). Local Economic Development: the case of Port Shepstone in KwaZulu Natal Paper presented at the Conference, “Local Economic Development in Post-Apartheid South Africa: The Challenges for Local Government. Rhodes University, Grahamstown, 16 July. Helmsing, A.H.J. & Egziabher, T.G. (2005). Local economic development in Africa: Introducing the issues. In Egziabher, T.G., & Helmsing, A.H.J (Eds), Local Economic Development in Africa: Enterprises, Communities and local Development. Masstricht: Shaker Publishing BV. Horn, G.S. & Lloyd, H.R. (2001). Local economic development in rural South African towns. Africa Insight, (31) 1: 59. Huff, W.G. (1999). Turning the corner in Singapore’s developmental state. Asian Survey, 34 (2): 214-242. International Labour Organisation (ILO). (2006). A Local Economic Development Manual for China. ILO: Geneva. Jahed, M., & Kumathi, S. (2007). Economics of the developmental state. New Agenda, Fourth Quarter Issue 28: 47-52. Johnson, C. (1983). MITI and the Japanese miracle: the growth of industrial policy, 19251975. Stanford: Stanford University Press. Koma, S.B. (2014). Developmental local government with reference to the implementation of local economic development. Doctorate in Administration: Public Administration. Unpublished dissertation. University of Pretoria. Leftwich, A. (1995). Bringing politics back in: Towards a model of the developmental state. Journal of Development Studies, 31(3): 400-427.

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Malefane, S.R. (2008). Planning economic diversification: A local economic development strategy towards economic-base restructuring. Paper delivered at the International Association of Schools and Institutes of Administration. Uganda, Kampala, 17 July 2008. Malefane, S. & Khalo, T. (2010). The role of local government in mitigating the impact of the recession. Journal of Public Administration, 45 (1): 133-144. Maserumule, M.H. (2009). Consolidating a developmental state agenda: a governance challenge. In Kondlo, K. & Maserumule, M.H. (Eds). The Zuma Administration-Critical Challenges. Cape Town: Human Sciences Research Council. Mokale, T. & Scheepers, T. (2006). An introduction to the developmental local government system in South Africa. A Handbook for the Councillors and Officials. Montfort Press: Johannesburg. Nzewi, O.J. & Kuye, J.O. (2007). The developmental state and conceptual interpolations: A comparative policy-targeting for South Africa within a global context. Journal of Public Administration, 42 (3): 195-210. Mayende, G. (2009). Rural development under a developmental state: analysing the policy shift on agrarian transformation in South Africa. In Kondlo, K. & Maserumule, M.H. (Eds). The Zuma Admnistration - Critical Challenges. Cape Town: Human Sciences Research Council. Mkandawire, T. (2001). Thinking about developmental states in Africa. Cambridge Political Economy Society, 25: 289-313. Nel, E. (Ed). (1995). Local economic development in South Africa: A review of current policy and applied case studies. Friedrich Ebert-Stiftung and South African National Civics Organisation. Johannesburg. Nel, E. (2000). Economic restructuring and local economic development in South Africa, in Khosa, M. (Ed.). Infrastructure Mandates for Change 1994-1999. Human Sciences Research Council. Pretoria. Nkwinika, T. (2010). South Africa Country Report. In Resourcing the local state, Electoral Institute for the Sustainability of Democracy in Africa. Johannesburg: Richmond.

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SAM KOMA Patterson, C. (2008). Country Report on Local Economic Development in South Africa. Unpublished Report prepared for GTZ Strengthening Local Governance Programme in South Africa. Pretoria. Rabie, B. (2011). Improving the systematic evaluation of local economic development results in South African local government. Doctorate in Public and Development Management. Unpublished Dissertation. University of Stellenbosch. Report on Strategic review of Local Economic Development in South Africa (2009) submitted to Minister Sicelo Shiceka. Department of Provincial and Local Government. DPLG. Pretoria. Robertson, M., & White, G. (Eds) (1998). The Democratic Developmental State: Politics and Institutional Design. Oxford: Oxford University Press. Rogerson, C.M. (2004). Pro-poor local economic development in post-apartheid South Africa: The Johannesburg fashion district. Paper presented at the 50th Anniversary Conference reviewing the first decade of development and democracy in South Africa, International Conference Centre, Durban, South Africa, 21-22 October 2004. Statistics South Africa (2008). GDP First Quarter, South Africa. Pretoria: Statistics South Africa. Statistics South Africa (2012). GDP First Quarter, South Africa. Pretoria: Statistics South Africa. Sen, A. (1999). Development as Freedom. Oxford: Oxford University Press. Tshishonga, N. & De Vries, M. 2011. The potential of South Africa as a developmental state-A political economy critique. African Journal of Public Affairs, 4(1): 58-69. Turok, B. (2008). The evolution of ANC economic policy. New Agenda. Cape Town: Mill. Turok, I. (2010). Towards a developmental state? Provincial economic policy in South Africa. Development Southern Africa, 27(4): 497-515. Turok, I., & Parnell, S. (2009). Reshaping cities, rebuilding nations: the role of national urban policies. Urban Forum, 20(2).

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Van der Heijden, T. (2008). Key issues in Local Economic Development in South Africa and a potential role for SALGA. Unpublished Position Paper prepared for the South Africa Local Government Association. Xuza, P. (2007). Ten years and ten trends of local economic development practice in South Africa: a practitioners’ perspective. Urban Forum, 18 (2): 117-123.

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IN

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SOUTH AFRICA: A CASE

OF E THEKWINI

CITY COUNCIL

Purshottama Sivanarain Reddy “The challenge is to convince the policymakers to promote and encourage hybrid economies in which micro-businesses can co-exist alongside small, medium and large businesses in which the street vendors can co-exist alongside the kiosks, retail shops and large malls. Just as they encourage biodiversity, they should encourage economic diversity and also promote a level playing field in which all sizes of businesses and all categories of workers can compete on equal and fair terms”. Ela Bhatt: Founder SEWA (Chen 2011:5) ABSTRACT Local economic development (LED) is an economic activity facilitated in a municipal area with the prime objective of stimulating the local economy and creating jobs through utilising local resources. The contributions of key local role-players and stakeholders, notably the non-governmental organisations, municipalities, business, labour and local communities, are critical to the process. By harnessing local resources, skills and ideas, the quality of life can be enhanced economically (International Republican Institute and National Business Initiative, in Reddy and Wallis 2011:2). The contrast between those who are successfully integrated into the local economy and those marginalised is a major political challenge globally and has implications for equity and equality in the local government. Key characteristics of an inclusive municipality are the need to foster growth and ensure equity. Inclusiveness implies that local communities irrespective of their financial circumstances, race, ethnicity, religion or gender are able to engage fully in local governance politically, socially or economically. Inclusiveness apart from facilitating sustainable LED and growth also promotes socially just local governance.

269

PURSHOTTAMA SIVANARAIN REDDY The historical developmental backlogs1 constitute a major constraint to deepening local democracy. Consequently, municipalities have to restructure their local economies to increase competitiveness and simultaneously address inclusiveness, i.e. drawing in those who are unemployed, indigent, women, disabled, youth and the informal sector. The socio-economic challenges of unemployment, poverty and infrastructural backlogs tend to dominate governance in localities on a daily basis, and consequently the key roleplayers and stakeholders are expected to facilitate inclusive LED which has become a major policy issue. The current financial and economic challenges are impacting differently on municipalities; however, even where there has been progress, supporting and promoting a vibrant and inclusive local economy necessitates a dedicated policy. A ‘onesize-fits-all’ model cannot be used given the differences and variation in the vibrancy and economic vitality of municipalities. The move from ‘government’ to ‘governance’ has also necessitated local empowerment and capacitation to participate in the local economy as inclusive LED requires localised planning and linking up with communities and the globalised economy with whom they have to compete (EUKN 2012:9). This chapter interrogates inclusive LED in the broader context of inequality, developmental backlogs and developmental local government2 which has been constitutionalised. It will also respond to two key questions, i.e. what is the enabling policy and legislative framework for inclusive LED nationally, and what type of policies and programmes are likely to be successful locally in facilitating inclusive LED, combating exclusion and addressing inequality? It will also highlight how inclusive LED can be stimulated and nurtured at the local level using eThekwini Municipality as a case study.

13.1

INTRODUCTION

There has been considerable progress achieved internationally to date in ensuring wider support for socio-economic development and democratic values and strengthening collaborative partnerships between social institutions, civil society and governments. However, inequalities and exclusion persist globally, both within and between countries. In addition, a significant number of countries are experiencing social conditions that can

1 2

Signifies backlogs in basic services, notably housing, water, sanitation, electricity and infrastructure, as a result of the apartheid policy. Defined as working with communities to create sustainable human settlements to meet their socioeconomic needs in a holistic way. Certain developmental outcomes have been prioritised, i.e. basic infrastructural services, creation of integrated cities and livable environments, encouragement of LED initiatives and local empowerment (DPLG in Reddy and Naidu 2012:93).

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be viewed as negative such as, inter alia, increasing disparities and marginalisation of some communities and groups. It is imperative that governments take the required action both in terms of available tools and strategies in addressing the challenges of disparities and inequalities in a proactive, holistic, constructive and sustainable way (United Nations 2010:111). The World Summit on Social Development held in Copenhagen in 1995 highlighted the fact that a key goal of social development is social integration and the global vision is creating a ‘society for all’. It was acknowledged that the key factors impacting negatively on social development are unemployment and poverty. Consequently, employment creation and poverty eradication is critical to the goal of social integration. Conversely, if social integration failed, the resultant effect would be polarisation and social fragmentation; increasing disparities and inequalities and pressure on individuals, families, local communities and public institutions. The rapid pace of social change has also resulted in economic transformation, migration and major dislocations of populations, especially in areas where there are armed conflicts (United Nations 2010:111). The adoption by the Summit of the Copenhagen Declaration on Social Development has meant that substantial progress has been made in furthering social development goals, through among others the UN Millennium Declaration (2000) which prioritised social inclusion. Poverty eradication, as highlighted as one of the MDG goals, is seen as a key impetus for stimulating and advancing development. A new target under Goal 1 was added following the 2005 World Summit where the focus was on ensuring full, productive and decent employment for all. In addition, social inclusion and integration have also been prioritised with linkages with major local and regional initiatives (United Nations 2010:111). eThekwini City Council has prioritised inclusivity more specifically in economic development, and it is currently high on the municipal agenda. The notion of inclusive local economic development in the broader South African historical context of inequality, development backlogs and developmental local government constitutes the basis of this chapter. It will also respond to two key research questions, notably: what is the enabling legislative and policy framework for inclusive local economic development in South Africa and what type of policies and projects, programmes and interventions at the local level are likely to be successful in facilitating inclusive LED, combating exclusion, addressing historical inequality, facilitating job creation and alleviating poverty? The chapter will also focus on three key sectors that are viewed as being essential to fostering inclusive local economic development, namely, youth development, gender-based local economic development and the informal economy. It will review and evaluate policies and strategies to ensure inclusive local economic development using the eThekwini City Council which is one of eight metropolitan municipalities nationally, located in the Province of KwaZulu Natal as a local case study.

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DEFINING

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It is imperative that certain key concepts, notably inclusivity and local economic development, be defined in a public administration and local government context. 13.2.1

Inclusivity

Creating a just society where there are firm commitments to the principles of equality and equity and, more importantly, upholding human rights are regarded as fundamental and are construed as a moral obligation globally. There are also other valid reasons for promoting inclusion and social integration, particularly in a governance context. Deep disparities have come about between and within countries due to an unequal distribution of wealth and differences in people’s background. The resultant effect is that it has reduced social mobility and, in particular, impacted negatively on growth, productivity and society’s well-being generally. There is a global view that promoting inclusion and social integration will contribute towards creating a society that is more stable, safer and just which in turn are key prerequisites for economic growth and sustainable development over the long term (United Nations 2010:111). The ‘inclusive society’ is viewed as one which is a ‘society for all’ in which each and every individual has certain distinct rights and responsibilities and furthermore has an active role to play (UN 1995: chapter 1). Creating an inclusive society is a universal goal and has considerable appeal internationally where one moves beyond issues of class, race, gender, geography and generation to ensure the equality of opportunity. Social interaction in an inclusive society is governed by a set of social institutions and norms which has already been agreed upon. The capacity of the entire citizenry in determining how institutions function is regarded as a basic characteristic of a society viewed as being inclusive. Furthermore, when broader governance challenges such as climate change impacts on society, each and every person is afforded an opportunity of putting forward their views and more particularly is allocated defined roles and responsibilities relative to the issue at hand (UN 1995:3). The various stipulations and principles in the South African Constitution also bear ample testimony to the notion of an ‘inclusive society’. The issue of social inclusion also has much wider political implications. The exclusion from economic and political participation could result in an armed rebellion, social unrest and even rioting. It is a given that there are groups, be it minorities and ethnic communities in a significant number of countries internationally, that in some cases are poverty stricken and face social exclusion. The latter is prevalent in certain states, provinces and

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regions that could be lagging behind economically for some reason or the other. These are barriers to social mobility in any country and, consequently, the attainment of full gender equality remains to be achieved in the vast majority of countries, both developing and developed (UN 1995:3). A city or town deemed inclusive denotes a locality where the local populace, irrespective of ethnicity, race, religion and gender or financial capacity, can participate fully in the political, social and economic life in the municipal area. The inclusive city or town also seeks to promote economic growth in the much broader context of equity. In this context, the issue of participatory planning and more specifically decision-making are generally accepted as being key elements to an inclusive city or town. The concept of inclusiveness not only denotes governance which is socially just, but it is also critical to the process of ensuring growth and in the final analysis sustainable development. Inclusive local governance also plays a pivotal role in reducing social tension and inequality and incorporates the concerns, both physical and social, of the marginalised and indigent communities. In addition, local ownership ensures more participation in development processes and programmes at the local level. The issues highlighted emphasise the fact that “social inclusion refers to the extent of outreach to the local communities, more specifically those viewed as being the marginalised or weaker groups” (Mikhelsen in Reddy, 2014:4). Mikhelsen (Reddy, 2014:4) elaborates on this point by adding that outreach implies concern over equity relative to the distribution of benefits, right to access benefits and sustainability of the project benefits to the broader communities in the locality (2008:44). It is quite apparent that eThekwini City Council is pursuing the notion of inclusivity as detailed above and in line with constitutional imperatives, notably sections 152 and 153. 13.2.2

Local Economic Development

“Economic development is an outcome which implies a positive, sustained and comprehensive change in the quality of people’s lives and a measurable improvement in their economic well- being” (UNCDF, 2010). It adds that “LED implies the application of these principles in a defined territory (region, province, city district or town”. The concept ‘local’ has certain distinct connotations that are the ‘how’ and ‘where’ of development and this, in turn, brings into focus the local actors and resources that have been harnessed for the process, which for all intent and purposes are sourced locally. In this context, the Global Forum on Economic Development (UNCDF, 2010) points out that the effective utilisation of the natural and human resources, capital and the continuous development as well as the strategic deployment of its comparative advantages constitutes the basis of the LED process.

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PURSHOTTAMA SIVANARAIN REDDY Reddy and Wallis (2011:5) quoting the World Bank point out that the purpose of LED “is to build up the economic capacity of a local area to improve its economic future and the quality of life for all”. It is described as a process “by which public, business and nongovernmental sector partners work collectively to create better conditions for economic growth and employment generation. The aim is to improve the quality of life for all”. One of the positives of LED is that there is an objective which has been defined and an outcome which will certainly have a positive impact on the local economy. Nuwagaba (2008:6) in developing this point further is of the view that LED is a locally driven strategic process involving certain key role-players and stakeholders that utilise local resources to stimulate the local economy and facilitate new job creation. It is the sum total of all the contributions of local communities, be it individuals, non-governmental organisations, local authority, labour or business, in improving their economic status by combining their ideas, skills and resources (International Republican Institute and National Business Initiative,1998:2). It is generally accepted that local authorities should be playing a facilitative role in developing their localities or areas as the emphasis is local rather than provincial or national development. Patterson (2008:3) points out that coresponsibility and collaboration are divided between the public and private sectors for the development of the municipal area, and it is an ongoing process. The vision for LED in South Africa is that “local economies are inclusive, dynamic and world class brands in which to invest, work, learn, visit, and be most successful in creating wealth that is shared and benefitting the majority of the local populace” (Republic of South Arica 2014:24). Several characteristics have been highlighted by Chen (2011:4) as guiding principles for inclusive cities in a LED context, namely: Urban economies are hybrid as it is both formal and informal and both modern and traditional. There has to be recognition of the contribution of the informal economy to both job creation and economic growth. Urban planning and management has to take cognisance of the informal workers and they should have a voice in both sales and policymaking bodies. The informal economy needs to be fully documented in official statistics, in terms of its size, composition and continuation, and should be valued by the policymakers. *

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An appropriate policy to promote inclusivity is indispensable to ensuring the successful development of the area and more importantly ensuring that the local government discharges its developmental mandate.

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LOCAL ECONOMIC DEVELOPMENT POLICY FRAMEWORK

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SOUTH AFRICA

There have been several policies developed over the past two decades that has a direct influence on LED. However, recently there are three policies that have a direct bearing on LED in terms of its broader socio-economic environment. Those are explained in the paragraphs that follow.

13.3.1

National Development Plan (NDP)

The NDP (2011) has prioritised job creation and inclusiveness in a dynamic economy, where there is equitably sharing of the benefits of growth and in the process poverty alleviation. It is anticipated that 11 million jobs will be created by 2030 through sustainable employment and inclusive economic growth, strengthening public sector leadership capacity for facilitating economic development and mobilising key sectors in creating a national vision. Emphasis will be placed on promoting employment in industries that are labour – absorbing and increasing competitiveness and exports (Republic of South Africa, 2011:24). The LED contributions to the 2030 vision are sector diversification, small business development (small, medium and micro enterprises), inclusive rural economies (land reform, agriculture and job creation), spatial economic transformation (through development frameworks) and ensuring competence and uniformity of LED initiatives (Republic of South Africa, 2014:21). It is imperative that there should be a positive linkage between national economic policies and local economic development, as the impact of the desired implementation should be felt nationally and in localities.

13.3.2

National Growth Path (NGP)

Creating decent work opportunities, the reduction of inequality and poverty through restructuring the economy and focusing on performance improvement relative to labour absorption, composition and rate of growth are the overarching goals of the NGP. ‘Drivers’ and a microeconomic and macroeconomic policy package are key to the process. Success as defined by the key economic indicators are jobs creation, growth, environmental outcomes and equity (www.moneyweb.co.za/mw/action/media/downloadfile/ media_field=9594). It is envisaged that employment will be enhanced by creating five million jobs, through job drivers, notably investment in infrastructure, construction, maintenance and production of outputs; agriculture and mining value chains and sectoral

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PURSHOTTAMA SIVANARAIN REDDY labour absorption; and services and manufacturing, opportunities for investment in the green and knowledge economies, levering social capital and promoting regional integration and rural development (www.moneyweb.co.za/mw/action/media/downloadfile/ media _field=9594). However, all of these has to translate to practice in the broader context of job creation and reduction of unemployment. The LED contribution to NGP objectives is through, inter alia, job creation, reducing poverty and inequality (central to LED); diversification of local economies leading to broader economic development; public infrastructure investment, support for small business and skills development; and rural and sustainable development (Republic of South Africa 2014:23). Consequently, it is imperative that local communities need to be educated in terms of developing the broader linkage between the objectives of LED and the NGP. Consequently, basic formal and civic education has to be high on the political agenda in terms of addressing this challenge.

13.3.3

Industrial Policy Action Plan (IPAP)

The NDP has set the vision for IPAP and it is located within the framework of the NGP. The overarching objective of IPAP within this broad policy context is to arrest industrial decline and at the same time, promote the diversification and growth of the manufacturing sector in the country. The government is of the view that the manufacturing sector can directly and indirectly generate a large number of jobs in a wide range of activities associated with the primary and service sectors (Republic of South Africa 2012:6).The value of LED within IPAP is highlighted through strengthening government/business employment and the contributions of the Department of Finance institutions/parastatal sector in economic development and skills development. Other priorities are economic linkages to neighbouring countries; strengthening intergovernmental and cluster agenda (sectoral and industrial) of LED; funding policy implementation even in the private sector; LED anchored by priority sectors, industry clusters and value chains; exploiting new opportunities; and investing in long-term capacity (Republic of South Africa 2014:23).

13.3.4

Guiding Principles for LED

The guiding principles as detailed in the Policy Framework and Guidelines Document (2014:23) are an accelerated, shared and inclusive economy. Government has acknowledged that economic growth has been below the country’s employment expectations and

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attention has shifted to addressing unequal wealth distribution, broadly sharing the ownership of capital, youth unemployment and ‘discontinuing the two economies divide’. Four pillars will guide the implementation of the framework, namely, building a diverse economic base, developing learning and skilful local economies and developing inclusive economies and economic governance. The vision of developing inclusive economies is elaborated on below.

13.3.5

Developing Inclusive Economies

There are two contrasting economic scenarios in the country, i.e. growth and development and extreme poverty, economic decay and underdevelopment. Consequently, it is imperative to ensure that both sectors benefit from the overall economic performance and development of the country. Six possible strategies have been put forward to this end to ensure economic inclusion, namely (Republic of South Africa 2014:23): Informal Economy Support Programme: high unemployment levels have prioritised all work (formal or informal) and the latter has to become a key thrust of national development. Inner City Economic Revitalisation: frees up resources for addressing socio-economic disadvantages, enhances returns on infrastructure and ensures economic growth through utilising the labour force, land and infrastructure optimally. Township Economic Development Programme: townships are an underutilised economic resource and it needs to move from the second to the first economy. Inclusive and Integrated Rural Economy: successful land reform and productive agriculture can enhance basic services, expansive agriculture, productive land reform and agro-industries. Youth Economic Empowerment: youth unemployment can be eased additionally through business opportunities. Broad Based Black Economic Empowerment Support: through empowerment and public procurement opportunities, productive partnerships and majority shareholder employed firms. *

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13.4

KEY SECTORS CONTEXT

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There are several key sectors that are viewed as being an integral part of inclusivity relative to the local economy, and they will be discussed below.

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Youth Development

Youth unemployment has been prioritised internationally but is more marked in South Africa given the large youth population. In many circles, the youth are viewed as being reckless, unskilled and careless but at the same time can be energetic, resourceful, fearless and pioneering. There is a strong view that the lack of a youth voice in governance issues has been a matter of concern. To ensure meaningful youth participation in matters that concern them, there has to be the required capacity development (eThekwini City Council, 2012a). The youth employment crisis has to be addressed by all spheres of government, and the key sectors of society as the issue could become explosive at some time or the other. Although youth employment has been acknowledged as a critical issue at the local level, more can be done strategically effectively and innovatively to address the issue. Local governments in Africa are increasingly being used as a vehicle to address socio-economic issues like poverty, unemployment and inequality. The policy thrust for increased democratic decentralisation on the continent has demonstrated that there are indications of good emerging lessons of local government generally and local authorities rising to the African youth employment challenge within the local development and LED mandates (UNDP 2012:5). Creating sustainable work opportunities for the youth on the continent requires the joint efforts of central, provincial/state and local governments. South African policies define the youth as the grouping that are between the ages of 14 and 35, and this broad range often tends to hide the heterogeneity of the group. The high levels of unemployed youth (15-24 years) in South Africa are a major cause for concern. While the national average for unemployment is estimated at 25%, youth employment doubles this figure at 52%. When the broader definition of youth is considered (15-34 years), 71% of those that are unemployed are the youth. The key factors that have contributed to high youth unemployment are the lack of or limited work experience and low education levels (eThekwini City Council 2013:10). The latter should be prioritised as it is also one of the Millennium Development Goals. LED provides an opportunity for the community, local government, civil society and private sector to work together in enhancing the socio-economic development of the area. Developing the required synergies between the four local stakeholders is key and imperative for ensuring the success of LED. More specifically, the local economy is stimulated by increasing jobs among the youth and ultimately the quality of life among the local communities. LED is one of the key conduits which can be used to address the youth

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unemployment crisis. There is an observable and manageable interface between the key stakeholders and the required processes necessary in terms of responding to the youth employment crisis (Forrest and Jali, 2012:15). Given the fact that local governments have their role, powers and competencies clearly spelt out in detailed constitutional, legal and regulatory frameworks, LED can be viewed as a key policy instrument to address the issue of youth employment. Consequently, LED is a significant instrument to reduce youth unemployment and should be viewed as a priority in local government (eThekwini City Council, 2012a).

13.4.2

Gender Equality

Gender equality has over the years made a substantial contribution to social stability and development in societies globally. Recently, women’s participation in local decisionmaking has been prioritised by governmental structures and it has been viewed as a positive development in the public sector. The barriers in this regard are that female representation in local councils is perceived as weak, insensitive gender planning concomitant with domination by males, budgeting and allocation of resources, cultural factors impeding women from participating, ineffective and weak institutions supporting and representing the women and high levels of illiteracy, notably in the rural areas (UNCDF, 2010:22). Consequently, gender issues are not effectively and adequately integrated in local development activities and plans. Robust and response gender programmes have proved that the local government can initiate change in terms of including women in local decision-making processes. Programmes like this are operational on two strategic levels, for example, capacity at the local institutional level to provide a supportive environment is strengthened where women priorities are linked to gender responsive participation, planning and budgeting. Secondly women are capacitated to allow them greater access and to positively engage and influence policy formulation at the local level relative to investment approaches, processes and outcomes so that it reflects their concerns and priorities. Local governments are key to local-level action to ensure gender equality irrespective of whether they are the implementers or targets of gender programmes at the local level (UNCDF, 2010:22).

13.4.3

Informal Economy

The concept ‘informal sector’ was initially coined in Accra, Ghana, in 1973 by Hart, and it was initially used to refer to those who could not find wage employment, engaged in lowincome activities and generally regarded as being the urban poor. It was then popularised

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PURSHOTTAMA SIVANARAIN REDDY and thereafter adopted by the International Labour Organisation (ILO) (Obeng - Odoom, 2011:360; Skinner, 2008:2). The informal sector has been characterised by, inter alia, a low level of productivity and organisation, falls outside the state licensing and regulation framework and consists of legally and economically sound activities generally being conducted on a small scale (David et al. 2012:14). David et al. (2012:15) add that these characteristics have been highlighted in the ILO definition of the informal economy put forward in 1993, namely, that “it is broadly characterised as consisting of units engaged in the production of goods and services with the primary objective of generating employment and incomes to the persons concerned. These units typically operate at a low level of organization, with little or no division between labour capital as actors of production and on a small scale. Labour relations, where they exist, are based mostly on casual employment, kinship or personal or social relations rather than contractual arrangements with formal guarantees”. This sector unlike the formal sector does not necessarily comply with procedures, standard and legal requirements. There is job creation as a result of the distribution channel. In developing countries, fast-food stands and spaza shops tend to generate considerable sales on the street. Notable trading activities are personal services (hairdressing and bookkeeping), manufacturing (carpentry and sewing) and building, arts and crafts, pottery, bricklaying and beadwork and entertainment (musicians) and transport (taxi services) (www.mindset.co.za/resources/0000022163/0000029281/ 0000029221/default.htm). The benefits of the informal sector are inter alia that it reduces poverty and unemployment and local entrepreneurs are able to support themselves; it is not difficult to start up as there no overheads and skills developed can be used in the formal sector later and there is a contribution to the national economy. The negatives of this sector are that state revenue is lost as they pay no tax; limited and lack of control results in unsafe and illegal activities and formal business areas tend to become untidy as a result of the cluttering (www.mindset.co.za/resources/0000022163/0000029281/0000029221/default.htm). Bylaw formulation and implementation has been the norm in terms of how African local governments have responded to street trading and more generally the informal economy. This narrow parochial view of the ‘informal economy’ has perpetuated the view by municipal functionaries and organised business that this sector is a ‘problem’ that needs to be addressed. This led to marginalisation of the sector and little or no reference to it in official planning and economic strategy documents (David et al., 2012:20). Recently, both national and local governments have acknowledged that the informal economy is a key component of economic development as it has provided an important

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vehicle for significant job opportunities and income generation more specifically in developing countries. Consequently, regulatory strategies and policy frameworks for the informal economy have to be formalised and implemented in such a manner that it does not hamper the potential of this important sector for further growth. The informal economy in South Africa constitutes a key focus area in terms of responding to pressing socio-economic challenges currently being faced in the country, namely, unemployment, poverty and the need to support the creation of sustainable livelihoods. There are several major challenges currently faced by municipalities in terms of policy development and more importantly implementing it in terms of creating an enabling environment for the informal sector. In this context, it would appear that the majority of municipalities nationally have not been successful to date in terms of developing policies in their jurisdiction that could be construed as being LED friendly in terms of an inclusive informal economy, particularly in relation to bylaws (UNDP/CLGF/UNCDF 2012:13).

13.5

LOCAL CASE STUDY: ETHEKWINI CITY COUNCIL

eThekwini City Council, located in the Province of KwaZulu Natal, is located in the East Coast of South Africa. The metropolitan municipality is approximately 2297 kilometres in terms of its geographical size and the current population is in excess of 3.5 million people. The local populace is diverse and is facing several social, economic, environmental and governance challenges, and consequently, the municipality is under considerable pressure to address these socio-economic issues through concerted policy action and initiatives. The local populace consists of people from different ethnic backgrounds, notably Whites (8%); Coloureds (9%); Africans (71%) and Indians (19%). The majority of the population comprises individuals within the 15-43 age group (eThekwini Municipality, 2011a:16). The eThekwini Municipal area extends beyond the central business district of Durban and its surrounding suburbs, stretching from Umkomaas in the south, Cato Ridge in the west, the beaches in the East and Uthongathi in the north. A significant part of the municipal area (at least two thirds) is rural/semirural with resultant economic realities (eThekwini City Council, 2011b). Several developmental challenges have been identified by the municipality, namely, low levels of literacy and skills development, high levels of unemployment and low economic growth, limited access to basic community and household services and ensuring an adequate supply of water. Other issues that need to be addressed include the high incidence of communicable diseases and HIV/AIDS, ensuring food security, loss of

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PURSHOTTAMA SIVANARAIN REDDY natural capital, unsustainable development practices, high crime and risk levels, climate change and infrastructural degradation (eThekwini City Council 2011:9). In addition, among the eight metropolitan councils, the highest number of people living on less than $2 a day and in poverty are to be found in eThekwini Municipality.

13.5.1

Economic Development Principles and Strategic Intent

The municipality’s Delivery Plan consists of eight separate but related plans, namely, good and responsive local government; financial accountability and sustainability; an environment which is socially equitable; a platform for employment, skills development and growth; arts, heritage and cultural diversity; sustaining the spatial; built and natural environment; developing a prosperous and diverse economy; and employment creation and a living environment which focuses on quality (eThekwini City Council 2013:13-14). Apart from the outcomes highlighted in the eThekwini Long-Term Development Framework, certain LED outcomes aligned to the NDP and national priorities have been developed, namely, becoming a global metropolis over the next 20 years, high economic growth over the next decade, enhancing leadership to steer a business unusual path, fostering partnerships for economic development which is sustainable, addressing spatial inequality and reduced income and reducing unemployment and poverty (eThekwini City Council 2013:37-38). Strong leadership has been identified as being essential to facilitate investment in the municipal area and more specifically in infrastructure. In addition, several other key areas will support this strategy, notably, sector support and enterprise development, increasing the labour market, support for social economy initiatives in previously disadvantaged and rural areas, prioritisation of township development, developing a competitive tourism industry and promoting investment in corridors and priority nodes. The latter programme is crosscutting, driven by national and provincial government and ensures maximum benefit from infrastructure projects (eThekwini City Council 2013:37-38). The ‘Imagine Durban’ initiative focuses on strategic long-term planning involving diverse participants. The vision was becoming the ‘most caring and livable city’ by 2020 and the basis was a tradition of community participation, service delivery, political accountability and learning and sharing of information (UNDP/CLGF/UNCDF 2012:53). Service delivery and growth and development facilitation have been consolidated into a single vision by best practices. Key lessons learnt from this initiative are inclusion of communities in imagining and owning their future built on a reinforced identity and ownership. Additional lessons include establishing specific units to drive community participation,

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creative facilitation of a city strategy-making process and innovation and learning and sharing of best practices locally and internationally being institutionalised. The creation of a basic institutional framework promotes the view of a learning city that engages communities beyond service delivery to cocreation of a sustainable future. Platforms for engaged citizenship like these which constitutes the basis for local governance and development are a rarity in an African context given that all resources have been directed towards the provision of basis services (UNDP/CLGF/UNCDF, 2012:53).

13.5.2

Towards a Multifaceted and Innovative Informal Economy

eThekwini Municipality had an employment rate of 20.41%, and, furthermore, 31.3% of the people were living in poverty in 2011. The informal economy is dominated by women who are engaged in survivalist trade that is generally viewed as being low income. Geographically, they are located in the town and city centres. Business activities in the informal sector are dominated by 48.5% trade and 11.9% services (Nzama, 2012:69). In the South African context, municipalities have adopted a multifaceted and innovative approach to the informal economy. In this respect, an amount of R150 million has been invested in the informal economy relative to infrastructure and services, notably, business support centres, electricity, water, ablution facilities, refuse collection, kiosks, markets, flea markets, storages, container parks and security services. The approach adopted by the municipality can be considered innovative for several reasons: Institutional arrangements: a department was established in the 1990s to manage street trading and provide the required infrastructure support and resources. Street traders were incorporated in the primary transport nodes in an urban renewal project through city plans. Approximately 6000-8000 traders have been accommodated and ongoing management, and consultation with relevant stakeholders was key to its design and delivery. Holistic approach: at the end of the 1990s, a metropolitan-wide Informal Trade Policy was adopted, reflecting a major shift in thinking, namely, that the informal sector is essential to economic development as opposed to being a welfare or poverty alleviation project. The interdependence between the informal and formal sectors was acknowledged. Enhancing understanding and communication: the eThekwini Municipality Informal Economy Forum (EMIEF) was created in 2005. The formation of the South African National Economy Forum (SANIEF) and hosting of its seminar in 2006 were key in facilitating national dialogue. *

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Developing capacity in the informal economy subsidised by the municipality. Additionally, a capacity-building programme for both worker organisations and local government officials was also embarked on with the initial focus on health education, developing basic business skills and assistance in accessing legal advice and financial services (Nzama, 2012:71 and www.wiego.org/informal - economy/durbanethekwinisouth africa-informal economy-p).

Managing the informal economy and, more specifically, street trading is a challenging task involving, inter alia, issuing of permits following demarcation of trading areas; ensuring that traders are organised into area committees which, in turn, has to feed into a city-wide forum; and rental collection which is ongoing. Much of this work involves the required enforcement of bylaws and regulations, and this is done in collaboration with the Durban Metropolitan Police. It involves delicate negotiations and in some cases dispute resolution where the interests of the formal economy and traders and local residents are often in conflict. In support of emerging traders and entrepreneurs, several local storage facilities and incubator factories have been developed where the workshop and storage space is available at a minimal rental to small traders. A selection process is currently in place whereby local enterprises can graduate to the entrepreneurial support centre where additional facilities such as training support are available if they show potential (eThekwini City Council. 2011a:89). The Business Development Support Programme seeks to transfer basic skills and promote the concept of business management to entrepreneurs that show potential. In this context, the main targets are SMMEs and their basic needs identified so that support deemed appropriate is provided in areas such as, inter alia, product certification, ensuring that a reliable product stream is in place through standardisation and changes in productivity, thereby adhering to the stringent requirements laid down by the export market. In addition, considerable emphasis has been placed on the Youth Entrepreneurship Programme which has strong linkages with the sector education training authorities which quite often provide numerous referrals from their training programmes. In the case of women, the main empowerment vehicle will be information and knowledge sharing through, inter alia, workshops, seminars and conferences so that they are aware of what their rights are and how their role in business can be enhanced (eThekwini City Council. 2011a:89). The NDP (2011) envisage that the majority of new jobs over the next two decades will be created by ‘small and expanding business forms’. Small, medium and micro enterprises (SMMEs) have constituted the basis for economic growth and job creation globally in both developing and developed countries. The percentage of owner-managers is low

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internationally and new start-up operations tend to be unsuccessful in the first two years. The constraints identified by SMMEs include, inter alia, an increasing regulatory framework and government bureaucracy, access to markets and finance, lack of adequate support and appropriate skills and rising input costs (municipal service charges) and the high cost of doing business. The regulatory barriers identified were Broad-Based Black Economic Empowerment (BBBEE) compliance (deemed onerous with little benefits) labour laws which are inflexible and inefficiencies by the South African Revenue Services (www.eoy.co.za/posts/too many-obstacles-stillhinderinhg-sas-entrepreneurial-growth823/: accessed on 2 June 2015). In this context, the government is considering reforms to the SMME regulations, notably procurement reform, simplifying the registration of municipal databases and reduced time frames for payment to SMMEs (Ethekwini City Council 2013:21). Other challenges identified are the level of response to risk and innovation, fewer businesses being started due to low levels of entrepreneurship and the failure rate of new businesses. The council sets goals to increase the level of employment and ensure that job creation targets are addressed. Attention should be focused on the challenges experienced by SMMEs and promoting an entrepreneurial culture. Support for businesses that have the potential to succeed should be provided, where the entrepreneur has business acumen and an understanding of the nature of the business. The latter is essential in developing a vibrant SMME sector (Ethekwini City Council 2013:22).The NDP has highlighted several ways in which SMMEs and job creation can be supported, namely, reviewing private and public procurement to create demand, regulatory simplification in business registration and easing access to finance, reforming the skills training sector and tax and labour (Republic of South Africa 2011).

13.5.3

Youth Economic Development

Research has shown that the youth (generally categorised as being between 15 and 29 years) in the eThekwini Metropolitan Area comprises 31% of the populace. The needs of the youth sector were identified as access to sports programmes and recreational facilities and skills development. More specifically, job opportunities, educational funding, gender issues, sociopolitical stability and effective participation in small business development are issues that the youth are interested in. Additional issues listed as relevant were HIV/ AIDS awareness and education on drugs and alcohol abuse (eThekwini City Council 2011a:36). The eThekwini Youth Development Policy was adopted on 10 July 2007. The definition of ‘youth’ is 15-35 years of age as defined by the National Youth Commission Act. The

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PURSHOTTAMA SIVANARAIN REDDY youth sector in Durban cannot be considered as a homogenous group as they come from different cultural and socio-economic backgrounds. The policy has a two-pronged approach and has as its basis promoting youth interests and supporting them behind the eThekwini Municipality vision, “by 2020, eThekwini Municipality will be Africa’s caring and liveable City”. The municipality has acknowledged that the youth constitute a key stakeholder in the Durban Metropolitan Area. There is a view that that the youth have considerable influence and a major stake in the metropolitan area as well as the future competitiveness of the City, and consequently investment in them over the long term should be prioritised (eThekwini City Council 2007:1). Empowerment post-1994 places considerable emphasis on prioritising and mainstreaming youth-related activities in the broader national context of youth development. The overarching goal is reinforcing the time-honoured and noble view of dignity in labour, instilling a spirit of patriotism and national consciousness in the young citizenry making them responsible citizens in an all-inclusive municipality (eThekwini City Council, 2007:1). One of the key strategic thrusts of the policy is economic participation and empowerment. More specifically: Ensuring an allocation of 30% of the municipal business opportunities to the youth sector through a database and compliance. Promoting sharing of successes, expertise and networking among the youth and young employees in business. Coordinating youth training programmes through the sector education and training authorities and learnerships. Promoting market-driven, practical and accredited training for the unemployed and out of school youth focusing on business and entrepreneurial skills. Facilitating youth participation in job opportunities/internships through human resources plans, strategies and policies. Targets and quotas linked to Employment Equity Plans will be prioritised. Facilitating the mentoring and coaching of youth for leadership and senior roles within the municipality (eThekwini City Council, 2007:1). *

*

*

*

*

*

The Youth Policy in Durban has not been fully implemented; however, there are several interventions that are currently ongoing, notably the stipulated involvement of youth in the Extended Public Works Programme (EPWP), innovative projects like the Green Corridor Programme, Career Expos, Youth Symposium, ‘Back to School Campaign’, the Umgubho Festival and the Eco-Schools Programme by Imagine Durban (letter dated

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26 February 2014 from C Forest, attached to the Economic Development Unit of eThekwini Municipality). A number of projects and programmes focusing on the film, the green economy and sport were initiated involving youth employment. The creation of a multi-stakeholder forum on the needs of the unemployed youth was also a significant development. There were discussions around enhancing employability through a skills development plan targeting the needs of unemployed youth. In addition, a broad youth programme is in place focusing on entrepreneurial skills, organizational development and capacity building through youth seminars and symposiums. There is an established municipal Institute of Learning (MILE) also focusing on the youth (letter dated 28 March 2014 from X Mashiane, attached to Public Participation Unit of eThekwini Municipality). There is a need in the different localities as a whole for the government, civil society and business to evaluate existing policies and practices around the youth employment issue so that there is a renewed interest in this contentious issue. Key to the process is ensuring that it is mainstreamed and there is a linkage to the formal economy (eThekwini City Council 2012b:36). Unemployment and particularly youth employment has to become a priority at a local level. Youth employment is a complex issue that necessitates the involvement of multiple stakeholders and avenues in terms of responses. Youth development and, more specifically, youth employment need to be approached as an integrated issue embedded in multiple policies and practices within the municipal area. However, a cautionary note can be sounded at the same time, as youth issues could become a tickbox and compliance issue without any meaningful action. Concern has been expressed that there is an implementation gap between policy and practice which seems to be endemic in the public governance system in South Africa (eThekwini City Council 2012b:36). All opportunities have been utilised to ensure that the youth become part of the mainstream economy, namely, NGP, EPWP and Zibambele are utilised effectively to anchor programmes for youth economic participation (eThekwini City Council 2007:9). Forrest and Jali (2012:150) have identified employment interventions from the supply as well as the demand side to enhance youth employment and development. Some of the measures in the case of the former are skills and experience development, assistance in job searching while the latter includes proactive policies and eliminating obstacles to selfemployment and public employment schemes. A key consideration in enhancing youth employment at the local level is a change in mindset, which has resulted in some of the most successful interventions. In this context, Forrest and Jali (2012:18) point out that an entrepreneurial spirit and thinking approach

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PURSHOTTAMA SIVANARAIN REDDY have to be inculcated, in particular the characteristics of innovation, creativity, confidence, resourcefulness and resilience together with other soft skills. They add (2012:l8) that a change in the mindset of municipal functionaries is also necessary in changing the perception that the youth are generally restless and with no purpose in life.

13.5.4

Gender Economic Development

It is accepted that satisfaction with life generally is lower due to limited work experience, low income and increased responsibilities in the case of households where the sole supporters are women. Women at present constitute 52% of the populace in the Durban Metropolitan Area and, in this context, there has been a quest for personal safety, gender equity and equal opportunities to be prioritised. The development of skills, training programmes, education on women’s rights, access to social support and protection against abuse were highlighted as key issues in the 2011/2012 IDP of eThekwini Municipality. In addition, job opportunities, provision of child support funds and crèche facilities, targeted support for women’s groups and working women, HIV/AIDS health services and counselling for the abused were additional priorities identified (eThekwini City Council 2011a:36). A significant sector of the informal economy in eThekwini Municipality is street trading. Siqwani-Ndalo (2013:1) quoting Lund, who pointed out that there are more men than women in the age group 21–30 and more women than men in the age group 41–50 years involved in street trading. Consequently, it would appear that men generally enter and leave street trading earlier in their lives, while women enter street trading much later in their life and remain longer in the sector. Black women (54%) are the majority of street traders in eThekwini Municipality and they trade in a variety of goods including, inter alia, vegetables, fruits, sweets, clothing and cigarettes. Incidentally, the most popular items on sale, notably fruits and vegetables, are often produced by somebody else. It should be noted that 49.4% of the youth in the Durban Metropolitan Area are young women aged between 15 and 34 (letter dated 6 February 2015 from Ms T. Chipaya attached to the Economic Development and Investment Promotion Unit of eThekwini Municipality. Durban). In the case of young women, they are experiencing particular societal difficulties, notably unemployment, teenage pregnancies and being victims of violence and male abuse resulting in feelings of being under threat, vulnerability and

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powerlessness. In addition, the major cause of death among African females in eThekwini Municipality is HIV/AIDS (eThekwini City Council 2007:9). According to Jali (eThekwini City Council, 7 November 2014), women and youth are seen as vulnerable groups and strategies need to be inclusive in this regard. They do not have a strategy for women in LED in place; however, within the job-creation element of their mandate, emphasis has been placed on reporting on the number of jobs created through programmes such as the Extended Public Works Programme (EPWP), more specifically on women and youth. Jali (eThekwini City Council, 7 November 2014) added that the major part of the policy or strategies are developed after they have been through a few trial runs in projects and those learnings then guide the policy. The previous policies were seen by the sector as reactive instead of proactive. In this context, the Economic Development and Job Creation Strategy of the Council is visionary and proactive and is currently at the implementation economic planning stage of the process where they are securing buy-in from different stakeholders on not only agreements on projects but also implementation (Jali eThekwini City Council, 7 November 2014).

13.6

CONCLUSION

Constitutionally and through the Local Government: Municipal Systems Act 32 of 2000), local authorities in South Africa have a clearly defined mandate of promoting socioeconomic development at the local level. However, 20 years into local democracy, despite progress being made in terms of addressing developmental backlogs that were inherited from the previous dispensation, there are still major challenges currently being experienced relative to job creation, reducing youth unemployment, gender equality and poverty alleviation. In this regard, the enabling constitutional and legislative framework for local economic development (LED) has not translated to enhancing youth employment, promoting gender-based economic development and equity and a strong and vibrant informal economy working in harmony with the formal economy. These issues cannot be seen in isolation and are part of a broader set of longitudinal relationships involving skills development, acquiring the required education and experience and, in the final analysis, employability. In acknowledging these factors, Forest and Jali (2012:18) point out that these are critical considerations impacting on youth development and employment and at present there is difficulty in responding to these issues from a policy perspective. However, they add that if the right policy mix can be achieved, the resultant impact on youth employment and development will be positive.

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PURSHOTTAMA SIVANARAIN REDDY Local government working in close collaboration with the national and provincial governments can use the resources at its disposal, notably human, financial, political and technical more creatively in terms of developing an enabling environment for youth employment, gender development and strengthening the informal sector. In order for that to happen, the municipal functionaries need to be educated into preserving and enhancing the general welfare. In this context, forging dynamic local partnerships with the key stakeholders, that is, the local communities, the private and NGO sector should be high on the municipal agenda. The issues highlighted in this chapter, gender and youth development and the informal economy can be viewed as cross-cutting issues and could feature in several policies, projects and programmes aimed at enhancing local economic development in the city. However, there needs to be a coordinated policy and implementation approach to these issues followed by ongoing monitoring and evaluation. Critical to enhancing the role of youth, women and the informal sector in local economic development is the fostering of an entrepreneurial culture among the local communities and the passion to grow a business and develop economically as a nation. In addition, there has to be strong political and management will and decisive action by the national, provincial and local spheres of government to promote job creation and increase employment levels, promote SMME development and gender equality, thereby ensuring that the vision of a developmental state in South Africa is realised. The Economic Development and Job Creation Strategy of eThekwini City Council has noted that “unless there is a step change in economic leadership which facilitates a change in the way the Municipality seeks to address the challenges of unemployment, poverty and inequality, we will fail to reach the destination that we collectively desire” (eThekwini City Council 2013:78). REFERENCES Chen, M. A. (2011). Inclusive Cities and Urban Livelihoods. WIEGO NEWS/Network covering the period July 2010 – June 2011. Harvard Kennedy School of Government. United States. June. Constitution of the Republic of South Africa Act, 1996 (Act 108 of 1996). David, S., Ulrich, O., Zelezeck, S., and Majoe, N. (eds.) (2012). Managing Informality: Local Government Practices and Approaches towards the Informal Economy: Learning Examples from Five African Countries. SA LED/SALGA and LEDNA.

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Department of Co-operative Governance and Traditional Affairs. (2013). The 2013 – 2018 National Economic Framework for LED. Pretoria : Econologics. October. European Urban Knowledge Network (2012). Inclusive Local Economic Development. Ministry of Housing, Urban and Rural Affairs. Copenhagen. March. eThekwini City Council (2007). eThekwini Youth Development Policy. Adopted on 10 July 2007. Durban. eThekwini City Council (2011a). eThekwini Municipality: 2011/2012 IDP Five Year Plan: 2011/2016. Adopted June 2011. Durban. eThekwini City Council (2011b). eThekwini Quality Household Survey: A Survey of Municipal Services and Existing Conditions (2010 – 2011). Durban. eThekwini City Council (2012a). CIFA: Durban Youth Employment and LED Workshop Report. 25/26/27 July. Durban. eThekwini City Council (2012b). Your Guide to eThekweni’s Economy – Tackling Youth Employment. Economic Development and Growth in eThekweni. Issue 3. Durban. eThekwini City Council (2013). Economic Development and Job Creation Strategy. Durban: Economic Development and Job Creation Unit. Forrest, C. and Jali, P. (2012). LED is a Young Person’s Game: Youth Employment and LED. Skills @ Work: Theory and Practice. Vol.5. pp. 13-22. Letter dated 26 February 2014 from C Forest, Research Officer attached to the Economic Development and Investment Promotion Unit of eThekwini Municipality. Durban. Letter dated 28 March 2014 from X Mashiane, Senior Manager attached to the Public Participation Unit of eThekwini Municipality. Durban. Letter dated 7 November 2014 from Ms P Jali, Manager attached to the Economic Development and Investment Promotion Unit of eThekwini Municipality. Durban. Letter dated 6 February 2015 from Ms T Chipaya attached to the Economic Development and Investment Promotion Unit of eThekwini Municipality. Durban.

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PURSHOTTAMA SIVANARAIN REDDY Nugawaba A. (2008). Country Assessment Report on State of LED in Uganda. Uganda: REEV Consulting International (accessed on 26 October 2010). Nzama, T. (2012). Taking an Innovative and Multifaceted Approach towards the Informal Economy in David, S., Ulrich, O., Zelezeck, S., and Majoe, N. (eds.). Managing Informality: Local Government Practices and Approaches towards the Informal Economy: Learning Experiences from Five African Countries (pp. 69-76). SA LED/SALGA and LEDNA. Obeng – Odoom, F. (2011). The Informal Sector in Ghana under Siege. Journal of Development Societies. Vol.27 (3 and 4): 355-392. Presidency. (2015). State of the Nation Address by J.Z. Zuma on 12 February to the Joint Sitting of the Houses of Parliament. Cape Town: Presidency. Reddy, P.S. and Wallis, M. (2011). Energising Local Economies: Partnerships for Prosperous Communities, Background Discussion Paper for the 2011 Commonwealth Local Government Conference, 15 – 18 March. CLGF: Cardiff, United Kingdom. Reddy, P.S. and Naidu, R. (2012). Development and Local Governance: The South African Experience in Baviskar, B.S. and Roy, A.N (eds.). Local Governance : A Global Perspective. (pp. 90 – 105). New Delhi: Government of India. Reddy, P.S. (2014). Local Government Capacity Development, LED and Inclusiveness: A Critique of the South African Experience. Journal of African and Asian Local Government Studies. Republic of South Africa. (2011). The National Development Plan 2030: Our Future. Make it Work: Executive Summary. Pretoria: National Planning Commission. The Presidency. Government Printer. Republic of South Africa. (2013). Industrial Policy Action Plan: Economic Sectors and Employment Cluster. IPAP 2013/14 – 2015/2016. Pretoria: Department of Trade and Industry. Siqwani – Ndulo, N. (2013). The Informal Sector in South Africa: Women Street Traders in Durban. Part One.

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Skinner, C. (2008). Street Trading in Africa. School of Development Studies. Working Paper. No. 51. Durban: University of Kwazulu Natal. UNCDF (2010). Pursuing the MDGs through Local Government. Global Forum on LED. New York January. United Nations. (1995). Report of the World Summit for Social Development held on 6 – 12 March 1995 in Copenhagen. New York: United Nations. United Nations (2010). Analysing and Measuring Social Inclusion in a Global Context. Department of Economic and Social Affairs. New York: United Nations. United Nations. (2012). The Role of Local Government in Combatting Youth Employment in Africa. Discusson Paper. November. New York. United Nations Development Programme (UNDP); Commonwealth Local Government Forum (CLGF) and United Nations Capital Development Fund (UNCDF). 2012. Local Governments in Southern Africa : An Analytical Study of Decentralisation, Financing, Service Delivery and Capacities. New York : UNDP. : accessed on 2 February 2014. : accessed on 18 February 2014. . The New Growth Path: The Framework: accessed on 22 September 2011.

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Robert Dibie

ABSTRACT This chapter examines the problems associated with youth capacity building and unemployment in Ethiopia. It argues that capacity building is a continuous process of development that could be accomplished through the participation of the citizens in their own development. The dynamics of development and participation at both national and grassroots levels in Ethiopia must involve the exposure of government change agents to participatory learning and action methodologies. The chapter uses data derived from primary and secondary sources to analyze the problem associated with youth capacity building and unemployment in Ethiopia. The conceptual framework is based on the social constructionist, the build block model of development, and the monetarist and the Keynesian theories. The findings show that technical capacity building in Ethiopia will serve as a lever for economic and social development. There is, however, a negative correlation between the nation’s educational system and the kind of technical skills needed to achieve its sustainable development goals. In addition, the Ethiopian Government policies have not been able to effectively galvanize the private sector and NGOs to create more jobs for youths. Further, the current government policy tends to focus on the supply side. Less emphasis has been placed on the demand side and comparable strategies to address the youth unemployment problems. Thus, the government, private sector, and NGOs should collaborate to establish a mechanism for an improved and efficient approach to provide youth employment in Ethiopia, particularly Addis Ababa. It further suggests that appropriate monetary and fiscal policies are necessary for Ethiopia to effectively address its urban youth capacity-building problems.

14.1

INTRODUCTION

One of the greatest challenges facing Ethiopia today is restoring its economic growth and sustainability goals. During the 1980s and early 1990s, the nation was plagued with severe famine and poverty (Gebeyaw and Chofana, 2012). Fortunately, these challenges have

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ROBERT DIBIE been followed by favorable environmental renaissance (Haile, 2003). Indeed, the current positive environmental conditions have become a catalyst for economic growth, bringing affordable energy, jobs, revenues, and an accompanying resurgence of manufacturing and agricultural products (United Nations Human Development Index, 2012). Despite these resurgence in agriculture after severe drought and famine, the challenges to sustainability especially youth capacity building in Ethiopia have become marred with problems. The ability to deal with economic and social changes, engage in responsible and ethical business practices, provide high-quality products and services, as well as develop methods and measures to determine if the government is meeting its citizens’ needs has not been very effective (Dibie, 2010). The extent to which the government has been able to address the sustainability challenges of human resources capacity as well as a holistic approach to capitalizing on the strengths of a diverse workforce has not been encouraging. Despite the political and economic stability in the country for almost two decades, the nation has not been able to attract and retain a committed productive workforce in turbulent economic conditions that offer opportunity for financial success but severely ignored youth capacity building (Ethiopian Economic Association/EEA/, 2005-2006; World Bank, 2011). In the process of trying to overcome the problem of unemployment, most youths between the ages of 18 and 24 years have often risk their time, little income, and efforts to develop an innovative product or ways of doing something for profit. The development of entrepreneurship in Ethiopia has been faced with a lot of challenges such as technical skill, inadequate funds, incentives, well-equipped vocational and technical training institutions, progressive educational system, and poor managerial skills. Many of unemployed youths in the country today are creative, but they are incapacitated because they do not have enough funds to start a business that could make them self-reliant (Dibie, 2014). According to Gebeyaw and Chofana (2012), millions of Ethiopians especially the youth and women are unemployed, underemployed, or in the swelling ranks of the working poor. The 2010 urban employment survey by the Ethiopia Central Statistics Agency (2012) reported that 4,790,958 out of the 5,907,470 labor force were employed with the remaining 1,116,512 people unemployed. This means that the urban population unemployment rate is about 18.9 %. The corresponding female unemployment rate is reported to be 27.4 %, while the male unemployment rate is 11 % (Ethiopia Central Statistics Agency, 2011). According to the United Nations Human Development Index (2012), youths between 16 and 25 represent more than 60 % of Africa’s total population and account for 45 % of the total labor force. In Ethiopia, it is estimated that the youth represent 25 % of the nation’s

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working-age population, and this figure may increase in the next two decades. In addition to youth population growth, increased poverty, environmental degradation, and unemployment are problems facing most countries in sub-Saharan Africa including Ethiopia. It is expected that this increase in the number of youth will not decline in the next four decades or more. To compound the capacity-building problems in Ethiopia, the high cost of seeking educational and vocational skills is increasingly causing millions of unemployed and underemployed youth in the country to turn into criminals (Eita et al., 2010). The underlying problems have resulted in a large number of youths under 15 years of age to seek employment every year. Several youths of this age group have also left the country in search of domestic employment in Arab and western industrialized countries (Nebil et al., 2010: Abebe & Alemu, 2013). Further, the lack of employment opportunities has given rise to other economic and social problems in the society, such as increased crimes, suicides, poverty, alcoholism, and prostitution (Rafik et al., 2010; Eita et al., 2010). There has also been a causal relationship between high unemployment rates and the spread of HIV/AIDS in Ethiopia (Haile, 2003). In addition, the lack of employment opportunities in the country has spilled over to health issues, low household income, stagnated government revenue, and, hence, deplorable GDP and the inability to effectively implement sustainable development strategic plans. The growing impact of unemployment exacerbated other economic problems such as home foreclosures and credit card debt and caused a number of bankruptcies among people who worked all their lives (Peters, 2013). The Labor and Social Affairs Bureau of Addis Ababa (2013) reported that the current adult unemployment rate is about 20 %, while youth unemployment ranges from 30 to 35 %. The Labor and Social Affairs Bureau also reported that Ethiopia’s rapid population growth combined with rural-urban migration resulted in a massive increase in the unemployment rate in Addis Ababa, the nation’s capital city. Basically, unemployed urban youth groups include those people who are not willing to take up any job opportunity but would prefer to wait until they are able to find appropriate jobs with an acceptable salary consistent with their qualification and experience (Abebe & Alemu, 2013). The Government of Ethiopia introduced measures in the past to address the youth unemployment predicament. These reform policies include labor market laws and decentralization of public spending. They also created enabling entrepreneurship environments, to improve the quality of education, stimulated innovation, and developed skills through Technical Vocational Education Training (TVET), private sectors involvement, as well as business development services. Despite these policies by both the national and Addis Ababa city governments, the youth unemployment problems have not been

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ROBERT DIBIE resolved. This policy dilemma has resulted in citizens requesting different approaches to address the unemployment issue (Abebe 2011; Nebil et al., 2010). According to Kraft and Furlong (2013), the five major economic goals that government should use to promote economic growth includes low levels of unemployment, low levels of inflation, a positive balance of trade, and the management of deficits and debt. There is very scanty evidence to show that the Government of Ethiopia has effectively utilized these economic growth policy instruments. Although enhanced capacity is central to Ethiopia’s development, the nation continues to trade off infrastructure development for social services, governance, and agriculture, strengthen public institution, improve public performance, and increase employment and appropriate skills for manufacturing and production. Capacity building in the country therefore lacks a fully articulated framework for assessing capacity needs, designing and sequencing appropriate interventions, as well as determining results for both the public and private sectors (Gwin, 2005). As a result, new ways of building the nation’s citizens capacity to realize a more effective state would have to come from entrepreneurship, experimentation, and learning of skills that are appropriate for its sustainable development process. The simulation of capacity building in the public and private sector of Ethiopia must address the human, organizational, and institutional capacity dimensions (Dibie, 2014). According to Gwin (2005), capacitybuilding efforts will succeed only where they take adequate account of the prevailing local politics and institutions and are Ethiopian owned rather than donor driven. This chapter examines the problem associated with youth capacity building and unemployment in Ethiopia. It argues that the ideal platform for capacity building is a partnership planning approach. Through partnership, beneficiaries of capacity development share in, belong to, influence, and direct the development process and establish dignity and self-esteem. There is higher percentage of female unemployment than their male counterparts in Ethiopia. The trend of a higher percentage of female unemployment in the country may result in their vulnerability to other social problems. It uses data derived from primary and secondary sources to analyze the problem associated with youth capacity building and unemployment in Ethiopia.

14.2

CONCEPTUAL FRAMEWORK GROWTH

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Domestic growth in Ethiopia is important because it provides a foundation for the future of its society. Economic growth can contribute to advancements in manufacturing,

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production, employment, and social well-being of citizens, creating beneficial outcomes and solutions to many economic problems. Economic growth is important because it keeps all nations moving in a positive, productive direction. Increased economic growth in Ethiopia may enhance or increase employment opportunities. New advances in agriculture, technology, and industry have brought the nation a long way, and it will continue to grow and change if appropriate capacity development policies are implemented effectively as time goes on. Ethiopia has improved greatly because of its economic growth and expansion in agriculture, industry, infrastructure building, and tourism. According to Dibie (2014), growth in infrastructure represents those types of capital goods that serve the activities of many industries including paved roads, railroads, seaports, communication networks, financial systems, and energy supplies that support production and marketing for industries within Ethiopia as well as other countries. Ikharehon (2007) contends that necessity for capacity building cannot be overemphasized to achieve sustainable development. In order for sustainable development to be realized, in developing countries, such nations must be able to produce more skilled human capital, and this can only be achieved by the government if it invests heavily in entrepreneurship and the acquisition of technical skills. The quality and relevant capacity building in developing countries should help the related countries put in place machineries for sustainable development. Theron (2005) describes the building block of development as a possible process in which to present a positive relation between top-down and bottom-up planning. Theron (2008) contends that the building block of development model tends to show an appreciation for social learning process, participation, empowerment, and sustainable development partnership. The process helps both the change agent and the beneficiaries of development to conceptualize and contextualize the building block toward planning a development process. As a result, any microlevel development engagement should consider the value of a slow-fast and incremental process, following the principles embodied in the building blocks of development (Brown 1997; Conyers & Hills 1990). Chamber (2005) pointed out that every capacity-building process needs congruence in institutional and personal change. In this regard, institutional and personal transformation should ideally interact and reinforce each other. Rondinelli (1993) and Esman (1991) suggest that developing countries should adopt a radical move toward participation, empowerment, and diversity. Chambers (2005) considers this prescription as a shift toward pro-poor realism. The social constructionist theory presents an argument that change initiatives do not come about as a due process following the crafting of strategy and policy (Lehne 2012; Boxer 2011). The theory stipulates that without effective implementation, even the most

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ROBERT DIBIE creative policy will fail (Porter 2006; Kraft and Furlong 2013). It also suggests that attending to members’ value systems and identifications may be one way of improving the likelihood that an organization or government will productively coevolve with natural and work environment. Figure 14.1 represents the concept of constructionist’s theory. It is a representation of what happens when we engage in conversation. Figure 14.1

Social Constructionist Theory Model

Knowledge Management Platform

Self

Economic Development Strategy

Growth Management Strategy

• Technology/Technical • Construction • Manufacturing

CONVERSATION ON CAPACITY BUILDING

• Entrepreneurship

Moral Agent

Public Policy on Capacity building & Public interest as a result of dialogue and partnership

Transformation

Public & Private Action

Source: Adopted from Boxer, Lionel. (2011). ‘Preparing Leaders for Sustainable Future.’ International Journal of Business Insights and Transformation, Vol. 3, (January), 34-43

According to Thomas Dye (2010), the lack of leadership could pose a major challenge and barrier to the implementation of any capacity-building project and sustainable policy. He suggested that in teaching about occupational safety and health as well as environmental issues, there must be a commitment and dedication to the understanding of how political and public administration leaders deal with the implementation of public policies. Dibie (2014) contends that for public policy implementation to be successful, public administrators and political leaders need to be able to inspire others to behave appropriately in a way that these capacity-building and environmental policies are implemented as intended. The social constructionist theory could be used to argue that the capacitybuilding measures policy was enacted and implemented in Ethiopia for the common

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good. Figure 14.1 shows the various components of a framework that will be used for capacity building. Appreciating the interconnectedness of the several parts of the framework predicts that a change in one component will affect the other components. According to Dibie (2014), public policy should be the outcome that supports the public interest. Public administrators and political leaders must seriously consider the complexities of the public interest not only among themselves but in dialogue with a variety of stakeholders. Thus, conversation among stakeholders is the major instrument that could enable public policy toward the achievement of capacity building. Figure 14.1 shows that the idea platform for development is a partnership-in-planning approach. This should be a partnership through which the change agent as outsider closely collaborates with the beneficiaries of a particular program or project in all the stages of planning and implementing. It is continuously shown all over Africa that the change agent often leans toward a mechanistic top-down approach because they believe that it works better if the development process is driven from outside due to the poor knowledge and skills levels among grassroots (inside-out) participants. The World Bank (2012) described capacity building as a process of change and the systematic management of transformation. It involves the transformation of peoples and institutional and societal capacity. Capacity building according to Chambers (2005) requires commitment, vision of leadership, viable institution and respective organizations, and material, financial, and skilled human resources. UNDP (2003) defined capacity building to cover human resources development and the strengthening of managerial systems, institutional development that involves community participation, and creation of an enabling environment. Capacity building in the context of development implies a dynamic process which enables individuals and agencies to develop the critical social and technical capacities to identify and analyze problems as well as proffer solutions to them. Azikiwe (2006) contends that capacity building entails the process by which an individual, irrespective of sex, is equipped with skills and knowledge they need to perform effectively and efficiently in their different callings. According to Olivier de Surdan (2005) and Francois Theron (2008), capacity development takes place at three different levels: (a) the individual level, (b) the organizational level, and (c) the societal level. These three levels are interlinked and interdependent. An investment in capacity development must design and account for impact at these multiple levels. A nation’s focus on what development policies and investments work best to strengthen the abilities, networks, skills, and knowledge base cannot be that of intervention. The bone of contention is that capacity building is about capable and transformational states,

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ROBERT DIBIE which enable progressive and resilient societies to achieve their own development objectives over time. Ideally the transfer of knowledge should be in both directions whereby a mutually beneficial and empowering social learning process and a partnership in planning through which the change agent acts as a mediator between types of knowledge systems. The challenge of capacity building is to see what responsible well-being might mean for all people, in their relation with themselves, with others, and with the environment. According to Dibie (2014), the major principles on which capacity building may create positive impact on people are in the areas of sustainability and equity. Capacity development is about who and how and where the decisions are made, management takes place, services are delivered, and results are monitored and evaluated.

Figure 14.2 Reflection of capacity-building impact

Responsible Wellbeing

Society

Organization

Human

Capabilities & Skills

Equity

Livelihood Security

Sustainability

Source: Chambers, R. 2005. Ideas for Development. London, England: Earthscan Press

This is because the overarching ends are human well-being supported by capability and livelihood. Sustainability and equity in the implementation of appropriate economic policies are necessary instruments for achieving good quality of livelihood and security. Capacity building for a society or nation can enhance citizens to become more economically and socially secured and be able to contribute effectively to the sustainable development process of the country. The question in the case of Ethiopia is: Do the beneficiaries experience a life-changing reality which builds their capacity, empowers them, and establishes honor, dignity, and self-esteem? The action research conducted in the country does not show total appreciation of this kind of reality.

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Argyris and Schon (1978), Kolb et al. (1971), and Revans (1980) developed theories of learning which incorporate the possibility of learning at the organizational level. Kolb (1971 and Revans (1980) contend that learning takes place when individuals critically reflect on their life experience, generalize from their reaction, and experiment with new behaviors by constructing experience for further reaction. Revans’ approach is particularly relevant to sustainable development, because it argues that organizations will survive and prosper in turbulent times only if they develop the ability to learn from their experience that exceeds the rate of change (1991). Many scholars have described the “five major economic goals” that government should attempt to promote in their strategic development plans. These sustainable development goals include economic growth, low levels of unemployment, low levels of inflation, a positive balance of trade, and management of deficits and debt (Kraft and Furlong 2013; Mankiw 2012; Mandel 2012; Frerrell et al. 2011). Economic growth means an increase in the production of goods and services each year, and it is expressed as gross domestic product (GDP). Stable prices or low levels of inflation or an increase in the cost to goods and services measured by the consumer price index reflects every change in the pricing goods and services. A positive balance of trade is an economic goal that positively reflects the role of Ethiopia in an international economy. In addition, full employment benefits might further galvanize the Ethiopian economy. If unemployment goes up, the governments will lose revenues because of the loss of taxes from paychecks. The government will have increased expenses due to welfare and unemployment expenses paid to the workers (Mankiw 2012; Ferrel et al. 2011; Peters, 2013). Governments have numerous strategic options at their disposal to try to influence the performance of the economy. Analysts believe that the two most popular options include fiscal policy and monetary policy. Other options include regulation and tax policy. The first policy that the Government of Ethiopia uses is fiscal policy. According to Chad Brooks’ article, ‘What is Fiscal Policy’ (2012), he states, “One of the factors that helps determine the country’s economic direction is fiscal policy.” The government uses fiscal policy to influence the economy by adjusting revenue and spending levels. Fiscal policy can also be used in combination with monetary policy. There are two main tools of fiscal policy. These tools include taxes and spending. Chad (2012) contends that taxes influence the economy by determining how much money the government has to spend in certain areas and how much money individuals have to spend. For example, if the government is trying to spur spending among consumers, it can decrease taxes. A cut in taxes provides families with extra money, which the government hopes they will turn around and spend on other goods and services, thus spurring the economy as a whole (Brooks, 2012). Another tool that fiscal policy uses is spending. Spending allows for government money

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ROBERT DIBIE to spread to certain sectors (i.e., capacity building) that need technical skills and economic boost. Individuals who receive these dollars will have extra money and will hopefully spend it on other goods and services. It is crucial for governments to find the right balance and to make sure that the economy does not lean too far either way. There are two types of fiscal policy: expansionary and contractionary. The first type, expansionary fiscal policy is designed to stimulate the economy. Expansionary fiscal policy is used during a recession and times of high unemployment or other low periods of the business cycle. It involves either the government spending more money, lowering taxes, or both. The goal is to place more money in the hands of the consumers so they can spend more and stimulate the economy. The second type, contractionary fiscal policy is used to decrease economic growth, such as when inflation is growing too rapidly. Contractionary fiscal policy also raises taxes and cuts spending. Fiscal policies are tied into the federal budget each year. The federal budget gives an overview of the government’s spending plans for the fiscal year and how it plans to pay for that spending through either new or existing taxes. The monetary policy determines the amount of money flowing through the economy and can affect the direction of a nation’s economy. Monetary policy is set by the Central Bank of Ethiopia and influences the economic activity by controlling the country’s money supply and credit. The Central Bank of Ethiopia can control monetary policy by fluctuating rates of interest and changing the amount of money banks must have in their reserves (Mandel, 2012; Mankiw 2012). The monetary policy goals are to encourage maximum employment, stabilize prices, and moderate long-term interest rates. According to Mankiw (2012) and Mandel (2012), when implemented correctly, monetary policy stabilizes prices and wages, which in turn leads to an increase in jobs and long-term economic growth. For example, the US monetary policy plays a significant role not just in the economy as a whole but in specific decisions consumers make, such as buying houses and cars, starting and expanding businesses, and deciding to invest money (Brooks, 2012). The key to monetary policy is finding the perfect balance; if you let the money supply grow too rapidly, it increases inflation, while letting it grow too slowly stunts economic growth. Economic theory on employment and unemployment has contributed to the problem of youth unemployment in Ethiopia. The problems with supply and the demand sides of the labor market in the country as well the lack of a transparent labor market information system have galvanized severe economic growth problems in Ethiopia. According to Schiller (2011), supply-side factors such as demographic structure, education, and training policies could affect the labor market outcomes in any nations’ economy. Demand-side issues including aggregate demand of the economy and the absorptive capacity of the economy for labor through development of enterprises and job creation institutions are potential factors that

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affect unemployment rate in any country (Schiller 2011; Lehne 2012). In addition, the ineffective labor market information system and the institutional and fiscal and monetary policies have a major role in the interaction of the supply and the demand sides of the labor market in Ethiopia (Mangozho, 2001 & 2002). The literature review presented several arguments that unemployment often constitutes potential low economic growth. According to Ferrell et al. (2011), the potential danger of not achieving economic growth lies in high unemployment and inflation rate among other factors. The Phillips curve represents the relationship between the rate of inflation and the unemployment rate. W. H. Phillips (cited in Mankiw 2012) believes that a consistent inverse relationship exists – when unemployment was high, wages increased slowly; when unemployment was low, wages rose rapidly (Mankiw, 2012; Hoover 2008). The International Labour Organization (ILO) declaration on social justice for fair globalization (2008) stipulated that an enabling environment for promoting employment is one in which individuals can develop and update the necessary capacities and skills they need to enable them to be productively occupied for their personal fulfillment and the common well-being. The quality and relevant capacity building in developing countries should be such that it must help the related countries put in place machineries for sustainable development. According to Anderson (2015) and Dibie (2014), in order to tackle the unemployment and capacity gap between basic education, vocational training, and the job market lifelong learning problems, the following factors are required: (1) skills provider and employers and (2) skills development and industrial investment, trade, technology, and environmental policies. And further, through institutions such as (1) interministerial mechanisms, linked to national development framework, (2) social dialogue, (3) skills forecasting and labor market information system, (4) value chain, (5) industrial clusters, (6) social inclusiveness, (7) maintaining employability of workers and sustainability of enterprises, (8) matching demand and supply of skills, and (9) sustaining a dynamic development process (Jones, 2001; Lehne 2012; ILO 2008). It could be argued therefore that skills development can improve employability of workers, productivity of enterprises, and the inclusiveness of economic growth. The Government of Ethiopia has an obligation to seek new and even more effective ways of making tangible progress toward its sustainable development strategic policies. The attainment of the nation’s sustainable development policies requires building organizational capacity (Anderson 2015; Kraft and Furlong, 2013). All too often the governments in the country, however, focus on creating new programs and keeping administrative costs low instead of building the organizational capacity necessary to achieve their aspirations effectively and efficiently (Dibie, 2014). The nation must change both its public administrators and those that fund them. It must also recognize that excellence in

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ROBERT DIBIE programmatic innovation and implementation are insufficient for government institutions to achieve lasting economic growth results. As a result, great programs need great organizations and capacity-building measures behind them (Miller et al. 2014).

14.3

RESEARCH METHODOLOGY

The goal of this chapter is to examine the nature of youth capacity building and unemployment in Ethiopia. The analysis utilized data derived from primary and secondary sources in Ethiopia. Primary research includes interviews in many cities and towns randomly selected from a government list. The selected cities include Addis Ababa, Jima Awase, Gambela, Bahir Dar, Gonder, Asela, Dese Gonder, Adama, Gimbi, and Dire Dawa. A total of 1,500 unemployed youths were interviewed. Specific information on the nature or causes of unemployment was obtained from the interview. This study also targeted youths that have completed vocational training or bachelor degrees and registered with the government for small business loans. A snowball random sampling method was used to select the participants from a list derived from the small business loan office. The open-ended, in-depth, and interactive interview approach gave the respondents the opportunity to discuss reasons for unemployment and capacity-building issues in Ethiopia. Overall, 200 participants attended the focus group meeting (male = 60 % and female = 40 %) aged 20 years and above. In all, 4,400 statements were collected and transcribed. These statements were divided into the questions that were asked. The focus group participants were selected from the same government list using the random sampling technique. Focus group discussions and in-depth interviews were useful to capture the respondents’ voice, experience, and interpretation of their experiences of the effectiveness of government capacity-building policies and impacts of unemployment. On the other hand, the secondary data were derived through content analysis of government policy documents and annual reports produced by international agencies such as the International Labour Organization (ILO), United Nation Economic Commission for Africa, and World Bank. Other data sources include annual reports from the Central Statistics Agency of Ethiopia, the Ethiopian Investment Agency, and the National Bank of Ethiopia. The staff of government agencies, departments, and nongovernmental organizations (NGOs) was interviewed to substantiate the cases in point. The findings support some of the arguments presented in the literature review. The central research questions are: 1. What is the nature of youth unemployment and capacity building in Ethiopia? 2. What are the social and economic problems associated with youth unemployment in Ethiopia?

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14 3. 4. 5. 6.

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In what ways have current government policies empowered youths to be entrepreneurs in Ethiopia? What is the Government of Ethiopia doing to effectively implement its capacitybuilding policies? Are the fiscal and monetary policies adopted by the Government of Ethiopia effective in addressing the unemployment problems in the country? What are the appropriate policies that the Government of Ethiopia could enact in the future to address youth unemployment?

The result of the study was organized into analysis matrix in order to summarize and develop typologies and descriptive statistics that link the findings to the research goals. The researcher also operationalized each of the impacts of youth unemployment and capacity building in Ethiopia. The findings described the various roles played by the Government of Ethiopia in capacity building and the creation of employment.

14.4

ANALYSIS

OF

YOUTH UNEMPLOYMENT PROBLEMS

The environment in which change agents work also plays a part in determining how effective capacity-building programs function or are implemented. The problem of unemployment basically arises from two essential dimensions of the labor market – the demand and supply sides of the market. On one hand, the demand side of the labor market is associated to the ability of the Ethiopian economy to generate employment opportunity for various skill categories. On the other hand, the supply side of the labor market deals with whether the current labor force in the country matches with the type of skills that the economy demands. In addition to the labor market, public and private institutions such as the governance of labor market-industrial relations and labor market services play a significant role in employment promotion. This implies that an ineffective management of labor market institutions has also led to high unemployment in Ethiopia. During the focus group meetings, the respondents revealed a number of factors and characteristics that they connect to their desire to contribute to the sustainable development process in Ethiopia as well as their sense of employability. As a result of the above understanding of individual employment and appropriate skills required, our respondents were able to transform their practice, perceptions, and thinking of the role of citizens in Ethiopia. Table 14.1 shows how they were able to break the social and economic stereotype regarding participation in the sustainable development process as well as the role of the Government of Ethiopia in creating an enabling environment. The comments of 96 % of the women respondents also indicate that they were ready to venture into male-dominated

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ROBERT DIBIE careers if they were empowered by laws. They also indicated that if laws that support the principle of equality between men and women were enacted as a constitutional provision in Ethiopia, women would be more empowered to seek their professional dreams. The following section provides a detailed discussion of the 4,400 statements made during the interview sessions. The interview findings show the gaps between employment of boys and girls. About 60 % of the boys interviewed indicated that they had graduated from high school or vocational colleges and are employed in one form of private business or the other. In addition, 40 % of the girls interviewed stated that they have not been able to find jobs. What is interesting is that only 20 % of the respondents indicated that they like the job that they are currently doing. A total of 11 % of the girls interviewed pointed out that they could not find jobs because the hiring managers preferred boys. Thus, there is consciousness to discrimination against women and girls in some industrial sectors in Ethiopia. This study has some refreshing revelations related to lack of appropriate equal employment opportunity policies in Ethiopia. It is interesting to note also that 55 % of the female vocational school and some college graduates indicated that their culture and religion would not allow them to work in the hospitality and tourism industry. Respondents in the interview session contend that the barriers to women’s empowerment and social consciousness are tied to self-efficacy, lack of self-esteem, lack of public trust, lack of appropriate policies, and disrespectful treatment of women by their culture. Eighty percent of the respondents indicated that if women are to become fully integrated into the economic and social sphere of life in Ethiopia, a certain amount of acculturation must occur. About 60 % of the male respondents and 70 %, respectively, of the female respondents indicated that the labor laws of the country have not been the most pertinent area of the policies for working young graduates. A total of 80 % of the respondents stated that they do not know much of what the Government of Ethiopia was doing to encourage small business development in the country. They did not know how to secure funding to start their own business after acquiring the appropriate skills from vocation colleges or universities. Respondents unanimously (93 %) reported that it is more difficult for women than men to get promoted in some professions. This is largely because some professions are dominated by men and few women who are employed in such organizations are in nonprofessional career positions. Furthermore, some senior manager or directors have very little regard for women, and that makes it difficult for them to be promoted. The respondents contend that since the sociocultural environment is highly male dominated and discriminatory, if a woman does not build her own confidence and competence and does not demand her rights, she might be forced out of her position. Thus, a constitution men and women equality provision would enable women to be focused and effectively address discrimination issues.

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14 Table 14.1

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Number of statements made by focus group question respondents

Employment issues

Negatively affected

Positively affected

Total

Equality

198

2

200

Human rights

151

49

200

Civil rights

170

30

200

Political rights

130

70

200

Theft

25

175

200

Prison term served

120

80

200

Prostitution

108

92

200

Other forms of crimes

125

75

200

Girls forced to marriage

50

150

200

Divorce

180

20

200

Child custody and guardianship

200

0

200

Reproduction

102

98

200

Credit to start business

182

18

200

Ownership and control of property

180

20

200

Inheritance

185

15

200

Provision of training

140

60

200

Opportunities for employment

178

22

200

Protective legislation

162

38

200

Social entitlements

182

18

200

Wages

50

150

200

Working conditions

120

80

200

110

200

Constitutional issues

Crime due to unemployment

Family relations

Economic issues

Effectiveness of government policy

Awareness of capacity-building policy 90 Total statement

4,400

Source: Derived from Focus Group Meeting 2009-2012

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ROBERT DIBIE 14.4.1

The Ethiopian Demand Side of Labor Market Issues

According to the Ethiopia Central Statistics Agency, report (2012), the agricultural sector is the dominant sector in the Ethiopian economy because it contributes over 41 % of the nation’s gross domestic product (GDP). The agricultural sector also contributes 60 % of Ethiopia’s exports and is the major employer of approximately 83.5 % of the country’s population. In addition, the agricultural sector in Ethiopia is the major employer of the rural population. As a result, job opportunity for urban youth in agricultural sector is limited. The second largest contribution to the national GDP of Ethiopia comes from the service sector (Gebeyaw and Chofana, 2012). Recent reports revealed that the contribution of the service sector to Ethiopian gross domestic product is about 46 % (Ethiopia Central Statistics Agency, 2012). Though the service sector of the economy has shown flamboyant performance with regard to its contribution to the GDP in recent years, it could not generate significant employment opportunity and neither is it paying as does the industrial sector. Figure 14.3 shows the sectorial gross domestic product (GDP) composition of Ethiopia.

Figure 14.3

Sectorial gross domestic product (GDP) composition

60.00% 50.00% 40.00% Aagriculture % GDP

30.00%

Iindustry % GDP 20.00%

Sservice% GDP

10.00% 0.00% 1998

2000

2002

2004

2006

2008

2010

2012

2014

Source: National Bank of Ethiopia, 2012

The industrial sectors’ contribution is very minimal with about 13 % comparative to the two dominant sectors in the Ethiopian economy. This indicates significant structural weakness of the economy. Employment opportunity for urban youth is directly related to the development of the industrial sector of the economy. The low level of development in the industrial sector of the economy therefore is one of the major issues that explain

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urban youth unemployment problem. Figure 14.4 shows the sectorial gross domestic product (GDP) growth rate of Ethiopia.

Figure 14.4 Sectorial gross domestic product (GDP) growth rate 20.00% 15.00% 10.00% Real GDP growth

5.00%

Indusstry growth Service growth

0.00% 1998

2000

2002

2004

2006

2008

2010

2012

2014

Agriculture growth

-5.00%

-10.00%

-15.00%

Source: National Bank of Ethiopia, 2012

Figure 14.4 illustrates sectorial GDP data from the National Bank of Ethiopia. The figure shows that since 2007, the service and the industrial sectors have outgrown the agricultural sector constantly. While most of Ethiopia’s growth potential appears to come from the industry and services sectors, the government has chosen to emphasize the agricultural sector in pursuing economic growth under agricultural lead industrialization policy parameters. Between 2004 and 2012, the service sector exhibited remarkable performance (far more than planned); however, the industrial sector underperformed and even failed to meet its five-year base target. Thus, the low share of the manufacturing sector, a very important sector in transforming an economy, is a major concern for the Ethiopian policy makers as in most African economies. Several scholars have attributed the demand-side problems of the labor market in African economies to be the result of weakness of the economies, saturated public services, and small private sector bases that are unable to employ large numbers of people (Schiller 2011; Mankiw 2012; Adebayo 1999; Rondinelli 1993; United Nations Economic Commission for Africa (UNEC, 2011). A study by the Ministry of Education in Ethiopia in 2002 reveals that the education system in the country has failed to promote vocational and technical trainings. This flaw in the nation’s educational system has negatively affected the level of cognitive skills of

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students and their aspiration for success. According to the United Nations Economic Commission for Africa (2011), this inadequate vocational training skills problem is common to most African countries. Therefore, it could be argued that the negative correlation between educational systems and the technical skills needed in the labor market is one of the noticeable causes of youth unemployment in sub-Saharan African countries including Ethiopia. Table 14.2 shows unemployment rate by gender and educational level in Ethiopia.

Table 14.2

Unemployment rate by gender and educational level

Educational status

Unemployment rate Total

Male

Female

Illiterate

15.2%

7.7%

18.5%

Literate

18.1%

11.8%

26.3%

Preschool

14.5%

2.7%

21.9%

Nonformal

15.0%

9.6%

23.0%

Grades 1-8

16.8%

9.6%

25.1%

Secondary not completed*

20.8%

14.9%

30.3%

Secondary education completed**

24.8%

16.6%

36.3%

Preparatory

22.0%

18.4%

18.4%

Certificate completed***

19.2%

12.6%

23.7%

Diploma completed

15.1%

11.9%

19.0%

Degree and above completed

7.3%

5.7%

12.7%

Educational Level

* Includes those who completed grade 9 in the new devised curriculum and grade 9-11 in the old curriculum **Includes those who completed grade 10 in the new devised curriculum and grade 12 in the old curriculum ***Includes TVET and any certificate above grade 12 in the old curriculum Source: Ethiopia Central Statistical Agency urban employment unemployment survey 2012

Ethiopia has documented employment policy, and the Ministry of Labor and Social Affairs is in charge of the collection, analysis, documentation, and distribution of the labor market information in the country. Congruously, the Ministry of Labor and Social Affairs has been publishing labor market information bulletin for dissemination of the

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labor market information to stakeholders on annual basis. The publication incorporates varieties of information collected and analyzed from such sources as census repots, labor force survey, employment survey, and educational statistics of the Federal Ministry of Education. Table 14.3 shows the relationship between employment and population ratio in Ethiopia.

Table 14.3 Employment to population ratio Region

Country level

Addis Ababa

Sex

2004

2006

2009

2010

2011

Both sexes

42.6

48.8

47.5

48.2

49.4

Male

51.6

58.5

59.0

58.5

60.2

Female

34.6

40.7

37.3

39.0

40.0

Both sexes

42.9

44.7

44.9

47.2

45.9

Male

54.0

56.0

57.6

57.9

58.5

Female

33.3

35.6

34.0

38.0

35.3

Source: Ethiopia Central Statistics Agency, 2011

Table 14.3 shows that 49.4 % of the population was employed at the time of the survey at national government level and 45.9 % at the Addis Ababa city level. The differentials of employment to population ratio by sex illustrate that 60.2 % of males and 40 % of females were employed in 2011 at country level. However, the figures are lower at Addis Ababa level, i.e., 58.5 % for males and 35.3 % for females. Periodical analysis of employment to population ratio reveals that the percentage of the employed population increases overtime. The size of the employed population increased from 47.5 % in 2009 to 48.2 % in 2010 and reached 49.4 % in 2011. This is true for males and females during the same survey period. However, the data shows that unemployment is higher in Addis Ababa when compared to the national government level rate. The ratio of employed female is significantly lower when compared to their male counterparts at national and in the Addis Ababa city levels. Ethiopia has the largest youth population in sub-Saharan Africa (World Bank, 2013). More than half of its population is under the age of 25, and 20 % are between 15 and 24 years old. Furthermore, this proportion is steadily increasing, having grown from 14 % in 1984 to about 20 % in 2005 and is still growing. Table 14.4 shows the trend of urban youth unemployment by sex in Ethiopia.

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ROBERT DIBIE Table 14.4

Trend of urban youth unemployment by sex

Year

Country level

Addis Ababa

Male

Female

Total

Male

Female

Total

1999

18.3

34.0

26.4

28.0

48.2

38.1

2003

26.7

42.7

31.6

21.2

43.7

32.1

2004

23.3

38.7

31.5

30.3

32.6

31.1

2005

19.4

32.9

26.9

32.9

42.2

37.7

2006

17.1

28.0

22.7

31.2

38.9

35.1

2009

17.4

33.9

26.0

24.3

32.1

28.0

2010

16.6

31.6

24.5

17.9

36.1

26.9

2011

16.5

30.3

23.7

17.3

33.7

25.1

T-test for equality of average youth unemployment b/n country level and Addis Ababa at 5 % significance level (sig) = 0.50 T-test for equality of average unemployment between male and female youth at country level and Addis Ababa at 5 % significance level (sig) = .006 Source: Ethiopia Central Statistics Agency, 2011

The youth in urban areas of Ethiopia are characterized also by persistently high unemployment (World Bank, 2007). Nebil et al. (2010) argue that without opportunities for today’s youth to earn a living, poverty will persist through the next generation. Therefore, the commitment by all stakeholders particularly, private sector, government, and NGOs and other civil society organizations in an integrated manner is indispensable for necessary measures to be taken in the country. Table 14.4 shows the trend of urban youth unemployment at country level and in Addis Ababa. In the past eleven years from year 2003 to 2014, even though urban youth unemployment shows certain rate of decrease, the female youth unemployment rate is highly pronounced when compared with male counterparts both at national and in the Addis Ababa city levels. If one analyzes the total urban youth unemployment, it will show a higher rate at the Addis Ababa city than at the national government level during the past eight years. It is also noticed that the highest unemployment is pertinent to female youth in the city than the male counterparts. From all these facts, we can understand that the female youth are more vulnerable to unemployment at the national as well as in the Addis Ababa city levels than the male youth. The average difference of the urban youth unemployment rate between national and the Addis Ababa city levels as well as male and female youth is

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statistically significant at 5 % level. Table 14.5 shows the sectorial gross domestic product (GDP) composition of Ethiopia.

Table 14.5

Urban unemployment duration Survey period Sex

Country level

2004

2009

2010

2011

Addis Ababa

2003

2004

2006

2009

Duration of unemployment (in months) < = 12

13-24

25-95

96 and above

Total

50.4

16.1

21.4

10.5

Male

56.2

15.3

19.4

7.1

Female

47

16.6

22.6

12.4

Total

54.1

13.4

15.8

15.2

Male

60.8

12.2

13.7

13.1

Female

51.0

14.0

16.8

16.2

Total

70.1

10.1

11.3

8.4

Male

72.6

10.2

10.1

6.9

Female

68.9

10.0

11.8

9.1

Total

61.2

12.5

12.5

13.8

Male

66.7

12.7

11.4

9.3

Female

58.2

12.5

13.1

16.1

Total

44.4

16.2

22.4

17.0

Male

18.6

6.0

7.5

4.0

Female

25.8

10.1

14.9

13.0

Total

42.7

16.4

25.2

15.7

Male

19.9

7.1

10.2

5.0

Female

22.8

9.3

15.0

10.7

Total

52.5

14.6

22.1

10.8

Male

22.7

5.5

7.4

3.2

Female

29.8

9.1

14.7

7.6

Total

47.0

14.8

17.8

20.4

Male

17.6

5.0

5.4

6.6

Female

29.4

9.8

12.5

13.8

Source: Ethiopia Central Statistics Agency, 2011

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ROBERT DIBIE Table 14.5 illustrates that on average, 59 % of the youth in the country were jobless for less than 13 months from between 2004 and 2011. Besides, unemployed youths, who were without jobs for 96 months and above, account for on average 12 % during this period. In addition, those who stayed without work for 13-24 months and 25-95 months accounted for an average of 13 %and 15 %, respectively. The number of females who were jobless for more than 13 months was greater than their male counterparts during all unemployment periods. In Addis Ababa, 47 % of the unemployed youth in the city had been jobless for less than 13 months from 2003 to 2009. The number of youths who had been without jobs for 96 months and above accounted for 16 % during the survey periods in Addis Ababa. Members of the youth in the city who were unemployed for 13-24 months and 25-95 months, respectively, accounted for 15.5 % and 22 %. During all unemployment periods, the female youth were found to be the biggest jobless groups in the city. From this, we can deduce that it takes a longer period for females in urban areas than the male counterparts to find employment. 14.4.2

The Ethiopian Supply Side of Labor Market Issues

To supplement the demand side of the labor market, the government of Ethiopia introduced specific and youth-targeted programs. One of such programs is the cobblestone project in urban Ethiopia which was initiated by the Engineering Capacity Building Program supported by the German Development Cooperative (GTZ). Since 2007, the Engineering Capacity Building Program has been training the youth in traditional crafting of cobblestone paving with the dual objective of creating jobs for youth and creating clean, attractive pavement roads in Ethiopian towns. It is based on the principle of local resource utilization in a labor-intensive manner to pave roads and public spaces using environmentally amicable approach adopted from the German experiences. The project created jobs for the youth organized to operate micro and small enterprises. This means construction of pavements in towns and cities enabled creation of new micro and small enterprises, thereby boosting housing investment. Available evidence shows that the project has resulted in the creation of more than 2,000 micro and small enterprises and employed more than 90,000 youths in urban areas of Ethiopia by the end of 2011. The Ethiopian Government has also made a number of efforts to address the unemployment problems faced by the urban youth because of the deficiency in the supply side of the labor market. As discussed earlier in the supply-side problems of the labor market, the youth are challenged due to unemployment because of the mismatch between their skills and the skill the economy requires. The most noticeable reaction from the government to this problem was the policy reform introduced to the education system of the country to

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transform the century-long theory-oriented education into practice orientation and skill development. Up to the middle of the 1990s, the orientation of the education system of Ethiopia was on theory rather than development of skills essential for effective practical exercise and entrepreneurial innovation. Comprehensive education system reform was introduced in 1994 with due consideration of the deficiency in the previous education system. The phases of education cycle classification in the previous system were as follows: grades 1 to 6 are primary school, grades 7 to 8 junior secondary school, and grades 9 to 12 secondary or high schools. At the end of the 12th grade, students were given Ethiopian school leaving certificate examinations to qualify for tertiary education. But a few of the examinees go for university study, owing to the limited number of higher learning education institutions leaving the rest without opportunity for higher-level skill development. According to urban employment survey by the Central Statistics Agency in March 2012, those with general education are substantially victims of unemployment. Amid the education sector reform, Ethiopia has recorded remarkable development in access to primary education and literacy. There has also been evidence for significant improvement in access to primary education and literacy across Africa in the last decade (United Nations, 2010). According to the United Nations 2010 Millennium Development Goals Report, the net primary education enrolment rate in the Central, Western, Eastern, and Southern African regions combined increased from 58 % in 1999 to 76 % in 2008, while in North Africa, it increased from 86 % in 1999 to 94 % in 2008. However, the increase in primary education enrolment rates has not necessarily been followed by an equivalent increase in secondary and tertiary education rates, especially for young women and girls. Owing to the 2011 African Youth Report when it comes to tertiary education among youth populations in Africa, the gross enrolment rate for tertiary education level is very low. The pattern for Ethiopia is similar as the increase in primary education enrolment has not been accompanied by equivalent rise in secondary and tertiary education enrolment. The participation of women and young girls is significantly lower at the tertiary level compared with the participations in primary education. The new education system introduced in Ethiopia after the reform has been more progressive. Only those who scored qualifying results on the national exam offered at the end of the tenth grade would be promoted to the preparatory schools. Those who do not achieve the necessary results for admission to the preparatory schools are provided with the opportunity to pursue formal education through technical and vocational education and training (TVET) which ranges from one to five years based on the level

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ROBERT DIBIE of competency the trainees want and the nature of the field of study chosen. For this purpose, a great number of polytechnics and technical training institutes were established to provide technical training in different trades and at various levels in a bid to strengthen the employability of the youth. This is the landmark departure of the current education system from the previous education system of the country in which most of the secondary school graduates remain helpless for further skills development. The positive impact of the technical and vocational education and training programs in enhancing employability of the youth in Ethiopia as documented in various studies although comprehensive evaluation of the impact of the policy reform is yet to come. One of such studies, for instance, is by Guarcello and Rosati (2007) which showed that the impact of participating in training programs increases the probability of being employed by 25 % in urban areas of Ethiopia and by about 13 % in rural areas. In a bid to improve the employability of the youth, the government has been investing substantial portion of the public budget to the expansion of universities that accept qualified candidates from the preparatory schools. There have been enormous achievements with this respect, and the number of universities just like the polytechnics and technical training institutes has been considerably increased from as low as 2 in 1991 to 31 in 2012. Moreover, the government devised modes of linkage between higher education institutions and the industry and initiated curricula reforms to insure relevance of higher education to Ethiopian economy. In spite of all these efforts, the fact that the economy could not absorb the graduates and unemployment started to challenge the literate is evident (Ethiopian Central Statistics Agency, 2012). This is partly attributable to the lower quality of education and of course to the mismatch in skills desired by the economy and skills embedded in the graduates. The lower quality of education is because of the capacity constraint of the poor government of a poor country to equally pursue expansion of access to education and assurance of the quality of education. However, the government has shown its commitment to ensure the quality of education in an institutionalized approach and established the Higher Education Relevance and Quality Agency (HERQA) affiliated to the Ministry of Education so as to enforce quality standards of higher education to remedy the quality problems. The failure to participate the residents in planning and implementation of the initial inner city redevelopment programs was partially because of lack of comprehensive policy framework to guide the relocation processes and partially because of the lack of political commitment by the government. It is understandable that the lack of resettlement policy framework could create confusions and complication as to how to deal with the cases. However, the country’s governance system is guided by a constitution that incorporates

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stipulations for citizen’s rights to be adequately consulted concerning policies and projects affecting their community (Federal Democratic Republic of Ethiopia, 1994). This constitution also states that the government has the duty to hold land as an agent of the people. The provisions in the constitution hence imposed legal obligations that would have forced the City Administration to consult the public and undertook the redevelopment project on their behalf. Article No. 44 sub-article 2 of the same constitution stipulates that all persons who have been displaced or whose livelihoods have been adversely affected as a result of government programs have the right to commensurate monetary or alternative means of compensation, including relocation with adequate government assistance. The compensations provided in the above cases were not according to the law of the country, and relocated people were provided with replacement housings or plot of land for construction of houses for government house dwellers and cost of construction of houses along with plot of land for private house owners (Abebe & Alemu, 2013). In addition to its domestic laws, Ethiopia has also ratified and adopted the Universal Declaration of Human Rights (UDHR) and International Covenant for Economic, Social, and Cultural Rights (ICESCR) that prescribe avoidance of forced eviction and proper participation of the affected group in planning and implementation of development-induced resettlement. It seems that the Government of Ethiopia may realize that they could afford the cost of nonparticipatory resettlement of original slum dwellers for inner city slum redevelopment programs. The government has consolidated its effort and issued resettlement plan in a view to guide the programs in the process of inner urban redevelopment in 2008 as mentioned earlier. The first pragmatic test against the implementation of this policy framework was the redevelopment project of Lideta Firdbet I out of the 14 planned inner city renovation areas followed by Bole, Sengatera, and Aratkillo sites (Abebe & Alemu, 2013). In these cases, there has been enormous improvement in the participation of the relocated original dwellers at least in sufficiently consulting them in the planning and implementation of the inner city redevelopment programs. On one hand, there has been documented evidence that the relocated residents were not sufficiently compensated even in these cases. In addition, the project did not pay removal and transportation cost for the residents though their representative committee demanded it. This implies that there is failure from the government in practical application of the legal provisions dictated to protect citizens’ rights (Abebe & Alemu, 2013). On the other hand, the integration of the employment strategy to urban housing development policy has contributed to employment creation, most of the beneficiaries of which are unemployed urban youth (Woldehanna et al., 2008; Woldegebriel, 2011). The

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ROBERT DIBIE integrated urban housing development program ultimately targets the unemployed poor, particularly the unemployed youth, in that the micro and small enterprises in the construction sector tend to be labor intensive and employ low-skilled workers. The participating micro and small enterprises are usually established by youth who either graduated from a TVET or have had certain experience in the construction sector. Private sector development is very important in every civilized society with capitalist economic system. The recent development in Ethiopia also follows this pattern. In transition economies like the Ethiopian economy, the development of the private sector requires support from the government (Dibie, 2014). Policies conducive to enhancement of the productivity of the private sector are important for this purpose. Equally important is the improvement of the linkage between the formal and informal sectors of the economy. The prevalence of informal economic activities is natural in Ethiopia as it is in transition economies. That means improving the complementarities between the informal and formal sectors of the economy can enlarge the business activities, making more job opportunities. Figure 14.5 shows the trends in the Government of Ethiopia spending in 1975-2015.

Figure 14.5

Trends in the Government of Ethiopia spending

8E+10 7E+10 6E+10 5E+10

Total Spendding

4E+10

General and security spending Economic development spending

3E+10

Social development spending 2E+10 1E+10 0 1975

1980

1985

1990

1995

2000

2005

2010

2015

Source: Ministry of Finance and Economic Development, 2012

The policy environment of the pre-1991 Ethiopia significantly restricted private sector investment if not considered totally banned under the Marxist-Leninist social policies

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of that regime. In that regime, the maximum capital investment allowable for private owners was limited to Br 250,000 Ethiopian currency). With the complete demise of the socialist era in 1991, there have been significant economic reform measures undertaken to make the business environment congenial to entrepreneurship and private sector investment. The government implemented extensive deregulation and liberalization policies due to proactive actions. The aim of this government initiative is to establish a cordial business environment for the promotion of private sector investment. The government has been providing supports of diverse form to entrepreneurs and industrialists that yielded significant and progressive record development in promotion of private investment, both domestic and foreign investments. These supports mainly include provision of free land lease, subsidized credit services, reduction of tax rates, and tax relief for specified period of time, training services, and more importantly business development services to encourage the development of the flourishing micro and small-scale enterprises (Lahne, 2006). To curb the unemployment problem in urban areas, the government has been providing effective supports to the youth interested in operation of micro and small enterprises on individual as well as group bases (Abebe & Alemu, 2013). Cognizant of the social and political consequences of youth unemployment, the government has designed and implemented programs which targeted job creation for the youth over the last decade. The most noticeable policy actions were the introduction of micro and small businesses development strategy and industrial development strategy with the purpose of promotion of private sector development so that it plays a significant role as a mechanism for economic growth and development. Since the micro and small enterprises development strategy was crafted in 2004, the youth has been encouraged to enter in to the micro and small enterprises in an organized way with special support rendered from the government. The support includes provision of entrepreneurship and business management training; mutual guarantee credit services through micro-finance institutions, market linkage services, relevant technology research, business development services, and basic infrastructure deemed necessary for their operation. The government has shown its commitment to continue supporting the development of micro and small enterprises in an institutional and coordinated approach. To this end, the government established the Federal Micro and Small Enterprises Development Agency and state governments stepped in by establishing similar agencies at regional levels. Ethiopia’s policy of generating employment for the youth through enhanced skills development in the economically active population is similar to what is in practice in its counterparts of sub-Saharan African economies.

321

322

542

521

684

897

752

816

674

561

635

756

1,127

1,862

2,240

5,100

5,322

7,307

7,184

5,080

5,360

47,420

1992/1993

1993/1994

1994/1995

1995/1996

1996/1997

1997/1998

1998/1999

1999/2000

2000/2001

2001/2002

2002/2003

2003/2004

2004/2005

2005/2006

2006/2007

2007/2008

2008/2009

2009/2010

2010/2011

Total

424,111

42,093

40,852.2

83,630.2

77,868.2

46,630.1

41,841.1

19,571.7

12,177.7

9,362.9

6,117.3

5,675.7

6,740

3,765

5,819

4,447

6,050

4,794

2,926

3,750

Investment capital***

Source: Ethiopian Investment Agency, 2012

***Investment capital is in millions of Birr.

No. of projects

Domestic projects

8,896

952

1,413

1,613

1,651

1,150

753

622

347

84

35

45

54

30

81

42

10

7

4

3

No. of projects

382,182

53,357

55,169

73,111

92,249

46,949

19,980

15,405

7,205

3,369

1,474

2,923

1,627

1,380

4,106

2,268

434

505

438

233

Investment capital***

Foreign projects

105

10

3

10

3

0

6

10

16

6

10

7

9

9

1

1

1

2

1

0

No. of projects

272,356

154,019

393.89

82,783.52

261.56

0.00

18,215.08

1,486.48

1,837.04

706.11

1,598.80

257.00

5,760.00

4,915.00

14.00

7.00

6.00

39.00

57.00

0.00

Investment capital***

Public projects

Number and investment capital of approved projects by ownership

Fiscal year

Table 14.6

56,421

6,322

6,496

8,807

8,961

6,472

5,859

2,872

2,225

1,217

801

687

624

713

898

795

908

693

526

545

No. projects

1,078,650s

249,469

96,415.4

239,524.8

170,378.5

93,579.0

80,036.3

36,463.3

21,220.0

13,437.9

9,190.2

8,856.0

14,127.0

10,060.0

9,939.0

6,722.0

6,490.0

5,338.0

3,421.0

3,983.0

Investment capital***

Total projects

ROBERT DIBIE

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As part of the efforts to boost job opportunities for young people, countries such as South Africa, Kenya, Tanzania, and Tunisia have developed young entrepreneurship programs and business start-up schemes supported by small business development organizations, which provide technical skills for new businesses (United Nations Economic Commission for Africa, 2011). Another strategy used by other African economies not introduced by Ethiopian policy makers so far is the provision of incentives to firms for the hiring of young people. Such efforts have yielded some positive results; for example, 1.27 million jobs were created in Tanzania over the last three years as a result of these programs according to the evidence from the fact sheet of United Nations Economic Commission for Africa (2011). Table 14.6 shows the number and investment capital of approved projects by ownership. The implementation of micro and small businesses development strategy and industrial development strategy has recorded enormous achievements in creation of employment opportunity for the youth in urban areas. It has benefited millions of youth in Ethiopian urban areas since its inception. Statistical evidence from the Federal Micro and Small Enterprises Development Agency revealed that the sector created employment opportunity for more than 1,150,000 unemployed youth in 2011 in Ethiopian urban areas. The Micro and Small Enterprises Development Agency has managed to achieve encouraging results in supporting the development of enterprises that are employment intensive so far. There are large numbers of micro and small-scale enterprises that have graduated from their original level and transformed to medium-scale industries. This could galvanize the successful support rendered from the government to the development of the sector on the one hand. On the other hand, the capacity of the sector in employment generation and poverty reduction is not satisfactory.

14.5

APPROPRIATE SOLUTIONS

AND

POLICY STRATEGIES

In establishing supply-side policies for youth employment, equal emphasis has to be given to the demand side of the labor market as well. In other words, it is necessary to try to reduce unemployment by addressing the lack of skills or poor attitudes of young people while concentrating on promoting economic growth and job creation. With this regard, the recent double-digit economic growth that Ethiopia witnessed has created job opportunity for many young Ethiopians. However, the public and private sectors have not created sufficient job opportunity nor has changed the structural weakness of the economy so far. This implies there is a need to pursue growth policies and strategies that are labor intensive. Table 14.7 shows the 2008 to 2011 job opportunities and investment projects in Ethiopia.

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ROBERT DIBIE Table 14.7

Recent Job Opportunity Records of Investment Projects

1. Total investment

2. Total private

3. Domestic

4. Foreign

5. Public

2008/2009

2009/2010

2010/2011

Number

8,807

6,496

6,322

Capital

239,525

96,415

249,469

Permanent workers

614,172

224,633

227,715

Casual workers

1,166,468

488,330

586,380

Number

8,797

6,493

6,312

Capital

156,741

96,022

95,450

Permanent workers

405,296

223,161

212,470

Casual workers

868,166

488,162

412,117

Number

7,184

5,080

5,360

Capital

83,630

40,852

42,093

Permanent workers

196,420

152,283

146,378

Casual workers

569,864

311,185

283,277

Number

1,613

1,413

952

Capital

73,111

55,169

53,357

Permanent workers

208,876

70,878

66,092

Casual workers

298,302

176,977

128,840

Number

10

3

10

Capital

82,784

394

154,019

Permanent workers

208,876

1,472

15,245

Casual workers

298,302

168

174,263

***Investment capital is in millions of Birr. Source: Ethiopian Investment Agency

Those demand-side labor market policies and strategies implemented by the government for employment generations including the special incentives and supports provided to private sectors and the public employment generation schemes have to be reinforced. That is, government investment into infrastructure development has to maintain its momentum and private sector development in the industrial sector has to be encouraged.

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Entrepreneurship has to be promoted, making it easier to start and run enterprises in order to provide more and better jobs for young people; and employment creation has to be enhanced, placing job creation at the center of macroeconomic policy. Central to the promotion of economic growth and development is promotion of investment to the real sector of the economy. For this purpose, it is essential to periodically evaluate and revise the incentives provided for investment to redirect the allocation of the available capital to industrial development. The development of micro and small enterprises has to be strengthened, encouraged, and facilitated by the government offices in charge of this responsibility because the sector practically proved to be one of the fundamental solutions to urban youth unemployment in Ethiopia. Enhancing the labor market information system through investments to improve information resources for youth is essential to avoid the mismatch between skills that educators entrust to their graduates and the technical skills that the economy requires. In a poorly developed labor market information system, many young people inevitably stumble in their initial career steps due to poor information about the world of work, leading to poor choices about education and careers. High-quality labor market information and career guidance can help youth make better informed decisions about their future, including the selection of academic/vocational programs, a decision to complete high school, and an optimal combination of education and work. The development of labor market information is also useful for the effective design and implementation of appropriate policies. Further, the collection, analysis, and evaluation of labor market information are crucial to ensure that laws and policies are evidence based and responsive to situations on the ground. Measures that can enable young people to have improved access to valuable information and opportunities, so that they might make informed decisions about their lives, are important. To this end, it is important to enhance the capacity of the labor market institutions. A labor market study by the World Bank (2007) proved that both the private sector brokers and the public sector labor market information providers are weak to serve the market function properly. This fact explains why employers have not been able to attract the most qualified. In a similar fashion, qualified job seekers cannot find sufficient job and revert to personal networks to get employed. This means that the lack of the informal networks would lead to unemployment economic problems for qualified urban youth. Currently, the labor market information system in Ethiopia is insufficiently developed to provide information for both job seekers and employers. Moreover, the available information on labor market developments in the country is often fragmented and limited in scope or out of date. The situation in Ethiopia with this regard is similar to that of many

325

ROBERT DIBIE sub-Saharan African economies (Dibie, 2014). The relevant labor market institutions which are causes of youth unemployment in Africa include labor demand barriers, such as observed discrimination by employers toward young people on the grounds of lack of experience and information gaps between job seekers and potential employers (United Nations Economic Commission for Africa, 2011). Hence, strengthening the labor market information system is therefore very important so that it can play its intermediation role between the supply side and the demand side.

14.5.1

Demand-Side Policy

Supply-side interventions can only be successful with complementary efforts that help to expand job opportunities for the youth. In an environment with low labor demand, young people will have a hard time finding a job, no matter what their skill level and educational attainment are. Thus, programs that generate jobs and foster local businesses are vital to reduce the prevalence of youth unemployment in urban areas (Ikatu, 2010). The following strategies are optional for the government to explore in the near future: 1. Reduced entry barriers by reducing experience requirements 2. Avoided discrimination on the basis of gender during recruitment process 3. Avoided discrimination during recruitment process on the basis of relationships, economic status, ethnicity, disability, etc. 4. Financially and/or technically support entrepreneurship 5. Organize and provide financial and technical support for youth to start their business 6. Increased interests for government organization to hire youth 7. Provides incentives for private sectors and NGOs to encourage them in hiring youth 8. Promote investment in public works and labor-intensive infrastructure projects that can absorb youth in the nation

14.5.2

Supply-Side Policy

The supply-side policies enable the youth to get prepared for the labor demand market. Thus, attention to strategies listed below is very essential. However, both employed and unemployed youth indicated the minimal level of government efforts in youth awareness creation. It is very important for the government to help youths to gain skills and training or education that has high labor market demand for the sustainable future.

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Further, the Government of Ethiopia should establish training institutions at national and regional levels that exclusively focus on providing the needed skills for young people in the country. This kind of vocational training institutions could galvanize young people to start their own businesses. Regarding government’s commitment in encouraging the youth to develop skills in technical and vocational training institutes, 88.8 % and 28 % of employed youth and unemployed youth agreed, respectively. But, the majority (72 %) of unemployed youth disagrees with such efforts by government. The differences in responses by respondents are also statistically at 5 % significance level. From all these facts, we can conclude that the matter of unemployed youth has not been effectively addressed to enable youths to gain vocational skills in the country. The following supplyside policy strategies are options for the government to explore in the near future: 1. Establish national vocational and technical training institutions that could provide appropriate training in the utilization of advanced technologies 2. Creating an opportunity for youth to easily join technical vocational educational training in order to gain education that leads to high skills in technological areas and experience in self-job creation 3. Awareness creation for unemployed youth on employment opportunities 4. Encourage youth to develop skill in technical and vocational training institutes 5. Establish policy for youth to participate in apprenticeship or internship when they are still in school to gain practical skills 6. Help youth to get adequate training/education that has high demand in the market 7. Give training that helps youth to start their own business rather than searching from other sectors 8. Produces enough food 9. Preserves the integrity of ecosystems 10. Uses resources efficiently (land, water, energy) 11. Uses renewable energy and recycles nutrients (Dibie, 2014) Capacity building is a continuous process of development that could be accomplished through the participation of the citizens in their own development. The dynamics of development and participation at both national and grassroots levels in Ethiopia must involve the exposure of government change agents to participatory learning and action (Bless, Higson-Smith and Kagee (2006). Rather than government change agent directing in a top-down manner, they should assume a supportive and facilitative role. Government change agents should be willing to relinquish power control over the relationship between change agent and community stakeholders in mutual social learning and capacitybuilding process (Jones 2001; Theron, 2008). These principles if well implemented could ensure radical changes in thinking, planning, and training. After protracted planning and

327

ROBERT DIBIE accompanying frustration, the role of facilitation can be assuming more practical and capacity-building dimensions. Sustainable development goals in Ethiopia should be based on the following orientations and alternative approaches. According to Francois Theron (2008), the following are areas that a nation could focus its capacity-building efforts: 1. Organizational training: This informal practical training in group dynamics, simple bookkeeping and accounting, adult literacy, banking, and proposal writing. 2. Technical training: Technical capability is needed for developing countries to engage effectively in the global economy; direct foreign investment, international trade, mobility of engineers, and the flow of work to countries with cost-effective talent will result. This is based on needs and priority defined by the people themselves. Training opportunities in various skills need to be arranged either externally or internally. 3. Indigenous science and technology capacity: Indigenous science and technology capacity is needed to insure that international aid funds are utilized effectively and efficiently – for initial project implementation, for long-term operation and maintenance, and for the development of capacity to do future projects. And a sufficient pool of engineers can enable a developing country to address the UN’s Millennium Development Goals effectively, including poverty reduction, safe water and sanitation, etc. 4. Technical workforce pool: In order to stimulate job formation in developing countries, a technical workforce pool is needed, made up of people who are specifically educated, and prepared to engage in entrepreneurial start-up efforts that meet local needs. 5. Leadership development: This is informal training in leadership development and the planning, implementation, and evaluation of projects. 6. External linkages and capacity building: People need to be assisted in establishing linkages and building networks with external agencies. Part of this process is helping people to acquire the skills, confidence, and capacity required in establishing and maintaining such linkages. 7. Exchange of experiences: People should be assisted in arranging visit to and exchange with similar groups, projects, training, and research centers and attending internships, on-the-job training sections, on-the-job conferences, workshops, and fieldtrips (Chambers, 2002; 2005). 8. Support and encouragement: The presence of the change agent living and working in the country and sharing the experiences and problems of the people is often a decisive factor in encouraging people to persevere in their early efforts to improve their own lives. Once a sustainable participatory development projects has been initiated, it should become a neither continuous process nor visible end to it.

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9.

10.

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Theron (2008) contends that the only thing that should end the project is the intervention of the change agent who should withdraw as soon as the local citizens can maintain the development project or process. International experience: The formulation of policies for a developmental state not only requires ongoing work within the state but also the capacity to rapidly learn from international experience. It should be the objective of government in the medium term to strengthen its engagement with society and with social partners. This can be achieved by, among other things, improving the function and capability of institutions, strengthening the participation of organized sectors of society within them, and enhancing the capacity of representative bodies by, among others, improving their research and representative support capacity on economic development and industrial policy. Without this capacity, it is more likely that the environment for engagement will be reactive and that productive partnerships will not emerge. Economic sustainability strategy: Economic sustainability is an actionable strategy companies engage in to ensure they remain a going concern. Different strategies include lean accounting or management, competitive market analysis, product differentiation, concentrated growth, or similar strategies. A nation’s operating environment will rarely remain static; external forces will pressure the country to make changes to public and business practices that will help the government maintain economic sustainability. Using one or more of these strategies can ensure that the country remains competitive and stable in all economies.

Finally, it is very important to note that capacity-building projects that have foundation behavior and attitudes, methods, and sharing planted in the humanist paradigm offer not only the basis for self-reliance and participatory development but a means and an end in itself.

14.6

CONCLUSION

This chapter has examined the problem of capacity building and youth unemployment in Ethiopia. It argues that the reason for Ethiopia’s high youth unemployment rates is the negative correlation between educational systems and the technical skills needed in the labor market and small private sector bases that are unable to employ large numbers of people. Technical capacity building in Ethiopia will serve as a lever for economic and social development (Russell Jones, 2001). This fact is currently being recognized as an important priority in the global sustainable community.

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ROBERT DIBIE The author pointed out that youth unemployment is a critical problem in urban Ethiopia, with a high incidence in the city of Addis Ababa. The unemployment problem tends to affect more females than males in the country. The research evaluated the youth unemployment situation in Ethiopia between 1999 and 2011. Other relevant reasons include labor demand barriers, such as observed discrimination by employers toward young people on the grounds of lack of experience, information gaps between job seekers and potential employers, and barriers to the creation and development of business opportunities, particularly in gaining access to financial, physical, and social capital. An equally important reason is the performance of the economy. The economy is structurally weak and dominated by the agricultural and service sectors with the contribution of the industrial sector limited to about 13 % in the gross domestic product. The Ethiopian Government has developed strategies to accelerate economic growth in the areas of infrastructure, telecommunications, tourism, education, health and private sector development, among others. In the service sector, there has been a rapid growth in the retail trade, tourism, transportation, financial services, and real estate. Yet, there is still a lot that the Government of Ethiopia must do in the area of renewable energy, sustainable communities, green economy, and the recycling of use products. The findings of this chapter show that current efforts have gone into building young Ethiopian’s knowledge and skills through the provision of basic levels of education and vocational training. However, in the new global economy, young people need to acquire more than just basic education, and curricula should be influenced by the current rate of globalization, regional integration, and technological transformation (Russell Jones, 2001). Investing in education and technical skills for young people should therefore go beyond increasing basic literacy rates to assure dynamic, multifaceted knowledge-building at higher and tertiary levels. In order to increase job absorption by the private sector, incentive packages, such as special tax breaks to promote persistent youth-labor-intensive investments, should be considered by the government rather than giving uniform tax advantages to all private firms (Merrick Jones, 2001). Strategies for creating an enabling environment for the private sector and NGOs should be clearly defined in the national youth policy. In addition, the strategy that enhances the collaboration of government, the private sector, and NGOs to deal with urban youth unemployment should be designed and implemented accordingly. There should be periodical forums in which potential private sectors, NGOs, and government participate to discuss issues related to urban youth unemployment (Nwazor, 2012). The youth employment policy should be revised to explore employment

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opportunities, not only domestically but also outside Ethiopia for expatriate and laborers by giving incentives to relevant agencies to engage in information sharing, promotion, and the facilitation of youth employment abroad. Higher institutions of learning and technical vocational educational training programs should periodically revise their curricula and focus on fields of study which have a high market demand to absorb graduates. Moreover, they should be able to create a linkage with potential government institutions, private companies and industries, international and national NGOs, and other stakeholders to enhance schools to work toward transition. If Ethiopian youth are to be competitive in the new and very competitive global economy, all stakeholders, including federal and regional governments, the private sector, and civil society, faith-based, and youth-focused organizations should strengthen cooperation and partnerships to ensure that returns from both formal and nonformal education bring about highly productive outcomes in the labor market. Finally, how people preserve or abuse the Ethiopian environment will largely determine whether capacity building and living standards improve or deteriorate. Growing human numbers, urban expansion, and resource exploitation do not resonate well for the future. Without seeking capacity building and practicing sustainable development behavior, the citizens of Ethiopia may face a deteriorating environment as well as even invite ecological disaster. REFERENCES Abebe T. & Aelmu, K. (2013). Analysis of urban youth unemployment in Ethiopia: The case of Addis Ababa. Journal of International Politics and Development, 11(1 &2), 131162. Adebayo, A. (1999). Youth unemployment and national directorate of employment and self-employment programmes. Nigerian Journal of Economics and Social Studies, 41(1), 81-102. Alamgir, M. (1989). Participatory development: the IFAD experience. In Lineberry, W. P. (ed.). Assessing participatory development: rhetoric versus reality. Boulder, CO: Westview Press. Anderson, J. (2015). Public policy making. Stamford, CT: Cengage Learning. Anderson, J. (2011). Public policy making. Boston, MA: Wadsworth Press.

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ROBERT DIBIE World Commission on Environment and Development. (1987). Our common future. New York: Oxford University Press. Woldehanna, T., Hoddinott, J., & Dercon, S. (2008). Poverty and inequality in Ethiopia: 1995/96-2004/05. Social Science Research Network. Woldengariel, T. (2011). Filtu farmer development irrigation. The Ethiopian Herald, (February 8), 2-4.

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ECONOMIC DEVELOPMENT REFLECTION

OF THE

PAST

IN

SALDANHA BAY: A

AND A

PEEK

AT THE

FUTURE Louis Scheepers and Lesley Welman

ABSTRACT This article reviews (1) the economic development in Saldanha Bay from a productionorientated local economy based on primary industries (i.e. agriculture and fisheries) to a capital-intensive local economy based on secondary activities (i.e. steel manufacturing), after 1994, and (2) presents the Vredenburg Urban Renewal Project as an example of how the Saldanha Bay Municipality and other spheres of government should proactively plan for the expected growth in economic activity and concomitant growth in population. The chapter explores the theoretical concepts applicable to regional development in its economic, social and developmental contexts. The changes in the structure of the local economy have taken place against the backdrop of various government development policies and approaches post-1994 South Africa, and some of these policies and approaches are presented. The new approach to regional development (national spatial development perspective) recognises the importance of co-ordinated and planned action at a lower sphere of governance and the increasing significance of the Greater Cape Town Functional Region to the local, national and international economy.

15.1

INTRODUCTION

The objectives of this article are twofold: firstly, to review economic development in Saldanha Bay post-1994 against the background of new regionalism and regional development in its economic, social and developmental contexts and secondly, to present an innovative project planned by the Saldanha Bay Municipality to in part address some of the developmental challenges accompanied by accelerated development.

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LESLEY WELMAN

METHODOLOGY

This article can be described as descriptive, explanatory and qualitative and makes use of the emic perspective of the authors (Webb & Auriacombe, 2006:592) as a senior local government practitioner and a researcher, respectively, interested in the political and social economy of the area under review and how it has and is continuing to change and impact on the people and institutions present there. The article analyses secondary data sources, and ‘new regionalism’ is used as an approach to analyse the economic development path of Saldanha Bay. An exposition of the transition from old to new regionalism in Saldanha Bay during its journey, post-1994, from a production-orientated local economy based on primary industries (i.e. agriculture and fisheries) to a capital-intensive local economy based on secondary activities (i.e. steel manufacturing) is proffered, and a description of a spatial intervention project planned for the town of Vredenburg is provided as an example of how the spheres of government should proactively plan for the expected growth in economic activity and concomitant growth in population.

15.3

BACKGROUND

The establishment of an Industrial Development Zone in Saldanha Bay can be described as both a blessing and a burden. On the one hand, it accelerates the move away from the traditional economic sectors that formed the bedrock of the regional economy over many decades. This, so conventional wisdom holds, will be accompanied by higher levels of economic activity and a concomitant increase in business and job opportunities. On the other hand, it will lead to a growth in population and increased pressure on the provision of physical, social, economic and environmental infrastructure. The challenge therefore is for all stakeholders in the development space (i.e. government, private sector and civil society) to adequately plan for and implement programmes and projects to mediate the challenges that will inevitably accompany accelerated development. Government policies post-1994 in South Africa have emphasised the role of grassroots development and community participation and engagement. Much debate surrounded the past and current implementation of the Industrial Policy Act on how to bridge the gap

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between ‘placed-based’1 and ‘space-neutral’2 approaches in order to address the imbalances between centripetal3 and centrifugal forces4 and a focus on regions with the potential to connect with the global markets. The establishment of what is now known as the ArcelorMittal Saldanha Steel Plant (hereafter AmsaSS) in 1998 (as a component of the Spatial Development Initiative (SDI) in the Western Cape) transformed not only the geographic landscape of Saldanha Bay but also started the process of ‘integrated spatial planning’ and the attraction of foreign direct investment (FDI) as a macroeconomic strategy. Since 1994, various scholars have doubted the ‘trickle-down’ effects of such large capitalintensive (e.g. AmsaSS) and community development projects (e.g. Paternoster Fish Market5) (see Stohr & Taylor, 1981; Escobar, 1995; Fitchen, 1998; Söderbaum, 2001 as cited in Bek, Binns & Nel, 2004:34). Also central to this discourse were the following three issues: (1) the ability of creating the preconditions for take-off,6 (2) the simultaneous development and integration of all the capital assets (financial, natural, produced, human and social) and (3) to lay down the foundation for institutional thickness7 and polycentrism8. According to Goodwin (2003:1), the above-mentioned capital assets have the capacity to produce flows of economically desirable outputs that are essential for the sustainability of economic development. Economic development in Saldanha Bay, in a more general context, refers to the sustained, collective actions of policymakers and communities to

1 2

3 4 5 6 7 8

Focus on the importance of a geographical context (place) and it is multidimensional (social, cultural and institutional) character. Explicit references were made to spatial effects. Great emphasis is placed on a sectoral approach which is built around mobility and the agglomeration process in specific urban areas (Barca, McCann & Rodríquez, 2011:10-20). In human geography, a centripetal force is a force which brings people and businesses together into a certain geographical space. A centrifugal force, on the other hand, would be something which drives people and businesses away from a certain place. The Paternoster Fish Market is located in Paternoster near the beachfront. It is a large area where fish and crafts are sold. This is where the local fisherman would come after a morning of fishing and sell their fresh fish. The second stage of Rostow’s model of development (1960) are said to take place when the levels of technology within a country develop and the development of a transport system encourages trade. In general, ‘institutional thickness’ is defined as an interlocking web of supportive organisations and institutions such as trade associations and local authorities (see, for instance, Amin & Thrift, 1994). The development of ‘dynamic zones of global economic integration’ outside of existing dominant zones (Faludi 2000, 2002 & 2006 as cited in Rogerson 2009:124).

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improve the wellbeing and economic health of the region. It also refers to the quantitative and qualitative changes in the economy. Economic development is therefore multidimensional (includes human capital, critical infrastructure, regional competitiveness, environmental sustainability, social cohesion, trust building, health, safety, education and literacy) and a focus on policy intervention. Careful planning is needed to ensure and sustain a more balanced spatial structure in all dimensions, and it is of paramount importance for any economic development policy to understand the connectivity of any particular business or industrial activity in the economy. Therefore, both the private and public sectors must be aware of the forward9 and backward linkages10 in the Saldanha economy in order to maximise the effectiveness of current and future policy formulation and planning. The new approach to regional development (the national spatial development perspective) recognises the importance of co-ordinated and planned action at a lower sphere of governance and the increasing significance of the Greater Cape Town Functional Region to the local, national and international economy.

15.4

THE TRANSITION

FROM

OLD

TO

NEW REGIONALISM

IN

SALDANHA BAY

Over the past 20 years, the economy of Saldanha Bay experienced a gradual shift from production-orientated primary industries (agriculture and fisheries) to capital-intensive secondary activities (steel manufacturing). This change in the structure of the local economy has taken place against the background of various government development policies and approaches in South Africa post-1994. Academics and policymakers have increasingly been focussing on the ‘region’ as the starting point for economic development. Central to this is the regionalist approach which places formal institutions at the core of the process to maximise spillover effects. The ‘old regionalism’ approach of South Africa was predominantly state-centric in character. This hegemonic approach of regional development through industrial decentralisation

9 Forward linkages refer to those activities that supply inputs to new or expanded activity. 10 Backward linkages are activities that utilise outputs of new or expanded activity.

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and the development of ‘lagging’ regions lasted until the mid-1990s in South Africa (Rogerson, 2009:131). This planning and operationalisation of ‘growth poles’ were further characterised by incentive packages by national government (Tomlinson & Addleson, 1987 as cited in Rogerson, 2009:131). During the early phase of the ‘new’ South Africa, authorities have faced the toughest challenges to address income and spatial inequalities, especially amongst the previously disadvantaged communities. According to Bek, Binns and Nel (2004:1), “government’s response has been to adopt a neoliberal11 macro-economic framework” to create the expected economic growth and job creation. Central to this approach were the launching of regional development programmes in 1995. Saldanha Bay, due to its strategic location and natural harbour, was seen as a specific location with ‘untapped economic potential’ (Bek, Binns & Nel, 2004:1). As a result of this, academics and policymakers have increasingly been focussing on the ‘region’ as the starting point for economic development. The regional development programme in 1995 was preceded by the National Physical Development Plan (NPDP) of 1975 (Fair 1975a as cited in Fair 1987:63) which emphasised the diffusion of development: To provide the necessary social and economic infrastructure and ‘climate’ for private investment in these areas To identify ‘points of growth’ where this investment can be concentrated with the maximum impact *

*

According to the latter, a ‘hierarchical pattern’ of centres (e.g. planned metropolitan areas, growth poles, principal towns and growth points) is proposed. During the early 1970s, there was added focus on the development of infrastructure and that laid down the foundation for the industrial phase in Saldanha. Authorities as well as the private sector missed out on the importance of and investment in human capital for attracting local and FDI at the time.

11 The neoliberal approach suggests that governments reduce deficit spending, limit subsidies, reform tax law to broaden the tax base, remove fixed exchange rates, open up markets to trade by limiting protectionism, privatize state-run businesses and allow private property and back deregulation. Liberalism in economics refers to ‘freeing up’ the economy by removing barriers and restrictions to what actors can do.

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The Saldanha Bay Municipal area, especially the towns of Saldanha and Vredenburg, has over the past three decades experienced a number of spatial development initiatives (from the NPDP of 1974 to the current Saldanha Bay IDZ). These development strategies did not only influence industrial and SMME development in the triangle (Saldanha, Port and Vredenburg) but also broadened and diversified the economic base of the SBM (see Figure 15.1 for the location of the triangle in relation to the surrounding towns or hinterland). Vredenburg (a town which is the administrative centre of the SBM) has outgrown its neighbouring towns in terms of retail trade and suburbanisation. The concentration of industrial and business (retail trade) activities in aforementioned towns reflected an unequal spatial structure of development. Figure 15.1

SBM Urban Spatial Management Framework (source: SBM Spatial Development Framework, 2010:207)

KEY: 1 - Areas of Major Growth Vredenburg, Saldanha, Port 2 & 3 - Areas of Intermediate Growth St Helena Bay, Jacobs Bay, Langebaan 4 - Areas of Limited Growth Paternoster, Hopefield

Although a strong interconnectivity currently exists between port, industrial and other activities in the triangle, it is the diffusion of development to lagging towns in the SBM (see Figure 15.1) that is questionable. There is no doubt that in the port of Saldanha, industrial and economic activities can act as a gateway for businesses or SMMEs in less prosperous towns in the SBM area. Communities in these towns can be actively involved and engaged in projects that are not previously known to them.

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As already mentioned, since 1973, strong emphasis was placed on infrastructure development. Table 15.1 displays the major infrastructural and industrial development in Saldanha since 1973. It is quite significant from the patterns and distribution in economic activities that the scene was set for heavy industrial activities. The upgrading of existing physical infrastructure and the later expansion as well as the development of institutional infrastructure do not mean or guarantee any meaningful changes/development in all capital assets (financial, natural, produced, human and social). Development is therefore not just the distribution of wealth, goods and services, but it must also address the problem of poverty, unemployment and inequality.

Table 15.1

The Major Infrastructural and Industrial Development In Saldanha Bay Since 1973

Period of construction

Project

1973

Causeway built linking Marcus Island and mainland

1973-1974

General Maintenance quay and rock quay

1974-1976

Iron-ore jetty

1975-1976

Construction of oil jetty

1980

Multipurpose cargo berth terminal added to iron-ore jetty Import of oil and export of high value lead and copper concentrates

1997-1998

Multipurpose terminal extensions

1994

Tronox (previously known as Namakwa Sands)

1998

aAmsaSS(production of hot rolled steel coils)

1999

Duferco (refurbishing of steel coils)

(Source: Adapted from Saldanha Bay and Langebaan Lagoon: State of the Bay 2011, Technical Report September 2012:13)

The turn to new regionalism since the mid-1990s in South Africa can be seen as “a broad, open-ended framework for analysing regionalism in a multilevel and comparative perspective” (Hettne & Söderbaum, 1998:6 as cited in Blindheimsvik 2009:17). New regionalism in South Africa was a direct response to failure of the ‘first’ wave of regionalism. Noteworthy of the ‘second’ wave of regionalism is that it recognises formal

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as well as informal aspects of regionalisation12 (Blindheimsvik, 2009:17). The greatest contrast between the ‘first’ and the ‘second’ wave of regionalism is that the former focuses on state actors, while the latter includes all stakeholders (civil society and public-private sectors) into its programmes/initiatives. The establishment of Namakwa Sands (currently known as Tronox) in 1994 not only emphasised the neoliberal growth strategy of export production but also paved the way for the stimulation of investment into local economic sectors and opened its doors to the global markets. The main objective of the SDI is the development of a strategic corridor (SaldanhaVredenburg) and an industrial cluster (the Saldanha heavy industrial zone) which will generate economic growth and ultimately diffuse development towards lagging towns/ regions. The SDIs in South Africa have also been perceived and conceptualised as “short-term, fast track interventions acting as catalysts for long-term growth” (Jourdan, 1998; Platzky 1998 as cited in Bek, Binns and & Nel 2004: 3). Another critique that can be added to the SDI in Saldanha Bay is the slow pace in the development of SMMEs and the establishment of interfirm linkages. The report titled A Macro-Economic Assessment of the Western Cape Economy’s Sectoral and Industrial Growth Prospects: 2010 to 2015, including an assessment of inter-industry linkages (Laubscher, 2011:99) emphasises the need for policy intervention. In this regard, two issues of concern to policymakers were accentuated. It is of paramount importance for any economic development policy to understand the connectivity of any particular business or industrial activity within the local economy. The first issue is to what extent any particular industry is dependent on intermediate inputs from supplying sectors and/ or dependent for its intermediate sales to other purchasing sectors. The greater this dependence, the larger the impact of any policy intervention is likely to be. This brings us to the second issue (related to the first), namely, the former and upward industries in Saldanha Bay’s economy. When the final demand for a particular industry changes, the impact does not only include the initial shock but a series of indirect and induced effects

12 The process of dividing an area into smaller segments called regions. One of the more obvious examples of regionalisation is the division of a nation into states or provinces. Businesses also use regionalisation as a management tool and a way to make certain that needs unique to particular areas are met.

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on output, value-added, employment, labour income, imports, etc., as the linked industries respond to the change. Any future policies regarding the implementation of the Saldanha Bay IDZ must take cognisance of the interdependencies of the private and public sectors, as well as with civil society. The opportunities that will be created by the growing West Africa oil and gas industry can only be fully exploited if the ‘connectedness’ with all stakeholders is already identified and established. The vast vacant space for light industrial activities in the Saldanha Heavy Industrial Zone creates opportunities for investment by local and foreign entrepreneurs. One of the greatest challenges is not only the land release issues within the municipal area between private owners and the Industrial Development Corporation and South African Iron and Steel Corporation but also how to manage, protect and conserve the region’s highly sensitive biodiversity.

15.5

VREDENBURG URBAN RENEWAL PROJECT

In this section, we present a project that the SBM is undertaking in order to be ahead of the curve of development happening in the municipality at present. The SBM is the subject, and also the initiator, of major economic development activities. This includes the establishment of the Saldanha Bay Industrial Development Zone (SBIDZ) and the implementation of Strategic Infrastructure Project 5 (SIP5), Strategic Infrastructure Project 8 (SIP8), numerous sustainable energy projects (wind and solar mostly, but also including liquid natural gas (LNG) and liquid petroleum gas (LPG)) and rare metals extraction projects. The development potential of SBM must be understood in its national context. In 2003, the government issued a National Spatial Development Perspective that recognised Saldanha Bay as an area of economic significance. More recently, the national government adopted an infrastructure plan that is intended to transform the economic landscape of South Africa, create significant numbers of new jobs and strengthen the delivery of basic services to the people of South Africa. This plan

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outlines 17 strategic integrated projects (SIPs) to support economic development and address service delivery in the poorest provinces. Each SIP comprises of a large number of specific infrastructure components and programmes. Two of these SIPs have direct relevance for SBM: SIP 5: Saldanha-Northern Cape Development Corridor SIP 8: Green Energy in support of the South African economy * *

SIP 5 aims to develop the Saldanha-Northern Cape linked region in an integrated manner through rail and port expansion, back-of-port industrial capacity (including the establishment of the IDZ) and strengthening maritime support capacity to create economic opportunities from the gas and oil activities along the African West Coast. SIP 8 supports sustainable green energy initiatives on a national scale through a diverse range of clean energy options as envisaged in the IPR2010 and to support biofuel production facilities. In October 2013, the Saldanha Bay Industrial Development Zone was established by the national cabinet. The stated goal of this project, which is a joint initiative between all three spheres of government, is “to create a highly functional and self-sustaining industry with multiple international and domestic investors that ultimately contribute to economic development and sustainable employment”. This goal will be achieved through the following objectives: Consolidation and/or elimination of inefficient and bureaucratic administration processes Focus initially on the establishment of a single cluster, i.e. the Oil & Gas and Marine Repair Cluster within the Saldanha Bay port precinct and surrounding area Provide supporting infrastructure that differentiates the cluster in Saldanha Bay from competitors, e.g. logistics, land availability, utilities, etc. Provide efficient free-zone operations and customs processes that facilitate timeous and cost-effective operations for both international and domestic investors Provide a single point-of-contact for investors to address their concerns and queries (SBIDZ Lico, 2012:3) *

*

*

*

*

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The feasibility study that preceded the proclamation of the SBIDZ identified the following job creation scenarios that could ensue from the implementation of the SBIDZ (see overleaf):

Table 15.2

Potential Job Creation Scenarios Due To Implementation of Sbidz: Employment Through Construction Employment to be created through construction

Projected jobs through SBIDZ due to construction, average per annum, per scenario CAPEX Low

Base

High

Direct

1 030

1 970

2 790

Indirect

885

1 680

2 565

Induced

810

1 545

2 325

Total

2 725

5 195

7 680

Table 15.3

Potential Job Creation Scenarios Due To Implementation of Sbidz: Employment To Be Created During Operation Employment to be created during operation

Projected jobs through SBIDZ due to operation, average per annum, per scenario

Projected jobs through SBIDZ due to operations, over 25 years, per scenario

OPEX

OPEX

Low

Base

High

Low

Base

High

Direct

2 730

3 655

5 700

Direct

4 240

6 670

5 700

Indirect

1 870

2 880

5 540

Total (including indirect and induced)

11 975

20 090

29 020

Induced

2 670

3 900

6 990

Total increase in jobs relative to current Saldanha Bay employment

16%

25%

34%

Total

7 270

10 435

18 230

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Potential Job Creation Scenarios Due To Implementation of SBIDZ: Total Average Employment To Be Created Total average employment to be created

Projected total jobs to be created through SBIDZ, average per annum, per scenario Combined Low

Base

High

Direct

3 760

5 625

8 490

Indirect

2 755

4 565

8 105

Induced

3 485

5 450

9 315

Total

10 000

15 640

25 910

(Source: Saldanha Bay IDZ Feasibility Study, 2011:18)

The Integrated Development Plan (IDP) of the SBM is based on a strategic platform aimed at being prepared for the growth and development that is forecast for the municipal area. This strategic framework is underpinned by nine strategic objectives (see Table 15.5).

Table 15.5

SBM 9 strategic objectives

Saldanha Bay Municipal strategic objectives 1 To diversify the economic base of the municipality through industrialisation whilst at the same time nurturing traditional economic sectors 2 To develop an integrated transport system to facilitate the seamless movement of goods and people within the municipal area and linkages with the rest of the district and the City of Cape Town 3 To develop safe, integrated and sustainable neighbourhoods 4 To maintain and expand basic infrastructure as a catalyst for economic development 5 To be an innovative municipality on the cutting edge in respect of the use of technology and best practice 6 An effective, efficient and sustainable developmental oriented municipal administration 7 To develop and use a multiplatform communication system to ensure swift and accurate dissemination of information 8 To provide ethical and effective leadership that engenders trust in the municipality amongst its stakeholders 9 To ensure compliance with the tenets of good governance as prescribed by legislation and best practice (Source: SBM Integrated Development Plan, 2013:90-91)

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The spatial development strategy of the municipality, as an integral part of the 2010 Spatial Development Framework (SDF, 2010:186) and the IDP, has identified the following principles to guide spatial planning in the municipality: To provide spatial definition to the vision and strategic priorities of the municipality To identify strategic priority areas for public/private sector investments To establish a spatial framework to assist decision makers in addressing development initiatives, concerns, problems and opportunities based on sound planning principles To provide strong direction to developers and other private sector initiatives To ensure that the municipality’s service infrastructure, investment and strategy respond positively to the development and basic needs of the greater community To provide clear, strategic, policy direction and prioritisation to local-level priority planning areas To create a clear framework to direct ongoing data collection, analysis and planning so that over time, the municipal planning framework becomes an increasingly refined, more detailed management tool To make recommendations which will ensure that certain critical, higher priority area aspects are subjected to further more detailed planning *

* *

* *

*

*

*

A key feature of the spatial definition of the town of Vredenburg, the administrative centre of the SBM, is that human settlements for the poorer sections of the population are mostly located on the periphery of the town, away from commercial activity. Post-1994, this inefficient spatial pattern was strengthened with the location of housing for the poorer sections of the community.

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LESLEY WELMAN

Vredenburg Spatial Layout (Source: Saldanha Bay Municipality)

The SBM SDF (2010:209) envisages the following strategic spatial interventions for Vredenburg: Establishing appropriate residential densification strategies around the CBD and along Saldanha Road Encouraging the redevelopment of strategically located existing low-density areas. Encouraging mixed use development along the envisaged Vredenburg/Saldanha corridor. Demarcating an urban edge which reinforces the desirable future growth pattern of Vredenburg Encouraging the prioritization of public investment within the CBD and along Saldanha Road to further stimulate private investment in these areas. *

* *

*

*

In response to the development pressures experienced by the SBM and in line with its SDF, the SBM has conceptualised the Vredenburg Urban Renewal Project. The vision for

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this project is to create a spatially integrated and innovative government precinct and mixed-use development. It is further envisaged that the project will act as a key catalyst for further phased development of the town of Vredenburg, specifically the township of Louwville and the Vredenburg central business district. The study area of the VURP is a collection of well-located land parcels owned by both public and private institutions (see Figure 15.3 below).

Figure 15.3 Vredenburg Urban Renewal Project study area

Figure 15.4 below presents a graphic representation of the VURP proposal, including the key spatial interventions proposed.

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Figure 15.4 VURP Proposal (Source: Urban Concepts, 2014)

The executive summary of the project (Urban Concepts, 2014) identifies the following eleven key ideas: ‘Government Walk’: slow pedestrian-friendly public street New road link between 6th Street and Bester Street Municipal offices, walk-in centre, town hall and civic square Provincial offices, walk-in centre and public square Historic square and historic railway station and railway shed Mixed-use precinct (offices, shops, residential) Kooitjieskloof Street gateway: health clinic, proposed school and mixed-use retail/ residential Lower-density residential fringe adjacent to Louwville Medium-density residential neighbourhood Public greenbelt and urban agriculture Local park with adjacent day-care centre, community hall and religious facility * * * * * * *

* * * *

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The VURP have four main objectives, namely, (1) to undo apartheid spatial planning and integrate different communities, (2) to bring government services closer to people, (3) to create jobs and business opportunities and (4) to improve the overall aesthetic quality of the town and the municipality in general. The project further enables the municipality to address the following three of its nine strategic objectives: To develop safe, integrated and sustainable neighbourhoods To maintain and expand basic infrastructure as a catalyst for economic development To be an innovative municipality on the cutting edge in respect of the use of technology and best practice. * * *

The project further is an attempt by the SBM and its provincial and national government partners to be ahead of the curve of development in Saldanha Bay and to ensure that physical, social and economic infrastructures are in place before the explosion in population numbers expected to accompany the implementation of the macroeconomic projects identified earlier.

15.6

CONCLUSION

In this article, we reviewed economic development in Saldanha Bay post-1994. This was done against the background of new regionalism and regional development in its economic, social and developmental contexts. We also presented an innovative project, the Vredenburg 22 Urban Renewal Project, planned by the Saldanha Bay Municipality as an attempt to address some of the developmental challenges presented by accelerated development. One of the outstanding features since 1994 is the resurgence of regions as important spaces and as actors in national and global politics. The establishment of industrial clusters and the significance of connecting resources, networks and nodes with each other forms an integral part of the new regionalist approach. Development, according to new regionalism theory, is not reduced to a question of economics, but also includes various dimensions of development such as basic infrastructure, education, economic agglomeration, knowledge transfer, regional integration and the participation and engagement of all stakeholders (public-private sectors and civil society). A broad focus is required to understand not only new regionalism but also the interdependent characteristics between the actors and structure.

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In the final analysis, the acceptance and application of new regionalism into regional policy and development in South Africa, and especially to the Saldanha-Vredenburg corridor, can be seen as a ‘new’ approach. Much debates and research about regional development policies and development are needed to bridge the gap between reality and theory. Therefore, in the context of South Africa it is of paramount importance that authority as an agent for policy formulation and application on the one hand and researches on the other must show greater awareness and urgency for engagement in achieving the underlying objectives of new regionalism and regional integration. The chapter also presents a project that the SBM is in the process of implementing. This project, the Vredenburg Urban Renewal Project, is an attempt by the municipality to proactively deal with the growth in population and the attendant social, economic, physical and environmental pressures. The project is an innovative attempt aimed at breaking down apartheid spatial patterns, bringing people closer to economic and job opportunities, bringing government services closer to communities and improving the aesthetic appearance of this key town. REFERENCES Amin, A. & Thrift, N.J. (1994). Living in the global. In Amin, A. and Thrift, N. (eds.). Globalization, Institutions, and Regional Development in Europe, Oxford: Oxford University Press, 1–22. Barca, F., McCann, P. & Rodriguez-Pose, A. (2011). The case for regional development intervention: place-based versus place-neutral approaches. Policy Research Programme, Nelspruit, Journal of Regional Science, 52, 134–152. Bek, D., Binns, T., & Nel, E. (2004). ‘Catching the developing train’: Perspectives on ‘topdown’ and ‘bottom-up’ development in post-apartheid South Africa. Progress in Development Studies, 4(1), 22–46. Bek, D., Binns, T., & Nel, E.L. (2005). Regional development in South Africa’s West Coast: ‘dividends on the process side’? Tijdschrift voor Economische en Sociale Geografie, 96 (2), 168–183. ISSN 0040-747X. Blindheimsvik, K. (2009). Is the whole greater that its components? A new regionalist analysis of the India-Brazil-South (IBSA) dialogue forum. Unpublished Master of Arts thesis. Pretoria: University of South Africa.

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Escobar, A. (1995). Encountering Development: The Making and Unmaking of the Third World. New Jersey: Princeton University Press. Ethekwini Municipality. (2012). Juggling Jobs: Assessing the New Growth Path and National Development Plan Job Targets. [Online] Available: . [2014, February 19]. Fair, T.J.D. (1975). The National Physical Development Plan (NPDP): A summary and review. South African Geographical Journal. 58, 126–134. Fair, T.J.D. (1987). South Africa: Spatial Frameworks for development. South African Geography and Environmental Studies Series, Juta & Co., Ltd. Cape Town. Faludi, A. (2000).The European spatial development perspective – what next? European Planning Studies, 8, 237–250. Faludi, A. (2002). Positioning European spatial planning. European Planning Studies, 10, 897–909. Faludi, A. (2006). From European spatial development to territorial cohesion policy. Regional Studies, 40, 667–678. Fitschen, A. (1998). The impact of the Saldanha Steel Project on the West Coast economy. Development Southern Africa. 15, 771–785. Goodwin, R.G. (2003). Five kinds of capital: Useful concepts for sustainable development. Global Development and Environment Institute. Working Paper No. 03-07. Hanival, S. & Maia, J. (2009). An overview of the performance of the South African Economy since 1994. [Online] Available: . [2014, February 19]. Hettne, B. & Söderbaum, F. (1998). The new regionalism approach. Politeia. 17(3), 6–21. Laubscher, P. (2011). A macro-economic assessment of the Western Cape economy’s sectoral and industrial growth prospects: 2010 to 2015, including an assessment of interindustry linkages. A research report prepared for the Department of Economic Development & Tourism (DEDT), Provincial Government of the Western Cape (PGWC).

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[Online] Available: . [2014, February 19]. Nkwinti, GE. (2012). The National Development Plan and the New Growth Path: Transforming the economy. [Online] Available: . [2014, February 19]. Ogujiuba, K., Stiegler, N., & Omojo, O. (2012). Policy variables and economic growth in South Africa: Understanding the nexus. Mediterranean Journal of Social Sciences, 3(11), November, 647– 658. Rogerson, C.M. (2009). The turn to ‘New Regionalism’: South African reflections. Urban Forum, 20, 111–140. Saldanha Bay Industrial Development Zone Licencing Company. (2012). Application for IDZ Designation and Operator Permit for the Saldanha Bay Industrial Development Zone: Information Document for Government Gazette Notice. [Online] Available: [2014, February 19]. Saldanha Bay Municipality. (2010). Spatial Development Framework. [Online] Available: [2014, February 19]. Saldanha Bay Municipality. (2013). Integrated Development Plan: Revision 1 - 2013 2014. [Online] Available: [2014, February 19]. Söderbaum, F. (2001). Institutional aspects of the Maputo development corridor. Development Policy Research Unit. University of Cape Town, Working Paper 47. [Online] Available: (last accessed 21 March 2014) [2014, February 19]. Stohr, W.B. & Taylor, D.R.F. (1981). Development from above or below? The dialectics of regional planning in developing countries, Chichester, John Wiley and sons, LTD. Tomlinson, R. & Addleson, M. (eds.) (1987). Regional restructuring under apartheid: urban and regional policies in contemporary South Africa. Johannesburg: Raven. Urban Concepts (2014). Conceptual Framework for the Vredenburg Urban Renewal Project. Unpublished.

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Johan Ackron

ABSTRACT Environmental management can no longer be solely about the historical agenda of environmental protection of open space. Whilst this remains important, environmental management functions must now include protecting biodiversity, investing in the ‘green’ municipal infrastructure of built environments, reducing environmental and social risk and addressing the implications of climate change, through both mitigation and adaptation investments. In particular, environmental management can no longer be viewed as a detached and independent line function of government but must rather be viewed as a transversal function cutting across all of the business of government. This chapter reports on an interpretive review performed to identify options for resourcing environmental management in the City of Cape Town. The chapter identifies relevant key concepts in environmental management that need to be internalised in local government in the city and relates this to the question of how to resource environmental management going forward. Key features of the institutional and fiscal framework at city level are identified as key principles that should guide the City of Cape Town’s approach to the management of environmental change in general, including its response to the challenges of climate change. In particular, the chapter calls for a ‘sustainable/sustainability governance’ approach to inform all city governance.

16.1

INTRODUCTION

The City of Cape Town recognises the challenges of environmental change and the need for responsible management of the environment, both for the benefit of all the residents of the city and as a responsible global citizen. In consequence, the City of Cape Town sought in 2011 to review its approach to the resourcing of environmental management. The review reported on in this chapter was

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JOHAN ACKRON conducted over the period of 2011/2012 at the instance of the city to inform its approach to environmental management going forward.

16.2

THE CITY’S ENVIRONMENTAL MANAGEMENT IMPERATIVE DETERMINANT OF CONTEXT

AS A

Environmental change is an ongoing natural phenomenon. Accelerated change has, however, coincided with a rapid increase in human population and the rate of industrialisation and manifests itself in various forms, of which accelerated climate change in particular has attracted much attention. The importance of responsible environmental management and the increasing need to mobilise resources for this purpose are reflected, for example, in the work of the Intergovernmental Panel on Climate Change (IPCC), established by the United Nations’ Environmental Programme (UNEP) and the World Meteorological Organisation (WMO) in 1988 (IPCC 4th Assessment Report, 2007). Drivers or ‘forcers’ of accelerated environmental change, beyond ongoing ‘natural’ change, currently impacting the City of Cape Town are the shared and cumulative result of global and local human activity. Whereas the global dimension lies beyond the direct control of the city, local human activity impacting on the environment is more amenable to city influence, regulation and control. In 2006, the City of Cape Town began to develop perspectives on the implications for the city of rising sea levels associated with global warming (City of Cape Town, 2006). However, climate change and the spectre of global warming are merely aspects of the more comprehensive phenomenon of environmental change, and the nature and scope of public sector activities generally associated with environmental management and environmentally informed governance need to expand considerably. There are three key drivers of this need for change: a. Environmental change is happening: The social, economic, infrastructural and other implications of general environmental change (including climate change) for the city mean that significant investments are required, both in mitigating such change and adapting to its consequences. These investments span a broad range of sectors, from core infrastructure services to development management processes and across capital and operating activities and expenditures. The management of environmental change is by its very nature a transversal imperative across a range of governance sectors and activities.

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b. A failure to act can be the most costly approach: In the past, a wide range of crucial benefits, derived by the community directly and indirectly from the environment as dividends on the city's environmental assets, have been regarded as ‘free’ goods with few, if any, conditions or charges attaching to their use. Yet when degraded, lost or impaired, these core assets and the associated ecosystem services that they render require corrective or replacement interventions that incur significant financial cost to the city. For example, allowing the spread of alien invasive plants into the landscape results in hotter, more severe bush fires that require costly subsequent anti-erosion measures by the city to prevent landslides, and inappropriate land use controls and de-vegetation have implications for water runoff, occasioning the need for extensive and costly storm water protection (City of Cape Town, 2009). c. The costs of environmental change must be efficiently and equitably allocated: Environmental governance imperatives and management functions need to address the provision of public, collective neighbourhood and private goods and services with environmental implications. For example, private development activities and an inappropriate coastal development setback policy can have negative impacts on public amenities such as beaches by triggering dune erosion as well as having legal implications in terms of liability on the part of planning authorities sanctioning such policies and activities. The misallocation of these costs can result in inappropriate incentives, economic inefficiencies and direct long-term costs to ratepayers. Where lack of investment in sustaining environmental services has resulted in environmental degradation or ecosystem loss, or where poor planning and other decisions have resulted in increased environmental risk, the ultimate incidence of the economic burden and risk is upon the local taxpayer, both in direct financial terms and indirectly through loss of economic opportunity. Whilst the pursuit of ‘sustainability’ has become prevalent in public policy, the (public) institutional dimensions that link the lofty humanocentric concept of ‘sustainability’ to the modalities of achieving it at the operational level have generally received scant attention. ‘Sustainability’ remains, to many, an amorphous concept. Causal linkages between human activities and the environment also still remain terra incognita to many. Decisions are often made, at worst, in ignorance of contingent environmental consequence and, at best, on the basis of simple cause-effect paradigms that ignore the complexities inherent in ecosystem relationships. Such ‘unsustainable governance’ can itself be inimical to the pursuit of the very sustainability purpose to which governments are overtly committed. Wiener (2000) has suggested that “…unsustainable governance may actually be a larger environmental hazard than unsustainable private industry, especially in countries dominated by the state sector…”. South Africa is such a country

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JOHAN ACKRON with a large and influential developmental state sector with an explicit commitment to direct intervention. Wiener (op cit) suggests that unsustainable governance may also manifest, for example, in a failure to act (‘weak governance’) or in over-robust ‘caustic’ measures (so-called strong governance) to achieve well-intentioned goals. But decisive government intervention, far from correcting problems, in actual fact exacerbates or, at the very least, relocates them. The most urgent need in pursuing ‘sustainable governance’, or indeed ‘sustainability governance’ as it may more accurately be characterised, is to internalise regulatory and other externalities across the full spectrum of public governance activity. At the time of conducting the Cape Town study, the environmental management functions performed by the city had not yet sufficiently evolved to meet the broader demands of sustainable/sustainability governance. This typically was due to a variety of factors, including unclear functional authority, perceived regulatory constraints in areas such as financial management, unclear fiscal frameworks to leverage resources for these responsibilities and undervaluation of the true cost to the city of the loss of ecosystem goods and services and the deterioration of the environmental assets and ecosystems providing them. In economic terms, the environmental linkages and costs of the activities taking place within the city’s functional biosphere were as yet, generally speaking, not adequately internalised and reflected in its decision-making. The city needs to make difficult trade-offs to meet its expanding environmental management responsibilities and challenges. A failure to internalise environmental considerations in all relevant facets of city governance and adequately to fund such initiatives in the shorter term could result in greater longer-term costs, both in environmental and financial terms. Many of these costs would have to be funded by ratepayers in general but at inflated levels, reflecting the environmental and other costs of failure to act timeously. In reality, current economic conditions provide the city with limited fiscal space to reprioritise expenditures or to generate significant additional revenues. This requires the city, through environmentally informed governance across the full spectrum of its activities, to resolve the dilemma of prioritising shorter-term needs and expediencies at the expense of longer-term investments in the environment and in environmentally informed governance with sustained future dividends.

16.3

DEFINING

THE

CITY BIOSPHERE

The interaction between biological (living) populations and their abiotic (nonliving) environments takes place within the context of ecosystems encompassing “…the whole

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system…including not only the organism-complex, but also the whole complex of physical factors forming what we call the environment” (Tansley, 1935). Following Tansley and Vernadsky (1926) ecosystems have come to be seen to comprise five overlapping ‘spheres’, as follows: Figure 16.1

* *

*

*

*

The City in Environmental Context

The hydrosphere, containing the hydrological (water) cycle The atmosphere, comprising atmospheric gases necessary to sustain many forms of life The lithosphere, comprising the solid portion of the earth’s surface layer, including soils and minerals The biosphere, comprising the collective of all living organisms, including but not limited to human populations The anthroposphere, comprising that part of the environment that is created or modified by humans in creating human habitats and constituting the so-called human footprint.

Ecological (ecosystem) goods and services (so-called EGS) are the products and benefits deriving from the functioning of ecosystems and ecosystem processes. They represent the dividends that all living organisms derive from environmental assets. The growing

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JOHAN ACKRON recognition of the importance of EGS to human society in providing for health, social, cultural and economic needs is a key driver of the increasingly humanocentric current sustainability imperative in public governance. The environment typically performs the following functions: a. Regulatory functions as part of ecological life-support systems (e.g. clean air, clean water and healthy soils) b. Habitat functions, providing refuge and reproduction habitat to wild plants and animals, thereby contributing to the conservation of biological diversity c. Production functions, involving processes leading to the production of food, raw materials and energy or genetic material d. Information functions, fulfilling what has been described as a ‘reference function’ in establishing baselines for human society and contributing to human health by providing space for spiritual enrichment and an enhanced sense of wellbeing (Wallace, 2007) (De Groot et al., 2002) Environmental systems do not respect human-made jurisdictions and mandates. City boundaries are highly porous in the sense that what happens within the municipal borders of the City of Cape Town is affected by and affects what happens in a regional, national and ultimately also in a global environmental context. To this extent, the city is also the recipient of the cumulative environmental impact of human activity and degradation to which it, in the company of others across the region and the world, has over time contributed. Its own ongoing actions continue to impact both upon its own environment and that of others, locally, nationally, regionally and ultimately globally. Environmental goods and services that the city derives may typically be categorised according to the following scheme (Samuelson, 1954). This classification informs the relevant environmental management strategies: a. Pure public goods and services that are both nonrival (consumption by one individual does not reduce availability for consumption by others) and nonexclusive (no one can effectively be excluded from using or drawing benefit from the good or service). Charging or similar mechanisms imposing conditionality on accessibility thus cannot be employed in regulating or funding them, and other means, such as general taxes, are necessary to extract social value from their use. b. Common-pool goods and services that are not nonrival but are nonexclusive in that their availability to any one individual is impacted by the behaviour of others.

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Individuals cannot be excluded from access and use, but the availability for others is diminished thereby – the so-called tragedy of the commons (Hardin, 1968). A number of EGSs in the city fall into this category, including the capacity of the environment to absorb pollutants. Where there are multiple, amorphous users (such as in the case of pollution by informal settlements), the intervention emphasis must generally be on imposing some (collective) condition, often a general levy, (collective) tax or charge on the enabling agents of such pollution rather than on the individual polluters themselves, who may in any event not be identifiable. The pollutant emissions absorption service provided by the global atmosphere to informal micropolluters across the globe may, for example, be classified as a common-pool service with direct regulation of large bodies of individual, informal micropolluters not practically enforceable. c. Private club goods and services that are exclusive but nonrival, such as the view of Table Mountain from an exclusive private vantage point or access to a ‘private’ beach. Since there is exclusivity, there could also be collective conditionality imposed upon such environmental goods and services by way, for example, of an explicit ‘mountain view levy’ upon properties within the Table Mountain viewshed to extract social value, reflecting the exclusive ‘use’ of the mountain as a visual resource. Similarly, tourists temporarily resident within the viewshed could be required to contribute by way of a rate surcharge on tourist accommodation and other property, and such surcharge could be employed to fund conservation of the viewshed. Typically, private club goods and services may be regulated both through so-called command and control regulatory methods and through economic instruments (EIs) aimed at influencing behaviour and raising revenue, as discussed below. d. Pure private goods and services that are both exclusive and rival. For example, pollution by identifiable, individual sources can attract individual sanction, and conditions can be imposed upon individual polluters by way, amongst others, of fines, tariffs and charges.

16.4

VALUATION OF ECOLOGICAL GOODS ENVIRONMENTAL AGENDA

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The value that society accords ecological systems is a determinant of the priority that environmental considerations enjoy in decision-making and needs to be reflected in public governance. However, to the extent that democratic government is charged with the advancement of the collective interest, it also has a role in informing society’s

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JOHAN ACKRON valuation of ecosystems and its approach to environmental governance. This is a role that the City of Cape Town increasingly needs to play in exercising its own mandated functions in a holistic, environmentally responsible manner. Society generally attaches both the use and nonuse values to EGSs. The ‘use value’ represents the ‘usefulness’ of the environment in essentially human terms, whilst the ‘nonuse value’ derives from considerations other than ‘usefulness’ and includes ‘existence value’ (the intrinsic value of ecosystems and assets for their own sake) and ‘bequest value’, reflecting the notion that present generations have a custodial duty towards the environment for the future (National Academy of Sciences, 2005). Ultimately, the way in which society values EGSs determines the level of effort, fiscal commitment and other resources expended on the management of the environment. Therefore, informing and influencing the value attached to the environment by society may provide important leverage when generating political will in environmental governance and, in particular, when securing the requisite resources for environmental management interventions. From a fiscal perspective, valuations of EGSs and of the environmental assets that produce them manifest either in the extent of the ‘willingness to pay’ to secure EGSs or in the ‘willingness to accept’ compensation for forgoing their use. However, ‘ability to pay’ in effect constrains the effective manifestation of value in the marketplace in deprived communities. The challenge of determining the real values of and setting realistic tariffs and charges for untraded EGSs is significant. Various techniques exist for imputing value and have seen limited environmental application in regard to, for example, the establishment of the value of certain leisure- and nature-based tourism market activities in the USA (National Academy of Sciences, 2005). The general advantage of market-related (revealed preference) mechanisms where they are able to be applied for establishing value is that they obviate the need for such costly and complex procedures.

16.5

ENVIRONMENTAL RISK PERSPECTIVES IN THE CITY OF CAPE TOWN

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a. A typology of environmental risk Complex natural processes, coupled with the vagaries of human behaviour, imply elements both of uncertainty and of consequence and therefore give rise to perceptions of so-called environmental risk. Such risk stems from imminent changes in accustomed interactions with the environment and the threat of loss of benefits resulting from environmental

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functionality and is shared by human and other living systems alike. The element of uncertainty in the current scientific basis of cause-effect relationships underlying climate change itself is reflected in the observation in the Fourth Assessment Report of Working Group II of the IPCC that “…some aspects of confidence in the climate change-impact relationship are factual, whilst others are subjective…” (IPCC 4th Assessment Report, 2007). Indeed, the so-called doctrine of certainty pervading the current policy discourse on global warming in particular has been challenged by Essex and McKitrick (2002). Perceptions of environmental risk that drive public policy and the allocation of resources for environment-related purposes have been categorised by DICE (2011) as follows: Environment-human risk or ‘natural’ environmental risk caused by ‘natural’ processes and changes that put humans and human systems at risk. Human-environment risk caused or induced by human activity. This anthropogenic risk may have negative consequences not necessarily for humans but for the environment itself and is the concern of emerging ‘deep-ecology’ approaches to environmental management. It generally has limited currency in more humanocentric approaches to sustainability. Human-environment-human risk that jeopardises humans through changes in the environment induced by human activity. *

*

Subjective elements combine with objective scientific knowledge in determining the perception of consequence and uncertainty by societies and individuals and therefore also their perception of risk. Risk perception, in its various dimensions, is a key determinant of individual and collective political will in the matter of the management of environmental change, the development of environmental and other policies and the appropriation of the necessary resources. b. A risk management approach to environmental management Environmental change is a complex phenomenon in which definitive science is still evolving and in which uncertainty, and therefore risk, is inherent. Environmental management responses at city level can therefore usefully draw on conventional instruments of risk management. As with all risk management, the ultimate objective of environmental risk management for the City of Cape Town would in such a response paradigm be to minimise retained risk whilst at the same time managing overall environmental risk to acceptable levels by means of the following: Identifying and assessing risk drivers and threats and compiling a credible risk matrix for the city. Where other jurisdictions are involved, the city has an important connecting role to play in procuring the compilation of an integrated and comprehensive risk matrix that incorporates environmentally linked risk. *

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16.6

Assessing vulnerability to specific risks and determining their expected consequences. Strategically prioritising risk according to likelihood and probability, magnitude and distribution and timing of impacts, their persistence and reversibility, the potential for adaptation to these impacts and their importance in terms of the valuation by society of the environmental systems at risk (IPCC 4th Assessment Report, 2007). Identifying ways of managing risk by elimination or avoidance of risk-inducing activities, mitigation measures to address drivers of risk, adaptation measures to anticipate and manage the consequences of environmental events and risk transfer or risk sharing including the transfer of risk to those responsible for originating it.

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Whilst environmental change is ongoing, most prominent from a humanocentric viewpoint are those change processes (both natural and human induced) that impact upon the capacity of the environment to deliver EGSs in the service of human populations and that are associated with the so-called human-environment-human risk identified in 5a) above (see Figure 16.2). Environmental governance at city level in particular is therefore primarily concerned with, on the one hand, managing the inducers or ‘drivers’ of environmental change and, on the other, with dealing with the consequences of environmental change deriving from all its causes. This will involve interventions across a wide range of governance activities, both within the city’s mandated jurisdiction and beyond it. The resourcing implications of mitigating and adaptive interventions can differ significantly, with ‘prevention’ through mitigation in many instances obviating the costs of later ‘cure’ through adaptation. Managed Responses to Environmental Risk

Natural/induced impact

Change inducers/ ‘forcers’

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Mitigation

Anthroposphere ‘artificial/ contrived’ human system

Adaptation

Figure 16.2

Ecosystem assets and processes

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a. Mitigation The emphasis in mitigating strategies is on addressing directly the inducers of negative environmental change by managing the drivers and enablers of such change (see Figure 16.3). The pervasive principle is that those responsible for accelerated environmental change should be induced to modify their behaviour or face some form of sanction and that they should, where feasible, bear some burden of consequence for their actions – as enshrined in the so-called ‘polluter pays’ principle. Sanction may be exacted by means of a variety of fiscal and other instruments. Mitigating strategies typically target one or both the following: The drivers of behaviour (its causes), variously through the sanctioning of environmentally undesirable behaviour and/or the encouragement of and inducement to desirable behaviour. The enablers of behaviour that render environmentally undesirable behaviour possible. Where the drivers of behaviour cannot feasibly be directly policed and regulated, it frequently is possible to regulate and otherwise influence the instruments and means of enabling such behaviour. *

*

Whilst revenue generation for government as such is not the main preoccupation of mitigating methods, they clearly need to be resourced. Some options for mitigation may be revenue positive (i.e. where revenue exceeds financial cost of implementation) and capable of contributing to the cross-subsidisation of other environmental management activities, whilst others involving positive inducements, subsidies and the creation of constructive alternatives to undesirable environmental practices may be revenue negative, requiring cross-subsidisation. Mitigating measures in place or under consideration in the City of Cape Town are reflected in Table 16.2.

Figure 16.3

The Mitigation Intervention Model

Behaviour enablers

Behaviour driver

Actions

Behaviour enablers

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JOHAN ACKRON Mitigating strategies accessible to the City typically involve a wide variety of intervention types, each with different resourcing implications. Examples of such intervention types are provided below. ‘Command and control’ instruments (so-called CACs) (Baldwin, Cave & Lodge, 2011) employ statutory instruments such as standards, targets and indicators of environmental performance and of environmental care. Limits are typically imposed on pollutant discharges and other activities. Standards-based systems can, however, be problematic to some if they in effect acknowledge ‘acceptable’ levels of environmental degradation. Statutory planning requirements, licensing requirements on activities with environmental impact and technological specifications to control pollutant discharge and other environmental impacts, as well as fines and other punitive measures for breach of minimum conditions, also typically are employed in this type of intervention. Technologically prescriptive approaches can, however, stifle incentives for polluters to find more innovative, effective and efficient technologies that are more environmentally efficient than those specified. Voluntary instruments involving moral persuasion (so-called moral suasion) and voluntary agreements regarding the moderation or modification of environmentally sensitive behaviour are also employed as mitigation instruments. Such methods can also be net revenue productive and appeal to the higher values and/or informed good sense of potential participants or donors. Their effectiveness is a function of the value that individuals and collectives place upon the environment and the goods and services that are derived from it. This in turn requires a level of understanding by communities of the relevance of environmental issues to their lives and an appreciation of the extent of environmental risk and vulnerability, as discussed in Paragraph 16.5. The creation of environmentally beneficial alternatives to divert and refocus environmentally undesirable behaviour, for example, typically involves land exchanges or development rights transfers to discourage inappropriate development at one location and encourage and facilitate its displacement to a more appropriate location, providing developers with alternatives that are more environmentally benign. Such alternatives generally, though not necessarily, require a level of cross-subsidisation, and their mitigation dividend typically manifests largely in the form of nonfinancial environmental benefits. The Integrated Rapid Transit System of the City of Cape Town incorporating as its first phase a Bus Rapid Transit System is an instance of such a mitigation strategy founded on the provision of a commuter public transit alternative to the use of private motor vehicles for city commuting.

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Positive inducements under the general heading of ‘paying for environmental services’ take the form of financial rewards or reimbursements for specific behaviours involving the maintenance of environmental integrity and of ecological processes delivering environmental benefits to the community at large (UNEP, 2008). Communities in South America have, for example, been reimbursed for not cultivating land in key river catchments in order to protect water sources for downstream urban and agricultural users. Such ‘behaviour aversion fees’ are established instruments of mitigation through positive behaviour inducement. The direct revenue generation potential of such actions can generally be negative in the shorter term with the key dividends in the form of ecological conservation and longer-term benefits. Future downstream financial benefits can follow from the savings resulting from reduced need for adaptive measures to deal with environmental degradation and crisis. Market-based/economic/fiscal instruments (Panayotou, 1994) are a variant of the positive inducements discussed above and focus on influencing rational economic and financial decisions in an environmentally sustainable direction. There is a marked trend internationally towards the application of so-called EIs where possible in preference to CAC measures. They typically include indirect levies and taxes that are avoidable through behaviour modification. So-called Pigouvian taxes are levied on a market activity that has negative consequences for others (negative ‘externalities’) and seek to internalise the social cost of the activity in the decision-making framework of individuals. The purpose of such Pigouvian taxes and levies is not to raise revenue but to engender socially compliant behaviour, but they are capable of generating revenue surpluses, at least for a period and particularly where there may be technological and other constraints to the rapid modification of environmental behaviour targeted by the tax. Market-based instruments typically take the form of carbon and other emissions and pollutant discharge taxes linked to emission standards, energy taxes on fossil fuels and other enablers of pollution and environmentally undesirable behaviour. Such taxes and levies are generally only effective if applied regionally or nationally. Studies suggest that if the proceeds from environmental taxes and levies simply go into general revenue and are not ring-fenced for explicitly environmental purposes, the level of opposition to their imposition generally increases (Robinson, 2002). South Africa already has such enabler taxes in place (Republic of South Africa, 2014). Levies on the ‘footprint’ of buildings and hardened, impervious surfaces that generate storm water runoff requiring adaptive drainage measures are also typically applied to discourage negative environmental practices. Such measures have been successfully implemented in the local sphere. Tax rebates for storm water retention and for the reduction of surface water runoff, amongst others, are employed by a number of cities internationally in the form of fee discounts and other considerations (United States Environmental Protection Agency, 2009). Storm water management incentive

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JOHAN ACKRON programmes in the USA offer low-interest financing for investment in good-practice storm water management to reduce discharge into the city systems and encourage efficient water utilisation (City of Philadelphia, 2014). Levies, rebates and exemptions for storm water retention and use are a relatively underutilised tool in the municipal sphere in South Africa. Table 16.2

Key Sectoral Mitigation Initiatives in Place in the City of Cape Town (2009)

Domain

Status to be managed

Inducers/forcers to be managed

Air quality

Corresponding emissions • Annual average levels for key atmospheric pollutants SO2, NO2 and PM10 • Number of times SA standards are exceeded

Climate change

Carbon footprint

• Total CO2 emissions and equivalents per capita through energy consumption • Carbon emissions by fuel source • Energy use by sector

Biodiversity

• Percentage of natural vegetation remaining, by type • Conservation status of natural vegetation, by type • Percentage of biodiversity network under formal conservation

Rate of destruction of biodiversity

Ecosystem • Proportion of land invaded by alien plants destruction by invasive alien species • Occurrence of invasive alien animal species

Introduction of alien species

Wastewater management

Volume concentrations of: • Ammonia • Chemical oxygen demand • E. coli • Suspended solids • Orthophosphate

• Efficiency of wastewater scrubbing • Recycling • Watershed planning

Freshwater quality

• Aquatic ecosystem status based • Phosphate and orthophosphate pollution rates on trophic state (nutrient levels) • Development planning • Health of rivers according to • Development control River Health Programme

Coastal water quality Volume concentration of faecal coliform bacteria

• Release of storm water containing urban pollutants • Treated sewage effluent released into marine environments

Water use

• Water volume treated and sold annually • Daily water use per capita

Volumetric water use

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General environmental levies with rebates and exemptions for positive environmental activities have been used as mitigation instruments in Queensland, Australia, to acquire bushland for conservation purposes. Local governments have adapted property rating systems to incorporate environmental costing in user charges for municipal services; separate rates or charges on rateable land to pay for environmental services, facilities or activities providing public benefit; rebates on general rates for positive conservation practices; differential rating with higher rates on land subject to land uses that result in greater degradation or environmental impact; exemption of certain land classes (such as land subject to a conservation covenant or agreement) from property rates; rate remission or cash grants for specified environmental improvement; and adjustment of general rates to cover the costs of rehabilitation and the management of degradation arising from environmentally destructive land uses, such as land clearing, air-polluting activities and so forth (Robinson, 2002). Charges, fees, guarantees and bonds represent yet a further mitigation variant. Charges may be levied for mitigating the consequences of environmentally undesirable or destructive behaviour and typically are levied for the removal of waste, for the rehabilitation of landscapes and for making good other consequences of activities that have negative environmental impacts. Waste disposal is already a charge levied by the City of Cape Town. Conversely, ‘positive charges’ (namely, inducement payments) may be levied to encourage net-positive environmental impact as described above. In Costa Rica, water users have been charged for the protection of environmental services provided by forests in watershed areas, enabling watershed landowners to be rewarded for maintaining catchment environments (Cordero, 2003). Such instruments are generally not widely employed in South Africa. Rehabilitation charges in the case of new ‘greenfields’ developments may also be required to be secured by a ‘development bond’, deposit or financial guarantee by the developer against agreed acceptable environmental performance and similar to the capital contribution for the provision of necessary services to newly developed land currently required by municipalities in the Western Cape, South Africa, in terms of section 42(2) of the Land Use Planning Ordinance (No. 15 of 1985). In South Africa, at its current stage of development and in a city such as Cape Town, the high social and opportunity development cost associated with sudden and radical modification of environmental behaviours is likely to be beyond what society currently is prepared to bear. Charges may, however, be levied, as elsewhere in the world, for the ‘permission to pollute’ within certain established bounds, as discussed above. ‘Effluent fees’ and other charges directly price into the business model of the polluter an environmental ‘clean-up’ cost and go beyond the mere collection and disposal charge typically levied for waste removal and generally not fully costed out in environmental terms. Such fees and charges

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JOHAN ACKRON also generate revenue streams that can be employed to cross-subsidise a variety of environmental interventions. Depletion charges or ‘royalties’ are intended to reflect the scarcity of nonrenewable resources and though commonly applied internationally in regard to mineral resources may also be creatively applied in other fields. Pollution or effluent charges, as discussed above, though generally distinguished from depletion charges, may also be viewed as a form of depletion charging reflecting depleting capacity of the environment to absorb the waste that is deposited into it. With the shrinkage of natural resource areas, natural viewsheds and seascapes, for example, prime property commanding, such viewsheds are increasingly at a premium, as may be reflected in the property market. To the extent that property rates revenue in many countries including South Africa is based on the market value of property, property rating systems provide a means of rate charging or surcharging based on location and hence present a means of extracting an element of such ‘depletion value’(Republic of South Africa, 2004). The concept of depletion charging may also be applied to diminishing natural land areas and ecosystems whose services to human populations have to be artificially replicated or replaced, for example, by flood control and drainage systems, water purification systems, waste management systems and the like. It is not internationally unprecedented to levy development charges for new ‘greenfields’ development to reflect the associated diminution in the quantum of natural space. ‘Positive depletion charges’ in the form of rebates, exemptions and even cash payment incentives may be granted for the ‘greening’ of ‘brownfield’ sites, the rehabilitation of abandoned or underused industrial and commercial facilities or their reuse and redevelopment to save on the further unnecessary expansion of the development footprint. Similarly, positive inducements to infill development within the urban edges of cities and towns such as Cape Town can be applied to enhance the use of urban space and economise on ‘urban sprawl’ into natural areas. Such ‘infill’ development is already a priority of the Provincial Spatial Development Framework of the Western Cape (Western Cape Provincial Government, 2011). Environmental permissions for development and other activities confer ‘rights’ to behave in accordance with certain standards and conditions and have in the past generally not been transferable or tradable. However, most notably in the USA and European Union countries, such environmental rights are now tradable either under a regulatory cap (‘capand-trade’ arrangements) or otherwise. Emission trading programmes are in place in several countries and regions, including schemes for the trading of greenhouse gas (GHG) permits (the European Union Emission Trading Scheme), a national market in CO2 and SO2 permits in the USA and various regional markets in nitrous oxide pollutants.

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‘Cap-and-trade’ programmes involve a central authority setting a ‘cap’ on emissions individually allowable for which prospective polluters purchase permits. Polluters needing to exceed their cap can acquire permits to do so from those who require fewer permits or are able to perform under the cap. The market in effect levies a charge on polluters who exceed their cap and rewards those who are able to perform under it and enables the redistribution of the liability for the predetermined emission load and environmental impact. In ‘baseline-and-credit’ variants of such schemes, polluters not subject to a cap are enabled to create bankable credits (‘offsets’) for future use by reducing their impact below baseline levels and selling credits to those who do function under regulatory limits. To prevent emitters in polluted regions or areas from acquiring emission permits from operators in less-polluted regions, thereby increasing local overconcentration of pollution and other environmental impacts, the US Environmental Protection Agency allows permits for operations in the polluted regions if applicants are able by way of cash payments or other inducements to reduce the emissions of others in the area, thereby making room for themselves within the permitted total local pollution load. ‘Transferable development rights’ (TDRs) provide a way of controlling land use for effective urban development management and natural resource conservation and provide a mechanism for incentivising conservation and maintenance of environmental, heritage, agricultural and other values of land without actually developing it. Development credits can be generated for areas where development is not desirable and offset against development in other more appropriate areas. Transfer or trading of development rights on one property to others potentially provides a source of revenue for land-regulating agencies such as municipalities through levies and other impositions on the acquisition of TDRs and provides owners of development rights with incentives for the conservation of their land. TDR ‘banking’ facilities may be provided to store development rights until they are able to be used. b. Adaptation Adaptive strategies address the consequences and implications of environmental change after the event, so to speak. A key component of any resourcing strategy for environmental management must remain the elimination of the self-induced cost drivers of environmental change that typically manifest in the need for adaptation. Adapting to environmental change takes various forms and is frequently so subsumed into the activities of governments that it is not always identified for what it is. The costs of adaptive interventions could in many instances, at least in part, be avoided if a more environmentally informed, inclusive and comprehensive transversal approach to

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JOHAN ACKRON decision-making, including adequate mitigating or avoidance measures, were adopted in the first place. There are also potential legal liabilities associated with failure to observe comprehensive transversal environmental due diligence. Such liabilities in the case of the City of Cape Town were foreshadowed in the judgement of the Constitutional Court of South Africa in the case of Walele vs. the City of Cape Town and others (2008). Thus, whilst the need for increased provision of (municipal) storm water drainage capacity may, for example, be the result of naturally changing atmospheric climate and associated longer-term rainfall patterns, it also is to a significant degree the result of the manner in which topographic contours are employed in town planning, how land use is permitted to change, the incidence of deforestation and removal of natural vegetation that affects water detention capacity and runoff and the ‘hardening’ of surfaces associated with modern urban development. All of the latter lie within the ambit of regulatory and planning control by city planning authorities. The need for adaptive coastal flood protection may well be associated with global warming and associated sea level rise, but it can also in part result from injudicious development in lower-lying coastal littoral zones, the permitted destruction of natural barriers such as dune beaches and the permitted destruction through development of flood plains and marshes that reduces natural adaptive capacity to deal with rising sea levels. Cape Town has arguably heightened its risk exposure to coastal flooding by extensive coastal land reclamation and development on its foreshore.

16.7

THE INSTITUTIONAL AND FISCAL FRAMEWORK MANAGEMENT IN THE CITY OF CAPE TOWN

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ENVIRONMENTAL

a. General local and international resourcing prospects The Clean Development Mechanism (CDM) is a project-based mitigation mechanism defined in the Kyoto Protocol (2007) representing a significant global response to environmental change by reducing GHG emissions in developing countries where GHG reductions are contentiously regarded as more ‘cheaply’ accessible. Such reductions, however, do not always necessarily serve the developmental and other interests of the developing world. According to the World Bank, the CDM has been the largest source of mitigation finance to developing countries and the largest contributor to the United Nations Framework Convention on Climate Change’s (UNFCCC’s) Adaptation Fund. Currently, in the order of 35% of CDM, projects in Africa are being carried out in South Africa, including the Kuyasa CDM Pilot Project in Khayelitsha, Cape Town.

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South Africa has made commitments to managing climate change in the National Climate Change Response Green Paper (Republic of South Africa, 2010). At the time of the present study (2011/2012), the South African Government was considering the establishment of a National Climate Change Fund to mobilise resources for investment in climate change mitigation and adaptation actions, establish a climate finance tracking facility to track the flows of climate finance and report on internationally supported mitigation actions and investigate carbon trading schemes as a medium- to longer-term policy response to climate change. The emerging Cities Support Programme sought to outline options under consideration by South Africa’s national government to enable cities such as the City of Cape Town to better access additional financing by providing a clear global commitment to addressing climate change issues at city level in line with the Durban Adaptation Charter for Local Governments adopted at COP17. The aim is to leverage this with available global climate finance, including the Green Climate Fund currently under discussion in the UNFCCC (ASSAF, 2011). However, prospects for global financing of environmental management in South Africa as a middle-income country seem to be limited in the short to medium term either to concessional loan financing or financing channelled through the private sector. b. Functional assignments There is no statutory impediment to the City of Cape Town taking a more active, progressive approach within its constitutional mandate in addressing key environmental management and climate change issues in accordance with a holistic, sustainability governance view. According to section 151(3) of South Africa’s Constitution, the City of Cape Town has the right to govern, on its own initiative and subject to the objects, duties and functions of local government as set out, respectively, in sections 152, 153, 155 and 156 and part B of Schedules 4 and 5 and to national and provincial legislation (Republic of South Africa, 1996). This confers broad authority on the city in terms of key environmentally linked interventions. Sections 151(3) and 24(b) of the Constitution, read together, enjoin the city to actively pursue ecologically sustainable development through the exercise of its full range of mandated functions. This can only be achieved by integrating environmental considerations into all municipal planning, decision-making and service delivery – functions that fall within the ambit of the city’s powers and functions as set out in part B of schedules 4 and 5 (sections 155 and 156) of the Constitution. As a general obligation in terms of section 152(1), the city must assess whether its decisions will contribute to the maintenance of an environment that is not injurious to human health or wellbeing and to the promotion of economic and social development that is ecologically sustainable. National environmental legislation incorporates the concept of sustainable development, which it defines as “…the integration of social, economic and environmental factors into

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JOHAN ACKRON planning, implementation and decision-making for the benefit of present and future generations…” (Republic of South Africa, 1998). Local government statute also places an obligation on municipalities to strive to ensure that municipal services are provided to the local community in a financially and environmentally sustainable manner (Republic of South Africa, 2000). Consequently, though legislation regulates the modalities of environmental management expenditures by local authorities, it does not necessarily prevent the city from incurring such expenditures. De Visser (2012) notes that the debate about whether or not a particular activity falls within the city mandate is often subsumed with the spectre of unauthorised expenditure. He argues that the concept of ‘unauthorised expenditure’ is, however, not the leading principle and lens through which legal validity is assessed. Instead, the appropriateness of the budget should become the leading principle. Where expenditure is incurred on an activity that is not a clearly mandated municipal function, if it serves objectives that are appropriate to and reasonably incidental to the mandate of the municipality as contemplated in section 156(5) of the Constitution, it cannot be irregular. However, many mandated municipal functions that are not explicitly environmental are directly environmentally linked and have environmental consequences, as discussed above. Thus, a limited explicit environmental mandate for the city does not mean that the city has limited environmentally linked duties and responsibilities nor that it is absolved from playing a ‘connecting’ role in procuring the required responses from those who do have explicit environmental mandates. Failure to perform its functions in an environmentally informed and responsible manner can result in transfer of induced and other risk to all ratepayers in the longer term, whilst loss of environmental services and environmental integrity also results in costs to local businesses and citizens. There are both theoretical and practical motivations for the city to take a more broadly environmentally informed view of its mandated role: i. Environmental considerations at the time of the study were generally not adequately transversally internalised into the city’s decision-making but were still largely regarded as a stand-alone functional focus area of city administration. The environmental dimension in city governance is therefore still largely an ‘externality’ in determining public choice and is not fully integrated across all city decision-making. ii. The government in all spheres has a public interest mandate with both direct and indirect roles to play in environmentally informed governance. Environmental governance theory and praxis have seen the development of various mechanisms for the regulation of public choice. These need to be considered by the City of Cape Town in informing its options for a more comprehensive and holistic environmentally informed city governance approach.

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iii. The city has shared responsibility and authority to promote, pursuant to section 152(1) of South Africa’s Constitution and within the context of its functional mandate, amongst others the object of a safe and healthy environment. Whilst it may not enjoy the full suite of competencies necessary to achieve this alone, nevertheless, the local government is under the clear constitutional injunction to ensure that all its functions are carried out in such a way as to realise this object and to play a ‘connecting’ role in procuring the necessary actions and resources within its own jurisdiction and beyond to achieve it. Importantly, therefore, environmental management is less a ‘thing’ that the city should do than a pervasive due diligence consideration that must explicitly inform all the decisions that it takes and all the functions that it performs. iv. The need for a comprehensive perspective of and engagement in environmental management in the city also has less esoteric motivations. Many of the activities engaged in by the city in the normal course of its business derive from environmental change caused by either its own actions or the actions of others and therefore constitute adaptive responses that, in many instances, could have been avoided if proper pre-emptive mitigating actions had been undertaken. In jurisdictions where comprehensive environmental management is not effectively and diligently practised, the activities of government and its agencies and the deficiencies in the government’s own environmental management practices can be significant drivers of costs and therefore have significant implications for resource availability. Where a sound, comprehensive and environmentally informed management approach is able to eliminate these self-induced drivers of cost, it is potentially able to positively impact the general fiscal efficiency and effectiveness of the city and its capacity to secure resources for its mandate. v. Although direct environmental management expenditure can deliver significant dividends, the city’s fiscal appropriation to its explicit environmental management activities has remained relatively limited. A study in 2009 suggested, albeit on the basis essentially of market impact alone, that the ecosystem services of natural hazard regulation, tourism and recreation and support to the film industry provided a benefit of between R1.5 and R4 billion per annum to people living in and visiting the City of Cape Town (de Witt et al., 2009). When conservatively adjusted for other (traded) ecosystem services, a benefit of between R2 and R6 billion per annum was estimated to be provided by the city’s natural assets. Total (traded) tourism values associated with natural assets in the city were estimated to fall in the range of R965 million to R2.95 billion per annum. The study concluded that expenditure on environmental management provided significantly higher financial returns than other city expenditures. The same study estimated that

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JOHAN ACKRON the leverage of municipal expenditure on the environmental sector was between 1.2 and 2 times higher than that of municipal expenditure on the city economy. But environment-related expenditures are not always explicitly ‘environmental’. The current city expenditures on activities that are environmentally linked and/or have environmental implications typically are fragmented across and obscured within various diverse budget votes and functional mandates and are thus difficult to assess coherently. Many existing expenditures across the city’s budget in effect are already environmentally adaptive and subsumed in a number of budget votes across the city administration. Maintenance expenditures in the water or roads sectors, for instance, may well respond to environmental management prerogatives, but reporting systems do not recognise them accordingly. The city recorded assets of over R20 billion under management in 2009/2010 and spent R2.6 billion on repairs and maintenance, depreciation and recovery of asset impairment. However, at no time did the city’s financial asset register record or account for key environmental assets that lay at the core of the city being one of the environmentally more sensitive and vulnerable cities of the world.

16.8

KEY PRINCIPLES FOR RESOURCING ENVIRONMENTAL MANAGEMENT CITY OF CAPE TOWN

IN THE

The city does face important fiscal constraints on broadening its environmental management activities, and there is intense competition within the city for limited resources. Expenditure growth must also be constrained by fiscal responsibility and discipline. City revenues remain under pressure as slow economic growth, high levels of local unemployment and rising costs, for example, of service provision, limit the fiscal space for real increases in resource allocation for explicitly environmental purposes. Underlying budget rigidity also militates against shorter-term reprioritisation of expenditures. Employeerelated costs, for example, presently account for in the order of one third of the city’s operating expenditures and are not readily changed without political and social consequences. Nevertheless, opportunities do exist in the shorter term either to expand or to reprioritise expenditures to explicitly enhance and institutionalise environmentally responsible governance across the city. These do not necessarily involve the generation of incremental revenues in support of an explicitly environmental function but do involve the improvement of the environmental efficiency of all city expenditures and of the environmental integrity of the city’s decision-making in a manner that recognises and internalises the environmental dimension of activities that themselves are not necessarily explicitly ‘environmental’.

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The following key principles are advanced as a basis for the development of a comprehensive, environmentally informed sustainability governance approach in the City of Cape Town: a. Resourcing environmentally informed management in government is not about resourcing a single environmentally explicit function or mandate but must involve a variety of diverse transversal activities that cut across individual functional mandates, many, if not most, of which may not in themselves be explicitly ‘environmental’. b. The city government has a key role to play as a ‘connector’ – convening and coordinating effective, environmentally informed and integrated environmental management across all jurisdictions within the city’s functional environment and specifically within the context of its Integrated Development Plan. c. Efficient resourcing of environmental management is not primarily about the generation of revenue but is about achieving the required environmental impacts and efficiencies in a cost-effective manner. It involves the internalisation of environmental considerations in all the city’s decision-making processes, particularly to eliminate self-induced environmental consequences with financial and other cost implications. d. Environmental management costs must be equitably shared. Those who derive benefit from an activity with environmental implications or from access to or use of EGSs should, in principle, be required to contribute proportionally to the societal cost associated with sustaining those benefits, though challenges as yet remain in terms of the modalities of valuing such benefits and costs. e. EIs generally provide for more cost-efficient and flexible responses to environmental management imperatives than do prescriptive CAC measures and need to be more widely considered. f. Ring-fencing of revenues can reduce resistance to increased environmental charges. It is particularly important to dispel the notion that environmental levies and charges constitute ‘stealth’ taxes, necessarily constrain employment creation in a community wracked by unemployment or necessarily negatively impact upon the wellbeing of poor households. g. First do no harm. Whilst sufficiently comprehensive definitive scientific evidence of cause and effect linking human activity to environmental impact and change does not yet exist, an environmentally risk-averse approach to all decision-making on the part of the City of Cape Town is indicated, consistent with the internationally recognised environmental ‘precautionary principle’ also recognised in South Africa’s national environmental legislation (Republic of South Africa, 1998). h. An informed community is essential for the proper valuation, prioritisation, resourcing and management of actions with environmental consequences.

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FINDINGS

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CONCLUSIONS

a. An extensive range of possible local governance interventions in support of comprehensive, efficient and appropriately resourced environmental management has been developed internationally and is available to the City of Cape Town. The nature and scope of public sector engagement in the environmental management of the City’s functional biosphere must change in material respects and must be effectively integrated into a coherent and comprehensive environmentally informed governance model for the city. b. Environmental management functions performed by the city have not evolved to meet broader environmental demands. This is due to a number of contributory factors, including unclear functional authority, perceived regulatory constraints in areas such as financial management and unclear fiscal frameworks to leverage resources for these responsibilities. Short termism and a lack of recognition of the true financial cost to the city of the degradation or loss of environmental services and the degradation or loss of the environmental assets and ecosystems that provide them remain contributors to the problem. c. The environmental implications and costs of the activities taking place within the city’s functional biosphere are as yet not adequately accounted for and reflected in city decision-making. Costs continue to be offloaded onto the environment through environmentally suboptimal development, degradation, pollution and underinvestment in the protection of the city’s environmental assets. Heightened risk associated with environmental change and resulting from injudicious human activity renders this approach increasingly costly in the short term and unviable and unsustainable in the long term. 16.10

THE WAY FORWARD

The city is faced with difficult trade-offs if it is to meet its expanding environmental management responsibilities. It will need fundamentally to review the full spectrum of its activities through an environmental lens. A failure to fund adequately and to comprehensively address the environmental imperative across all city activities in the short term and to re-engineer the city’s priorities and practices accordingly could impose greater longer-term costs on the city in terms of adaptation and loss of environmental functionality. Current economic conditions provide the city with limited fiscal space in the short term to reprioritise expenditures or generate additional revenues. This requires the city to explicitly seek longer-term financing and environmental efficiencies rather than merely short-term revenue increments and expediencies.

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The immediate imperative for the city appears to be the pursuit of broad consensus around environmental imperatives. A public debate involving key stakeholders in the city biosphere must be launched to inform and educate residents on key environmental challenges facing the city and to engage with them on suitable responses. In particular, the following essential questions need to be addressed: a. What impediments currently exist to the deployment of an inclusive environmental management programme within the city consistent with statutory and international agreements and protocols, and how can these be overcome? b. How is the essentially transverse character of environmental management within the city and across its borders be best accommodated institutionally and organisationally within a comprehensive sustainable/sustainability governance approach? c. What instruments are best suited to securing resources for a comprehensive environmental management strategy, as envisaged for the city, and how should they be applied in order to maximise the co-benefits to all concerned within the city? d. How can perceptions regarding the value placed upon the environment by decision makers and the community at large best be moulded, and how can awareness of the true private and social cost of injudicious environmental practice best be heightened? REFERENCES ASSAF, 2011 Towards a Low Carbon City: Focus on Durban (2011). The Academy of Sciences of South Africa (ASSAF). ISBN 978-0-9869835-4-2. Baldwin, R., Cave, M., & Lodge, M. (2011). Understanding Regulation: Theory, Strategy and Practice. 2nd ed. Oxford: Oxford University Press. City of Cape Town (2006). Framework for Adaptation to Climate Change in the City of Cape Town. Cape Town. City of Cape Town (2009). State of the Environment Report. Cape Town. City of Philadelphia Water Department (PWD). [Online]. Retrieved 1 March 2014: . Cordero, S. (2003). Introducing Water Use Charges to Pay for Environmental Services Case #1. [Online] Retrieved February 23, 2014: .

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JOHAN ACKRON De Groot R.S., Wilson, M. A., & Boumans, R.M.J. (2002). A typology for the classification, description and evaluation of ecosystem functions, goods and services. Ecological Economics, 3(41), 393-408. De Visser, J. (2012). “Cities and climate change: ex abundanti cautela – ‘from an excess of caution’?”. In A. Cartwright, S. Parnell, G. Oelofse, & S. Ward (Eds.), Climate Change at the City Scale (pp. 122-146). London: Routledge. De Witt, M., van Zyl, H., Crookes, D., Blignaut, J., Jayiya, T., Goiset, V., & Mahumani, B. (2009). Investing in Natural Assets: A business case for the environment [Online]. Retrieved July 14,2014: . DICE. (2011). Bergen Laboratory for the Study of Decision, Intuition, Consciousness & Emotion. University of Bergen. Essex, C. & McKitrick, R. (2002). Taken by Storm: The Troubled Science, Policy and Politics of Global Warming. Toronto: Key Porter Books. Hardin, G. (1968). The tragedy of the commons. Science, 162 (3859), 1243-1248. IPCC 4th Assessment Report (2007). Working Group II: Impacts, Adaption and Vulnerability: Table 19.1. Examples of potential key vulnerabilities [Online]. Retrieve July 14, 2014: . National Academy of Sciences (2005). Better Environmental Decision-Making. [Online]. Retrieved February 24, 2014: . Panayotou, T. (1994). Economic Instruments for Environmental Management and Sustainable Development [Online]. Retrieved July 14, 2014: . Parry, M. F., Canziani, O. F., Palutikof, j. P., van der Linden, P. J., & Hanson, C. E. (Eds.) (2007). IPCC 4th Assessment Report: Working Group II: Impacts, Adaption and Vulnerability. UK: Cambridge University Press.

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Republic of South Africa (1996). Constitution of the Republic of South Africa Act 108 of 1996 [Online].Retrieved July 7, 2014: [2014, July 07]. Republic of South Africa (1998). National Environmental Management Act 107 of 1998 [Laws]. Pretoria: Government Printer. Republic of South Africa (2000). Local Government: Municipal Systems Act 32 of 2000 [Laws]. Pretoria: Government Printer. Republic of South Africa (2004). Municipal Property Rates Act 6 of 2004 [Laws]. Pretoria: Government Printer. Republic of South Africa (2010a). National Climate Change Response Green Paper. Government Gazette no. 33801, 25 November. Republic of South Africa (2010b). South African Government National Climate Change Response Green Paper. Government Gazette no. 33801, 25 November. Robinson, J. (2002). A Review of Economic Instruments for Environmental Management in Queensland. School of Economics: University of Queensland. Republic of South Africa (2014). South African Revenue Services (SARS). [Online] Retrieved February 17, 2014: . Samuelson, P. (1954). The pure theory of public expenditure. Review of Economics and Statistics, 36(4), 387-389. Tansley, A.G. (1935). The use and abuse of vegetational terms and concepts. Ecology, 16 (3), 284-307. UNEP (2008) Payments for Ecosystem Services: Getting Started– A Primer [Online]. Retrieved July 14,2014: . United Nations (2012). The Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC) United States Environmental Protection Agency, 2009

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JOHAN ACKRON Managing Wet Weather with Green Infrastructure: Municipal Handbook - Incentive Mechanisms [Online]. Retrieved July 14, 2014: . Vernadsky, V.I. (1926). The Biosphere. New York Copernicus books. Wallace, K.J. (2007). Classification of Ecosystem Services: Problems and Solutions [Online]. Retrieved: [2014, July 17]. Walele, A. H. (2008). Walele v. City of Cape Town and Others [Online]. Retrieved July 17, 2014: . Western Cape Provincial Government (2011). Provincial Spatial Development Framework (PSDF). Western Cape. Wiener, J.B. (2000). From Sustainable Development to Sustainable Governance [Online]. Retrieved July 17, 2014: .

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URBAN AGE: SOME CONCLUDING NOTES Purshottama Sivanarain Reddy

ABSTRACT There has been a substantial growth in the global urban population over the past two decades, and this has major implications for particularly developing countries. Rapid urbanisation will put considerable pressure on those countries that have just been coping with the delivery of basic services, notably water and sanitation, electricity, housing and roads. It is quite clear that the mammoth service delivery challenges in countries like South Africa cannot be addressed by the governments acting in isolation. There has to be collective action by all the key role players (government, private/NGO sector and local communities) and stakeholders to address societal challenges. Consequently, innovative urban governance has to be high on the municipal agenda internationally in terms of responding to these challenges and moving beyond. Good governance has to be reinforced and nurtured within the broader context of local democratic decentralisation. South Africa following two decades of local democracy is still grappling with historical developmental backlogs and service delivery challenges. Local democracy has to be deepened, and constitutional imperatives relative to basic service delivery have yet to become a reality for the majority of the populace. The need for good governance has been acknowledged and it has been a fairly stormy passage in terms of moving in that direction. It is envisaged that the third decade of local democracy will yield more positive results.

17.1

INTRODUCTION

The global urban population in their rather diverse regional and political contexts has grown phenomenally over the past two decades. It has been estimated by the UN-Habitat State of the World Cities Report of 2000/2009 that the urban areas will be inhabited by half of the world’s population by the middle of the twentieth century. It has also been pointed out that whilst the urban population in developed countries will be virtually the

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PURSHOTTAMA SIVANARAIN REDDY same, it is expected to double in developing countries. This can be attributed to an estimated 60 million people moving to the cities and suburbs particularly in settlements viewed as low-income in developing countries. It is anticipated that this figure will be approximately 73 % on the African and Asian continents (UN-Habitat 2007 and United Nations, 2014:2). The global urban population is expected to reach 6.25 billion in 2050, and it is a fact that a significant number of cities would be unable to meet the development needs of the world’s growing population. This has serious implications for urban governance and in the final analysis, the provision of basic services, more specifically in developing countries. The urban challenges faced in this regard globally include, inter alia, provision of basic services (water, sanitation, housing and electricity), creating jobsustainable opportunities, infrastructural provision and maintenance and providing adequate social services at the local level. These challenges are in turn compounded by additional problems like pollution, traffic congestion, crime and security, environmental degradation and natural disasters which have been on the increase (UN, 2014:2). Consequently, there is a need for innovative urban governance approaches to respond to these societal challenges highlighted above and more specifically, to enhance the quality of life in local communities both in developing and developed countries.

17.2

THE CONCEPTUAL FRAMEWORK REDEFINED

Urbanisation denotes a process whereby towns and cities are established and increase in size and by which an increasing proportion and number of people work and live in settlements that can be defined as urban. According to Thornhill and Cloete (2014:4-5), the characteristics of every urban area (village, town and city) are that parts of it are reserved for additional division into building stands, streets and pavements, parks, sports grounds and cemeteries, business areas, industrial sites and public buildings. In developing countries, like South Africa, in some cases, undeveloped land could be set aside for informal settlements and even small, medium and micro enterprises as part of its priorities. Some academics refer to urban governance in the broader context of municipal management and governance, and consequently, Van de Waldt (2014:6) points out that the term ‘urban’ will correlate directly with the systems, structures and functions ascribed to a municipality in a specific spatial form. He adds that in this context, municipalities can, inter alia, assume different forms, namely, rural, urban, metro, city and townships (in the African context). He adds that a city can be viewed as having acquired ‘city status’, an urban locality having in excess of the arbitrary population size and a town dominating others where the regional economic and administrative context it operates is emphasised. He points that there is no standard definition of a city internationally (2014:6). The

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concept of a city-region has been gaining momentum in South Africa of late where the focus is on making the city in question globally competitive in its regional setting. However, it is part of the ongoing discourse on subnational government. When people move from the rural to the urban areas or even from neighbouring countries as refugees (particularly in the African context), they are faced with the challenge of finding a house or shelter. Given their limited financial resources, they end up settling on land belonging to municipalities, public bodies and even private individuals. Quite often, they generally end up constructing houses or even shelters from building material deemed unsuitable for building purposes. There is generally no provision made for demarcated building stands; essential services such as potable water, electricity and rubbish removal; and streets in these informal settlements. However, as Thornhill (2014:6) points out, informal settlements in South Africa provide homes for the poor.1 Informal settlements in urban areas are viewed as having complex contexts, and consequently, Ambole (2014:1) has advocated a transdisciplinary approach for innovative research in this regard. Such an approach will unravel informality as it recognises and embraces complexity whilst seeking transformative social change. The UN (2014b:1) points out that ‘urbanisation’ is a process of transformation from rural to urban lifestyles, whereas ‘urbanism’ is a way and characteristics of modern cities. It signifies the “introduction (to formerly rural settlements) of modern infrastructure and services and large more formally organised governance institutions as opposed to smaller scale, traditional, community level institutions”. A critical issue that has impacted on the urban political system in the last decade has been the transition from ‘government’ to ‘governance’. In the developed countries, this required a response to governing in a multilevel and globalising context, where there is increasing complexity and where non-state actors have become an integral part of the process. However, in the developing countries, the concept has been promoted and advocated as a policy requirement together with democratic decentralisation, driven to a large extent by international development agencies and more specifically the World Bank (UN 2014b:6). Governance is a process where decisions impacting on the public sector are made and implemented. This public process has come about through relationships, interactions and 1

Of late, the residents of informal settlements in South Africa have been demanding proper housing and municipal services resulting in a large number of protest marches which in some cases have turned violent.

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PURSHOTTAMA SIVANARAIN REDDY networks between the citizenry, private and non-governmental sector and different sectors of government, and it would ultimately involve negotiation, decisions and different power relations between relevant role players and stakeholders to determine who gets what, how and when. Consequently, it tends to extend beyond government and or good government and regulates the manner in which a particular service is planned and managed within a defined political, social and economic framework (UNDP undated: 5). The notion of governance acknowledges that there is power within and outside formal authority and furthermore, public institutions make decisions based on relationships which are complex between many stakeholders and role players. With the evolvement of the concept of governance globally, so did the exercise of democratic freedoms which has become a critical component of sustainable human development. This has also meant that the role and impact of public institutions in service delivery and protecting the rights and freedoms has become more marked in development thinking and discourse (http://www. undp.org/policy /practicenotes.htm). “Urban governance is the sum of the many ways individuals and institutions, public and private, manage the common affairs of the City. It is a continuous process through which conflicting or diverse interests may be accommodated and co-operative action can be taken. It includes formal institutions as well as informal arrangements and the social capital of citizens” (UN Habitat 2002). The concept urban governance has developed in response to the increasing diversity and complexity brought about by urban growth, which cannot be managed by municipalities in isolation alone as the issues have moved beyond municipal boundaries. Increasing globalisation together with rapid urban growth has resulted in major and far-reaching changes to the dynamics of the urban environment. The resultant changes has in turn impacted on the role, spatial identity and impact of local authorities, which have moved beyond their municipal boundaries and even beyond the responsibilities and capacities of local governments. Consequently, it can be seen that urban governance has come about as a result of the necessity to manage urban growth which has increased both in scope and complexity as a distinct process. It is also in response to the challenges of urban sustainability which is currently high on the global agenda, more specifically the post2015 development agenda (UN 2014:3). The natural increase of the population globally and rural-urban migration of the population are some of the main reasons for urbanisation, although redefinitions of the

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rural-urban status and furthermore the constant adjustment of municipal boundaries and re-demarcation have also increased the urbanisation process. In South Africa, the demarcation and re-demarcation of municipalities over the years and more recently the ushering in of ‘wall-to-wall’ local government have also had a marked impact on urbanisation and redefinition of the rural-urban status relative to local governance. Rural development is an integral part of the development agenda of the South African government. Rural poverty reduction, food security, HIV/AIDS, migration and the delivery of basic services are some of the key areas for intervention. Mohamed Sayeed (2014:2) et al. believe that despite its shortcomings, soft systems methodology (SSM) provides an opportunity to understand the complex nature of rural development and enables the relevant role players to understand the complex situations towards stimulating learning, change and innovation. Globally urban areas/municipalities can be diverse, complex and at different stages of development. They also have different needs which need to be responded to at a particular point in time. However, irrespective of the circumstances in which urban areas/municipalities find themselves, there has to be a firm innovation agenda in place for the locality. Internationally, the global world of urbanisation has tended to become much more flatter, where urban areas/municipalities are functioning as nodes in a high political, social, economic and environmental network. This has meant that the global populace has become more interconnected, reliant and interdependent on each other for an enhanced urban future for the local communities.

17.3

17.3.1

INNOVATIVE GOVERNANCE: TOWARDS

A

NEW URBAN AGENDA

Urbanisation and the New Urban Agenda

There have been several factors that have led to urban issues/urbanisation being placed high on the public governance agenda globally in the twenty-first century. Urbanisation has facilitated growth and development resulting in, inter alia, a dramatic reduction in poverty, major progress in human settlements, increased national economic growth, connectivity which helps to boost productivity and creation of opportunities, merging of towns and cities into new regional spatial configurations, interdependence between urban and rural areas and equitable development (UN, 2014e:3). Coupled with that, there has been considerable emphasis placed on the whole notion of humanitarianism of late. However, by the same token, urbanisation has been unable to respond to the many existing challenges, notably, urban sprawl, pollution and congestion, urban poverty,

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PURSHOTTAMA SIVANARAIN REDDY emission of greenhouse gases, increasing inequalities and segregation. In this light, the present model of urbanisation has been viewed as being unsuitable in terms of responding to these challenges (UN, 2014:3e). In this regard, O’Brien has highlighted some factual information which does shed some light on the issues highlighted but at the same time pointed to some stark contradictions namely: The global population is expected to increase considerably due to an increase in life expectancy. Only 3% of the world’s surface area is occupied; however, 60% of the land to be urbanised by 2030 has not yet been developed and more urban property capacity has to be built over the next 40 years. An estimated 75% of the energy, 80% of the CO2 emissions and 50% of the global waste are generated by municipalities; however, at the same time, municipalities and other urban settlements provide the best opportunities to be innovative in terms of reducing emissions, waste and energy consumption. Approximately 600 cities will be generating 65% of the global growth. Africa in the next few decades, will be the youngest continent with a larger working population than China or India; however, there will be many urban challenges arising from this. The urbanisation strategy in China is clear; India is emerging from a relatively low level of urbanisation; Latin America is the most urbanised, and this has been increasing. Consequently, sustainable urban transition is a common challenge globally, and implementing a common integrated strategy across sectors and regions internationally is critical to long-term success (O’Brien, 2014). *

*

*

* *

*

The resultant changes arising from rapid urbanisation has impacted on the role of cities and spatial identity which have moved beyond the territorial boundaries, responsibilities and capacities of local government (UN, 2014:3). Although urbanisation does have the potential to make municipalities and ultimately countries more prosperous and developed, many municipalities internationally are inadequately prepared for the demographic, spatial, socioeconomic and environmental challenges resulting from urbanisation. The challenges are summarised below: Demographic: rapid urbanisation, a very small number of shrinking cities with an ageing and increasing multicultural population Environmental: high dependence on fossil fuel as a source of energy and climate change Economic: uncertain pace of the future growth industry services; unemployment following the recent global financial crisis and increase in the informal sector *

*

*

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Sociopolitical: spatial and social inequalities, urban sprawl and weak rural-urban linkages unplanned peri-urbanisation and increasing scale and ecological footprint of cities Institutional: relating to governance and the changing role of government (UN, 2014:2)

The challenges highlighted above has to be addressed in a holistic and integrated manner, taking cognisance of social, economic and environmental aspects if urbanisation is viewed as being transformational in terms of promoting sustainable development. There is a positive correlation between urbanisation and development, and in this context, the transformative power of urbanisation has to be harnessed to facilitate this process. This in turn requires a change in the mindset of the municipal functionaries where urbanisation is not seen as a problem, but as a powerful instrument for development and a strategy for poverty reduction and facilitation of basic service delivery. In fact, the real challenges of urbanisation if its positive aspects has been acknowledged is the issue of sustainability in a social, economic and environmental context (UNDP, 2014e:36). The role and responsibilities of municipalities in both developed and developing countries in the past decade bear ample testimony to the challenges of sustainable development at the local level. Sustainable urbanisation can promote and contribute to sustainable development, thereby ensuring that municipalities and human settlements are inclusive and equitable in terms of facilitating inclusive and sustained growth, environmental protection and social development for all the citizenry. Consequently, policies are required to ensure that there is equitable distribution of the benefits of urban growth and for the planning and management of the spatial distributions of their populace and their internal migration (UN, 2014c:16). In this context, it has been pointed out that “policies that aim to restrict rural – urban migration are ineffective at forestalling city growth and can even produce economic, social and environmental harms” (UN, 2014d:17). Consequently, there exists a need for policies that promotes more balanced distribution of urban growth. In this context, it is imperative to take cognisance of the international lessons learned and what needs to be done for certain goals to be achieved: To harness the role of urbanisation as engines of sustainable development To change the relationship between municipalities and the natural environment by minimising ecological footprints, promoting the green economy and decoupling urban growth from resource use and its environmental impacts To transform urbanisation in such a manner that it shifts from being a platform for change to a force for change Emphasise sustainable urban development within the overall context of sustainable development * *

*

*

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*

To ensure the full realisation of human rights, including the right to shelter, water, sanitation, health care and education (UN, 2014c:5)

The United Nations is of the view that Habitat 111 provides the international community with an excellent opportunity to utilise the resources and goodwill to achieve global strategic goals. The views and practices are being supported as part of a new urban agenda informed by the United Nations charter and principles and full respect for international law, reaffirming the respect for human rights, peace, security and freedom (UN,2014c:16). It is believed that a New Urban Agenda2 would reinforce the notion of good citizenship and ensure the full appreciation and the contribution of different nations to sustainable development internationally. A rights-based approach to urbanisation would ensure adequate housing, food, water, gender equality and women’s empowerment, rule of law, good governance and in the final analysis, the global commitment to a just and democratic society for facilitating development (UN, 2014c:16). The commitment to a rights-based approach to development is drawn from the Millennium Declaration which is the right to development for which good governance is essential. Key components of a rights-based approach can only be achieved through effective public administration which would include, inter alia, participation, transparency, non-discrimination, equity and equality, empowerment and accountability (http://www.undp.org/policy /practicenotes.htm). A rights-based approach will not only develop the capacities of right holders, to claim and exercise their rights, but also the obligation of political functionaries to fulfil their human rights obligations in this regard. Consequently, there is considerable pressure on public administration and public institutions to accord a high priority to the indigent and marginalised in policymaking and the resultant development strategies emanating thereof. Internationally, South Africa is one of several countries which documented its strong human rights culture, introduced in 1955 as part of the Freedom Charter and thereafter the 1996 Constitution with an entrenched Bill of Rights. However, the progressive realisation of these rights has been a challenge, given the limited acknowledgement of the informal sector, evictions, social marginalisation and inequality which has quite often manifested itself in violent service delivery protests (Muller, 2014:1). In this regard,

2

The ‘New Urban Agenda’ will be considered by the international community in 2016, and it is anticipated that it will address the outstanding issues of the Habitat Agenda and the Millennium Development Goals, thereby becoming an integral part of the post-2015 UN Development Agenda.

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Muller (2014:1) has advocated the notion of the ‘Right to the City’ which guarantees the progressive enjoyment of universal economic, social, cultural and environmental rights. A renewed political commitment for sustainable urban development globally can harness the positive role and impact of urbanisation in driving growth and sustainability, addressing the governance challenges and reducing the negative externalities being experienced (UN, 2014e:3).

17.4

TOWARDS DECENTRALISED GOVERNANCE: SOME CONTINENTAL EXPERIENCES

Globally, decentralisation has been a key instrument in the reinforcement of local government as the primary vehicle for local development. Decentralisation policies and government reforms since the 1960s have played a pivotal role in strengthening city governments and municipal autonomy in both developed and developing countries. It has also facilitated the election of municipalities in the majority of developing and transnational countries. These reforms have in turn resulted in municipalities gaining increased responsibilities for the delivery of basic services, urban planning, social policy and environmental management (UN, 2014e:9).

17.4.1

Africa

Decentralisation has been high on the agenda since the 1990s; however, the process has been slow and full of challenges with a key consideration being what governments decentralise de jure and de facto. This divergence can be explained by, inter alia, limited resources, the need for attaining economies of scale, capacity constraints, lack of political will and the influence of bureaucratic politics (UNDP, 2010b:6). In countries endowed with rich natural resources and furthermore where there is widespread resistance from central government and politicians to decentralise decision-making powers, these challenges are generally heightened. A further concern highlighted is the risk of state capture at the local levels, where although the poor have achieved some form of representation, the measures in place for accountability are usually not strong enough to ensure that there are effective representations of their interests in the respective decision-making processes. Consequently, although public sector decentralisation and local governance have been incorporated into the processes of economic and democratic change, the likelihood of pro-poor outcomes being achieved is unlikely without a firm commitment to strengthen

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PURSHOTTAMA SIVANARAIN REDDY accountability downwardly and upwardly at both the national and local levels of government (UNDP, 2010b:7). There is general agreement that the state must be strengthened in order to address the crisis and achieve balanced development, with a particular emphasis on governance and institutional capacity of public administration at the local level. Although capacity development has always been prioritised, it has to a large extent always been driven by the agendas and concerns of particularly international partners, thereby resulting in lack of real local ownership. Consequently, capacity development of the public service and public administration is viewed as a sine qua non, not only to ensure inclusive MDG achievement but at the same time secure development interventions and programmes nationally (UNDP, 2010b:7).

17.4.2

Latin America and the Caribbean

Progress has been made in the reform of public administration, local governance and decentralisation; however, there is considerable political, territorial and economic centralisation and power being concentrated in major metropolitan areas, which in turn results in long-standing socioeconomic disparities being perpetuated. Critical challenges that need to be addressed are facilitating economic growth, increasing employment and enhancing public security and social services (UNDP, 2010c:6). In addition, there is a need to improve taxing management at the local level, institutional development objectives should be prioritised over partisan political ones, ensuring consensus for legal reforms at the subnational levels, capacity development for transparent and efficient financial management and supporting citizen decision-making and actions to address social challenges and economic growth (UNDP, 2010c:6).

17.4.3

Europe

The majority of countries embarked on decentralisation of service delivery functions to subnational government and administrations; however, there are still unresolved questions relative to the new role of the state administration and intragovernmental relations in a decentralised system. There are gaps between the small towns and capital cities and rural areas, and ethnic minority groups are lagging behind, resulting in poverty and inequality. There is a need for more inclusive and participatory policy processes from national to subnational governments (UNDP, 2010d:6).

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Although there has been a variation in decentralisation, a major challenge across countries is the limited capacity to design, implement and monitor decentralisation policies, exacerbated by local government institutions and local stakeholders’ lack of preparation for operating in a reformed environment. Greater support is needed at the local and national levels to ensure that decentralisation translates to sustainable local development. Areas accorded a priority in local governance are inclusive local economic development and improved living standards for the indigent and vulnerable (UNDP, 2010d:6). The Netherlands has the largest number of non-governmental organisations internationally, operating in inter alia the fields of health care, education, social housing, culture and social services. According to Minderman and Van der Berg (2014:1), the national government has withdrawn from these sectors over a period of time, granting more space and power to these private entities. The notion of social awareness among the executive leadership of these organisations has been entrenched and this has in turn contributed constructively to the internal supervisory boards facilitating the decentralisation of national government.

17.4.4

Asia and Pacific Islands

Urban governance is a critical area in the Asian and Pacific countries as this region includes the fastest-growing cities with massive urban-rural migration and 33 of the cities that are expected to shortly reach the 5 million population mark. There has also been a rapid increase in informal settlements with almost half the urban population in Asia living in slums (UNDP, 2010e:7). Consequently, local governance is high on the municipal agenda for policymakers, city administrators and mayors. The Pacific Islands with their small populations scattered over many small islands are experiencing distinct challenges, notably urbanisation and migration to the main islands, governance standards are perceived as being inadequate; poor access to services and opportunities due to long distances and remoteness and poor quality of service delivery (UNDP, 2010e:7). There is also limited private investment and employment. There are also capacity constraints, diseconomies of scale which determines how far decentralisation can go, poor transportation and communication, disincentives for government to work in remote areas and the coexistence and competition between traditional leadership and imported forms of governance (UNDP, 2010e:7).

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PURSHOTTAMA SIVANARAIN REDDY 17.5

LOCAL ECONOMIC DEVELOPMENT: BEYOND RHETORIC

The development role of local government has become particularly marked internationally in the past decade. In the African and South African context, it has to be seen in the broader discourse of a developmental state. Koma (2014:18) points out that South Africa is defined and viewed as a developmental state, and consequently local economic development is but an important vehicle at the disposal of the state to realise its strategic socioeconomic development imperatives. Reddy (2014:2) develops this point further and adds that municipalities have the mammoth task of restructuring their local economies to increase their competitiveness and simultaneously addressing inclusiveness, i.e. drawing in those who are unemployed, youth, disabled women, indigent and the informal sector. Scheepers and Welman (2014:1) have extended local economic development to be viewed against a wider background of regionalism and regional development where regions have emerged as important space and actors in national and global politics. As indicated earlier, the notion of the city-region is slowly gaining momentum in South Africa. LED failure particularly in the most impoverished municipal areas has a direct impact on local governance. Limited or no LED in a significant number of municipalities has manifested itself in public protests against poor municipal service delivery. Factors impacting negatively on LED are, inter alia, limited capacity of municipalities to facilitate a new development role; poor working relations between the provinces, district and local municipalities; and limited interaction between the formal and emerging business sectors and inability of many municipalities to develop an LED strategy within the broader IDP process (SALGA, 2010:5 and Phutiagae, 2012:153). An entrepreneurial culture is key to enhancing local economic development, more specifically the passion to grow a business and develop as a nation economically. Strong political and management will by public functionaries at the national, provincial and local spheres of government is critical so that they act decisively in promoting LED, thereby responding to the challenges of poverty, unemployment and inequality (Reddy, 2014:25).

17.6

CAPACITY DEVELOPMENT

Globally, there is a tendency by states, governments, public institutions and non-governmental organisations alike to set the bar high in terms of vision, ideals and goals to be met; however, capacity is quite often the deciding factor. Consequently, the required

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policies are formulated, and implementation tends to become a challenge which then tends to impact negatively on the resultant public programmes. The decentralisation of national ministries and governments that are highly centralised globally has made it imperative for local government capacity to be broadened. According to Rosenbaum (2011:164), it seems that a new creativity has emerged in subnational government as a result of the increasing focus on decentralisation, whether it is in Bolivia where the movement of the rural poor into the main centres through building and strengthening local institutions has been encouraged as a result of the Popular Participation Law or the People’s Republic of China, where major economic development has been facilitated by higher degrees of local autonomy. He adds that the largest amount of new construction activity experienced in a single urban area in human history has been in Shanghai and points out that these developments has made a marked impact on local government and public administration (2011:164). The majority of the local leadership in particularly developing countries internationally is relatively inexperienced, and consequently, the required level of professionalism is lacking in many of the subnational governments. There has to be a greater shifting of focus by particularly developing countries and international development agencies and non-governmental organisations to address the issue of capacity development. There has to be a positive correlation between a nation’s educational system and the kind of technical skills needed to achieve its sustainable development goals (Dobie 2014:1). There is a need to build more effective and stronger governance institutions, inclusive and integrated institutional systems and mechanisms to facilitate structural and societal transformation processes more specifically at the subnational levels. Furthermore, adequate technical capacity is also needed to analyse and manage these processes. Improved governance capacity is fundamental to ensuring that spontaneous urbanisation is replaced with planned urbanisation; new linkages and stronger ties among the various spheres of government are also critical in terms of support, coordination, cohesion and ensuring long-term sustainability (UN, 2014b:10). Structural variables have an influence on public service delivery, and certain reforms can contribute to enhanced service delivery. It is imperative that structures should be designed to enable the municipality to perform better (Steiner, Kaiser and Reichmuth, 2014:1). As governments internationally experience challenges in financing and delivering much needed services to the citizenry, providing platforms and facilitating self-organisation of

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PURSHOTTAMA SIVANARAIN REDDY citizens as producers appears to be a prudent strategy. In this context, Ayad Al-Ani (2014:157) points out that it is necessary for public institutions to transform and utilise the required tools to facilitate the opening of P2P networks and direct and enable them to work on public issues. Consequently, where governments fail to act or are slow, social media combined with online applications could facilitate bottom-up participatory action to galvanise government to action in responding to public needs.

17.7

TOWARDS GOOD GOVERNANCE

AND

ACTIVE CITIZENSHIP

Key to the process of responding to the challenges of urbanisation is the quest for good urban governance. More specifically, there is a need for a deepening of democracy to facilitate responsive local governance which at the same time ensures that the rights of local communities are respected and adhered to, relative to efficient and effective service delivery. There is also a need to reinforce the need for public accountability; greater transparency in public governance and also respect for law and order, especially in developing countries. Good governance is an integral part of democracy and generally follows on from this process. A common recurring theme in both processes is public participation, transparency and rule of law which has to be nurtured and reinforced over time, thereby ensuring that it constitutes one of the foundational building blocks of the system. In South Africa, the corrosive effect of corruption has eroded confidence in the government and the political leadership over a period of time. The National Development Plan, according to Pillay and Mantzaris (2014:1-2), has proposed the creation of an anticorruption system that can operate free from political interference and supported by public functionaries and the citizenry at large. They add that the basis of this system is that designated agencies investigate corruption, leaders take action when alerted to it, citizens resist the temptation to pay bribes, the private sector does not engage in corrupt activities and the media fulfils its investigative and reporting function (2014:1-2). Active citizenship has been viewed as a vehicle by the South African Government to strengthen the local governance system. Mchunu and Theron (2014:1) point out that during the apartheid era, there was active citizenship; however, the post-1994 dispensation has been characterised by passive citizenry. They add that the non-governmental organisations need to adopt a pro-poor stance to reignite active citizenship. The development of robust partnerships between the public/private and NGO sector and local communities is a key consideration so that all the key role players and stakeholders

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take ownership of the local governance process and at the same time address the challenges of urbanisation. Consequently, it is imperative that there should be a clear mission statement, expectations and honouring of commitments when managing stakeholder relations at the local level. Good stakeholder relations are largely based on trust and legitimacy, thereby ensuring that the reputation of relevant stakeholders remains intact (Geurtsen and Verstraeten, 2014:1).

17.8

URBANISATION

AND THE

POST-2015 DEVELOPMENT AGENDA

Urbanisation has emerged as one of the key global trends of the present century, which if effectively and efficiently managed can enable the international community to overcome major global challenges, like climate change and rising inequalities, thereby moving towards more sustainable, equitable and inclusive development for all. This was acknowledged by governments in paragraph 134 of the Rio + 20 Outcome Document, entitled ‘The Future we Want’: “We recognize that, if they are well planned and developed, including through integrated planning and management approaches can promote economically, socially and environmentally sustainable cities,…” (UN, 2014:2). The deadline set for achieving the MDGs by the United Nations is 2015. Of late, there have been consultations and discussions taking place to replace the MDGs as part of a new post-2015 global development agenda. An urban governance system is required that translates global consensus into local action internationally, and this constitutes a major challenge (UNDP, 2013:1). The UN Global Summit on Local Development, held in Kampala, Uganda, in 2010 recognised that the MDGs in order to be effective and sustainable require ‘localisation’ (CLGF, 2012:1).Local government working in collaboration with the private sector can facilitate investment promotion and job creation and can also be used to mitigate disaster risk and build resilience and address wider issues of climate change. Environmental management can no longer be solely about the historical agenda of environmental protection of open spaces. It has moved beyond being the independent and detached line function of government to a transversal function cutting across all the business of government (Ackron and Burger, 2014: 1).Many governments and international agencies are supporting decentralisation and local government capacity development to enable them to become more efficient and effective delivery agents for basic services (CLGF, 2012:1).

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PURSHOTTAMA SIVANARAIN REDDY 17.9

CONCLUSION

The new urban age has been one that has been marked by challenges which has impacted on both developed and developing countries alike; however, it does offer opportunities to respond very positively to global issues such as poverty, inequality, climate change and social marginalisation and poor basic service delivery. The ‘New Urban Agenda’ that has been proposed by the international community is expected to be all encompassing in terms of responding to global challenges such as, inter alia, urban poverty, slums, social marginalisation and inequality and economic depression. There is a need to have a shared vision and understanding of the global challenges that need to be addressed by all the key players and stakeholders, namely, governments, the private sector, the citizenry and non-governmental organisations for innovative and genuine partnerships to be effected in terms of responding to these issues (www.scn. sap.com/community/public.sector). The private sector is generally perceived to be better managed, accessible and more efficient, although it is unregulated and inequitable. Joint collaboration and public-private partnerships can improve equity, accessibility and quality and can be mutually beneficial in terms of exchange of resources, technology, knowledge and skills, cost-efficiency and public image (Björkman, 2014:12). REFERENCES Ackron, J. and Burger, J. (2014). Options for Resourcing Environmental Management in the City of Cape Town. Record of the Proceedings of the 14th Winelands Conference, held on 31 March – 14th April 2014. Cape Town: University of Stellenbosch. Al - Ani . A. (2014). Government as a Platform? Public Virtual Structures for Service Delivery as Elements of a Renewed Public Administration. Proceedings of the 14th Winelands Conference held on 31 March – 4th April 2014. Cape Town: University of Stellenbosch. Ambole, A.A. (2014). Transdisciplinary Research for Innovation in Informal Settlement Upgrading. Record of the Proceedings of the 14th Winelands Conference, held on 31 March – 14th April 2014. Cape Town: University of Stellenbosch.

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Björkman, J .W. (2014). Comparative Health Reforms in Brazil, India and South Africa: A Research Agenda. Proceedings of the 14th Winelands Conference held on 31 March – 4th April 2014. Cape Town: University of Stellenbosch. Dobie, R. (2014). Youth Capacity Building en Unemployment in Ethiopia. Record of the Proceedings of the 14th Winelands Conference, held on 31 March – 14th April 2014. Cape Town: University of Stellenbosch. Geurtsen, A. and Verstraeten, A. (2014). How to Co – operate with Stakeholders : Lessons from the Netherlands. Record of the Proceedings of the 14th Winelands Conference, held on 31 March – 14th April 2014. Cape Town: University of Stellenbosch. Koma, S. (2014). Local Economic Development : An Ingredient or Growth and Poverty. Record of the proceedings of the 14th Winelands Conference, held on 31 March – 14th April 2014. Cape Town: University of Stellenbosch. Mchunu, N. and Theron. F. (2014). Re-igniting Active Citizenship in South African Local Governance : the Role of the Third Sector. Proceedings of the 14th Winelands Conference held on 31 March – 4th April 2014. Cape Town: University of Stellenbosch. Minderman, G. and Van der Berg, S. (2014). Is Internal Supervision in Dutch Non – Profit Organisations Relevant to the Decentralisation of Central Government? Record of the Proceedings of the 14th Winelands Conference, held on 31 March – 4th April 2014. Cape Town: University of Stellenbosch. Mohamed Sayeed, C., Pillay, P., and Reddy, P.S. (2014). Innovation in Rural Development in South Africa: A Critique of Soft Systems Technology. Record of the Proceedings of the 14th Winelands Conference held on 31 March – 4th April 2014. Cape Town: University of Stellenbosch. Muller, A. (2014). From the Freedom Charter, through the Bill of Rights to the “Right to the City” : What is the Relevancy for a Sustainable South Africa? Record of the Proceedings of the 14th Winelands Conference. held on 31 March – 14th April 2014. Cape Town: University of Stellenbosch. O'Brien, S. (2014). Accelerating Innovation towards a New Urban Agenda: Talking Urban Matters. SAP for Public Sector. 10 June 2004.

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PURSHOTTAMA SIVANARAIN REDDY Phutiagae, K. (2012). Local Economic Development and Municipalities in South Africa, in Van der Walt, G. et al. (eds.) Municipal Management: Serving the People (pp. 143 – 161), Cape Town: Juta and Company. Pillay. P and Mantazaris, E. (2014). The National Development Plan and Corruption. Record of the Proceedings of the 14th Winelands Conference held on 31 March – 4th April 2014. Cape Town: University of Stellenbosch. Presidency. (2015). State of the Nation Address to the Joint Sitting of Parliament on the 12 February 2015. Cape Town: Presidency. Reddy, P.S. (2014). Local Economic Development and Inclusivity in South Africa. Record of the Proceedings of the 14th Winelands Conference, held on 31 March – 4th April 2014. Cape Town: University of Stellenbosch. Rosenbaum, A. (2011). The Post – Governance World : Continuing Challenges, New Opportunities. in Dwivedi, O. P. (ed.), Public Administration in a Global Context : IASIA at 50. (pp. 153 – 180). Brussels : Bruylant Publishers. Scheepers, L. and Welman, L. (2014). Local Economic Development in Saldanha Bay. A Reflection of the Pas and a Peek to the Future. Record of the Proceedings of the 14th Winelands Conference.held on 31 March – 4th April 2014. Cape Town: University of Stellenbosch. South African Local Government Association. (2010). South African Local Government Association (2010) : SALGA LED Position Paper, Pretoria: SALGA. Steiner, R., Kaiser, C., and Reichmuth, L. (2014). What Structural Factors Public Service Delivery. Record of the Proceedings of the 14th Winelands Conference, held on 31 March – 4th April 2014. Cape Town: University of Stellenbosch. Thornhill, C. and Cloete, J.J.N. (2014). South African Municipal Government and Administration. Pretoria: Van Schaik Publishers. UN – Habitat (2002). The UN Global Campaign on Urban Governance : Concept Paper. Nairobi. UNDP (2013). Localising Sustainable Human Development: Considerations for the Post 2015 Global Development Agenda. New York: UNDP. January.

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UNDP and Pan African Parliament (2013). Pre – Meetings of the Global Thematic Consultation on Governance and the Post 2015 Development Agenda: “The Africa We Want Post 2015”. 24 – 27 February 2013. South Africa: Pan African Parliament. United Nations (2010a). Building Bridges between the State and the People: An Overview of Trends and Developments in Public Administration and Local Governance. New York: UNDP. September. United Nations (2010b). Building Bridges between the State and the People: An Overview of Trends and Developments in Public Administration and Local Governance in Africa. 2010. New York: UNDP. August. United Nations (2010c). Building Bridges between the State and the People: An Overview of Trends and Developments in Public Administration and Local Governance in Latin America and the Caribbean. New York: UNDP. August. United Nations (2010d). Building Bridges between the State and the People: An Overview of Trends and Developments in Public Administration and Local Governance in Europe and the Commonwealth of Independent States. New York: UNDP. August. United Nations (2010e). Building Bridges between the State and the People: An Overview of Trends and Developments in Public Administration and Local Governance in Asia Pacific. New York: UNDP. August. United Nations (2014a). Effective Governance, Policymaking and Planning for Sustainable Urbanisation: Report of the Secretary General. New York: United Nations. United Nations (2014b). Integration Segment: Sustainable Urbanisation. Economic and Social Council. New York. United Nations (2014c). Progress to Date on the Implementation of the Outcomes of the Second UN Conference on Human Settlements (Habitat 11) and Identification and of New and Emerging Challenges on Sustainable Urban Development: Report of the Secretary – General: 17/18 September 2014. New York. United Nations (2014d). World Urbanisation Prospects: The 2014 Revision: Highlights. New York.

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PURSHOTTAMA SIVANARAIN REDDY United Nations (2014e). Preparatory Committee for the UN Conference on Housing and Sustainable Urban Development (Habitat 111). New York. 17/18 September. UNDP (undated). Public Administration Reform: Practice Note. Available on ; accessed on 10 February 2015. Van Der Waldt, G. et al. (2014). Municipal Management: An Orientation, in Van der Waldt, G. et.al (eds.). Municipal Management: Serving the People (pp. 1-22). Cape Town: Juta and Company. Cape Town. ; accessed on 10 June 2014.

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AUTHORS Ackron (Johan) A graduate in theoretical physics and applied mathematics, Johan Ackron later became interested in economics and pursued his studies in that direction. He worked in the private sector and in consulting and thereafter in general management in the parastatal development sector – at the “coal face” of development in Southern Africa so to speak – for twenty five years. He served as a policy adviser in the CODESA negotiations that led to the formulation of South Africa’s new Constitution and has been associated with Stellenbosch University in various capacities for the past fourteen years, most recently as an Academic Extraordinaire in the School of Public Leadership. He has an abiding interest in questions related to sustainability and sustainable development representing a nexus of the physical and social sciences. In particular his interest extends to contextually appropriate intervention and performance management, and he currently consults in these fields particularly to the public sector. He teaches modular and executive programmes in local economic development, performance management, and local governance in the School of Public Leadership of Stellenbosch University and in the Centre for Public Management and Governance of the University of Johannesburg. His publications and co-publications cover a number of themes including more recently access to and economic regulation of water in South Africa, the institutionalisation of sound local economic development praxis in the public sphere in South Africa, and emergent good practice approaches to business support and the implications for local governance. Al-Ani (Ayad) Prof. Dr. Dr. Ayad Al-Ani was a former Executive Partner for Accenture and director of the Vienna Office. He was leading the ESCP Business School in Berlin as a rector. His teaching experience covers the University of Economics and Business, Vienna; Hertie School of Governance, Berlin; and the Diplomatic Academy, Vienna. He currently is a researcher at the Humboldt Institute for Internet and Society in Berlin and lecturer at the University of Potsdam. Amollo Ambole (Lorraine) Lorraine Amollo Ambole is a holder of a TRECCAfrica candidate at the School of Public Leadership, Stellenbosch on knowledge co-production and innovation in informal sanitation projects in informal settlements in South Africa

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Scholarship and is a PhD University. Her research is contexts, and she is using as her case studies. One of

AUTHORS those cases is Enkanini informal settlement, which has been used in this paper. Lorraine continues to hold the post of a tutorial fellow at the School of the Arts and Design, University of Nairobi, Kenya. She previously held the position of assistant lecturer at the Design department in Maseno University, Kenya. In 2014, she became a World Social Science (WSS) fellow after attending the WSS fellows’ seminar on Sustainable Urbanisation in Taipei. Her other interests are in sustainable design, and she has presented at various international design conferences. Most recently, Lorraine was invited as a panellist at the World Design Capital 2014 Design Policy Conference held in Cape Town. She is also an active member of the Design for Social Innovation and Sustainability (DESIS) network. Björkman (James Warner) Educated at the University of Minnesota (BA summa cum laude 1966) and Yale University (MPhil 1969 & PhD 1976), James Warner Björkman is Professor Emeritus of Public Policy and Administration at the Institute of Social Studies, The Hague, The Netherlands, where during 1996-2000 he was Deputy Rector and subsequently chaired the Staff Group on States, Societies, World Development. Formerly having also been Professor of Public Administration and Development at Leiden University, he has held Visiting Professorships in England, Slovenia, Sweden, India, Pakistan, Namibia, South Africa, and Japan. Within the International Political Science Association, he chaired its research committee on Comparative Health Policy (2006-2012). He also directed two 5-year research projects in India funded by the Indo-Dutch Program for Alternatives in Development. Among his 18 books are: Controlling Medical Professionals, The Comparative Politics of Health Governance (1989), Health Policy Reform, National Variations, and Globalization (1997), Health Policy: International Library of Public Policy (1998), Public-Private Partnerships in Health Care in India: Lessons for Developing Countries (2009), The Practice of Policy Making in India: Who Listens? Who Speaks? (2009), and Comparative Health Reforms in Central and Eastern Europe, 1990-2010: Options, Obstacles, Limited Outcomes (2013). He has published 85 articles, reviews, and chapters and serves on the editorial boards of Public Organization Review, Grassroots Governance Journal, and the Indian Journal of Asian Studies. Dibie (Robert) Robert Dibie, PhD, is Distinguished Professor of Public Policy, Public Management and Environmental Studies at Indiana University Kokomo’s School of Public and Environmental Affairs (SPEA). He has been dean and senior higher education administrator for many years. Previously, Professor Dibie served as the director of graduate programs in public administration at Western Kentucky University. Professor Dibie is the author of

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AUTHORS several books, book chapters, and more than 90 research articles in peer-refereed journals. His latest books are: Comparative Perspectives on Environmental Policy and Issues by Routledge Press; Public Administration: Analysis, Theories and Application by Babcook University Press. His research articles have appeared in the International Journal of Public Administration; Journal of African Policy Studies, Journal of Developing Societies, Journal of Sociology and Social Welfare; Journal of Social Justice, Journal of African and Asian Studies; Politics Administration and Change Journal and so on. He has presented more than 120 academic papers in national and international conferences, focusing on issues of sustainable development, public management, public policy, women empowerment, environmental policies, development administration, and non-governmental organizations (NGOs). As a nationally recognized leader in higher education, Professor Dibie has presented many seminars, workshops, and lectures in the areas of Higher Education Leadership, Public Policy, Environmental Policy, Gender Empowerment and Sustainable Development in a number of universities around the world. He has also consulted for several NGOs and universities in the United States, Europe, Africa, and the Caribbean Islands. Geurtsen (Arno) Dr. Arno Geurtsen RC (1963) is senior research fellow at the Zijlstra Center for Public Control and Governance of the Vrije Universiteit in Amsterdam. His research focuses on stakeholder management, public value, and governance of non-profit organizations. Key concepts are stakeholder interaction, design thinking, and co-makership. He is a board member of the Association of Supervisors of Educational Institutions, where he is responsible for training and governance. Kaiser (Claire) Dr. Claire Kaiser is a researcher at the Center of Competence for Public Management at the University of Bern. She successfully completed her PhD in public administration with her cumulative dissertation on Amalgamations of Municipalities in Switzerland. She is involved in research and consulting projects as well as assisting lecture courses. In 2013, she was a Visiting PhD Researcher at Queen Mary University of London. She studied economics, business administration, communications and media studies at the University of Bern and at the Università degli Studi di Roma “La Sapienza”. Koma (Sam) Dr. Koma completed his doctoral studies with the University of Pretoria and his research was financially supported by both the National Research Foundation and University of Pretoria. Furthermore, his global research experiences involve visits to the Hungarian

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AUTHORS Academy of Regional Studies in Budapest, Hungary and the Stein Rokkan Centre for Social Studies in Bergen, Norway. He is internationally and locally well-travelled and has presented scientific papers at international conferences held in countries such as Italy, Thailand, Bahrain, and Indonesia. Koma was previously involved in the Norway-South Africa Comparative Social Security project and the South Africa-Netherlands Programme in Alternatives in Development. He is presently appointed as an external examiner for the North-West University, University of the Western Cape, University of the Fort Hare, University of Stellenbosch, and Regenesys School of Public Management. His areas of research specialisation are local government, local economic development, and public policy analysis and his research articles have appeared in scientific journals based in South Africa and abroad. Dr. Koma is presently involved in lecturing undergraduate and postgraduate students and the supervision of Masters’ research projects within the School of Public Management and Administration, University of Pretoria. He is also involved in various professional associations, namely, the South African Association of Public Management and Administration and the International Association of Schools and Institutes of Administration. Over the past ten years, he has been extensively involved in facilitation of training to public sector managers and completion of management consulting projects for municipalities and government departments. He is currently involved in collaborative research with the Indiana University in the United States of America. Mantzaris (Evangelos) Professor Evangelos A. Mantzaris was full Professor and Head of Department at the Social Policy Programme at UKZN, and a Research Professor at Mangosuthu University of Technology before he was appointed as a Senior Researcher at the Anti-Corruption Centre for Education and Research of Stellenbosch University (ACCERUS) in 2012. In the past three years, he has published widely on corruption and anti-corruption in South Africa’s public and private sectors with special emphasis on leadership, financial management, supply chain and procurement, the political/administrative/interface conundrum, detection and offensive strategies against corruption, internal controls and risk management. He holds a PhD (Sociology), from the University of Cape Town, has published seven full scale books, 19 chapters in books, 54 SAPSE journal articles, has participated by delivering papers in 50 national and international conferences, and has presented invited seminar and lecture series at Oxford, Yale, Lehman College (New York), Panteios, and the University of Athens in Greece. He has written policies on Communication Strategies, Deployment, Disciplinary procedures, Change Management for a number of municipalities and has performed Tender evaluations, PMS, Matching and Placing, skills audits, Local Economic Development and IDP structuring, and writing for Umgugundlovu, KSD, Nqhuthu, and uMshwati municipalities. He has done long term

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AUTHORS research for the Office of the Premier, KZN, the Department of Social Development, the Department of Cooperative Governance (KZN), the Department of Transport (KZN), and has done research and consultancy for consulted the KSD (Mthatha), Nqutu, uMswathi, uMgugundlovu municipalities. He has written and facilitated training in Project Management, Writing Skills, and Effective Service Delivery for local municipalities and provincial government. Mchunu (Ntuthuko) Ntuthuko Mchunu is a programme manager for community based tourism development in the City of Cape Town. He holds a Masters degree in Public Management and Development from Stellenbosch University. He has practical experience in the local government sphere of tourism development government as a change agent. As a new generation author, Mchunu has presented academic papers in both national and international conferences. He has co-authored peer reviewed journal articles and has contributed chapters in academic books. Mchunu specialises in public participation, with interests in service delivery issues, including the role of the third sector, good local governance, and active citizenship. Minderman (Goos) Goos Minderman is extraordinary professor Good Governance at School of Public Leadership of Stellenbosch University, extraordinary professor Public Governance and Public law at the Vrije Universiteit in Amsterdam, and teaches at many other universities. He started as a lawyer in civil service, wrote his PhD on public finance and entered academic life in 1998 and initiated the Zijlstra Center in Amsterdam. He is member of the organizing team of the Winelands Conference since 2011. His publications focus on the field of public finance and financial control, aswell on nonprofit management and supervision. He was member of the Dutch Senate, was appointed in various government advisory committees, and was member of the presidium and executive committee of Conference of European Churches for ten years. This volume is the third Winelands report he has edited. Mohamed Sayeed (Cheryl) Cheryl Mohamed Sayeed is currently a Post-Doctoral Fellow in the Discipline of Public Governance under the auspices of the School of Management, IT and Governance, at the University of KwaZulu Natal. She holds a D. AMINISTRATION (Public Administration) qualification from the University of KwaZulu Natal. In addition, she holds a Master of Arts (Rural Development Planning), a Bachelor of Social Science Honours (Human Resource Management), and undergraduate qualifications in Development Studies and the Social Sciences with Rural Sociology, Industrial & Labour Studies, Public

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AUTHORS Administration, and Development Administration as majors. She is a qualified Higher Education Institution Assessor and has been trained to conduct institutional quality assessments by the South African Higher Education Quality Committee (HEQC). She is a Commonwealth Scholar, having being the recipient of an Association of Commonwealth Universities scholarship, which allowed her to complete her Masters qualification in the United Kingdom. Her academic experience in teaching, research, and community engagement at institutions for higher learning spans over 18 years through her time spent as a lecturer at the University of KwaZulu Natal and Mangosuthu University of Technology, with key specialisation in Public Administration and Development Management modules at both undergraduate and post graduate levels. Her research interests lie broadly within the fields of Management, Public Administration, and Development Management. Over the years, she has delivered papers to local, national, and international audiences, and published in this field with a core focus on poverty, food security, governance, corruption, and public policy implementation. She is currently conducting research into the role of local government in poverty reduction under the guidance of a senior professor at the University of KwaZulu Natal. Furthermore, she is pursuing collaborative research initiatives with the Anti - Corruption Centre for Education and Research of Stellenbosch University (ACCERUS). Muller (Anneke) Anneke Muller is a senior lecturer in the School of Public Leadership at Stellenbosch University and co- ordinator of the Sustainable Development Planning specialisation of the Masters Programme in Sustainable Development. She graduated with a BSc (Geology and Geography) and Masters in Town and Regional Planning (cum laude) from Stellenbosch University, and with a BIurus (with distinction) from the University of South Africa (UNISA). She is registered as a Professional Planner with the SA Council of Planners (Pr. Pln . A/632/1990) and is also a member of the SA Planning Institute (SAPI). She served on the Western Cape Branch Committee of SAPI from 1993 to 1999 and was Chairperson from 1998 to 1999. She previously worked as Chief Town and Regional Planner for the Western Cape Provincial Administration, where she was one of the chief drafters of the Western Cape Planning and Development Act 7 of 1999. Her research interests include sustainable development and sustainable human settlements; planning under complexity; planning law and policy; planning, public participation and forms of democracy; conflict management and transformation; planning and human rights; poverty and development; and informal housing. She has supervised 32 completed Masters theses and written a number of articles. She is presently reading for a PhD degree at Stellenbosch University on “Learning to Reinvent Development Planning for Sustainability: Critical Reflections on South African Development Planning and Sustainability Discourses’.

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AUTHORS Pillay (Pregala) Pregala Pillay is a Professor in the School of Public Leadership and Director of AntiCorruption Centre for Education and Research of Stellenbosch University (ACCERUS). She holds D. ADMIN qualification from the University of Durban Westville (University of KwaZulu Natal). She has achieved Certificates in Town Management: Urban Development from the Institute International D’Administration Publique (France), Enhancing Leadership and Policy Implementation Skills in the SADC Public Sector from CESPM/ CAPAAM (Botswana) and Oral Methodologies/Empowering Communities on HIV/Aids from the University of Michigan in partnership with the Durban University of Technology (South Africa). She commenced her academic career at Mangosuthu University of Technology and later joined her alma mater and progressed from Lecturer, Senior Lecturer to Director of the School of Public Administration and Development Management. She has more than 20 years’ experience in teaching a diverse range of Public Administration modules to under and postgraduate students. She has researched and published widely on contemporary issues in Public Administration, local government, service delivery, leadership, and corruption and has presented papers at national, regional, and international conferences. She has been invited to serve as an external examiner for a selection of universities across South Africa. She has peer reviewed articles for leading journals in Public Administration in South Africa and beyond and in particular, serves as a reviewer for Administratio Publica. She has served in several leadership capacities inter alia, Member of the Presidential Review Commission, Task Team IV, Trustee of the Joint Universities of Public Management Education Trust, Board Member of the Association of Southern African Schools and Departments of Public Administration and Management, Co-Chair of the Working Group on Women, Diversity and Equity of International Association of Schools and Institutes of Administration, Board Member of the Journal of Governance and Public Policy, and Judge on the Women in Compliance Award. Reichmuth (Lukas) Lukas Reichmuth is a Ph.D. candidate and research assistant at the Center of Competence for Public Management at the University of Bern. He holds an M.A. in International Affairs and Governance from the University of St. Gallen (Switzerland), a study program that included two exchange semesters at the University of Geneva and the Norwegian School of Economics (NHH) in Bergen. Reddy (Purshottama Sivanarain) Professor P.S. Reddy is a Senior Professor and local government specialist at the University of Kwazulu Natal in Durban. He is the Project Director of the Working Group on

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AUTHORS Sub-national Governance and Development of the International Association of Schools and Institutes of Administration (IASIA), headquartered in Brussels. He also serves on the Board of Management representing the African Region and on an IASIA – United Nations Department of Economic and Social Affairs (UNDESA) Taskforce for Effective Public Administration at the Local Level for the Achievement of the MDGs. Prof Reddy is also an Alternate Associate Board member of the Commonwealth Local Government Forum (CLGF) (headquartered in London) representing universities and research organisations. He is the editor/co-editor of nine books focusing on local governance and development and currently serves on the editorial/advisory committee of five journals in South Africa, United States, India, and Australia. He is rated as an established researcher with the National Research Foundation in South Africa and previously served on one of its specialist committee representing the Discipline of Public Administration. In 2014, he received the Donald Stone Award for being “A Distinguished International Scholar/ Practitioner” and for his “Contribution towards Advancing the Wellbeing of IASIA”. Scheepers (Louis) Louis Scheepers is the municipal manager of Saldanha Bay Municipality. He is a committed and experienced career civil servant and local government practitioner with 23 years of experience in the management of district and local municipalities. Mr Scheepers has served as municipal manager (accounting officer) and administrator of four municipalities and has a strong background in all aspects of strategic planning & management, institutional turnaround, people development & management, and organisational transformation & design. Louis is currently a candidate for the PhD in Public Management & Development Planning at the School of Public Leadership of the Stellenbosch University. The title of his dissertation is An Institutional Capacity Model for Municipalities in South Africa. Louis holds a Masters in Public Administration (MPA) from the University of the Western Cape and a National Diploma in Public Management (ND: Pub Man) from the erstwhile Technikon South Africa. Steiner (Reto) Reto Steiner is a Professor of Public Management and a member of the Managing Board at the Center of Competence for Public Management at the University of Bern (Switzerland). His main areas of teaching and research include organizational design, local and regional governance, and public corporate governance. He teaches not only at the University of Bern but also at various universities overseas. He serves on various editorial boards of academic journals, and he presided over the 2010 Annual Conference of the International Research Society for Public Management. Reto Steiner has many years of experience in consulting for public institutions. His previous clients include the Swiss Federal Council, the Swiss Agency

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AUTHORS for Development and Cooperation, and various international and Swiss state and local governments. The focus of these projects has been organizational change, steering structures, and decentralization. He is a member of the Council of Administration of the International Institute of Administrative Sciences (IIAS) in Brussels and member of the Executive Committee of the Swiss Association of Administrative Sciences. Since 2013, he has been a Titular Member for Switzerland of the Group of Independent Experts on the European Charter of Local Self-Government (GIE) at the Council of Europe. Theron (Francois) Francois Theron is an anthropologist and social development consultant. As senior lecturer at the School of Public Leadership (SPL) at Stellenbosch University, he teaches, conducts research, publishes journal articles and books, presents nationally accredited short course programmes in local government, and consults as a development planning professional. Theron has published numerous journal articles, written, contributed and edited many books, and delivered papers at national/international conferences on topics in his field. He has supervised and examined more than 60 master’s students in public administration, development studies, sociology, anthropology, political science, and social forestry and acts as external moderator /examiner at four universities. Theron’s specialist fields are public participation, community development, and action research. He facilitates two programmes (public participation in local government & integrated community development planning), acts as facilitator at workshops, and consults broadly at university and community level. Theron is well networked in the international/national social development field. Verstraeten (Ans) Ans Verstraeten, MSc (1971), is researcher at the Zijlstra Center for Public Control and Governance of the Vrije Universiteit in Amsterdam. Her field of research is stakeholder management, legitimacy, and public value of non-profit organizations. Since 2012 she has presented papers on these topics at conferences. She is employed at a Dutch charity organization as Head of Business. In 2011, she completed an Executive Master of Nonprofit and Public Management with a thesis on ‘Accountability on social returns by fundraising organizations’. Welman (Lesly) Lesley Welman is currently a High School teacher. His record of accomplishment as a geography teacher spans a period of 26 years at Diazville High. During his teaching career, he exposed his geography learners to various field work (rural and urban

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AUTHORS settlements, landscape formation, and the spatial distribution of economic activities). Through this continuous involving in issues regarding the real world problem of Saldanha, he also laid the foundation for the building of formal and informal institutional thickness in communities. The end result is not only to establish trust building amongst the communities but also to develop a sense of place and identity. After he completed his post-graduate qualifications in Economic Geography (part-time) and to enhance his knowledge in town and regional development, he started preparing himself for the expanding of the current regional development theory (New Regionalism and Evolutionary Economic Geography) and the establishment of a regional development model for Saldanha. Lesley is currently a candidate for the PhD (Economic Geography) in the Department of Geography and Environmental Studies. The title of his dissertation is Regional development of Saldanha Bay region, South Africa: The role of institutions. Lesley holds a Masters in Economic Geography and a High Teaching Diploma (HTD) from the University of the Western Cape.

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REVIEWERS We are very grateful to all reviewers who have contributed to a swift, double-blind review process of this book:

Ballard (Harry)

Cape Peninsula University of Technology

Bassi (Andrea)

Extraordinary Associate Professor at Stellenbosch University

Biggs (David) Biljohn (Maréve)

City Manager of the City of Hercules, California University of the Free State

Bosman (Frouwien) Bossert (Hans)

City of Cape Town Municipality Extraordinary Professor at Stellenbosch University

Cameron (Robert)

University of Cape Town

Ceaser (Nicky) Draai (Enaleen)

Stellenbosch Municipality Nelson Mandela Metropolitan University

Fields (Billy) Keyter (Charles)

Texas State University Polytechnic Namibia

Knudsen (Morten)

Copenhagen Business School

Malan (Naudé) Master (Warren)

University of Johannesburg ASPA’s Good Governance Worldwide

Mubangizi (Betty) Nel (Danielle)

University of KwaZulu-Natal University of Johannesburg

Rabie (Annelie) Raga (Kishore)

Rabie Consulting & serving Councillor on the Central Karoo District Municipality. Nelson Mandela Metropolitan University

Rowe (Mike)

University of Liverpool

Schutte (De Wet) Thornhill (Chris)

CPUT- Cape Peninsula University of Technology University of Pretoria

Treurnicht (Stephan) Steen (Martijn van der)

UNISA Netherlands School for Public Administration

Vosselman (Ed)

Radboud University Nijmegen

Wallis (Malcolm)

Regent Business School

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