Rural Development Framework

May 1997

Compiled by the Rural Development task Team (RDP) and the Department Of Land Affairs ISBN 0-621-27692-8

Foreword
This document was written by the Rural Development Task Team in the RDP office. Following the closure of the RDP office, responsibility for its updating and finalisation was passed to the Department of Land Affairs. It is the outcome of several rounds of consultation. The most important was the public response to the Green Paper that was published in the Government Gazette, No. 16679 of the 3rd November, 1995. In response to the discussion document, which also included the Green Paper on Urban Development, there were 29 responses to both papers, plus 32 responses to the rural paper, and 27 further responses to the urban paper. Most responses to the rural paper were from District Councils, followed by provincial departments. There were also several from professional associations and from individuals. We would like to thank all those who provided commentary, both positive and negative. Many of the comments were incisive and useful, and widened the understanding of rural issues on the ground, and we have tried to do justice to these inputs. Some, however, were outside the scope of the document, and others we could not agree with. We hope it is clear from the text why not. Many respondents to the discussion document requested more detail on the immense variety of local conditions in the rural areas of South Africa, and the variety of ways that these can be expected to influence the policy framework. While fully accepting the importance of local variations in conditions, it is not possible to discuss them all. This document describes the overall policy framework that is emerging. It sets out a

framework for rural people to consider and to build on, bearing in mind their local conditions. This document was prepared before the preliminary estimates of population based on the 1996 census became available in June 1997. Nonetheless, the conclusions reached about the level of poverty in rural areas remain unchanged. Rural Development Task Team (RDP) & Land Reform Policy Branch (Department of Land Affairs)

Contents
Foreword Executive Summary 1 Introduction: Aims, Definitions and Context 1 1.1 The purpose of the Rural Development Framework. 1.2 The definition of 'rural' 1.3 Poverty levels in rural areas 1.4 The multi-sectoral nature of rural development 1.5 Rural development within the national policy framework 1.5.1 Affordable infrastructure 1.5.2 Employment and incomes 1.5.3 Environment and rural development 4 Building Rural Infrastructure 4.1 Purpose 4.2 Local government and service provision 4.3 The backlog in services 4.4 Expected service levels 4.5 Costs of provision 4.5.1 Cost issues 4.6 Water and sanitation 4.7 Rural access roads 4.8 Energy policy for rural areas 4.9 Rural housing policy 4.9.1 The need for coordinated planning of settlements 4.9.2 The need for community facilitation

1.6 The need for cross-sectoral coordination 4.10 The Consolidated Municipal of rural development Infrastructure Programme (MIP) 1.7 The way forward 4.10.1 Rationale for the Consolidated MIP 4.10.2 Coordination 2 Building Local Democracy and Development 4.11 National development finance

2.1 Purpose 2.2 Powers and functions of local government

institutions (NDFIs) 4.11.1 Development Bank of Southern Africa (DBSA)

2.2.1 Locils in rural areas 4.12 Spatial issues 2.2.2 District cocal coununcils in rural areas 4.12.1 Spatial Development Initiatives 2.3 Upgrading the skills of councillors and (SDIs) council officials 5 Building Social Sustainability 2.3.1 Help with financial management 2.3.2 Council offices 5.1 Purpose 2.3.3 Training 5.2 Safety and security in rural areas 2.3.4 Project and programme-related capacity building 5.3 Legal issues 2.4 Meeting community priorities 2.5 Funding rural development 2.5.1 Funding of local government 2.5.2 Affordability issues 2.6 Local structures for land reform and administration of land . 5.3.1 Enforcement of rights 5.3.2 Law-making and administrative processes 5.3.3 Access to legal information 5.3.4 Monitoring 5.3.5 Women's needs 5.4 Children in rural areas 5.4.1 The rights of the child 3 Building Local Economic Development and Rural Livelihoods 5.5 The rights of farm dwellers 5.6 The rights of the disabled in rural areas 3.1 Purpose 5.7 Rural health 3.2 Current obstacles 3.2.1 Poor rural-urban linkages 3.2.2 Migration, remittances and unemployment 3.2.3 Constraints on entrepreneurial activity 3.2.4 Restrictions on women 3.2.5 Obstacles to the expansion of the small farming sector 3.2.6 Vulnerable environments 3.2.7 Land tenure and ownership issues 3.2.8 Women's land tenure rights 3.2.9 Obstacles to provision of 5.7.1 Primary health care 5.7.2 AIDS in rural areas 5.8 Capacity building in rural areas 5.9 Improving rural education 5.9.1 New policies for rural education 5.10 Security and welfare 5.11 NGOs and CBOs in rural development

infrastructure on communal land

5.11.1 Community-based organisations 5.11.2 Service NGOs

3.3 Incorporating environmental concerns in rural development 5.12 Managing drought 3.3.1 Environmental rights 3.3.2 Institutional support 6 Building Local Capacity to Plan and Implement

6.1 Purpose 3.4 Local economic development (LED) 3.5 Markets, spatial integration and regional 6.2 The case for decentralised planning and decision making economic development 6.3 Issues in local level planning 3.6 Partnerships with the private sector 6.4 District planning 3.6.1 Private-sector finance 6.4.1 Planning apparatus initiatives 6.4.2 Scope and content 3.7 Land reform and agriculture 6.5 Survey and planning information on the 3.7.1 Land reform and increasing the rural areas social wage 6.6 Information systems for averting 3.7.2 Land reform and the disasters environment 3.7.3 Employment in agriculture 3.7.4 Support services for small and 6.6.1 Monitoring vulnerability 6.6.2 Averting and preparing for disaster medium-scale farmers 6.6.3 Children's nutritional status as a lead 3.7.5 Agricultural marketing indicator 3.7.6 Irrigation 3.8 Forestry 3.9 Tourism 3.10 Rural industries 3.11 Promoting Small, Medium and Micro Enterprises (SMMEs) 3.12 Financial services 3.13 Promoting labour intensity 3.13.1 Relief employment

Executive Summary
1. INTRODUCTION

The Rural Development Framework describes how government, working with rural people, aims to achieve a rapid and sustained reduction in absolute rural poverty. Solutions are sought to the following questions:

how to involve rural people in decisions affecting their lives, through participation in rural local government (Chapter 2); how to increase employment and economic growth in rural areas (Chapter 3); how to provide affordable infrastructure and improve services in rural areas and resolve the problems posed by the remote, low-potential areas into which people were crowded during the apartheid era (Chapter 4); how to ensure social sustainability in rural areas (Chapter 5); how to increase rural local government capacity to plan and implement and assemble the essential information for planning, monitoring and evaluating both the process and progress of development (Chapter 6).

Rural areas Rural areas are defined as the sparsely populated areas in which people farm or depend on natural resources, including the villages and small towns that are dispersed through these areas. In addition, they include the large settlements in the former homelands, created by the apartheid removals, which depend for their survival on migratory labour and remittances. Rural poverty Almost three quarters of people below the poverty line in South Africa live in the rural areas. Of these, children less than five years, youths and the elderly are particularly vulnerable; women more so than men. The poorest ten per cent account for just one per cent of consumer spending. The highly skewed distribution of incomes in South Africa goes hand in hand with highly inequitable literacy levels, education, health and housing, and access to water and fuel. Rural development Development in rural areas requires:

institutional development: helping rural people set the priorities in their own communities, through effective and democratic bodies, by providing the local capacity and access to funds for them to plan and implement local economic development; investment in basic infrastructure and social services: the provision of physical infrastructure (eg housing, water and power supplies, transport) and social services (eg basic health care and schools); improving income and employment opportunities and by broadening access to natural resources (eg arable and grazing land, irrigation water, woodland and forests);

restoration of basic economic rights to marginalised rural areas by establishing periodic markets as the organising spatial and temporal framework for development; resource conservation: investing efforts in the sustainable use of natural resources; and justice, equity and security: dealing with the injustices of the past and ensuring the safety and security of the rural population, especially that of women.

Rural development and the GEAR The Reconstruction and Development Programme represents government's commitment to eradicate poverty. For this vision to materialise, policies must be orientated towards the provision of basic needs, the development of human resources and a growing economy which is capable of generating sustainable livelihoods. The success of government's strategy for growth, employment and redistribution (GEAR) is dependent on the maintenance of a sound fiscal and macro-economic framework. Rural development will contribute to this policy by:

diversified job creation through local economic development; redistributing government expenditure to formerly deprived areas; an expansionary infrastructure programme to address service deficiencies and backlogs, while delivering infrastructure and essential services cost-effectively; social development in many fields, particularly education and health services, and through providing access to resources to improve household and national productivity; integrating marginal rural areas where the majority of citizens have been cut off from the national economy.

Coordination of rural development For these objectives to become a reality in rural areas, coordination of the different sectoral initiatives is essential at both national and provincial level. Until 1996, national level coordination of rural development was carried out by the inter-departmental Rural Development Task Team. At provincial level, rural development policy and implementation are guided by inter-departmental committees which are not altogether successful in coordinating planning and development. Local government is well placed to effectively coordinate sectoral initiatives on the ground, but few rural municipalities are as yet in a position to do this. 2. BUILDING LOCAL DEMOCRACY AND DEVELOPMENT South Africa is at present consolidating the transition of the country to democracy in all spheres. One of the most significant developments is the establishment of democratic local government; another is the adoption of the Constitution which places the responsibility for service provision on local government.

Local government in rural development Local government is the elected government body:

that takes ultimate responsibility for service delivery; with which CBOs, representatives from local fora and other stakeholders consult for the purpose of assessing needs and priorities; that mediates competing interests in resource management, project planning or the provision of services; that sets Land Development Objectives under Section 27 of the Development Facilitation Act (67 of 1995) that bind all land development decisions and policies in their area of jurisdiction; whose function it is to coordinate the work of the different departments and follow through requests for funding or implementation to the appropriate provincial and national bodies; with responsibility for ensuring that the needs of poorly organised local people are also taken into account.

Role of national and provincial government It is the constitutional responsibility of national and provincial government to:

help local government to recognise and define the needs of local people; to encourage local government to involve local people in planning and in the actions necessary to satisfy their needs; and to enable local people, suitably organised to access national programmes on known terms and conditions, so as to assume increasing responsibility for these actions.

In other parts of the world, these precepts have been the basis of successful rural development. The Rural Development Framework proposes how the skills and resources of councils will be strengthened through capacity building and funding. 3. BUILDING LOCAL ECONOMIC DEVELOPMENT AND RURAL LIVELIHOODS Job-creation programmes for rural areas must tackle employment generation through the promotion of as wide a range of activities as possible. The wider the range of jobs and activities, the higher the demand for services locally, the more local markets will grow, and the more money will circulate in rural areas. Local economic development can be achieved by building on and utilising the local natural resource base and the opportunities provided by actual and potential trade links within an area. The chapter recommends the strengthening of these links through the establishment of local markets for locally produced goods and services. In this way it is proposed to restore basic economic rights to marginalised rural people. Obstacles

Most of the constraints to rural development stem from the long period of apartheid with its discriminatory policies and neglect of the majority black population. Forced removals led to over-population of the 'reserves' and deprivation of basic needs. High population growth put pressure on family income, social services and on natural resources. Structural and legal obstacles were raised to marketing and thereby to production The major obstacles to be overcome in rural areas are:

Landlessness and overcrowding in the former homeland areas and inappropriate farming methods on commercial farms have given rise to severe land degradation and soil erosion. Environmental management policies and practices remain sectoral and fragmented. Current land ownership and land development patterns strongly reflect the political and economic conditions of the apartheid era. Racially-based land policies were a cause of insecurity, landlessness and poverty amongst black people, and of inefficient land administration and land use. Apartheid spatial planning created a rural landscape devoid of economic opportunities for the disadvantaged majority, especially women; devoid of local markets and dependent on distant cities and towns for employment, goods and services. In the predominately white commercial farming areas, past government policies have led to an over-capitalised, over-mechanised farm system. The opening up of the system to African farmers faces many obstacles. Due to decades of discrimination and oppression, lack of skills and experience and rural finance; lack of markets where small farmers can trade their produce; lack of support services for sustainable small-scale agriculture farmers, eg applied research and extension.

Opportunities This chapter describes the potential for local economic development initiatives and for job creation in several quarters: commerce; small, medium and micro enterprises; agriculture; forestry; tourism; and labour-intensive public works. It recognises the prime importance of broadening access to land resources, the establishment of partnerships between local government and the private sector and NGOs for the promotion of a wide range of enterprises. These should be built upon to utilise the local natural resource base and of the potential for trading links within an area. These should be strengthened through the establishment of rings of markets for locally and regionally produced goods and services, linking small towns into regional economies, building total production and cash circulation and a more competitive position in the wider economy. 4. BUILDING LOCAL INFRASTRUCTURE The infrastructure backlog in rural areas is immense. Sustained investment in appropriate types of infrastructure is essential for achieving the equity and efficiency objectives of the government. Prior consultation with local government structures and community fora is a precondition for all rural infrastructure projects, so also is the close cooperation of the

national and provincial line departments involved. The chapter describes the policy principles and the coordinating structures which provide the framework for implementation. Expected service levels and costs of provision Target service levels for different types of rural areas cannot be laid down with precision. Key factors influencing the level of service provision are: speed of economic growth in the locality; how widely the benefits of that growth are distributed; the capacity of institutions responsible for delivering municipal services; and the individual and collective choices of consumers. The contrast in expected levels of service provision between urban and rural areas reflects the relatively high unit costs of installation in the latter and the fact that rural people can afford only the lowest level of recurrent costs. Capital subsidies To meet the backlog in infrastructure in rural areas, government is committed to subsidise the capital costs for a basic level of service with the following programmes:

School and clinic building programme, through the national and provincial departments, fully funded by government, with telephones and electricity; The DWAF Community Water and Sanitation Programme provides the platform for the implementation of internal bulk and connector water and sanitation projects. The Department of Constitutional Development's Consolidated Municipal Infrastructure Programme (MIP): up to R3000 per household for the installation and rehabilitation of internal bulk and connector services, ie water and roads. The Department of Housing's National Housing Subsidy: up to R15 000 per qualifying person for the land, on-site infrastructure, as well as top structure; or The Department of Land Affairs Settlement/Land Acquisition Grant: up to R15 000 per qualifying person to acquire land and effect homestead and land improvements, through the provision of basic infrastructure as part of the Land Reform Programme.

Consolidated Municipal Infrastructure Programme The Consolidated Municipal Infrastructure Programme arose from the need to coordinate the various grant funding programmes of the four national departments that provide capital for municipal infrastructure - ie, the departments of Constitutional Development, Housing, Water Affairs and Forestry and Land Affairs. The Consolidated MIP focuses on internal bulk and connector water, roads and stormwater drainage, solid waste disposal and public lighting services. It provides grant funding for new infrastructure, as well as for the upgrading and rehabilitation of existing internal bulk and connector infrastructure, to urban as well as dense and dispersed rural areas. The closer alignment of grant funding under the Consolidated MIP will help municipalities to build and manage sustainable infrastructure systems.

Water and sanitation, and energy policy The Community Water Supply and Sanitation Programme aims to ensure that all South Africans have access to an adequate water supply and safe sanitation facility, over the next nine years. The lack of adequate energy sources in rural areas is a major obstacle to economic and social development. The principal impediments are: the limited distribution network and the high initial costs of extending it; the recurrent cost of conventional energy supplies; and the lack of information for poor people about alternative energy sources, including possible sources of finance. The policy options currently under discussion aim to address these problems. A capacity building programme, including energy users, suppliers and facilitators, aims to ensure that local-level initiatives reflect people's needs, are rational and well informed. Rural housing National housing policy aims to provide access, for all South Africans, to a permanent residential structure with secure tenure, ensuring privacy and providing adequate protection against the elements; and potable water, adequate sanitary facilities including waste disposal and domestic electricity supply. However, government support to housing development tends to receive lower priority in rural areas. Rural households are often poorly organised to obtain their place in the queue for subsidies. Legally acceptable evidence of land tenure has also been a problem for applicants on communal land. This problem is in the process of being resolved. The Settlement/Land Acquisition Grant, an alternative subsidy to that of the Housing Subsidy of the Department of Housing, accommodates rural people wishing to acquire land for agriculture as well as for residential purposes. In the case of farm workers, living on land belonging to an employer, difficulties arise when the right to occupy is tied to employment. In these cases, the granting of a subsidy for housing improvements, has to be linked to guarantees by the land owner that the tenure of the applicant is secure. Rural settlement programmes place great demands on government to support organisation and planning at local level. The demand goes well beyond the staff capacity of the agencies concerned. Both the DLA and the Provincial Housing Boards make facilitation funds available to assist groups to organise themselves, to ensure that their needs are being brought to the attention of funding institutions and that settlement projects are sustainable. 5. BUILDING SOCIAL SUSTAINABILITY The most recent surveys undertaken in rural South Africa reveal depths of poverty as severe as in the poorer African countries to the north. They show that women, and

female-headed households are particularly disadvantaged. As a result, three quarters of rural children are growing up in households below the poverty line. This chapter sets out the constitutional rights of rural people and vulnerable groups and the ways in which they can both contribute to and campaign for better service delivery and living conditions. Throughout, the role of NGOs and CBOs is recognised to be vitally important, both as deliverers of services and in ensuring good governance, transparency and participation. Government seeks to involve NGOs and CBOs in the policy dialogue and in decision making. In this connection, the strengthening of NGOs and CBOs as separate, specialist institutions is important. A constructive partnership between the government, NGOs and community organisations will maximise the benefit of rural development initiatives for rural people. Safety, security and legal issues Safety and security are a precondition for social and economic development. The responsibility for the establishment of peace and harmony in the countryside lies with all citizens, but particularly with the local leadership. Processes which will strengthen their commitment to fair administrative systems and conduct will be supported by government. A community policing forum (CPF) should link up with every rural police station to ensure active community support for safety and security. Women's groups should be well represented as part of the effort to reduce violence against women and children. Poor rural people have little or no recourse to the legal system. They remain vulnerable to being exploited by employers and landowners. In the former homelands, the poor continue to be traumatised and exposed to inter-communal conflict. Given the shortage of funds, the problem is how to extend legal services to remote areas. An assessment of rural legal advisory offices is needed to determine how to increase their reach and efficiency. Children's rights A large proportion of South Africa's population are children. Most of them live in rural areas where eighty per cent of the very poorest children are to be found. Poor women are under great pressure to carry out other income earning work too and so their children are deprived of essential care and attention when they are away from home. Under the Bill of Rights of the Constitution, every child has the right, inter aliato family care or parental care, or to appropriate alternative care when removed from the family environment; basic nutrition, shelter, basic health care services and social services; to be protected from maltreatment, neglect, abuse or degradation; and be protected from exploitative labour practice.

The most fundamental right is the right to life. Ready access to basic health care services is important for immunisation programmes, emergency assistance and routine assessment and support. The most useful overall indicator of the condition of children is their nutritional status and this should be regularly monitored and related to environmental health. This nutritional information should be central to the planning of any programme to improve the condition of children in rural areas, the steps needed and how scarce resources can be best allocated. Rural health Diseases of poverty, such as infectious diseases and maternal and infant illness and mortality are all too common in the rural areas. A high number of rural children die of easily prevented illnesses. All of these conditions could have been eliminated if proper health services had been provided in the past. The target throughout the country is to have one clinic for every 5000 people, offering free primary health care and ensuring that essential drugs are available at each facility. These clinics will be supplemented by mobile units serving sparsely populated rural areas. The Department of Health is committed to the redeployment of trained staff to rural areas and to improving their working conditions, in order to encourage greater commitment to the rural areas. As in the urban areas, the AIDS epidemic is a major concern. While strongly supporting preventive measures, government aims to address the need for appropriate social assistance for AIDS victims and their dependents as well as their medical care. Rural education Under apartheid, Africans living in rural areas were denied educational opportunities to an even greater extent than those in urban areas. Most rural schools are poorly resourced with buildings, equipment, and books and without electricity and running water. Children usually walk long distances to school and class sizes of 70 pupils are not uncommon. Drop out and repetition rates are high and a large number of children do not attend school at all. Opportunities for secondary education, for childhood 'educare' and adult education are scarce. Government is committed to increase the level and availability of formal education in rural areas, and supply training and assistance to the new district and rural councils. The South African Schools Act became effective from 1 January 1997. The Act determines, in line with the Constitution, the right to basic education. The obligation to provide sufficient places in public schools lies with the provinces. The public school sector category includes, amongst others, the current community schools and farm schools, forestry and mine schools and many religious schools. The Act also makes provision for all schools to have democratically elected governing bodies in which parents, teachers and (in secondary schools) students will be represented. Public spending on education

will, as far as possible, be weighted to favour the poor and historically deprived schools. Most rural community schools and farm schools fall into this category. Security and welfare Lack of opportunities for gainful employment is the scourge of South Africa's rural areas. The government, therefore, recognises the need for developmental social welfare and a social security system that reaches all people in need. Social welfare is more readily available to urban people. In line with the recommendations of the 1996 Lund Commission, they are to be more equitably distributed in future. Labour intensive public works in the case of drought or other disaster, will complement the rural economy and will not undermine it. Relief, consisting of food hand-outs, which can reduce self reliance, should only be used in dire emergency. 6. BUILDING LOCAL CAPACITY TO PLAN AND IMPLEMENT The effective performance by rural municipalities of their functions will require the establishment of a planning capacity, at least at district level. The purpose will be to provide information on the resources available and to assist elected councillors to identify the most appropriate development options. The overall objective will be the full and productive utilization of the resources available within the district - natural, human and financial resources. This chapter considers the case for decentralized planning, the issues to be resolved, and the likely scope and content of work and the type of planning apparatus. Outstanding issues are expected to be resolved in the course of the local government White Paper preparation process, currently being steered by the Department of Constitutional Development. With the tighter fiscal environment, there will be need for better informed resource allocation based on accurate district-level data. National government expenditure will continue to be apportioned between provinces and departments, who will reallocate funds to province-level activities. Implementing departments will wish to see these allocations used rationally to achieve their particular policy objectives. Revenues raised by local authorities will be allocated to services decided by elected councillors. Efficiency of resource allocation will be improved by coordination of the work of national and provincial government and local authorities. A district-level planning capacity will therefore be essential. Local-level involvement in planning can generate increased support and commitment, stimulate self-help, and mobilise local resources. Integration and overview are essential in development work. The following planning tasks, not necessarily in order of priority, might usefully be undertaken by a district planning unit. Data collection: Planning for infrastructure development and improved services in rural areas requires accurate information.

Monitoring resource allocation by government departments in the district - particularly the status of projects and programmes, their impact, who has been reached and with what effect. Periodic markets and services: planning for periodic markets that radiate to small settlements and for the delivery of government services to these points at the same time. Drought monitoring - an essential component of a drought management strategy, requiring the collation and analysis of data to predict the location and incidence of drought-related stress. Provision of information to councillors, local government officers and members of the public on the available government programmes and initiatives. Environmental monitoring and impact assessment Spatial planning and LDOs: The Development Facilitation Act requires every local government body to establish Land Development Objectives as the basis for planning of development in its area. These objectives also satisfy most of the requirements of the Integrated Development Plans provided for in the Local Government Transition Act.

1. Introduction Aims, Definitions and Context

1.1. The purpose of the Rural Development Framework This document is written from the perspective that rural development is the business of everyone in rural areas. It is the business of rural people, and they must set the agenda. It is government's role to support rural people in their development efforts. The Rural Development Framework sets out to define that role. It does not prescribe a specific strategy but shows where inter-sectoral planning and coordination are needed for resources to be used productively for rural development to become a reality in the next two decades. The vision of rural development set out in this document has two main aspects (see Box 1.1):

those related to governance and the provision of physical infrastructure (water supplies, electricity, etc.) and social services (education and health care); those related to the enabling framework essential for rural livelihoods to expand and thrive, principally by restoring basic economic rights to marginalised rural areas.

These are two sides of the same coin. Without the first, people and their businesses will not thrive; without an expansion in production, marketing and related economic activity, people will not be able to pay for the services they need and government will be unable to provide them. Rural development covers functional areas of concurrent national and provincial legislative competence. These functions are laid down in the Constitution. National legislation provides for a uniform set of policies and institutions (both moderated by provincial governments) which attempt, for the first time, to create equality of rights and opportunities for all South Africans, rural areas as well as urban areas. This document describes these institutions and policies, the impact of which will vary, depending on a combination of factors: history, natural resources, location, leadership, etc. It is concerned with the powers, responsibilities and relationships of local and other levels of government, as they affect rural development.

1.3: Distribution of Poverty between Rural and Urban Areas (1993) Poverty Shares, (%) (Where are poor people?) (What proportion of the population is poor?) Poor Rural Urban Metropolitan All 74.6 15.7 9.8 100.0 Ultra-poor Poor 80.7 73.7 14.1 40.5 5.3 19.7 100.0 52.8 Ultrapoor 43.5 19.8 5.8 28.8 Poverty Rates (%)

Notes:The share of poor refers to the percentage of all poor who live in a given area, e.g. 74.6% of the poor in South Africa live in rural areas. The poverty rate refers to the percentage of people in a given area who are poor, e.g. 73.7% of the rural population is poor. This document was prepared before the data from the 1996 census became available. (Source: RDP: Key Indicators of Poverty in South Africa, 1995, where there is an important discussion on defining poverty in South Africa. Both qualitative and quantitative studies indicate about 40% of households in South Africa are poor. Here 40% of the total number of households (having 52.8% of the population) is defined as poor and 20% as ultra poor.)

1.2 The definition of 'rural' Estimates of the proportion of the population who live in rural areas in South Africa vary widely because there is no accepted definition of the term 'rural'. In other countries, 'rural' is often used either to indicate low density of population or dependence on farming or forestry and the manufacturing and commerce directly associated with it. All censuses and official surveys in South Africa until 1995 were based on a definition of 'rural' which is now recognised to be flawed. This included all households not living in formally declared towns. Thus, many peri-urban households and many single migrants in hostels were classified as rural. This led to an overstatement of the income of genuinely rural people and an underestimation of the contribution of agriculture to their incomes (see Box 1.2).

In apartheid South Africa, many areas, defined as rural, were in reality urban areas without services. As they had high concentrations of people who sought work in some distant city, such places were, in effect, displaced urban. There are also areas of relatively high population density with no local economic base whose inhabitants are sustained through pensions and/or remittances from migrant workers. These are sometimes called rural clusters, the term 'rural' indicating the lack of economic support and services. A definition is required to ensure consistency for the collection of statistics. However, historical complexities and cultural perceptions cannot easily be simplified into a definition that suits all purposes. The Central Statistical Service (CSS) is working to categorise South Africa's settlements, using central place theory and a functional analysis based only on population density and existing services. This paper defines 'rural' as the sparsely populated areas in which people farm or depend on natural resources, including the villages and small towns that are dispersed through these areas. In addition, 'rural clusters' in the former homelands, ie large settlements without an economic base except for transfer payments, are also included. For a list of areas included under 'rural', see Box 1.3.

However, a problem with this definition is that many households fall into both urban and rural categories as they derive their income from a range of sources, including labour migration to towns. 1.3 Poverty levels in rural areas The rural landscape embraces mountains and plains, semi-deserts and humid savannas and also more temperate climes. It includes the former homelands and the large farm areas, all bearing the scars of past injustices. Throughout the rural areas, there is deep poverty and deprivation, especially - but not only - in the former homelands. The commercial farms, in the freehold areas, provide wealth to their owners, but relatively little to their employees who have the lowest incomes and standard of living of all the groups of workers in the country. Rural towns, too, show great differences in prosperity and in their interaction with their hinterlands. In South Africa, as elsewhere, people are much poorer in rural areas than in the cities (see Table 1.3 and Figure 1). Almost three quarters of the poor live in the rural areas. Of these, rural children less than five years, youths and the elderly are particularly vulnerable; women more so than men. The distribution of poverty goes beyond the ruralurban divide. It has a sub-regional context. The incidence of poverty also differs markedly among the different population groups. The poorest ten per cent of South Africans, of whom 77 per cent are Africans living in rural areas, are responsible for just one per cent of consumer spending in the country. The highly skewed distribution of incomes in rural South Africa goes hand in hand with highly inequitable levels of literacy, education, health and housing, and lack of access to water and fuel. Rural areas have far fewer services than the towns. All of these factors limit the ability of rural households to improve their standard of living. 1.4 The multi-sectoral nature of rural development Rural development is the business of everyone in rural areas. This statement captures the multi-sectoral nature of the undertaking and the notion that, because rural development greatly affects the lives of the people, they should have a strong hand in setting the agenda and the priorities. A dynamic process of combined government action, with the participation of people in rural areas, must be set in motion to realise a rapid and sustained reduction in absolute poverty. Rural development can be achieved through:

helping rural people set the priorities for development in their own communities, through effective and democratic bodies, by providing access to discretionary funds, by building the local capacity to plan and implement local economic development; the provision of physical infrastructure and social services (e.g. water and sanitation, transport, health services, and schools);

wider access to productive resources in the rural areas, especially through: - land tenure reform, land redistribution and land restitution; - extension of water supplies, and the reform of water laws to protect the rights of down-stream users, - rural financial services for investment in rural livelihoods, - periodic systems as the organising and coordinating framework for rural activities (spatial and temporal) for investment in trade, service delivery, transport and information,

thus raising incomes for rural men and women by providing opportunities for increasing farm and non-farm production in poor areas; and

ensuring the safety and security of the rural population.

1.5 Rural development within the national policy framework The RDP is the embodiment of the commitment of government to the eradication of poverty in a rapidly growing economy and in the context of an open, peaceful and democratic society. For this vision to materialise, policies must be orientated towards the provision of basic needs, the development of human resources and a growing economy which is capable of generating sustainable livelihoods in rural as well as urban areas. The success of government's strategy for 'growth, employment and redistribution' (GEAR) are dependent on government's maintenance of a sound fiscal and macro-economic framework. The GEAR strategy is an economic reform programme directed towards:

a competitive fast-growing economy that creates sufficient jobs for all job seekers; a redistribution of income opportunities in favour of the poor; a society capable of ensuring that sound health, education and other services are available to all; and an environment in which homes are safe and places of work are productive.

These principles form the macro-economic framework within which the Rural Development Framework is drafted. Rural development will contribute to this policy by:

diversified job creation through local economic development, including the growth of small and medium scale enterprises; redistributing government expenditure to formerly deprived areas; an expansionary infrastructure programme to address service deficiencies and backlogs, at the same time delivering infrastructure and essential services costeffectively;

social and sectoral policy development in many fields, particularly education and health services, and through widening access to resources in order to improve household and national productivity.

1.5.1 Affordable infrastructure South Africa needs to reduce its budget deficit. Government funding for all types of infrastructural development will therefore be scarce. The costs will have to be affordable within the constraints imposed by available budgetary resources. At the same time the expenditure must meet the need for growth in the economy. The expansion of infrastructure plays a number of crucial roles, including the provision of basic services, increasing the level of private investment, and enhancing efficiency and competitiveness. In combination, these factors add to new economic activity and thereby increase substantially the job creation potential of the economy. Rural areas are characterised by relatively high logistical costs, high per capitaservice costs, and poorly developed local government structures. Where services are provided, the recurrent costs of all but the most basic services must be met by those who use them. This in turn requires a viable local economy. Beyond the essential expenditure for meeting basic needs, investment must be justifiable on the grounds of its potential to raise productivity and incomes, and to generate the income to pay for services. 1.5.2 Employment and incomes Facing possibly the highest rate of unemployment in the world, the government is forced to pursue economic growth and export orientation as its major strategy for increasing employment. There is a commitment to keep wages moderate, to avoid wage-price inflationary spirals. With globalization of the economy, wages for the majority are going to remain low for the foreseeable future. The government will pursue a range of policies to raise effective household incomes and therefore the domestic demand for goods. This requires negotiation of a social wage and social security net, to apply throughout the country. This is central to the purpose of the National Economic and Labour Council (NEDLAC), where there will be crucial and ongoing negotiations over the kinds of policies (eg for basic health care, education, social security, and food prices) that will support South African households without raising wages to uncompetitive levels. Efforts will be made to reduce production costs and therefore increase productivity, through, for instance, education, training, and some shortterm industrial subsidisation. Rural development can greatly contribute to raising the social wage. 1.5.3 Environment and rural development South Africa's natural resources are vulnerable to over-exploitation and misuse. Many environmental problems arise in densely populated urban areas from industry and mining.

In other cases, it is poor rural people who suffer the consequences of this pollution. It is the responsibility of government to ensure that pollution is brought under control and to provide incentives for better practice. For their part, local people must be helped to plan local resource use and to manage and conserve their environment for the benefit of future generations. 1.6 The need for cross-sectoral coordination of rural development Coordination of different sectoral initiatives is essential at both national and provincial level, especially as the rural voice is not yet strong. This was recognised in the Reconstruction and Development Programme, adopted by the Government of National Unity in 1994, which was built on six principles:

an integrated and sustainable programme; a people-driven process; peace and security for all; nation-building; link reconstruction and development; democratisation of South Africa.
(The Reconstruction and Development Programme, 1994, p.4)

Following the change of government in 1994, national level coordination of rural development was carried out by the inter-departmental Rural Development Task Team in the RDP office. This team was disbanded in 1996. At provincial level, rural development policy and implementation is guided by provincial development strategies. There are inter-departmental committees for this purpose in most provinces, backed by the provincial planning departments, which are not altogether successful in achieving suitable coordination of planning and development. Local government is well placed to effectively coordinate sectoral initiatives on the ground, but few rural municipalities are as yet in a position to do this. It is therefore critical that rural local government be built up speedily. It is essential that, at both national and provincial level, government departments should be held accountable for the impact of their policies on the lives of rural people. Levels of financial allocations should also be monitored to ensure that rural areas obtain an equitable share of the budget. A case can be made for placing the responsibility for overall rural development coordination with the office of the State President or with another cross-sectoral department, such as Finance, or Constitutional Development. If the function were to be located in the Department of Finance, it would have the added advantage of being able to oversee government expenditures on rural development, including drought relief if and when this was incurred.

1.7 The way forward With high unemployment in rural areas, the creation of sustainable rural livelihoods must be a major objective. To plan and implement local economic development, rural councils and communities need access to funding and to capacity building for planning and implementation, for which national and provincial support is essential. Without such help, local government in the poorer rural areas will not be able to meet its constitutional obligations to promote social and economic development. Government departments are keen to provide that support and are in the process of doing so, but their efforts are often poorly coordinated. Because there have been many recent policy developments, both the departments and the people themselves are often unaware of the incentives offered by the various government agencies. The assistance which can be made available to rural people is described in this paper.

2. Building Local Democracy and Development

2.1 Purpose This chapter considers the role of local institutions in rural development. It recognises that, in many rural areas, the required institutions have yet to be properly established and that detailed local government policy is in the process of being developed. South Africa is at present consolidating the transition of the country to democracy in all spheres. One of the most significant developments is the establishment of democratic local government; another is the adoption of the Constitution which places the responsibility of service provision on local government. Most municipalities do not yet have the resources or the capacity to deliver services to their people. There is a large backlog of services in most areas, particularly those which were disadvantaged in the past. The demand by the ordinary citizens living in these areas for decent services is pressing and justifiable. The establishment of local government is a lengthy process. In most rural areas no such institution has existed in the past. People are having to learn governance skills for the first time. It is the constitutional responsibility of national and provincial government to:

help local government to recognise and define the needs of local people; to encourage local government to involve local people in planning and in the actions necessary to satisfy their needs; and to enable local people to assume increasing responsibility for these actions.

In other parts of the world, these precepts have been the basis of successful rural development.

2.2 Powers and functions of local government The powers of municipal government are set out in section 156 of the Constitution. A municipality (ie an organ of local government) has executive authority in respect of, and has the right to administer, the local government matters listed in Part B of Schedule 4 and Part B of Schedule 5 (see Box 6.1), as well as executive authority and the right to administer any other matter assigned to it by national or provincial legislation. Where a municipality has the right to administer a matter, it may make and administer by-laws in respect of those areas. The Constitution sets out a very clear developmental role for municipal government. In particular, section 153 provides that municipalities must structure and manage their administration, budgeting and planning processes to give priority to the basic needs of the community and to promote the social and economic development of the community (see Box 2.1). The section goes on to state that municipalities must participate in national and provincial development programmes. Although the Constitution confers the above powers on municipalities, the role of national and provincial government is an important one. The Constitution specifies in section 155 (6) that each provincial government must establish municipalities in its province and must: (a) provide for the monitoring and support of local government in the province; and (b) promote the development of local government capacity to enable municipalities to perform their functions and manage their own affairs.

These imperatives, combined with the clearly developmental role that the Constitution gives to municipalities, necessitate provincial and national intervention to ensure that municipal structures have the capacity to perform their functions.

The role of provincial government is, however, not limited to capacity building. Both the national and provincial legislatures are required to develop guidelines and policies with regard to developmental matters. In particular, national government must continue setting national policies and standards in the developmental arena as provided for in Section 146 and Section 44(2). The Constitution provides for different categories of municipality (see Box 2.2) Local government is the elected government body:

that takes ultimate responsibility for service delivery; with which CBOs, representatives from local fora, local business representatives and other stake-holders consult for the purpose of assessing needs and priorities; that mediates competing interests in resource management, project planning or the provision of services (this role falls to the district level, i.e. Category C, where the priorities for the district are set and funding negotiated); that sets Land Development Objectives under Section 27of the Development Facilitation Act (67 of 1995) that bind all land development decisions and policies in their area of jurisdiction; whose function it is to coordinate the work of the different departments and follow through requests for funding or implementation to the appropriate provincial and national bodies - the most important will be the Provincial Interdepartmental Committee, chaired by the Provincial Director General; with responsibility for ensuring that the needs of poorly organised local people are also taken into account.

At the primary level in rural areas, there are the following local government bodies (i.e. Category A and B - see Box 2.2): Rural Councils, initially including various transitional

forms; and Town Councils. These are supported by rural District Councils (i.e. Category C), called Regional Councils or Service Councils in some provinces, with indirectly elected representatives from each local council. The District Councils include the old Regional Service Councils (RCS) and Joint Services Boards (JSBs). These provide an embryonic bureaucracy to serve the District Council. The old RSC/JSB levies will become an income source to the District Council. In some rural areas local government has yet to be established. A major effort is needed to provide the training, capacity building and the resources needed for local government to function. Such training and capacity building is the prime responsibility of the Department of Constitutional Development and the provinces. Some other central government departments (e.g. Water Affairs and Land Affairs) are involved in capacity building in connection with specific projects and programmes. The responsibility for establishing public services, for infrastructure development, and for working with other stakeholders to promote local economic development, will be transferred to primary local government level from the existing district councils as the necessary capacity is developed. It is only the primary level of local government which can provide on-the-ground coordination of sectoral agencies (e.g. land, housing, water). National and provincial sectoral departments should support this coordinative role. 2.2.1 Local councils in rural areas As part of the Local Government White Paper development process, discussions are underway at national and provincial levels to identify the exact functions and responsibilities of each tier of government and to work out their relationships. Ideas are being examined for partnerships between local government, private enterprise and NGOs, which will promote development and democracy. The Local Government White Paper is expected to define the number of local authorities, how they can become financially viable, and describe an efficient model for rural local government. With some local variation, together both District and Local Councils are expected to provide the services set out below. It is expected that primary rural councils will have responsibility for:

providing basic services including administration, planning and evaluation, local roads, refuse and sewerage removal, water and sanitation, electricity, storm water drainage, primary health services, protection and emergency services, security, transport, cemeteries, libraries and museums, and recreation facilities; for rural development; ie interacting with the various parties involved, setting priorities for access to affordable services, infrastructure and local economic development;

identifying special local needs and applying to the District Councils and other sources for the funds to meet them. 2.2.2 District councils in rural areas

It is likely that District rural councils will undertake the following:

establish and support primary local government structures, initially in conjunction with the provincial government; act as a conduit for the inter-governmental grants provided by other levels of government; appoint and employ personnel who will serve more than one primary local authority; set guidelines on levels of services to be applied throughout the district according to the framework established by national and provincial government; establish where certain development and support services (eg periodic services on market days) should be provided in order to be of benefit to poor and remote communities in the district (and set the financing rules thereof); provide technical assistance to primary local government for the planning of local economic and infrastructure development, and services; strengthen the capacity of primary councils (as they gain wider administrative experience, they should be given more legislative and executive powers); establish Land Development Objectives and formulate an integrated development plan for its area of jurisdiction.

These issues are expected to be covered in the White Paper on Local Government which is under preparation and expected to be published at the end of 1997. 2.3 Upgrading the skills of councillors and council officials Municipalities must hold the provincial governments to their obligations under the Constitution. This is essential if local governments are to receive their complement of powers and functions and if they are to work with local people to achieve rural development. Capacity building for rural local government will be critical for their development (see Box 2.3). Indeed, investment funds will not be made available until councils have shown they have the ability to manage funds and to plan and implement in a consultative manner. As RSCs come under democratic supervision as District Councils, they will have to redirect and broaden the services they provide. Rural people will want closer control over services and the speedy devolution of responsibility to primary local authorities. Yet RSCs will have little experience in these matters. A number of initiatives are underway to resolve these deficiencies.

2.3.1 Help with financial management The Department of Constitutional Development recognises lack of financial management as the key weakness at the primary level. Measures are needed which make the best use of available personnel and are cost effective. The department is also setting up a scheme whereby retired town clerks and other consultants will assist new councils. 2.3.2 Council offices RDP funds have been allocated for the Rural Administrative Infrastructure Development programme to build and equip simple offices for all new councils. Some of the funds will be used for the training of rural local councillors. 2.3.3 Training A restructuring of the Local Government Training Board (LGTB) and the 15 provincial training centres is in process. The LGTB has to ensure that rural councils benefit and that all training fits the National Qualifications Framework. Many NGOs have developed materials and skills for training new council officials and councillors. Provinces should ensure that they utilise these already existing services speedily. 2.3.4 Project and programme-related capacity building The Municipal Infrastructure Programme provides capacity building relating to infrastructure development. Councils receiving MIP funding for infrastructure development will thus also obtain funds for capacity building. There are other programmes run by national and provincial departments that either already support capacity building, or should be asked to do so when local-level planning and implementation are required, and/or recurrent costs and responsibilities, arising from the infrastructure investments, will fall on local government or other local bodies (see Box 2.4).

2.4 Meeting community priorities

Organised groupings of people can lobby local councillors directly, or apply through a local coordinating committee, for funding to improve service delivery or infrastructure (see Box 2.5). After negotiation in the local coordinating committee, requests that cannot be funded by the council should be submitted by the primary council concerned to the District Council. In turn, the District Council can look to its own resources or approach the appropriate provincial or national department. In either case, the provincial interdepartmental committee would be expected to make the final decision on the allocation. Requests from coordinating committees can also be placed by the primary council before an NGO, a donor, or a parastatal body. Local and foreign donors, parastatal or statutory bodies, or any government body should look to the committees for guidance on local priorities. This should ensure that funding is geared to genuine local needs. Once agreement has been reached on an investment project, implementation might be supervised and/or carried out by national or provincial departments, by the primary local council itself, or through a contract with a small or medium-scale enterprise from the area. All implementation should be as labour intensive as possible. The local council should seek to ensure that this stipulation is observed. 2.5 Funding rural development Rural development is funded by all three spheres of government, partly by rural people through payment for services and local taxes, and partly by the private sector through collaborative partnerships with government.

National government contributes through sectoral programmes, such as the Community Water Supply and Sanitation Programme, or the Housing Subsidy or Settlement/Land Acquisition Grants, or more generally through the Consolidated Municipal Infrastructure Programme. Central government also provides funds to Councils, as Inter-governmental Grants (IGGs) which are currently being restructured to ensure that essential services are provided. These very limited, revenue-sharing funds are meant to favour areas with a low revenue base. This is important for effective rural development, given the wellestablished link between discretionary funds made available at a local level and the appropriateness and speed of rural development. Provinces will contribute to rural development through sectoral programmes, such as for health and education. 2.5.1 Funding of local government

Issues relating to the funding of rural development are intimately linked to those of funding local government. Funds are required in rural areas for running local government, providing services, improving and maintaining infrastructure and generally promoting local economic and social development. A municipality may impose rates and taxes, levies and duties on its constituent population. It may also raise loans from banks. Municipal councils are supposed to be self-financing, but many rural councils will not be

able to raise sufficient revenue locally or be able to provide adequate guarantees to obtain such loans. Currently the tax base consists of the old RSC levies, now going to the District Councils, plus any levies and service charges. The Katz Commission is considering the levying of a land tax as a source of revenue for local government. 2.5.2 Affordability issues The level of services which can be provided by rural local government will depend on a number of factors including technical and financial feasibility, population density and the location of the nearest bulk supplies (eg potable water, electricity). Service provision will also critically depend on the potential of the local tax base. A basic level of services will be made available as an entitlement; thereafter, any improvements must be paid by the local population through levies and rates. It is a requirement of the Constitution that municipal councils create a level of services that is affordable to the local population, and that they set up effective systems for obtaining payment for them. It will be necessary to set tariffs in a manner which will ensure cost recovery in the longer term. 2.6 Local structures for land reform and land administration Government attaches great importance to placing land administration services as close as possible to the local level. Decentralisation is necessary, first to speed up the process of land reform and to obtain strong grassroots support, and secondly because local government bears the primary responsibility for the provision of supporting services to land reform beneficiaries. Without this support, land redistribution and settlement cannot be viable. Important land administration functions, particularly those relating to land development control, are already vested in urban municipalities. This decentralisation of decision making must be extended to the predominantly rural municipalities as well, although the present capacity of local government to take on these functions in many rural areas is recognised to be limited. The long term vision is that each district should eventually have its own District Land Office within the municipal structure, staffed by officials and guided by the council and the provincial office of the Department of Land Affairs. The functions of the District Land Offices would include the confirmation of user rights (in the case of communal and public land); imposition of restrictions on the use of land, authorisation of change of use and land subdivision, and assistance with the preparation of Land Development Objectives (LDOs) consistent with the Development Facilitation Act ( 67 of 1995), as well as the administration of the government's land reform programme. Local government has an important role in the acquisition of land for leasing in small plots to poor people for intensive cultivation, close to towns with other income opportunities, schools and health facilities. The Department of Land Affairs recommends

that the concerned local authority be consulted on the disposal of all state land within its area. This is in recognition that local government authorities are best placed to take into account local needs and requirements. In the context of land tenure reform, District Land Offices would assist communities to make decisions about the content of local tenure rights and administration of land rights at the village level. They would provide a facility for the registration of existing rights, would ensure that rights systems were consistent with constitutional protections and provisions, and would assist with adjudications of rights. They would also link to the Deeds Registry in ensuring that all rights are registered within the framework of a unitary, non-racial system. It is in the problematic area of land tenure reform in communal areas that the issue of decentralisation of decision making is most pressing. Administrative reform has to grapple with the issue of group rights versus individual rights and democratic control versus tribal authority control. It is the Department of land Affairs view that higher levels of tenure security in areas which remain under communal tenure are most likely to be delivered where the local system is administered by a statutory local government authority within the framework of national policy and legislation.

3. Building Local Economic Development and Rural Livelihoods

3.1 Purpose Following a review of possible local economic development initiatives, this chapter describes job creation opportunities in several sectors: commerce, rural industrialisation, agriculture, tourism and public works. It recognises the importance of partnerships with the private sector and NGOs at local level for the promotion of a wide range of enterprises. These should build on and utilise the local natural resource base and the opportunities provided by actual and potential trade links within an area. The chapter recommends the strengthening of these links through the establishment of local markets for locally produced goods and services. The Rural Development Framework seeks to:

re-introduce the drivers of the modern economy (scale, low unit costs, a greater diversity of economic, trade and service activities and enhanced cash circulation) which were removed to central places so that other areas would become marginalised, dependent upon them and unable to compete with them; do so within an "economy of participation" that allows local residents to produce and to sell competitively small and irregular amounts of produce and wares into both local and regional markets;

lower the presently very high citizen transaction costs to undertake daily tasks of buying and selling, gaining services, meeting and finding information; provide TLCs and economic actors with an organising and co-ordinating framework of urban centres, public places and markets, within rotating rings of markets, in which to discipline and to deliver effectively and efficiently economic activities and services. 3.2 Current obstacles

Most of the constraints to rural development stem from the long period of apartheid with its discrimination, forced removals and neglect of the majority black population. Forced removals led to over-population of the so-called homelands and deprivation of basic needs. High population growth put pressure on family income, social services and on natural resources. Structural and legal obstacles were raised to marketing and thereby to production (See Box 3.1). 3.2.1 Poor rural-urban linkages Small rural towns should be a focus for development, providing input and output markets, mechanical and other workshops, financial services, and social services such as schools and clinics which will be of benefit to people in the surrounding area. For historical reasons, these functions and links to the rural hinterland often do not exist or are poorly developed. Inter-district transport routes serve migrant labour routes, not the needs of intra-regional trade. Output from the large farms passes through cooperatives to distant markets without serving the needs of small towns. Stores and supermarkets bring in food products over large distances rather than attempting to establish local suppliers. There is need to integrate economic activity in order to generate income from added value at a local level.

3.2.2 Migration, remittances and unemployment Migration of labour to distant urban areas and to mines has been declining in recent years. Nevertheless, migrants' remittances remain an important source of income, most of which is used for daily needs, leaving no surplus for investment. Labour migration has long been a cause of family breakdown and disruption. It has led to a host of social problems both in the rural areas and the places of in-migration and employment. However, more recently, there have been problems of increasing numbers of young people in rural areas, unable to find work anywhere. Without productive employment they face a lifetime of poverty, lack of fulfilment and exposure to increasing levels of crime and violence. 3.2.3 Constraints on entrepreneurial activity

Property rights are important for obtaining capital for investment in entrepreneurial activity - either through selling the asset or getting finance on the strength of it. For many decades, the African population was deprived of this economic opportunity as a result of discriminatory laws which prevented them from owning or leasing land or marketing produce. Among other things, this has stifled business related opportunities (see Box 3.2). These difficulties have been compounded by the failure of government to encourage the development of financial services in the rural areas and by the particularly conservative nature of the banking system. Commercial banks which might have offered financial services in the former homelands have been discouraged by parastatals offering credit at uneconomic rates to a privileged few. The very poor access to education and training, the limited natural resource base, and monopolistic ownership of marketing chains have also deprived local people of business openings.

3.2.4 Restrictions on women Women face additional hardship as a result of customary marriage and inheritance laws, which have reduced their ability to take up economic opportunities. They have restricted access to land, finance, information, training, and markets. They face most of the drudgery of collecting water and fuel wood and they shoulder the care of children, the old and the infirm without access to adequate social services. 3.2.5 Obstacles to the expansion of the small farming sector

In the predominately white commercial farming areas, past government policies have led to an over-capitalised, over-mechanised farm system. With the withdrawal of subsidies and drought relief, they are financially vulnerable and ill-equipped to withstand the marked variations in rainfall normal in a semi-arid environment. Many agricultural towns and villages have withered as processing industries have moved closer to national and international markets. The standard of living of 1,2 million farm worker households in South Africa is notoriously low. They constitute one of the poorest and most insecure sections of the population. Widespread departures from existing systems of agriculture are rarely immediately feasible. The change to small-scale farming is expected to be gradual, due to the many institutional and capacity constraints (see Box 3.3). A move from capital-intensive production on relatively few large farms to labour intensive techniques on many smaller farms will take much longer than many perhaps envisage. Nonetheless, the benefits in the long term are expected to be significant.

3.2 6 Vulnerable environments South Africa has a rural environment made vulnerable by low and erratic rainfall and by the poverty of many of its people. Regulatory mechanisms have not recognised the rights or constraints on poor people, nor the ease with which they are flouted by the rich and powerful. Landlessness and overcrowding in the former homeland areas and inappropriate farming methods on commercial farms have given rise to severe land degradation and soil erosion. Although there is a lack of data on the extent and rate of land degradation, there is sufficient evidence to indicate that South African soils are deteriorating rapidly due to poor management practice and inadequate monitoring and enforcement. There is a serious risk of increased land degradation if preventive measures and better management do not accompany the land reform programme and land development in general. The management of land resources is spread over different national and provincial ministries, each carrying out their jurisdictions as specified by the specific Acts. This means that the institutional framework, as well as the legal system, generally fails to integrate their approach to land use, including the protection of the natural environment. The Physical Planning Act (125 of 1991), the Environment Conservation Act (73 of 1989) and the Conservation of Agricultural Resources Act (43 of 1983) assume integration of environmental management in land use planning. However, at the administrative level, environmental management practices remain sectoral and fragmented. 3.2.7 Land tenure and ownership issues Under colonialism and apartheid, various restrictions were placed on land rights. Black people were prohibited from owning or leasing land in most of the country. Today, even in the 'reserved' areas, rights or interests in land are insecure. Over the last few decades, these so-called communal systems have been characterised as 'backward' and unproductive and government has attempted to individualise communal tenure. The way in which this privatisation or 'individualisation' has taken place has often been a cloak for corruption. It resulted in large-scale dispossession of the land rights of the poorest and most vulnerable people. Because legal prohibitions created severe shortages of land in the areas where black people were allowed to live, some people established homes where they had no legal rights. These settlements need to be brought within the ambit of the law with a proper system of administrative support. One of the major challenges of tenure reform is to de-racialise the system of land rights in a way which brings pre-existing vested rights in land within a non-racial unitary system. Tenure reform must set in place viable institutions and tenure forms which address and resolve the current problems of insecurity, inequality, lawlessness and uncertainty regarding land ownership which discourages public and private investment in services. It

must resolve current tenure disputes, overlapping tenure rights, and conflicting claims. A major problem in communal areas is the lack of adequate administration to support communal land tenure. This is partly due to the breakdown of traditional institutions and partly to the fact that law enforcement agencies have been reluctant to intervene in disputes over land rights. 3.2.8 Women's land tenure rights Communal and traditional tenure systems do, in some instances, operate in ways which deny the basic human rights of their members. Discrimination against women is well documented, as is the fact that certain of these systems deny members the right of democratic participation. A balance must be obtained between respect for the values and beliefs which underlie communal tenure and the need to guarantee basic human rights. 3.2.9 Obstacles to provision of infrastructure on communal land The issue of how to accommodate physical infrastructure in areas of communal land tenure also has to be tackled in order to ensure that land is set aside for service and development purposes and that it is appropriately owned and registered. An agreement has been reached between the Departments of Housing and Land Affairs that the national housing subsidy can be made available in communal areas provided that the right to occupy is legally registered, for instance by the local land office under the auspices of the local authorities, thus circumventing the requirement of formal land ownership (see Chapter 4). 3.3 Incorporating environmental concerns in rural development Sustainable development is development that delivers basic environmental, social and economic services without threatening the viability of natural, built and social systems upon which these services depend. Above all, concern for the environmental sustainability of rural development in South Africa should be a socio-economic concern, which is ultimately an issue of social justice. Its principal goal should be the preservation of people and the enhancement of their standard of living. It is about improving the quality of life of poor people in rural settlements and creating long term income from even the most barren of surroundings. A wide range of possible environmental impacts must be taken into account. Environmental management should not be restricted to conservation of natural resources, the preservation of ecosystems, the maintenance of biological diversity. It should also include: measures to help the poor to use and manage the environment sustainably; the management of the human living environment; and the understanding of the cultural, social and economic forces that define our relationship to the environment. Environmental concerns therefore embrace concern for human rights. In many parts of South Africa, the natural resource base is overexploited because of extreme poverty, lack of access to land, water and energy sources. Structural economic

change is therefore a basic requirement for sustainable development. The new democratisation of the state and of local government provides an ideal opportunity for the implementation of local integrated environmental management. 3.3.1 Environmental rights Section 24 of the Constitution (in the Bill of Rights) states that: Everyone has the right (a) to an environment that is not harmful to their health or well-being; and (b) to have the environment protected, for the benefit of present and future generations, through reasonable legislative and other measures that: (i) prevent pollution and degradation; (ii) promote conservation; and (iii) secure ecologically sustainable development and use of natural resources while promoting justifiable economic and social development.

Section 24 of the Constitution acknowledges the connection between the environment, health and well being. Section 24(b) introduces the notion of inter-generational equity by guaranteeing the right for citizens to have the environment protected for the benefit of both present and future generations. The Constitution places an obligation on the State to take reasonable legislative and other measures to ensure that the issues listed under Section 24(b) are attended to. (See Box 3.4 and Box 3.5)

3.3.2 Institutional support Local government is responsible for containing negative impacts on the environment and for adopting measures to improve environmental management (see Box 6.1). Assistance from national and provincial departments is required for the capacity building, information and monitoring that will allow local governments to discharge their obligations in this area. Interest in environmental management should be localised as far as possible. Civil society should be encouraged to engage in environmental policy development and management. 3.4 Local economic development (LED) Internationally, the failure of deconcentration strategies, such as attempts to relocate industry to depressed areas, has led local government authorities to seek their own solutions to their economic problems. This approach has come to be termed 'local economic development (LED). It refers to locally inspired efforts to increase growth and employment and to develop markets. The strategy is also applicable in rural towns (see Box 3.6). If local efforts are to succeed in the rural areas, local government, the private sector and communities must come together to explore opportunities for growth and development.

Such an approach may stumble initially because of the distrust and enmity in this racially divided population. On the other hand, South Africans have shown that much can be achieved through negotiation. Local level negotiation is crucial to the development of a stable society and for economic progress. There is always scope for building local economies based on the development of resources in the surrounding rural areas, such as in the large and small farm sector, agroindustries, forestry, other resource-based production and tourism. This needs to be done for the towns in farming areas which have often lost their connections with rural communities as more and more farm production is moved directly to the national market. It applies in the former homelands where towns were built to accommodate the increasing numbers of displaced people, or were created for purely administrative reasons. The feasibility of this strategy will depend on local agro-ecological conditions and settlement patterns. It is more likely to succeed in the more intensive farming areas like, for example, Mpumalanga than in the Free State. There is no blueprint for the development of towns, but small towns can do much to activate employment and growth, provided that their efforts are complemented by a wider macro-economic and sectoral policy environment and the development of transport routes and industrial corridors (see Chapter 4). The necessary infrastructural development will require funding or partfunding from outside the rural areas. The one ingredient which cannot be provided from outside is leadership, which must emerge from within the communities. If this can be identified and brought to the fore, and reconciliation within the area can be achieved, then district councils and local rural councils will be able to lobby for the kinds of investment that will lead to growth.

All of these paths will be enhanced if active steps are taken to increase the availability of information, encourage community organisation and agreement on development plans. The Department of Constitutional Development's LED Directorate is playing a key role in this work. With strong national competition for limited resources, communities will have to rely on their available resources and exploit their own comparative advantage.

3.5 Markets, spatial integration and regional economic development The apartheid spatial divisions were a costly legacy, isolating so many communities both geographically, socially and economically. Most citizens ended up in economically marginalised areas from which the drivers of the modern economy were stolen back to central places. Obstacles to marketing inhibited production. Remote services and administration raised the costs of daily life. The rural poor became dependent upon the central modern economy for work and pensions which, in turn, they helped to build with their labour and their spending in towns. The central issue for the economy is how to reintegrate those areas where most people are now trapped as economic prisoners. Reintegration is urgently needed to raise their standard of living. New life can be injected into these impoverished settlements and communities with the establishment of regular markets, moving from place to place according to a fixed rota.

Periodic markets are traditional in most countries and have, more recently, been promoted with good results in Kenya and Zimbabwe and more recently in South Africa (see Box 3.7). Weekly markets provide local producers and crafts people with opportunities to trade their goods and skills. By attending all the market days within a region, producers and service providers can gain a full week's earnings. The markets can generate economies of scale, lower unit costs and thus provide a greater diversity of goods and services. Until now, agencies of all kinds have promoted small-scale production in South Africa. People themselves have tried to make a living through vegetable gardens, small trade and manufactures. Without organised local markets, their failure rate has been high. Over 80 per cent of families have no value added activity. They spend remittances and pensions largely in established and often distant white towns because what they wish to obtain is not available locally. The main reason for the failure of small initiatives is that there is little cash circulation in rural areas. On the other hand, regular local markets would call forth production and generate employment in the locality.

Provincial and local government departments can promote their own efficiency and the success of such a strategy by taking services to markets on a weekly basis, keeping overheads down and scaling up delivery. Pension pay-outs are an obvious example. Mobile post offices could follow the same route and schedule. If the Department of Health mobile clinics did likewise, a good attendance would be assured. All of these would serve to 'take the town to the countryside. Other services, public and private, are possible and should be encouraged by the provincial authorities (see Box 3.8).

Even greater synergy can be achieved if markets are arranged in tandem with the proposed multi-purpose service centres (MPSCs) that are now being promoted by several departments (eg the Post Office, ESKOM, TELKOM and the police) and local and regional service providers. The Post Office intends to provide not only well situated postal services, but also information centres and rural financial services. Careful community liaison will ensure that economic activity and service provision develop hand in hand and work to the advantage of both. With services being provided on a regular basis, trading in goods and skills will be sure to follow. 3.6 Partnerships with the private sector In rural areas, the 'private sector' consists mainly of white commercial farmers. In small towns it consists of banks, agricultural-input suppliers, small retail firms and large retail chains and various machinery and building contractors. With the growth of small farms, and with a much wider range of entrepreneurs wanting to engage in development, it will be in the interests of the established private sector to participate in new ways, such as by joining the debate at the local development fora and collaborating with their rural neighbours. Progress may be slow, but it will be hastened where knowledge and experience in skills are shared. Established business people can offer hard-headed evaluation of proposed projects, taking account of current budgets and of the opportunities for expanding resources through grants, loans, and own contributions. They can work with councils on the development of facilities and services that will attract other investors and small-scale enterprises. They can be encouraged by the council to look beyond the boundaries of the towns for customers, markets and inputs, and to develop commercial and financial services for the expansion of other sectors, such as farm production and tourism, and the marketing and processing of products from the area. In formulating a long-term plan for the area, the above-listed partners will want to examine the different options, including spatial development of the area to integrate businesses, residences, the transport system and the area's resources. Some towns may see an advantage in setting up a development agency, run on business lines, interacting closely with the council and all groups in the community. 3.6.1 Private-sector finance initiatives The private sector may also invest in the construction and management of infrastructure and in service delivery (eg water supplies). Private-sector financing of state projects can transfer risk to the private sector, reduce budget deficits and improve value for money. At the same time local government can retain control of their assets while getting the benefits of private sector discipline and finance. However, national and provincial departments remain responsible, within their own sectors, for the effective provision of services by the municipalities. Regulations will be developed by some departments governing the involvement of private sector firms in the

provision of services. These are likely to stipulate that contracts should be awarded on a competitive basis, that standard forms of contract be developed, and that service provision be extended to poorer sections of the population. While such regulations are being developed, interim measures may be introduced. The Department of Water Affairs and Forestry, for instance, has already prepared interim guidelines for the provision of water supply and sanitation services by the private sector. 3.7 Land reform and agriculture In many countries, policies to encourage labour-intensive production as well as incentives to small farmers to invest in suitable agricultural technology have increased production and employment. By contrast, South Africa has supported the development of large farms, thereby displacing people to marginal areas, and increasing rural poverty. This process will be reversed by the new policies to broaden the base of land ownership. The promotion and support for labour intensive agricultural enterprises, should help increase rural employment, production and income. Redistributive land reform and the provision of support services are central to the government's employment strategy. There are vital economic benefits for rural society generated by land reform. More households will be able to obtain sufficient food on a consistent basis and will be able to raise cash incomes through the sale of surpluses. Empirical evidence from land reform the world over has demonstrated that many farm operations on smaller scales can be more efficient, furnishing higher returns to the scarcest factors of production (land and capital). An area of high potential arable farm land normally produces considerably more livelihoods if divided into small familyoperated farms. Intensification can also have a favourable impact on off-farm employment through the multiplier effect on the local economy. 3.7.1 Land reform and increasing the social wage Incomes could be augmented if local councils sought opportunities to redistribute and/or lease small parcels of productive land around small towns. This could complement other efforts to increase access to resources and to reduce costs, for example by helping with the provision of affordable housing and enabling workers to live near their places of work. Grants may be obtained from the Department of Land Affairs to enable primary local authorities to acquire land or extend or create a commonage for the purpose of establishing agricultural or other productive lease schemes for use by poor and disadvantaged residents. Land reform is crucial for rural industrialisation in proximity to the huge concentrations of population which owe their existence to the brutal process of dispossession; for example, in northwestern KwaZulu Natal, and adjacent to the Border region of the Eastern Cape. The so-called buffer zones, designed to maintain racial separation between

white towns and black townships, represent major opportunities for land reform. These areas are richly supplied with infrastructure, so that the costs of supplying water, electricity and transport links are likely to be relatively low compared with remote rural regions. In these situations, there are large areas of state and public land suitable for lease by councils to support small-scale, part-time, intensive cultivation. In addition, freehold areas may be purchased for this purpose by municipalities with government grants. In the past, increases in agricultural production have had positive effects on other sections of the economy, most notably manufacturing. The manufacture of agricultural products is considerably more labour-intensive than in the rest of the manufacturing sector. There are comparative advantages to be exploited in agricultural trade with countries in the region. 3.7.2 Land reform and the environment The land reform programme aims to reduce the levels of environmental destruction associated with over crowding on poor land, but the risk of informal housing spreading on prime agricultural land must be avoided. Both residential development for poor rural households, using Settlement/Land Acquisition Grants for land and basic services, and the allocation of space for food production in community gardens should be subject to environmental standards. If communities themselves understand the necessity for conservation and can be involved in the planning of the required conservation measures, they are most likely to support them. 3.7.3 Employment in agriculture On large farms, operations are normally centrally managed with low management:labour ratios. Work is often seasonal, providing employment only to migrant labour which run the risk of remaining unemployed for part of the year. Large farms emerged under conditions of lower population density and are increasingly difficult to justify in the face of changing factor combinations (i.e. increasing land scarcity and unemployment). For land reform to succeed in creating many livelihoods, the move to small-farm systems has to be supported by reorienting institutions and by providing rural finance and market access. Thus government's agricultural policies promote greater diversity of scale and type of farm production in South Africa. This is expected to increase the efficiency and vitality of the sector. The promotion of small farm and forest production is expected to increase employment and provide products for the immediate local market and for local agroindustry. It is therefore part of an integrated strategy for local economic development. 3.7.4 Support services for small and medium-scale farmers Land reform has the potential to boost employment and raise incomes by increased agricultural production in both the large and small farm sectors. Appropriate research will be needed if this potential is to be fulfilled in the small farm sector, in addition to public and private investment in other support services.

Small-scale agricultural enterprises and agri-businesses are regarded as Small, Medium and Micro Enterprises (SMMEs) by the Department of Trade and Industry, and will be able to profit from its services. But the major support for small-scale agriculture should come from the provincial departments of agriculture, into which the Department of Agriculture's Broadening Access to Agriculture Thrust (BATAT) programme has now been integrated. The objective of BATAT is to develop the potential for assisting small and medium scale farmers, emphasising market orientation, developing the capacity for participatory research and technology development, and improving the efficiency and effectiveness of government and the Agricultural Research Council to the benefit of all farmers. A major reorientation of research and extension has been started to benefit all types of farmers. There is ample international evidence to show that the returns to agricultural research for the small farm sector are high and that this is an important way to invest in the poor. There is potential to improve both crop production and livestock production. Box 3.10 provides an example of the sort of innovations that are required in the Eastern Cape. 3.7.5 Agricultural marketing

A greatly amended Marketing of Agricultural Products Act (1996) restricts the extent of government intervention according to specified and much more limited aims. There will no longer be single channel marketing and no marketing boards, so prices will follow stronger market orientation. This provides new opportunities for entrants into marketing and processing, for instance through establishing local maize mills, which has been an

important stepping stone for emergent businesses in many other African countries. It also reduces overall food transport costs as grain moves from farm to mill to consumer, avoiding long distances to major towns for processing.

3.7.6 Irrigation Irrigation policy is being formulated in a consultative process initiated by the Department of Water Affairs and Forestry to be presented to parliament in 1998. There are three important issues to be resolved.

the parallel process of developing a new Water Act; the imperative to reduce overall water use in agriculture, improve efficiency of use by charging for its real cost and switching to higher value crops that can pay for the use of such a high cost input; the broadening of access to irrigation farming, eg small scale irrigators - mainly women - in community gardens who use water very efficiently in countless smallscale schemes around the country, contributing widely to household food security.

3.8 Forestry

Industries producing timber and wood products from the sustainable use of natural resources can be developed more widely and thus provide more jobs in the rural areas. Large-scale commercial forestry has a bad name arising from conflicts with local people over land, water use, adverse environmental impacts and labour practices, although these are in the process of being resolved through negotiation at the local level (see Box 3.11). Conflicts over water can be mediated through the Afforestation Permit System. Authority over water is being transferred from the forestry to the water affairs branch of the department and the forestry industry has drawn up a voluntary code of practice that should ensure that some of the worst abuses, such as planting trees on wetlands or on the margins of indigenous forests, do not recur. Forest management has tended not to involve local people, being the preserve of the individual land owner. Until recently, social, or participatory, forestry received little attention in South Africa. Internationally, there is increasing evidence of the benefits of shared forest management (see Box 3.12). It can promote local institutional capacity, better relations among stakeholders, and improved flow and diversity of products and access to markets. Shared forest management requires a coalition of interested parties. 3.9 Tourism South Africa has a diverse heritage and a wide variety of cultures, in addition to the wildlife, scenery and coasts for which it is better known amongst domestic and foreign tourists. In times of peace, the potential for tourism is considerable. South Africas apparent superiority in infrastructure provides an advantage over other parts of Africa in the eyes of international tourists. Until recently, tourism has generally followed a narrow path, keeping within former white South Africa and national parks and protected areas, providing incomes largely to the major hotel chains and transport companies. The 'trickle down' to local economies has been negligible. Most of the income has gone to the cities. This is reflected in the negative attitudes to the parks among local people who have little reason to protect wildlife or tourists.

Internationally, the trend is towards forms of tourism which educate the visitor about history, environment and culture (see Box 3.13). This should encourage the re-evaluation of the opportunities for diversifying the industry and attracting visitors to areas of South Africa that have not been visited. However, tourists cannot be attracted into areas which are not safe or secure and are without basic facilities. The development of tourism in South Africa will depend upon private investment, underpinned by a government framework which encourages the channelling of benefits to local people through their constructive involvement, including their participation in sustainable environmental management and commerce. National, provincial and local government share responsibility for tourism development. They will be assisted by the new National Tourism Organisation (NTO) which will be in charge of international marketing and promotion, setting industry standards, and managing research, market intelligence and information. The NTO will assist provincial and local agencies. It will facilitate the growth of the industry through community education, and the development of SMMEs in the tourism sector. The development of tourism can thus attract consumers to new areas, bringing in outside funding in the process. However, local rural communities have also to consider the problems that accompany tourism. Income from tourism is usually seasonal and can be unreliable. Local ventures to promote tourism can be stressful to local people, if not well planned and properly understood.

3.10 Rural industries Before its reformulation in 1991, the Regional Industrial Development Programme (RIDP) sought to subsidise industrial development in or near the borders of the crowded former homelands. However, the policy failed both to reduce economic disparities between regions and to stimulate economic linkages. The newly formulated strategy of the Department of Trade and Industry seeks to promote development on the basis of regional resource endowment, comparative advantage and demonstrated economic viability. It will include a package of incentives, including investment incentives, depreciation allowances and development finance, as well as other assistance such as training and information. In an effort to identify bankable projects, the DTI has been analysing regional comparative advantage as part of its Regional Industrial Location Strategy and it will provide such information to prospective investors. It has also been carrying out analyses of industrial clusters, some of which are based on agro-industrial linkages: forestry products, including pulp and paper as well as timber industries; footwear; food processing and beverages; and textiles. Previously the National Economic Forum carried out studies into tourism, sugar and fruit juice production, among other things. In appropriate locations, all of these, and many others, could provide the basis for local economic development. If local authorities wish to attract industries, they will need information on the assistance available from the RIDP or the DTI's Centre for Small Business Promotion (see Section 3.14). Local authorities should also consider complementary investment in facilities to improve living conditions in order to raise the social wage. 3.11 Promoting Small, Medium and Micro Enterprises (SMMEs) The Department of Trade and Industry has set up new structures of support for emerging business. These include a national network of Local Business Service Centres (LBSCs) operated by local NGOs, the Khula Enterprise Finance Company for financial services, and the Ntsika Enterprise Promotion Agency (NEPA) which will provide entrepreneurial training (accessible through the LBSCs) and carry out research and policy development in support of entrepreneurs. NEPA is currently examining the possibilities for the expansion of a variety of agricultural activities, such as silk production, aquaculture and bee keeping, as well as handicrafts. It is also investigating market structures, subcontracting issues, and the feasibility of teaching entrepreneurial skills at school. LBSCs will be accredited NGOs. The LBSCs in rural areas will be subsidised by government. Some activities in all LBSCs may be subsidised to help single out deserving clients. Each centre will be governed by a local committee and will need to be accountable and transparent to maintain its accreditation. The LBSCs will help entrepreneurs to obtain training, for which they must pay, and will provide continuing support to new businesses until they are firmly established (see Box 3.14).

Khula will also work with NGOs and banks to provide financial services at local level, providing loan capital and some coverage of initial operating costs. In addition to ensuring that all local entrepreneurs learn how to obtain the information, advice and other programmes available through the nearest LBSC, local government and other organisations should be committed to procurement from local suppliers and to the contracting of local entrepreneurs. 3.12 Financial services Financial services are needed, not only by employers and small scale business people, but also by farm workers, the landless, pensioners and smallholders. Financial services need to be readily available to make a real difference to people and economic development. In 1996, The Presidential Commission on Rural Financial Services proposed that the Land Bank retain its primary purpose of providing both wholesale and retail finance for land purchase (an important adjunct to the land reforms) and for agricultural production. The bank will be required also to provide project financing and to increase its lending to small-scale farmers, and it will be required to adopt a 'best practice ethic' for lending. Some of its lending will be at province level and through development corporations. Some will be through agency agreements with the Post Office. There are also proposals to promote a third tier of banking through NGOs, credit unions and other retail organisations. The Land Bank is one of five National Development Finance Institutions (NDFIs), which will have complementary functions (see Chapter 4). Finance and support services for

rural non-farm enterprises will be available through Khula Enterprise Finance Limited, an NDFI set up by the DTI. Both the Land Bank and Khula will on-lend to local intermediaries. Major attempts are being made to extend the outreach and accessibility of financial institutions to benefit farmers and entrepreneurs who have not previously had access to formal financing systems. Banks, post offices and a variety of non-government organisations are likely to become part of a broad web of financial institutions falling within a regulatory framework still to be established. The framework will promote the growth of pluralism, including, for instance, less formal organisations, such as savings clubs and stokvels, which will remain important to entrepreneurs who are starting out in business. 3.1.3 Promoting labour intensity The funding principles of the RDP require all departments to promote labour intensive techniques in infrastructural development. These are now well entrenched through contractual obligations and established criteria for business plan approval (see Chapter 6). These procedures must be adopted by local government too, so as to help increase local employment and at the same time improve infrastructure and services for local people. The National Public Works Programme (NPWP) is responsible for assisting with the formulation of policy with regard to the way in which infrastructure is delivered by departments at the national, provincial and local government levels (see Box 3.15). Government spending on infrastructure is now directed strongly towards areas of the country that have suffered from years of neglect. The identification of projects is in the hands of local and provincial government line function departments. It will soon be in the hands of communities themselves in so far as they can propose projects for the Community Based Public Works Programme (CBPWP) (see Box 3.16). This programme is in addition to normal local government infrastructure provision. It aims to both build useful infrastructure and provide a basic income to unemployed people as a matter of urgency. Following the identification of a project, a project steering committee should be formed, which should be fully representative of the beneficiary community. The committee members themselves will be offered training in order to improve their ability to carry out their responsibilities. The committee will need to address a number of critical issues with regard to labour intensive construction including the following:

the extent of labour-intensive work to be carried out by community members and the rate to be paid per task; the manner in which community members will be selected for work on the projects; the extent to which local emerging entrepreneurs are to be given the opportunity to work on the project.

The use of task-based working gives the workforce greater control over the use of their own time and ensures that labour-intensive construction is carried out efficiently. The employment of community members on labour-intensive civil engineering construction projects is now controlled through the New Framework Agreement of Labour Intensive Construction in Civil Engineering - Criteria and Guidelines. This document is intended to protect communities from exploitation, whilst providing the opportunity for people who might not yet have entered the formal job market to do so through employment on a government project. The entitlement to education and training is clearly stated. Whilst the Framework Agreement does not apply to building projects, the aims of the NPWP will apply to building projects as well as to civil engineering projects. The main difference between civil engineering and building projects is that the latter are labour intensive and well suited to execution by local contractors. The education and training to be provided in association with labour-intensive infrastructure projects will depend on the needs identified in the beneficiary communities. It is expected that it will include the following:

vocational or skills training, recognizing skills levels already attained and providing documentary evidence of the level of attainment to assist with subsequent employment; capacity building for steering committee members and, where appropriate, for local emerging contractors in such areas as business and financial management and estimating and tendering; adult basic education and training in literacy and numeracy and in other life skills.

The NPWP is also engaged in a fundamental transformation of the way in which government controls and commissions construction works. This will enable emerging contractors to undertake work for government. It will remove the financial and organisational obstacles that they have hitherto faced and provide more regular work for them

3.13.1 Relief employment The public works programme has the potential to provide the basis for social security in rural areas, both by tackling structural unemployment and by providing relief following a natural disaster. There is ample evidence in South Africa and internationally that public works programmes offering survival wages generally provide relief effectively to those most in need; only people genuinely in need offer themselves for work. Provided the problem of 'ghost workers' is guarded against, labour-intensive work programmes are generally free of corruption and easy to monitor by local government authorities. They can also be expanded rapidly in emergencies, as happened for instance to meet the drought relief needs in South Africa in 1992/93.

4. Building Rural Infrastructure

4.1 Purpose The RDP places specific emphasis on the development and upgrading of household infrastructure as part of a basic needs programme. It is widely acknowledged that sustained investment in appropriate types of infrastructure is essential for the achievement of the equity and efficiency objectives of the government. The national and provincial departments concerned have a constitutional obligation to support local government in ensuring an "environment that is not harmful to health". Current service levels decline from the urban core to scattered settlements. This chapter describes the policy principles and the coordinating structures which provide the framework for implementation. Prior consultation with local government structures and community fora is a precondition for all rural infrastructure projects, so also is the close cooperation of the national and provincial line departments involved.

4.2 Local government and service provision The constitutional role of local government in service provision is described in Chapter 2. The building of the capacity to carry out this role in poor rural areas will necessarily be gradual. The provision of services includes all activities such as needs assessment, planning, budgeting, the appointment of consultants, the adjudication of tenders and awarding contracts, the commissioning of services, the employment of staff for administration, operations and maintenance. Service provision is a complex process requiring both human and financial resources. Most local governments, particularly those in poor rural areas, do not have the resources to engage in infrastructure development, operations and maintenance, and require outside support. In the interim, local governments will require support from the provincial and central governments. 4.3 The backlog in services The backlog in infrastructure in South Africa is immense. Northern Province, Eastern Cape, and KwaZulu Natal have the greatest backlog. Meeting this backlog requires large investment, institutional development, training and technology development. More cost effective alternatives must be found in rural areas where bulk services are costly (see Box 4.1). There are strong economic arguments for building infrastructure to support production and equally strong ethical arguments for the provision of essential infrastructure in areas deprived in the past. The RDP and various sector White Papers show a strong commitment to an equitable allocation of investment in both urban and rural areas, but there will inevitably be competition for funding arising from the need for strong fiscal discipline. Rural and town councils will need to show that proposed investments

represent a justifiable use of scarce resources (public and private) and that they can manage the process. The Constitution stipulates that municipalities must provide basic services in a sustainable manner within their financial and physical capacity. While the capital cost of basic infrastructure components will be subsidised, tariffs for supplies will not be subsidised. Councils wishing to subsidise services must themselves raise the additional funds required. State grants for basic infrastructure and top-up loans can be disbursed only through financially viable institutions. The lack of such institutions at the local level is a serious impediment. 4.4 Expected service levels Target service levels for different types of rural areas cannot be laid down with any precision. Key factors influencing the feasibility of the level of service provision are:

speed of economic growth in the locality; how widely the benefits of that growth are distributed; the capacity of institutions responsible for delivering municipal services; and the individual and collective choices of consumers.

The Municipal Infrastructure Investment Framework (Department of Constitutional Development, March 1997) provides a national policy framework for infrastructure provision, covering both urban and rural areas, distinguishing between the urban core, urban fringe, dense settlements, villages, scattered settlements and farm worker housing (see Box 4.3 for definitions). The contrast in expected levels of service provision between urban and rural reflects the relatively high unit costs of installation in rural areas and the fact that rural people can afford only the lowest level of recurrent costs. A ten-year time frame and an average growth rate in GDP of 3 per cent per annum is assumed in the drafting of the rural scenario in Box 4.2.

The size, density and relative location of settlements affect the cost of providing a service. There are significant urban and rural differences. On average, rural settlements in South Africa have about 2 500 people with about 3 dwelling units per hectare. This can be compared with urban areas where the average size of a local authority has about 50 000 with a density at the core of more than 15 dwelling units per hectare. Given the low density in rural settlements, it is too costly to provide roads, water supply and electricity to each plot. On the other hand, simpler technologies can be provided which, if properly managed, can be in better balance with the surrounding environment and which lend themselves to more labour-intensive construction techniques. 4.5 Costs of provision The capital costs of service provision vary widely because of the variety of settlement types that are classified as rural (see Box 4.3). Dense rural settlements, for example, have cost structures similar to those for urban areas. Indicative 1996 capital costs of services for rural areas (ie for internal, bulk and connector services) are summarised in Table 4.2. The rural minimum capital costs are for unreticulated local water, VIP latrine sanitation and non-grid electricity. Table 4.3 shows typical monthly recurrent costs of the selected scenarios. The cost for water and electricity depends largely on levels of consumption and the ranges shown reflect this. Relatively little is known about these operating costs in rural areas and the costs given are rough estimates only.

4.5.1 Cost issues Capital and recurrent costs must be affordable. Central government will not support a capital programme which is over ambitious and not sustainable. At the same time, if infrastructure is put in place which is inadequate and costly to run, it will place a permanent burden on the economy which will dampen growth and lead to the eventual deterioration of the infrastructure. If infrastructure is put in place which leads to increased economic output, the recurrent costs will be more manageable.

TABLE 4.1 INDICATIVE CAPITAL COSTS OF DIFFERENT LEVELS OF SERVICE PROVISION IN RURAL AREAS (INTERNAL, BULK AND CONNECTOR) (Rand per household) Rural minimum Water Sanitation Electricity Roads TOTAL total excl. electricity 300 2 000 2 400 0 4 700 2 300 Basic 1 300 2 000 4 200 2 100 9 600 5 400 Intermediate 4 100 2 000 4 100 4 000 14 200 10 100 Rural full 6 700 6 800 4 200 11 500 27 200 23 000

TABLE 4.2 INDICATIVE RECURRENT COSTS OF DIFFERENT LEVELS OF SERVICE PROVISION IN RURAL AREAS (Rand per household per month) Rural minimum Basic Intermediate Rural full

Operating, maintenance and bulk purchase Water Sanitation Electricity Roads and Stormwater TOTAL total excl. electricity 3 4 9 0 16 7 11 4 33 3 51 18 24 4 42 6 76 34 38 24 80 6 148 68

Capital charges TOTAL capital charges TOTAL excluding 40 20 82 47 123 87 250 214

elec. Source: Based on MIIF (1996) documents but figures rounded for illustrative purposes only The level of services provided and their affordability to rural people must be a major concern. Even the minimum rural scenario (see Table 4.1) would place an unbearable cost burden on rural households without subsidisation. A subsidy at one point implies a tax elsewhere. Subsidies for services can be provided in three main ways. First, higher prices may be charged to some consumers to enable lower prices to be charged to others. Secondly, subsidisation is possible from revenue raised from local taxes. Finally, taxes can be raised by one level of government and given in the form of grants to another. Only within the electricity sector is there scope for redistribution on a national basis, other than through the national fiscus. Because of the national electricity grid, and the fact that generation is undertaken almost entirely by ESKOM, it is possible to set generation and transmission prices high enough to generate a profit for redistributive purposes to poor households, particularly rural ones. For reasons relating to the revenue potential of the tax base and for the tendency for wealthier residents and investors to move to areas where taxes are lower, the redistributive responsibility of government lies principally with the national tier. Redistribution can be achieved through the provision of operating subsidies and through capital grants. Provincial and national governments spend approximately R2.8 billion each year on providing local government services directly where local authorities do not exist or do not have the capacity to provide services. If targeted at poor households to subsidise the recurrent costs of providing basic service levels, this would be equivalent to R50 per household per month to be provided in respect of the poorest 40 per cent of urban and 70 per cent of rural households (Municipal Infrastructure Investment Framework, 1996). To meet the backlog in infrastructure in rural areas, government is committed to subsidise the capital costs for a basic level of service with the following programmes: School and clinic building programme, through the national and provincial departments, fully funded by government, with telephones and electricity (either grid or non-grid; 25,000 schools are to be connected by the year 2000). The Community Water and Sanitation Programme which provides the platform for the implementation of internal bulk and connector water and sanitation projects. The Consolidated Municipal Infrastructure Programme (MIP) will provide up to R3 000 per household to local councils for the installation and rehabilitation of

internal bulk and connector infrastructure, ie water and roads, together with capacity building to enable local authorities to operate and maintain their assets. The National Housing Subsidy of up to R15 000 per qualifying person for the land, on-site infrastructure, as well as house top structure, in multiple housing developments for low income households only; or a Settlement/Land Acquisition Grant of up to R15 000 per qualifying person in rural areas to acquire land and effect homestead and land improvements, through the provision of basic infrastructure such as water, sanitation, internal roads, top structures and fencing as part of the Land Reform Programme. The institutional arrangements, the size of the capital subsidies and what they can acquire, are reasonably clear in urban areas, in which internal services (see Box 4.1 for definitions) are funded out of the R15 000 housing subsidy, which must also cover the cost of the land and top structure. Internal bulk and connector services at a basic level are funded by the Consolidated MIP by up to R3000 per household. The situation in rural areas is less clear, for the following reasons: In rural areas, the distinction between internal services and internal bulk and connector services is often unclear. Thus the allocation of charges to the R15 000 Housing Subsidy and the R3 000 per household MIP subsidy for internal bulk and connector infrastructure is less straightforward. Government intends to extend the Housing Subsidy to rural settlements, but this has yet to happen. In the meantime, the Department of Land Affairs is allocating the Settlement/Land Acquisition Grant of R15 000 to rural applicants acquiring land (or land tenure upgrading), housing and services as well as land for farming. In these circumstances the R15 000 subsidy secures neither a modest livelihood for the household nor basic services. Applicants to the Department of Land Affairs often prefer to spend their grant on acquiring productive land and to forgo their right to the basic services needed to sustain their health. This could result in requests for a housing subsidy at a later date. While the present system of dual funding is acceptable because it speeds up disbursement of the subsidy, duplicate funding will not be permitted. Government is working on ways to improve the alignment of the different subsidy mechanisms.

4.6 Water and sanitation Water is essential for both the health and standard of living of the rural population and for the development of the land and many other enterprises, including manu-facturing, recreation and tourism. Surveys show that water is the first priority of rural people. Under the Constitution, primary responsibility for the provision of water services rests with local government. Indeed, the pressing need for water is a strong incentive for people to establish effective local government. Where there is no effective local government, the Department of Water and Forestry is playing a direct role in the provision of water supplies to local communities. The Department's Community Water Supply and Sanitation Programme aims to ensure that all South Africans have access to an adequate potable water supply (defined as 20-25 litres per capita per day within 200 metres of the household) and an adequate and safe sanitation facility per site, over the next nine years. The Department finances the Mvula Trust which is working mostly with smaller communities. The trust provides grant or loan finance to communities for water development and support for project implementation, policy development and capacity building.

Planning for water and sanitation development is being integrated with the plans of other departments through the establishment of provincial and area planning fora with wide stakeholder participation. They have allocated funds and set priorities for projects. At a local level, the Department liaises with local planning fora. Where these have not been established, it lends support to local government for the purpose. Planning at the local level involves situation analysis, identification and prioritisation of projects, and devising managerial and technical solutions. Currently, most construction is funded fully by government, but in the case of Mvula projects a community contribution of 8% of costs is required, usually paid in the form of labour. All grants will necessarily have upper limits in per capita terms, but there will be some flexibility in areas of difficult terrain and higher costs. Recurrent costs in the former homelands have up to now been covered by government, but a water tariff is charged in new projects for the purpose of recovering operation and maintenance costs. 4.7 Rural access roads Rural people require access to roads of an adequate standard for buses and minibus taxis to operate at reasonable levels of service, defined in terms of reliability, safety, comfort and cost. Level 4 roads link settlements to the public road network, usually to a level 3 road (a district/regional road that links economic centres) or to a level 2 (provincial) road, but rarely to a level 1 (national) road. Level 4 roads are generally less than 10 km and constructed for a low frequency of traffic (less than 40 vehicles per day), but may carry 100 vehicles per day when improved. The construction and maintenance of level 4 roads are a local government responsibility, though arrangements vary in different provinces. Because district and local authorities often lack skilled personnel, efforts have been made by the Department of Transport to improve capacity through joint funding and the loan of skilled staff. Local community preference must be determined and respected when options are evaluated. Institutional

arrangements must be devised to help local people make appropriate choices and to enable them to participate in construction and maintenance. In future, grant funding for internal bulk and connector roads (ie level 4) will be provided through the Consolidated MIP to which councils may apply. There will be a strict upper limit on central government funding; subsidies on water connectors and local connector roads must not exceed R3 000 per household. However, Consolidated MIP funds can be leveraged by other counterfunders to any level required by a municipality, provided the municipality meets the costs. Internal roads will be subsidised by the Department of Housing and the Department of Land Affairs.

4.8 Energy policy for rural areas

The lack of adequate energy sources in rural areas is a major obstacle to the undertaking of essential domestic, agricultural, and educational tasks; to health and transport services; and to the initiation or development of manu-facturing or trading enterprises. The majority of people living in rural areas are very poor. Their access to sources of fuel energy (ie electricity, petroleum, oil, coal) is very limited due to neglect and underdevelopment and, in the case of farm workers, total dependence on the goodwill of farmers. Most of the small quantity available energy is for domestic purposes. Fuel wood is the most common source, but it is becoming increasingly scarce and thus more costly. The principal obstacles to improving access to energy sources are: the limited distribution network and the high initial costs of extending it; the recurrent cost of conventional energy supplies; and the lack of information for poor people about alternative energy sources including possible sources of finance. The main policy options currently under discussion are summarised in Box 4.6. They embrace all rural energy user categories and all energy carriers. Energy policies and strategies have seldom been devised in cooperation with other sectors in rural areas. However, an energy policy is now being developed that will address rural energy issues and the role of the Department of Minerals and Energy. The consultation process for the development of the White Paper will establish the degree to which the role of the Department should expand to include coordination between government, the energy supply sectors and local communities; as well as a possible role in capacity building, energy planning and facilitation. So far, there has been little cooperation and coordination between suppliers in the energy sector. The electricity sub-sector has often been overemphasised, even though grid electrification is unlikely to be the most cost effective means of supply for many essential services in rural areas. The new emphasis on integrated energy planning will lead to synergy between development and fuel delivery that recognises the multi-faceted nature of rural energy needs. Strategies to integrate energy and rural development concerns into local level decision making are shown in Box 4.7.

In order for local organisations to be brought into energy planning and implementation, there will need to be provincial-level support by the Department of Minerals and Energy. Other energy funding or delivery structures are: SAREDA, a renewable energy implementation agency to mobilise funds, manage a revolving credit fund, provide project management services, plan projects, handle consumer education and arrange for maintenance services; the Biomass Initiative and IDT. 4.9 Rural housing policy The national housing policy is to provide, for all South Africans, a permanent residential structure with secure tenure, ensuring privacy and providing adequate protection against the elements; and potable water, adequate sanitary facilities including waste disposal and domestic electricity supply. The R15 000 maximum housing subsidy is for households earning below R800 per month. In addition to the top structure, the subsidy may be used for other facilities (eg installation of water supplies, sanitation and waste disposal). The vast majority of rural households qualify for the maximum subsidy. Government support to housing development tends to be neglected in rural areas. Where rudimentary shelter is in place, housing is often perceived by the authorities not to be a problem. The fact that other basic facilities (potable water, sanitation, etc) are totally lacking tends to be overlooked. Rural households often fail to obtain their place in the queue for the subsidies offered by government. Housing subsidies are usually granted in response to submissions canvassed by developers or better organised urban communities. For these and other reasons, provincial housing allocations tend to be spent in urban and peri-urban areas.

Government's intention is to have, as far as possible, a unitary subsidy policy which operates for both rural and urban areas and different types of tenure (people living on other people land as well as on freehold and communal land) countrywide. In practice, this has been difficult to implement, due to the differences between rural and urban areas. Although the tenure issue is in the process of being resolved (see Box 4.8), other differences in needs and capacities between rural and urban areas have been more difficult to overcome. The Department of Land Affairs operates a subsidy scheme (the Settlement/Land Acquisition Grant) which is seen as an alternative to that of the Housing Subsidy of the Department of Housing. This accommodates rural people wishing to acquire land for crops and/or livestock as well as for residential purposes. They often prefer to spend their grant on the land rather than on services. The planning of such group projects requires greater community facilitation and participation in decision making than in the average developer-delivered urban housing project.

In the case of farm workers, living on land belonging to an employer, difficulties arise when the right to occupy is tied to employment. In these cases, the granting of a subsidy for housing improvements has to be linked to guarantees by the land owner that the tenure of the grant applicant is secure. Further, the investment of the grant in the housing must not be lost to the beneficiary on leaving employment. 4.9.1 The need for coordinated planning for land reform settlements

It is the responsibility of the national government to ensure a more equitable distribution of land, to support the work of the Commission on Restitution of Land Rights and to implement a programme of land tenure and land administration reform. On the other hand, it is the responsibility of provincial governments to provide complementary development support to those participating in the land reform programme. For sustainable development, there must be close co-operation between national and provincial governments to ensure that beneficiaries enjoy services provided by the provinces, as envisaged in the Constitution. After farm land has been transferred, provincial and local government have responsibility for providing assistance with farm credit, farm-inputs and marketing. Advice and assistance may be needed to ensure the productive use of the land, as well as the provision of infrastructure. The success of the programme thus hinges on a high degree of co-operation between the different tiers of government and the extent to which there is a common vision of land reform and subsequent development. 4.9.2 The need for community facilitation Rural settlement programmes place great demands on government to support organisation and planning at local level. The demand goes well beyond the staff capacity of the agencies concerned. Both the Department of Land Affairs and the Provincial Housing Boards make facilitation funds available with a view to assisting groups to organise themselves and ensure that the needs of rural communities are being brought to the attention of funding institutions and that settlement development takes place in a sustainable way. 4.10 The Consolidated Municipal Infrastructure Programme (MIP) The Consolidated MIP, under the management of the Department of Constitutional Development, coordinated by an Inter-departmental Task Team, provides funding for municipal infrastructure. Grants are provided to municipalities for internal, internal bulk and connector services in line with the Municipal Infrastructure Investment Framework (MIFF). For definitions of infrastructure terminology, see Box 4.1. 4.10.1 Rationale for the Consolidated MIP The Consolidated MIP arose from the need to coordinate the various grant funding programmes of the four national departments that provide capital for municipal infrastructure - ie, the departments of Constitutional Development (DCD), Housing (DoH), Water Affairs and Forestry (DWAF) and Land Affairs (DLA). The Consolidated MIP focuses on internal bulk and connector services for water, roads and stormwater drainage, solid waste disposal and public lighting services. It provides grant funding for new infrastructure, as well as for the upgrading and rehabilitation of existing internal bulk and connector infrastructure, to urban as well as both dense and dispersed rural areas. The closer alignment of grant funding within government under the Consolidated MIP helps municipalities to build and manage sustainable infrastructure systems.

4.10.2 Coordination Coordination takes place through an Inter-Departmental Task Team consisting of the Department of Transport (DoT), DWAF, DoH, DLA and DCD, Department of Minerals and Energy (DME) and the Development Bank of South Africa (DBSA). Responsibilities for grants for infrastructure, shown in Table 4.3, are based on the following understandings: Where the responsibilities of the DOH overlap with the DWAF in providing internal services to dense and dispersed rural areas, coordination will take place by means of the national database for subsidy beneficiaries. The Bulk and Connector Infrastructure Grant (BCIG) will be phased out during the 1997/98 financial year making the Consolidated MIP solely responsible for the delivery of internal bulk and connector services in all areas where municipalities have the capacity to deliver and sustain these services. The DWAF manages and regulates the provision of external bulk water resources. The DWAF will provide grant funding of internal water and sanitation projects, internal bulk and connector water projects within the existing dense and dispersed rural areas. DWAF will coordinate its activities where similar activities overlap with the Consolidated MIP. Only when rural communities have acquired the institutional capacity to maintain and operate their infrastructure will DWAF cease to provide this support. The DLA's Settlement/Land Acquisition Grant is not to be used for infrastructure funding alone. It must be linked to a land component, ie land acquisition or tenure upgrading. The DLA prefers to fund the land element only, but where this is not practicable, the Grant can be used for the provision of basic services. Where the responsibilities of DLA overlap with DoH and the DWAF, coordination will be by means of the national database for subsidy beneficiaries. The DoT is responsible for national roads. Grant funding for internal bulk and connector roads is provided through the Consolidated MIP and for internal roads by the DoH and DLA. Consolidated MIP will provide grant funds (R3000 per site per low income household, earning less than R3500 per month) to supply needy communities with a package of services comprising a combination of water, roads and stormwater drainage, solid waste and community lighting over the next 10 years. Funding of sanitation generally falls outside the criteria of the MIP. However, funds may be secured for the rehabilitation of existing sanitation. Table 4.3 Allocation of responsibilities for grant funding for rural infrastructure Dense Dense Dense Rural Dispersed

Rural (new) water Internal services sanitation DoH, DLA DoH, DLA

Rural (existing) Rural (existing) upgrading rehabilitation DoH, DLA DoH, DLA DoH, DLA DCD, DWAF DCD DCD DCD DCD DoH, DLA DoH, DLA DCD, DLA DCD, DWAF DWAF, municipal DCD DCD, DWAF DWAF, municipal DCD DWAF na DoT

roads and DoH, stormwater DLA water Connector sanitation services DCD, DWAF

DWAF, DWAF, DCD municipal municipal DCD DCD, DWAF DCD DCD

roads and DCD stormwater water Internal bulk services sanitation DCD, DWAF

DWAF, DWAF, DCD municipal municipal DCD DWAF, NA DoT DCD DWAF na DoT

roads and DCD stormwater water External bulk sanitation DWAF na

roads and DoT stormwater

4.11 National development finance institutions (NDFIs) Five NDFIs are being created or transformed to meet the needs of a widened economy. These are the Development Bank of South Africa - primarily funding physical infrastructure, the Land and Agriculture Bank, the Industrial Development Corporation, Khula Enterprise Corporation, and the National Housing Finance Corporation. They have lending operations in both rural and urban areas. NDFI's are able to borrow at scale, thus reducing costs. They can facilitate lending to municipalities which would have difficulty borrowing from private sector finance houses.

Their role is to facilitate growth and development in accordance with policy principles set out by the Department of Finance, viz:

The NDFIs will be autonomous, though acting within a broad government mandate. They will be capitalised by the state, but not sustained through ongoing fiscal transfers. Subsidies will be transparent and costed. They must 'leverage in' government and private resources, but not crowd them out. They will open market opportunities and assume clearly defined risk profiles. They will act as a bridge between the government budget and private capital.

To achieve success within these principles, the NDFIs need to identify projects for joint financing with private-sector financiers. The private sector will need to develop expertise in operating in regulatory environments, taking on longer term investments, and working in close relationship with the public sector. Municipal Councils will approach the DBSA and, where appropriate, other NDFIs to negotiate loans for infrastructure development. For all infrastructure, except the most basic, as enumerated above, councils may expect rigorous evaluation of the financial viability of the developments (see Box 4.9).

A key policy principle which determines the financial framework for investment in rural infrastructure is that a basic needs approach is appropriate for service provision in most areas of the country in the foreseeable future. Only in areas where economic growth is confidently forecast will councils be able to obtain loans for upgrading infrastructure above basic service levels. In this way, resources will be directed to communities who are presently least served, while a higher level of services may be offered by councils to stimulate development in those settlements which have the strongest economies. The local authority will be have to show that there is leadership, community support, local capacity and commitment to manage the process; that they are financially able to take up loans; that the technology is affordable; and that cost recovery measures are in place. 4.11.1 Development Bank of Southern Africa (DBSA)

DBSA is now the key public sector intermediary for lending for infrastructure. The DBSA is concentrating on co-financing projects with the private sector, particularly for municipal infrastructure projects where the private sector is involved as an equity holder and/or manager of the infrastructure. The Local Authority Loans Fund, which used to be run by the Department of Finance, is now administered by DBSA. Its functions are expected to be amalgamated with the DBSA.

4.12 Spatial issues The patterns of settlement in many rural areas lack agro-ecological and socio-economic logic. Settlement is often far from job opportunities or services. It is often entirely unrelated to major commercial and public transport routes. In some areas population densities are very high; in others settlement is very scattered. In some areas political patronage leads to further distortion in residential patterns and service provision. Settlement patterns have been generally unaffected by the wider economy of Southern Africa because of limited interaction across frontiers. Spatial integration must be a major objective of local and provincial planning to reduce service and infrastructure costs at the same time improving access. Public investment decisions at district and provincial level will greatly affect local communities. It is therefore critical that local councils not only mandate their district councillors to pursue their interests, but also that local and district councils maintain close links with provincial planning bodies. There must be close coordination between the locational decisions made by local, district and provincial bodies.

Grants may be accessed from the Department of Land Affairs by under-resourced, poor and/or rural local authorities for the preparion of Land Development Objectives consistent with the Development Facilitation Act (67 of 1995) which require local authorities to set out a development vision for their area and to consult with local stakeholders and other relevant parties. 4.12.1 Spatial Development Initiatives (SDIs)

The term 'Spatial Development Iniatives" (SDIs) has been coined by the departments of Trade and Industry and Transport to describe a programme of strategic initiatives by government aimed at unlocking the under-utilised economic development potential of certain strategically important spatial locations in South Africa. There are a number of these initiatives being pursued by national, provincial and local government in South Africa (see Box 4.10). The Maputo Development Corridor is the most advanced and the best known of the SDI's. Several types of SDI's have been identified and developed, the most important are listed Box 4.11.

5. Building Social Sustainability

5.1 Purpose The level and depth of poverty in the rural areas is becoming clear with the most recent and comprehensive surveys undertaken in rural South Africa. They show that women and female-headed households are particularly disadvantaged and, as a result, three quarters of rural children are growing up in poor households. This chapter sets out the constitutional rights of rural people and the ways in which they can both contribute to and campaign for better service delivery and living conditions. 5.2 Safety and security in rural areas Safety and security are a precondition for social and economic development. The responsibility for the establishment of peace and harmony in the countryside lies with all

citizens, but particularly with the local leadership. Elected councillors and traditional leaders have a responsibility to the whole community. They must be fair and committed to working with all groups. Processes which will strengthen their commitment to fair administrative processes and conduct will be supported by government. A major transformation of the police is underway. The Constitution prescribes the establishment of a national police service which is representative, legitimate, impartial, transparent and accountable, upholding and protecting the fundamental rights of all people. A community policing forum (CPF) should link up with every police station. In many urban areas, these have already become effective, breaking down suspicions and ensuring community involvement in policing. CPFs are not yet widely established in rural areas. It is particularly important that women's groups are well represented on them as part of the effort to reduce violence against women and children. Other much needed improvements are a victim support programme, better information management, police training and motivation and improved infrastructure. 5.3 Legal issues Poor rural people have little or no recourse to the legal system which is based in distant urban centres. Despite the new dispensation, the rural poor remain vulnerable and are often exploited by employers and landowners. In the former homelands, the poor continue to be traumatised and wounded by inter-communal conflict. Often illiterate and poorly served by public information services, they are unaware of their rights under the constitution and other new laws. The few rural legal advisory offices, operated by NGOs, are inadequate for the immense task of providing advice, information and representation in remote areas. Given the shortage of funds, the problem is how to extend legal services to remote areas. An assessment of rural legal advisory offices is needed in order to determine how to increase their reach and efficiency and thus complement the services of the Department of Justice. Regular legal service clinics attached to weekly markets is an option to be considered. It has been proposed that legal students and graduates be specially encouraged to work in remote communities, that government officials serving in rural areas be charged with informing people of their rights and that magistrates and court officials be persuaded to be more sympathetic to the plight of rural people. 5.3.1 Enforcement of rights Statutory agencies, such as the Public Protector, the Gender Commission and the Human Rights Commission, have been established to monitor and enforce the Constitution. Due to a scarcity of resources, they have barely reached into the urban let alone the rural areas. Their work and that of the Land Claims Court should be publicised and extended. The independent mediation service provided for by the Department of Land Affairs in land and owner-occupier disputes should also be made widely known.

There are many areas which have belonged to particular groups or tribes since the immemorial. There are also areas where groups purchased land but did not get title. Instead, in both cases the land is registered in the deeds office as "state owned". This is an anomaly created under colonialism and apartheid. In such instances the rights of the long term holders of the land should be treated as ownership rights. This means that no tier of government or government department has the right to treat the land as state owned. Instead the rights holders must be consulted in all matters pertaining to their land rights. Anything less would amount to confiscation of historical or indigenous land rights. While the Department of Land Affairs is committed to the recognition and protection of pre-existing land rights which were undermined by colonialism and apartheid it is equally committed to protecting and upholding the basic human rights of all South Africans. In particular the rights of members of group based land holding systems must be protected, especially the process of inclusive decision making in all matters pertaining to the management of the jointly held land asset. 5.3.2 Law-making and administrative processes National, provincial and municipal spheres of government all legislate to further their policies. Poor rural people are rarely in a position to influence the law-making process, unlike 'organised agriculture', for example. All law-makers should engage publicly with representatives of affected rural people to determine their position. The same applies to administrators when framing regulatory procedures and mechanisms. 5.3.3 Access to legal information Laws should be clearly formulated and easy to understand by those affected. They should be made widely available in the appropriate language, if necessary before promulgation. It is essential that vulnerable sections of the population are clearly informed of their rights. The school curricula must cover the Children's Charter and the Labour Relations Act, and women should be informed of their rights to maintenance, family planning assistance and medical aid. Farm workers and tenants should be advised of their position under the recent land legislation. Land owners, too, should be offered legal advice as to their rights and responsibilities. People seeking land in rural areas should have access to information under the land restitution legislation and other land reform initiatives. 5.3.4 Monitoring

The rights of rural people are traditionally the most fragile in society and their status must therefore be diligently monitored and secured. Despite efforts to draft laws conscientiously, policy is not always faithfully or comprehensibly reflected in legislation. The policy environment may also change and the capacity and willingness of implementing agents to amend, enforce or implement legislation may vary. Government must remain alert to the need for monitoring and evaluation of the impact of legislation and to assess its continuing appropriateness. 5.3.5 Women's needs A staggering number of women suffer persistent humiliation and violence at the hands of the men in their midst. Rape and child abuse must be curbed. The circumstances of these crimes - in which the perpetrators are frequently related to or known to their victims - add fear of retribution to the hurt. Women and children must be helped to grow in confidence of their right to live unmolested; they must learn how to protect themselves and how to seek help when in need. People must be encouraged to report such crimes and insist that the police act with urgency and integrity in all cases. As a great proportion of men continue to be employed in mines, industries and towns away from home, women are often the heads of household in rural areas. With responsibility for caring for their families, the elderly and the infirm, in circumstances where the most basic needs - food, water and fuel - are hard to obtain, they are often also

the sole breadwinner. With scant formal education or training, they have little chance of obtaining paid employment. Customary law provides wives with only secondary rights of access to land. Whereas men gain rights to land through their lineage or clan, women get access to land only through their husbands. Men are obliged to allocate land to their wives which the women can use at their discretion. As women are usually responsible for providing food for the household, they tend to use it for this purpose, which may also prevent them from growing crops for sale. Development efforts in rural areas must therefore begin with provision of support to women. Any improvement in their circumstances will result in a better future for the new generations. Although numerous surveys have charted the most urgent needs of women, in the long run the most important is likely to be participation in local politics whereby they can directly influence the development process. To achieve such a breakthrough, women must be offered education and training, and information to help them contribute to community planning. Women's groups require encouragement and support on many fronts to increase their capacity to take their place in the community, politically and financially. Having a separate source of income is important for women who need funds with which to care for the family. Short-term welfare measures, whether in the form of a grant or a pension, or public works payments, are helpful, improving the availability of cash for income-generating projects. A precondition for better income-earning opportunities is the release from drudgery through the provision of essential infrastructure - water and energy - and a recognition of women's rights to land.

Access to health care services, including reproductive health care, is a right under the Constitution, but a great deal has to be done to extend these facilities into the remote rural areas. Better health care, especially for women, will relieve much suffering and despair. Information on hygiene and nutrition as well as first aid should be available to all. As women traditionally have been oppressed by some aspects of customary law, it is essential that they are informed of changes in their position. The Department of Justice, through the South African Law Commission, is examining the harmonisation of common law and indigenous law in the Constitution and the Bill of Rights. Family law is also being examined. Parliament has passed a law establishing the Commission on Gender Equality. Rural women must be enabled to make their concerns heard there. They must hold the government to the commitments made at the Beijing Conference and when signing the International Convention for the Elimination of Discrimination Against Women in 1995 (see Box 5.2). These agreements should have far-reaching implications for the rights of rural women. The realisation of these principles depend on fundamental changes in attitude towards the role of women and their contribution to society.

5.4 Children in rural areas A large proportion of South Africa's population are children; most of them live in rural areas where eighty per cent of the very poorest children in the country are to be found. With seriously inadequate basic health care services, mortality rates are high amongst rural children. Many are stunted through malnutrition or under nutrition. One in four children is stunted and one in ten is underweight. One child in three suffers from vitamin A deficiency; one in five is anaemic. Feeding babies and children and providing them with the affection and attention they need for cognitive, emotional and social development is time consuming for any mother. Poor women are under great pressure to carry out other work, too, and so their children are often deprived of essential care and attention. 5.4.1 The rights of the child Under Section 28 of the Bill of Rights of the Constitution, every child has the right, inter alia to:

family care or parental care, or to appropriate alternative care when removed from the family environment; basic nutrition, shelter, basic health care services and social services; be protected from maltreatment, neglect, abuse or degradation; be protected from exploitative labour practice.

The most fundamental right is the right to life. The full development of children requires more time and attention than mothers alone can provide. The care of children is the responsibility of both the parents. Others in the household must support pregnant and breast-feeding women in order that infants get the best start in life. Ready access to basic health care services is important for immunisation programmes, emergency assistance and routine assessment and support. With funds for such services severely stretched due to the huge back-log in provision, the immediate need is for the essential services which can be provided by a trained community worker with the cooperation of lay people. The most useful overall indicator of the condition of children is their nutritional status and this should be regularly monitored and related to environmental health, such as the availability of potable water and sanitation. This nutritional information should be central to the planning of any programme to improve the condition of children in rural areas, including the steps needed and how scarce resources can be best allocated. 5.5 The rights of farm dwellers Because farm workers and their families often live on isolated homesteads, on land owned by others, special attention must be given to their rights. It is necessary to ensure that land owners do not infringe or undermine the basic rights of workers as set out in the Bill of Rights, eg human dignity, freedom and security, servitude and forced labour. Farm workers and their families, living on the land of others, are entitled to equal access to

government services and to subsidies and grants, such as the national housing subsidy, to which their low income entitles them. Farm workers must also be covered by legislation on occupational health and accident insurance, not only for physical accidents connected with the use of machinery, but also those resulting from the misuse, or unsafe storage, of toxic agricultural chemicals As labour tenants are a specific category of rural dwellers who are particularly vulnerable, with specific land needs, the Land Reform (Labour Tenants) Act (3 of 1996) provides for the protection of their rights and for the acquisition of land for labour tenants who will be able to access the Settlement/Land Acquisition Grant for this purpose. The Extension of Tenure Security Bill aims to provide security of tenure for vulnerable occupiers of rural and peri-urban land. It provides for government actively to promote and support long term security for vulnerable occupiers, protecting them against unfair eviction, and regulating the relationship between land owners and occupiers. 5.6 The rights of the disabled in rural areas The risk of impairment and disability is much greater for the poor, especially because of the lack of emergency treatment. The RDP Framework for the Development of an Integrated National Disability Strategy lists numerous factors that increase the likelihood of disability. Nearly all of these occur more often in rural than urban areas. The birth of an impaired child, or the occurrence of disability in a family, often thrusts the family deeper into poverty. Rural development which aims to increase the incomes of the poor and provides better services is thus essential for reducing the incidence of disability. In addition, legal, financial and medical measures are required to locate and help the disabled improve their standard of living in accordance with their rights as citizens. 5.7 Rural health Diseases of poverty, such as infectious diseases and maternal and infant illness and mortality are all too common in the rural areas. A high number of rural children die of easily prevented illnesses. All of these conditions could have been eliminated if proper health services had been provided in the past. 5.7.1 Primary health care The target throughout the country is to have one clinic for every 5000 people, offering free primary health care and ensuring that essential drugs are available at each facility. These clinics will be supplemented by mobile units serving sparsely populated rural areas. The Department of Health is committed to the redeployment of trained staff to rural areas and to improving their working conditions, in order to encourage greater commitment to the rural areas.

Medical staff are being organised into primary health care teams, including environmental health practitioners. Collaboration is being sought with NGOs and community health workers in the delivery of services and in promoting health awareness and healthy behaviour to prevent HIV/AIDS, tuberculosis, and poverty related-diseases. 5.7.2 AIDS in rural areas AIDS has reached epidemic proportions in South Africa. Unlike other African countries where infection rates differ significantly from urban to rural areas, there are no marked differences in South Africa, probably due to the high level of population movement. Surveys show that 10,44% of women attending antenatal clinics across the country are infected with HIV. Approximately 1100 new infections occur daily. This figure is expected to escalate to 2500 new infections a day in the next 20 years. Levels of infection are increasing in all provinces with KwaZulu-Natal, Mpumalanga and Gauteng having the highest rates. The predominant modes of transmission are heterosexual and perinatal. Young people between 20 and 29 years are the most affected. The trend which is of most concern is the rapid increase in the number of teenage girls contracting the virus. The vulnerable position of women, whose dependence renders them powerless to negotiate protection for themselves, is exacerbated by HIV/AIDS. HIV/AIDS has the potential to reverse hard won economic development gains and improvements made with life expectancy and child mortality. Infection of an individual is eventually translated into a family tragedy, stretching the resources of the extended family beyond its limits. Both material and non-material resources are rapidly consumed in caring for the victim. When both parents die, children are left to cope. The effect of AIDS on agriculture may be profound, with small scale farmers switching to less labour intensive crops, people selling their land or leaving crops and animals unattended. The most seriously affected are poor households, those dependent on subsistence agriculture or remittances, the elderly and children. Government and civil society face rapidly increasing demands for care and support. While strongly supporting preventive measures, government aims to address the need for appropriate social assistance for AIDS victims and their dependents as well as their medical care. Where NGOs have close contact with communities, they are well placed to improve understanding of the HIV/AIDS threat and stem the escalation of the epidemic. 5.8 Capacity building in rural areas Rural people have the smallest share of resources devoted to formal education. In consequence, they are the most poorly organised, and therefore least able to demand assistance. Their ability to contribute to decision making will be critical to the success of rural local government (see Box 5.3).

State assistance is required to increase the capacity of municipal government, and for those structures to employ people skilled in facilitation and mediation to promote organisational skills among rural people. In the absence of experience and trained personnel in this area, government will have to rely largely on non-governmental and private sector organisations. 5.9 Improving rural education Under apartheid, Africans living in rural areas were denied educational opportunities to an even greater extent than those in urban areas. Most rural schools are poorly resourced with buildings, equipment, and books and without electricity and running water. Children usually walk long distances to school and class sizes of 70 pupils are not uncommon. Drop out and repetition rates are high and a large number of children do not attend school at all. Opportunities for secondary education, for childhood 'educare' and adult education are scarce. The needs are immense. Community schools in the former homelands were built with only a partial subsidy of building costs from the state. The state provides teachers salaries, books and furniture. All other costs - building maintenance, cleaning equipment, educational resources, sports equipment, etc. - are paid by the community. Given the prevailing poverty, it is hardly surprising to find most schools in a wretched state and offering education of inferior quality. School committees, made up of parents, have no real power to influence school policy. Schools for the children of farm workers, one of the poorest groups in the country,

have been built by private farmers, with state subsidies. Teachers salaries are provided by the state. With few exceptions, these schools are even more poorly resourced than the community schools. Government is committed to increase the level and availability of formal education in rural areas, and supply training and assistance to the new district and rural councils. 5.9.1 New policies for rural education The major rural education issues facing national and provincial governments are how to improve access to education, improve its quality and establish effective democratic structures for school management. To redress past neglect of rural education, there must be positive discrimination in favour of rural areas. In 1995, the Minister of Education appointed a committee to review school organisation, governance and funding, and the state's constitutional responsibilities. On the basis of the published findings, a draft bill was published for public comment. It included a draft school finance policy. The South African Schools Act (84 of 1996) became effective from 1 January 1997. The Act determines, in line with the Constitution, the right to basic education. The obligation to provide sufficient places in public schools lies with the provinces. The Act caters for two broad categories of schools: public schools and independent schools. The public school sector category includes, amongst others, the current community schools and farm schools, forestry and mine schools and many religious schools. The Act also makes provision for all schools to have democratically elected governing bodies in which parents, teachers and (in secondary schools) students will be represented. In this regard, the Act emphasises the Ministry of Education's firm commitment to ensure that the new pattern of school organisation breaks with the past and lays a foundation for a democratic, equitable, high quality system of education. This includes the empowerment of school governing bodies to assume responsibility for their schools within national and provincial policy frameworks. The Act also provides for a new finance policy for public schools that will be based on a partnership between the government and communities. Public spending on education will, as far as possible, be weighted to favour the poor and historically deprived schools. Most rural community schools and farm schools will fall into this category. The Department of Education has also embarked on an intensive drive to meet the state's obligation to provide basic education for all. This has involved building more schools and classrooms to address the huge backlogs, primarily targeting areas that were previously neglected. Linked to this has been the allocation of provincial education funds for transport assistance to children in remote areas, to improve their access to schools. The Departments of Education and Health co-manage the Primary School Nutrition Programme to address the question of hunger in primary school children. The programme has been largely rural, and has increased pupil registration and attendance at school.

Various other issues which affect educational quality are now being addressed. These include the adequate provision of stationery, textbooks and other reading materials, the strengthening of teachers' advisory services, and the provision of electricity, clean water and telephones to educational institutions. 5.10 Security and welfare Lack of opportunities for gainful employment is the scourge of South Africa's rural areas. It is a major issue with which government must deal. However, many rural households are going to remain poor for the foreseeable future. The government, therefore, recognises the need for developmental social welfare and a social security system that reaches all people in need. Support to households at risk must be multi-faceted, building on existing patterns of family and community support, with the objective of achieving a fair distribution of benefits between urban and rural areas. The social welfare provisions - child allowance, social insurance and unemployment benefits, grants for disabled people and social security for the elderly - are more readily available to urban people. In line with the recommendations of the 1996 Lund Commission, they are to be more equitably distributed in future. There should be closer cooperation between departments providing services in rural areas. Out reach would also be improved if the welfare agencies enter into partnerships with non-governmental organisations, who may be in a better position to identify vulnerable households and put them in contact with the appropriate government services. The importance of local government improving its early warning systems is stressed in Chapter 6. Public works in the case of drought or other disaster, must complement the rural economy and must not undermine it in the longer term. Relief, consisting of food handouts, which can reduce self reliance, should be used only in dire emergency (see Chapter 4). 5.11 NGOs and CBOs in rural development Those who stress good governance and transparency and argue for participation, see a role for NGOs in rural development greater than as mere deliverers of services. They seek to involve NGOs and CBOs in the policy dialogue and in decision making. In this connection, the strengthening of NGOs and CBOs as separate, specialist institutions is important. Partnerships with these organisations will maximise the benefit of rural development initiatives for local communities. Given the international trend amongst donors to increase support to NGOs, donor funds to the NGO sector are expected to grow in the long term. It is the responsibility of government to provide an environment in which those that can prove themselves can

flourish, in competition with other non-statutory organisations. Donors should be encouraged to fund NGOs and CBOs independently and in their own right. The distinction between CBOs and service NGOs is important as it affects claims regarding how far they represent the grassroots; the style, capability and stability of management; to whom they are accountable; and the social and professional networks to which they have access. 5.11.1 Community-based organisations CBOs such as civics, community development forums and trusts are less widespread in rural than urban areas, but nevertheless more numerous than is often realised. They are needed to pressure local government to deliver services to their members, as well as to encourage their members to pay for services where this is necessary. CBOs seek state support for capacity building in order to organise their membership; to represent them more adequately; to be involved in service delivery and as project managers and as implementers. There is no doubt that CBOs must be involved in steering projects from start to finish, and that they require capacity building to become more proficient for this purpose. However, whether members should be paid with state funds to implement projects for their members is a separate question. Under Treasury rules it is not possible to enter into government contracts for works and services (valued at more than a small sum) without a public tender process. NGOs and CBOs may not have the technical and managerial experience, (eg in road building or housing construction) to compete successfully in such a process. However, civics have been successful in advocating changes in tendering rules to favour local, small-scale and labour-intensive companies, in which many of their members are likely to be employed. Civics are also involved with other stakeholders in the coordinating committees that plan projects and ensure that their limited budgets are well spent. Because the importance of capacity building to CBOs is well recognised, and in order to relieve the restrictions on state expenditure, the National Development Agency is being set up specifically to allow CBOs to obtain funding for skills training. CBOs should ensure that NGOs, who are funded to support them, have a commitment to build CBO leadership, not just to lobby for them. When both types of organisation are involved in rural development projects, clear terms of reference must be established, which include:

a commitment from both sides for capacity building of the CBO; clear and agreed time frames and goals; measurement of impact; agree methods for trying to reach the poorest; impartial review of agreements by an outside agency acceptable to both parties.

5.11.2 Service NGOs

South Africa has a multitude of NGOs covering the length and breadth of rural development. The earliest NGOs were associated with the churches. Early programmes aimed at encouraging savings clubs for the purchase of food production inputs, now have a very wide geographical spread. Second generation NGOs, such as the National Land Committee (NLC) and their affiliates have assisted many communities in their struggle against forced removals from areas scheduled for white farming. A third group of NGOs has emerged to fill the obvious gaps in government services. They are far less politicised, more concerned with programme implementation and keen to collaborate with government agencies involved in rural development. Service NGOs in rural areas have a good record of supporting CBOs. However, many have found difficulty in moving from advocacy to development implementation. By ensuring that CBOs are funded to hire service NGOs where possible (rather than funding the NGOs directly), the latter will put more effort into providing appropriate assistance. The world over, there is an on-going reappraisal of the ways that governments seek to provide services for rural development. If implemented in South Africa, it would result in a restructuring of support services. In the planning of such organizational reforms it will be necessary to seek answers to a number of searching questions, eg:

What functions should continue being those of a scaled-down public sector? What activities and responsibilities should be passed over to the private sector? What sort of agent in the private sector can be expected to assume those responsibilities - commercial interest, CBO or NGO? What incentive, if any, will those private agents need to encourage them to assume these new roles? How might a reduced public sector best interact with these private agents?

International experience shows that NGOs engaged in successful rural development projects often have difficulty scaling up their activities. However, they often provide better services than the state, especially in more marginal areas. The paucity of state experience in rural development in South Africa leads to the expectation that NGOs will continue to assist government with capacity building, training and experimentation for some years. At the same time, it will be essential for them to maintain their independence, if they are both to complement state services and to provide an alternative. 5.12 Managing drought Most of South Africa has low average rainfall and high variability in intra- and interseasonal rainfall patterns. Dry weather and dry areas are common and should not be regarded as drought, which is 'the failure of expected rain'. Farmers who choose to farm in dry areas have to learn to farm in ways that take account of the dry conditions. When people intensify their use of dry areas, they become particularly prone to drought. Government will aim to reduce this vulnerability, but not by compensating them for production failures resulting from ill-considered intensification of land use in dry areas. Effective drought management should have the following components:

assistance to those in drought prone areas to either reduce their dependency on agriculture, or to move elsewhere to less populated areas; assistance to farmers to identify technologies suited to variable conditions; the provision of reliable agro-meteorological forecasts, on the season ahead, with recommendations on resource use, so that, faced with the probability of a poor yield, farmers can choose whether or not to economise with inputs (eg seed and agricultural chemicals) and thus reduce their losses, letting them take their own decisions and live with the consequences; the improvement of irrigation water use, but not in ways that are inefficient, nor in areas where higher water use would have unacceptable economic or environmental costs; the identification of poor people who are dependent on variable agricultural incomes and the provision of assistance in the short term, eg with public works programmes or, in rare emergencies, with food relief.

These interventions remove drought management from the domain of agricultural subsidy to that of (a) technical advice and assistance to farmers and (b) to the provision of drought relief to poor and vulnerable groups. An Early Warning System for Food and Water Security is urgently needed in South Africa (see Section 6.6 and Box 6.2) for identifying the vulnerable, together with appropriate relief (which rarely should include food). The Department of Agriculture is currently examining these issues with other departments. South Africa signed the UN Convention to Combat Desertification in January 1995. The objective of the convention is to combat desertification and to mitigate the effects of drought through an integrated approach which combines the activities of various government and non-government bodies. It is a multi-sectoral strategy with a combined focus on environmental issues such as land rehabilitation, water resource management and sustainable agriculture, and related social advantages in terms of job creation, better living conditions and economic growth. The Department of Environmental Affairs and Tourism will be taking the lead in this initiative. The first step towards the implementation of the convention is the drafting of a National Action Plan. This will guide actions for resisting the process of desertification. A national campaign will be launched to promote awareness of the issue, and to improve the capacity of role-players to deal with it.

6. Building Local Capacity to Plan and Implement

6.1 Purpose

For matters listed in Part B of Schedule 4 and Part B of Schedule 5 (see Box 6.1), the new Constitution shifts the responsibility for rural development from national and provincial spheres of government to local government level. The effective performance by rural municipalities of these functions will require the establishment of a planning capacity, at least at district level. The purpose will be to provide information on the resources available and to assist elected councillors in identifying the most appropriate development options. The overall objective will be the productive and sustainable utilization of the resources available within the district - natural, human and financial resources. This chapter considers the case for decentralized planning, the issues to be resolved, and the likely scope and content of work and the type of planning apparatus needed. Outstanding issues are expected to be resolved in the course of the local government White Paper preparation process, currently being steered by the Department of Constitutional Develop-ment. 6.2 The case for decentralised planning and decision making

The case for establishing a planning capacity at local government level in rural areas is based on the following assumptions: With the tighter fiscal environment, there will be need for better informed resource allocation, based on accurate district-level M&E data.

National government expenditure will continue to be apportioned between provinces and departments who will reallocate funds to province-level activities. It must be assumed that implementing departments will wish to see these allocations used rationally in order to achieve their particular policy objectives (e.g. for DWAF, to facilitate the provision of water in sufficient quantity and quality for human needs; or for DoE, to provide equitable access to educational opportunities). Further, line departments must be prepared to consider constructive and well formulated proposals coming up from local government level. It can also be assumed that revenues raised by the local authorities will be allocated to services selected by the elected Councillors. And, again, that efficiency of resource allocation can be improved by, for example, better coordination of the work of national and provincial government and local authorities. It is reasonable to assume that NGOs and other non-statutory service providers will agree to some coordination and direction by local government, provided that it is in the interests of the people they aim to serve and in line with the conditions imposed on them by their funders. Finally, community leaders can be assisted by officials of field departments in the improvement of living conditions, especially when they work together to solve particular problems at community level.

Given this framework, support for a limited amount of decentralized planning activity at district level in the rural areas of South Africa can be justified because:

data on local areas needed by national and provincial government planners is often unavailable or unreliable; significant ecological, ethnographic, demographic and historical variations exist within regions and districts; local people have special knowledge about the development opportunities in their locality; local-level involvement in planning can generate increased support and commitment, stimulate self-help, and mobilise local resources. integration and overview are essential in development work.

6.3 Issues in local level planning The degree to which decentralized planning will be feasible at local government level (primary or secondary level) in rural areas is not yet clear. There is, in any case, expected to be a basic tension between the vertical organisation of line departments and local

government attempts at horizontal coordination. Vertical loyalties are much the more powerful, particularly when a local government's coordinating efforts are not buttressed by adequate discretionary funding, ie taxes, levies and duties as well as other sources, including subventions from provincial and national government. Indeed, the scope for local level planning will be closely related to the discretionary resources available. A number of questions arise:

To what extent will power over resource allocation, both between and within national and provincial departments, remain centred at national and provincial level? To what extent will the municipal level be able to influence the budgetary process? Will the essence of the system be one of requests travelling up the system and decisions being transmitted downwards? Will feedback on requests which are passed up the system fail to flow back down to local committees? Will the national and provincial governments' expenditure estimates be disaggregated for district planning? Will districts have a clear understanding of what they can expect in terms of capital allocations channelled through national and provincial departments? Will municipalities have access to reliable data on development expenditure by NGOs and community groups for planning purposes? At what local government level would planning be most practicable - primary local government level or at secondary level (i.e. district)? Would the District Planning Unit (proposed below) be funded by the provincial or the district council budget? Who would appoint the staff? What will be the link with community level planning?

6.4 District planning Given the limited resources of skilled personnel and planning infrastructure likely to become available in rural areas, the establishment of planning units is most likely to be possible only at district level for the foreseeable future. 6.4.1 Planning apparatus A small District Planning Unit (DPU), with modest facilities, under the leadership of a District Planning Officer, with two or three economists/planners, is envisaged in each district. The DPU would come under the direction of the rural District Council and would enjoy the cooperation of the communities and development agencies it would aim to serve. Ideally, a District Environmental Officer would also be assigned to the DPU and placed under the authority of a District Planning Officer. 6.4.2 Scope and content The following tasks, not necessarily in order of priority, might usefully be undertaken by such a unit.

(a) Data collection: A planning system should not be judged solely on decisions taken by Councillors. An equally important consideration will be the quality of the information on which its decisions are based. Planning for infrastructure development and improved services in rural areas requires accurate information; eg to plan for school provision requires knowledge of the current number of children and also their likely numbers five and ten years hence; budgets must be prepared, teachers recruited and classrooms built well in advance. (b) Monitoring resource allocation by government departments in the district particularly the status of projects and programmes and their impact, who has been reached and with what effect. Attention should be paid both to discretionary resources at the disposal of a district, as well as those of line departments. A District Planning Unit might review the efficiency with which departmental resources (capital for new projects, as well as recurrent resources, personnel emoluments and other expenditure) are being utilised. The volume of recurrent resources will probably exceed the funds available for new projects. More effective use of these recurrent resources could have greater impact on performance than new projects. (c) Periodic markets and services: planning the location and timing of periodic markets that radiate to small settlements and the delivery of government services to these points at the same time. (d) Drought Monitoring: Monitoring is an essential component of a drought management strategy. It requires the collation and analysis of data which could be used to predict the location and incidence of drought-related stress. In particular: - data necessary for assessing the vulnerability of the population, (eg water availability, nutritional levels of children, and poverty) - data for monitoring the status of natural resources (eg water pollution, environmental degradation, the effects of drought on crops and water supplies; crop pest and animal disease outbreaks); (e) Provision of information to Councillors, Local government officers and members of the public on the available government programmes and initiatives. There should be emphasis on coordination through the voluntary sharing of information. Local people must be able to find out about production possibilities, credit sources, available services, and their rights and obligations under the Constitution. Local government officers need to be able to obtain the latest information to advise councillors and the public. (f) Environmental monitoring and impact assessment: The work of a District Environmental Officer would logically be closely integrated with that of a District Planning Unit and brought under the authority of the District Planning Officer. Ideally, the officer would advise on the environmental impact of projects, evaluate and appraise the environmental aspects of district programmes, and identify areas which need urgent attention.

(g) Spatial planning and LDOs: The Development Facilitation Act (67 of 1995) requires every local government body to establish Land Development Objectives (LDOs) as the basis for integrated and coordinated planning of development in its area. The LDO process will also satisfy most of the requirements of the Integrated Development Plans provided for in section 10D (6) of the Local Government Transition Act (97 of 1996). Once LDOs have been set for a local government body, all decisions and policies, by all government bodies, must be consistent with them. The DPU could assist the local governments to meet these conditions. (h) Project and programme planning: Participation of DPU staff economists in the preparation and appraisal of selected sectoral programmes and projects, as well as in ad hoc project planning, would seem to be most important and could conceivably attract additional resources to the district. Planning staff might also usefully contribute to the work of sectoral task forces (eg education, agriculture) formed at district level. Government departments and agencies are required to present business plans before projects and programmes are considered for funding. These must specify the indicators against which progress will be measured and how information will be collected. Project planning must show why state funding is needed, how it will be used, and how its effectiveness will be monitored. Business plans are crucial both for the initial advance of funds and for subsequent stage payments, which are released subject to performance as measured against the specified key indicators. The DPU would assist with the preparation of these business plans. (i) Local-level planning: A frequent deficiency is the general lack of professional advice and assistance available to communities for the purpose of project planning and implementation. The DPU (working closely with local communities, Community Development Facilitators and NGOs) might usefully set aside some time to the preparation of simple business plans and the building up of local data bases using information collected by NGOs using Participatory Rural Appraisal (PRA) techniques. (j) Strategic planning: Under this heading is included the preparation of estimates for the medium term expenditure framework for a rolling District Development Plan, potentially an extremely useful exercise for integrating the work of the line ministries, local authorities and NGOs at district level, for taking stock of past performance, for focusing on the needs and capacities of the district and for familiarising district-level officials with the necessity for strategic choice. Significant benefits would be obtained if these technical services could be efficiently provided at rural district level. The DPU would be accountable to the District Council and its sub-committees and the constituent primary municipal councils. 6.5 Survey and planning information on the rural areas Data on rural areas are generally scarce. There are two basic types of survey information which can be used for rural development planning purposes: (a) large-scale, cross-

sectional, quantitative surveys, and (b) data bases assembled by sectoral agencies, eg ESKOM, Department of Health. The former 'snap shot' surveys includes, for example, the 1993 national study of living standards and development in South Africa - The Project for Statistics on Living Standards and Development (PSLSD) (often referred to as the SALDRU study). This survey, sponsored by the World Bank, was a national survey of some 8 000 households. The Development Bank of Southern Africa (DBSA) maintains a data base containing provincial information. South Africa's Central Statistical Service (CSS) has revamped and greatly improved the annual October Household Survey(covering each province) and carried out a national Population Census in 1996. The quantitative data generated by the 1996 census are being combined with the data on the 1:50 000 map series of the country by the Surveyor General of the Department of Land Affairs to create a spatial record of people and places for the planning of the 1999 elections. The information will provide an invaluable sampling frame for future regional and countrywide surveys. There are also a series of valuable provincially-based social surveys. Examples of sectoral data bases are those being established and linked to the National Health Information System and the ESKOM data base. The latter is based on the data base of the National Electricity Forum. It is now being expanded with additional demographic data and other information from various government departments such as Housing and Land Affairs. It will form a data base on infrastructure to which all government agencies will be linked. Other important data, to which local authorities can obtain access, are found in the government's Central Statistical Services, the DBSA, and the departments of Land Affairs, Public Works, Education, and Water Affair's community water and sanitation data base. Local chambers of business are often useful data sources, as can be unions, churches and teachers. Other national departments are able to offer planning advice. For example, the Directorate of Demographic Monitoring and Evaluation in the Department of Welfare will offer advice on the demographic implications of projects and programmes. For natural resources, the Department of Agriculture's Geographic Information Systems on land potential, soils, land use, etc., are now being expanded to include all the former homelands (a major lacuna for almost all departmental systems). Since these systems were already regionalised, comprehensive provincial data on natural resources are easier to obtain than data in other fields. 6.6 Information systems for averting disasters 6.6.1 Monitoring vulnerability

Now that the depth of poverty in rural areas is better understood by the authorities and there is a commitment to providing social services and relief, local governments should monitor the vulnerability of the local population. Such information can be used to ensure that public sector investment programmes also reduce vulnerability. Local-level monitoring should be backed by a provincial and national system. This should provide the basis for a social safety net, appropriate drought planning and targeted social support to vulnerable groups in rural areas throughout the country. Provinces should develop the coordination required for effective early warning, as soon as possible. 6.6.2 Averting and preparing for disaster Reliable information on vulnerability is the basic requirement for averting disaster and, if necessary, for dealing with its effects. With good information, it is possible, promptly and more accurately, to identify who will be most effected and to assist them directly, thus reducing the cost and increasing the efficiency of relief programmes. Information will be useful only if there is also adequate capacity to respond. Procedures must be set up at the local level to monitor the situation and take action, whether in response to a natural disaster, such as flood, fire or drought, or to deal with income shocks suffered by the poor, who have little ability to deal with sudden falls in their already low incomes. One way of ensuring the regular review of local conditions is to make this a routine item on the agenda of the Council, or of the local development forum. At a national level, a National Disaster Management Committee was established in early 1996, consisting of various government departments, several NGOs, and representatives from municipal structures. Working groups have been set up for policy development and to establish information needs. A national Disaster Management Policy is being developed. Disaster mitigation will become incorporated widely into government planning. 6.6.3 Children's nutritional status as a lead indicator

Childrens nutritional status provides indications of the extent of immediate poverty and hunger. It will also reflect the longer term impact of the RDP. Childrens growth is a powerful indicator of general social development, for it measures not only the childs well-being, but also that of the community and nation in which the children live. It is easy to measure and easy to understand. All rural councillors and planners should be familiar with this requirement and should be alert and informed about any significant changes in nutritional status of local children. Analysis of the causes of malnutrition in a community can lead to appropriate intervention, whether through employment provision, improved water or sanitation, improved primary health care, or improved communication, information and education. In the longer term and at a wider level various other indices have been developed to measure the overall well-being of populations. These include GDP per capita and various social indicators such as the Human Development Index. All are useful at an aggregate level, though most of them present measurement problems. None of them have the immediacy or usefulness of local nutrition indicators. Clinic statistics should be made widely available, and analysed at local, district, provincial and national levels as a part of the planning processes.