To be or to question ?
Should we question what we do? Or should we just get on with the job? And be grateful that we have work? I faced this question many times. Answering influenced how we branded INSITE. Our response was not either to be critical or to be practical. But to be both critical and practical. Therefore, we focus our services on sustainable practices. INSITE does this by questioning mainstream practical strategies and budgets. In this process we develop methods for identifying capacity needs. Then we address these needs with plans. Thus, our motto is be critical of mainstream, yet practical.
‘Development’ and services
INSITE’s slogan is “linking development to people”. This emphasises we should shape development around people. Not the other way round. In order to achieve this we need to be both critical and practical. In short, focus on mainstream, practical. Accordingly, we need to understand the broader political and economic context. Within this context we explore mainstream, practical, solutions. But we need the right solutions. Based on this I explore this tension between being critical and being practical. Let me describe how this played itself out in branding INSITE. In doing so I explain how it drives our work. It is also important to understand who we are and how we started. What is the context within which we offer services? I unpack where INSITE is at today. What types of services do we offer?
Are we mainstream, practical?
INSITE is a micro-enterprise. It provides a range of services. The following is the list. Capacity Needs Analysis. Support for Funding. Support for Monitoring and Evaluation. Administration and Business Process Support. Policy and Strategic Research on Climate, Energy, Financing, Housing and Urban strategies. Training in Social Housing and Rental processes. And facilitation of NGO and Community Development processes. INSITE is a BE company. Paul Hendler and Mogie Pillay are the two members of the Close Corporation. Besides we have a team of four partners. Outside of the partnership circle we have seven associates. We call on them when required. They constitute the INSITE team. No, we are not mainstream. But we are certainly practical.
Did we start out as mainstream, practical?
In 2003 Arumugam Pillay and I established an entity called Probitas. Probitas’ intended service was capacity building for housing finance. Then there was a great push to supply affordable housing finance. One such system – propagated and developed in the US – was called securitisation. But there was also state housing funding in other countries. Nevertheless, securitisation became the dominant theme in SA. The US Agency for International Development (USAID) promoted it. USAID funded studies on securitisation at the Wharton Business School. In 2001 Arumugam and I attended one such course. Then we thought that there was potential for implementing this in South Africa. After the course we lectured on securitisation at the Public & Development Management School (Wits).
In 2008 the sub-prime crisis hit the US and the world economy. Risks underlying securitised finance triggered this crisis. In 2008 there were also xenophobic attacks by South Africans on other African nationals. All these events were wake up calls for us. In response we looked at the economic and political contexts within which housing markets developed. This led us to rethinking the role of housing finance. Consequently, by 2011 we were rebranding Probitas into INSITE. In other words we refocused the business. Our understanding of the political economy informed us. Yes, we started out as mainstream (teaching securitisation). But this was impractical in South Africa. We have since turned this around. Consequently, we are no longer mainstream. But we are far more experienced, having travelled the road that we did.
Mainstream practical: economic context
Why should we bother about the economic context within which we work? Because the economic strategies of our country influence how markets work. The South African government assumes that we have a developomental state. This means that it sees its role as facilitating the functioning of markets. To achieve this the Government has pro-poor strategies for the majority get access to these markets. The private housing market is a good example. Here the government’s road map intends to spread homeownership for all. This strategy intends to generate household wealth and upward mobility. Consequently, they say the end result is a better quality of life for all. But reality contradicts this formula. The StatsSA 2011 Census shows that after 17 years of democracy 84,6% of households couldn’t afford established housing markets.
Only 15% of SA population has access to the ‘good life’ through the secondary housing market
This means that most citizens can at best buy into owner-occupation. This follows because they will have little chance of selling for a significant gain. We have done many projects for government assuming the above. But this good-sounding formula is false. Therefore, we need to unpack the meaning of simplistic formulae. To do this we need to start looking at the global economic context. And its impact on South Africa.
South Africa is part of the global economy. Mainstream economic thought sees markets operating in equilibrium. This means that prices remain more or less stable. It also means that prices of assets, like housing, will constantly rise in the long term. But two words capture the concerns of the global economy. Economic instability, which contradicts the assumption of equilibrium. Over the last 30 years the global economy has liberalised. This period has seen extreme financial instability. The result? Current sluggish global growth. The underlying causes are a combination of over-indebtedness, high energy input costs and falling demand.
This analysis contradicts mainstream macro-economic theory. Yet none of the mainstream economists saw the Great Recession coming. A small group of economists did however predict this event. One was Steve Keen. He drew on the work of deceased non-mainstream economist Hyman MInsky. And other non-mainstream economists. He analysed the ratio of private debt to GDP as the crucial indicator of a coming economic collapse. Keen points to the current high levels of private debt to GDP in major economies. He predicts debt devaluation that will plunge us into a greater recession than 2008.
Manifestations of this are deep economic problems in Portugal, Ireland, Italy, Greece and Spain (PIIGS). The PIIGS problems are a drain on the EU. In addition, we are still suffering the aftershock of the Great Recession of 2008. But the decades prior were anything but stable. For example, in 2000 the NASDAQ crashed (the dotcom bubble burst). Preceding that, between 1997 and 1999, was the Asian Crisis. Another example of the underlying problems was the Mexican debt crisis in 1994. In 1987 the US stock market crashed. In 1982 there was an international debt crisis. These were all indicators of the persistent unpredictability of deregulated financial markets. Contradicting these trends were the state capitalist societies of Brazil, Russia, India and China (BRIC). Despite embracing the Western neo-liberal model South Africa under the ANC joined with these countries to form BRICS.
South African economy
Financial instability did not spare South Africa’s economy. In 2008 the Johannesburg Securities Exchange lost half of its capital value overnight. Our economy lost a million jobs between 2008 and 2010. We regained these jobs but as outsourced and insecure work, without decent benefits. This has created hardships for many of the 85% of SA households referred to above. In addition, SA’s real unemployment rates remain high, between 36 and 40 percent. High unemployment reflects the structure of our economy as extraction-based and consumption-driven.
Definite figures about economic enterprises are hard to come by. A large proportion of our companies are small, medium and micro-enterprises (SMMEs). An even larger proportion are in the informal sector. In the table below I assume that SMMEs corresponds to formal sector self-employment. The rest refers to informal sector enterprises.
Formally and informally self-employed in South Africa (2015)
Between the early-1990s and 2015 formal sector SMMEs (like ourselves) declined by 16,6%. We have anecdotal evidence of self-employed consultants going out of business. Yet, many formal sector employees also became self-employed as the economy contracted. Informal sector enterprises dropped by 52% between 2001 and 2009. This reflected the impact of the Great Recession. By 2015 these had not yet reached their 2001 levels.
The above figures are relevant to our field of work. This area has been mainly public tenders. Here the trading environment has been difficult. This difficulty showed through large responses by bidders for tenders. This is because many professionals are desperate for work. Many qualify for preferential procurement. And too many are (sadly) under-qualified for the standards required. We experienced negative outcomes of preferential procurement. In recent years we bid for a tender on public banks. We also bid for a tender on housing consumer education manuals. We assembled a bid for a provincial economic development tender. However, the winning bidders were unknown companies. Furthermore their prices were unrealistic. Another example is that once we were disqualified for allegedly forgetting to include our CVs ……
In short, the criteria for adjudicating public tenders are muddied. The result is an unacceptably cost of bidding. This is compared with a low likelihood of winning the bid. As a result we have been searching for new ways to earn revenue.
Mainstream practical: political context
But the challenges are not only from the economic context. There is also the political context. Here, political instability increases economic uncertainty. It also is about the type of development government promotes. Especially as austerity takes hold of public policies. The question is what do we contribute to society through working on tenders?
We are in a period of growing geopolitical turmoil. We are aware of political instability in South Africa. In fact many other countries are unstable. The underlying reason is US and EU strategy to change regimes. And western commitment to introduce democracy and free markets. The evidence for this is that they targeted countries where there was “financial repression”.
For example, instability started with the 1993 US attack on Iraqi forces (Kuwait). Instability continued. Yugoslavia fragmented in the early 1990s. This arose from pressure to privatise their economy. The NATO attack in 1999 completed the dismemberment. Following 9/11 the US invaded and occupied Afghanistan. Here the US was explicitly on a democratising mission. The second Iraq invasion (and occupation) took place in 2003.
Other events followed. There was the Hillary Clinton-supported Honduras coup (2009). Clinton also helped engineer Regime change in Libya (2011). The US State Department helped to overthrow Viktor Yanukovich in Ukraine (2014). In addition Washington had contacts with right wing opposition in Brazil. Thus the Brazilian opposition engineered a coup against Dima Roussef (2016). There is explicit US involvement in regime change in Syria (currently).
This strategy also had unintended consequences. One of these consequences was Brexit (2016). Another consequence is the Trump Presidency in the US (2017). A further and more serious outcome is ongoing Russian support for Syria.
Political change in South Africa
The above is contrary to mainstream views of the West as a benign force. An analysis of recent events in the Ukraine reinforces this critical view. Here are other analyses of Ukraine and Syria. Western geopolitical and energy-security interests are assumptions. We build the critical view on these assumptions. These interests are driving regime change. Rather than concern for the welfare of the people.
South Africa’s transition was different. After 1994 the ANC’s strategy was to liberalise markets. This approach converged with US and EU policies. But the neo-liberal strategy does not remove all state welfare payments. Without any resources people would suffer. This would likely lead to revolt. The system could collapse. So ANC strategy supported stability through limited grants for children, pensions and housing. These grants are limited in the sense that they provide for basic survival. In reality people require more welfare to live decently.
The state also became an instrument for capital formation by a black elite. Many are the instances of mismanagement and outright bribes for state contracts. These have had a negative impact on development. The current #ZumaMustFall campaign focuses on one corrupt faction. As we have pointed out before the critics of Zuma are also compromised by manipulation of the judicial system. There is also large scale corporate tax evasion.
West vs BRICS
Our ‘peoples government’ reflects elite interests. Therefore we should look for elite influence over the current struggle over the state. Following from this we see a geo-poliitcal conflict between Western and BRICS interests. Thus, whoever wins will not necessarily benefit ‘the people’. How can the people put in place governments that address popular needs? Accordingly, we must clarify who can drive progressive change. And how they could begin to implement this.
Our professional work has happened within a context of economic insecurity. Not only does this affect business trading conditions. It also undermines the outcomes that we claim to be promoting. We feel the above pressures. In response we studied global and local dynamics. We responded by clarifying our services and how we do these services.
Off mainstream, practical activism
I reflected on the last 20 years. So much was promised to our people. So little was delivered. The graph above says it all. In addition, almost 20% of our population live in informal structures. The graph below indicates this.
Percentages of SA households in informal structures
Isandla Institute told me the real figure is closer to 30%. Us built environment and NGO professionals have had little impact. During 1986 I was in an NGO in Johannesburg, Planact. We tried to keep to the principle of community-driven development. This builds community power. The idea is to influence state policies. This follows from a theory of the state. Because the state is not a thing to be ‘captured’. It is a social relation. It reflects and refracts power from different classes. The achievements of the trade union and civic movements of the 1970s and 1980s inspire me. Because real change in policies will come from extra parliamentary organisations.
Off mainstream, practical media activism
To give effect to this I participate in a media activist project Stellenbosch Transparency. We expose elite manipulation of the grassroots. INSITE supports emerging grassroots community organisations. We do this by stressing an agenda of policy change. Authentic community demands are important in relation to #ZumaMustFall. This is congruent with INSITE’s slogan “linking development to people”. Our activism will inform our reflections of development strategies. We will not regurgitate the dominant ‘development state’ theme. The latter is a state-supported/market-led formula. Rather, our work will reflect demands and solutions from communities. We commit to communicating these to elites. And to the dominant classes. Let them hear a different perspective on peoples power.
Off mainstream, practical on climate change
A major threat to peoples development is climate change. Since 2014 INSITE has worked with the Evangelical Church of Westphalia (ECoW). We are developing a civil society intermediary for funding renewable energy. The objective is alternative sources of saving to invest in energy transition. INSITE and ECoW have a creative relationship. We look critically at the simplistic ideas. Like the state-supported/market-led model referred to above. This brought in a new and positive quality to the working relationship. A quality largely absent in our work on public tenders. Nor has our work got stuck in a technical groove. We interact with broader fossil-fuel divestment movements. And with institutions that could reinvest from fossil fuels to renewable energy.
Off mainstream, practical business model
INSITE’s is a home office-based micro-enterprise. We have low overheads. Our associates are likewise micro- and small-enterprises. Some are home-office based. None of us carry more than our own overheads.
There is a sluggish global economy. There is little if any growth in the SA economy. This means micro-enterprises need to keep their overheads low. This enables flexibility. We can contract and stay small when the going gets tough. We are quick to expand the team as demand for services rises. Flexibility is critical. To cope requires contstant strategic and tactical flexibility.
e-Commerce and capacity building
Self-reflection has opened oppotunities for e-commerce. At this stage we have developed a website. This provides basic information off which to launch further products through the internet. View our first range of electronic products in Project Planning and Project Management.
We are also developing courses for other SMMEs. One of these is a Training Course in Project Planning and Project Management. We implemented this during February 2017. We are exploring courses for the informal sector referred to above. INSITE recently downsized and insourced our administrative support. Low revenues in our trading environment forced this decision. We developed a process for administering expenditure records. This could be a first course for informal sector training and e-commerce.
20 April 2017