Download this article as a PDF.
As I explain in my book “Permaculture Strategy for the South African Villages”, the most common kind of strategy employed in rural development in South Africa is what I call the entrepreneurial cooperative project. The aim of these projects has been to take a group of about 40 local villagers and organize an agricultural cooperative to produce a marketable product. The project makes use of a piece of land and structures that are owned in common, or by the government. For example, a group owned chicken production unit, or a group owned vegetable production unit. Some of these projects are more ambitious than others. In my book I explain why these projects are very likely to fail. Here I am interested in wondering what might be done to revive such failed projects and turn them into successes. Considering this realistically is not a reason to continue initiating such badly designed projects and clearly in my writings I suggest a different project design as much more useful in relieving rural poverty. Nevertheless, attempts to kick start entrepreneurial projects are very likely to continue and here I am interested in considering what is actually required to make a commercial operation work out in a rural area. It may also be helpful to suggest what to do with infrastructure which has often been quite expensive.
The Tigane Project:
I will give as an example the discussion of the Tigane project by Ithuteng Nkhereanye at the anthropology conference held in Cintsa recently. The following is just from my notes and may not be completely accurate but it gives an idea of the kind of project I am talking about here.
Ithuteng spoke on the failure of the Tigane project. Makrosahna was the town in NW province where the project was established. It has a population of 19,800. There is 45% unemployment. The municipality bought a farm that was previously established and had some infrastructure equipment such as boreholes. They called for business plans and the winning proposal was given a R1.5 million grant. The project leaders or the municipal council, I am not sure which, selected 25 members. These beneficiaries were the poorest of the poor. There was a 10,000 chicken broiler unit which was later expanded with another 20,000. There were 6 vegetable kennels. Then another 12 tunnels. There was a dairy unit with 40 cows and irrigation for the grazing pastures. The project appointed a training manager. It was very successful in its first year and won national awards. They were able to pay beneficiaries R450 a month.
The project failed like this. There was squabbling between beneficiaries. The project manager was fired for fraud. The cows were sold by the steering committee. The members were split by age, gender, and bullies plagued the weak. Men said the women did nothing but gossip and the women said the men stole and vandalized the project. Despite these disputes they closed ranks against outsiders. The buildings were neglected and vandalized. The informal groups exercised control over members’ amount of input. In other words, people were not allowed to work hard. The members assumed that they were employed by the municipality. The appointed managers had no real knowledge of farming. It was a consultant driven, top down approach. They did not register the project as a legal entity.
Recommendations to reconstruct the project:
My recommendation is that the project should be reconstituted like this.
The “cooperative” form of the project cannot work and should be abandoned.
The organization of the project should be much more like the organization of a school or health clinic. At the top should be two managers appointed by and paid by the municipality as professionals on professional salaries. One should have expertise in commercial farming and the other expertise in business, accounting and marketing for a small business. They should get a one year contract with renewal guaranteed each year for five years if they are working well, or up to ten years or more if it continues to operate well and they retain the confidence of the Municipality. Their salaries can increase if the business can afford it, but the municipality should make this decision. If profits allow it, the council would pay bonuses to the beneficiary employees and the managers proportional to their starting salaries – so every participant is getting some part of the extra cake. The managers should also recruit trainers for particular skills on a part time basis. These trainers would instruct beneficiaries on the site itself.
A new group of 10 beneficiaries (from the poorest of the poor, equal gender representation and age spread) should be appointed as full time workers for the project. They should be guaranteed a wage of at least R1500 per month. They will also get a bonus if the business can afford it, but should not be encouraged to expect this.
The municipality should simply donate the necessary infrastructure – there should be no requirement that the beneficiaries pay it off. The ownership of the whole project remains with the Municipality.
The managers of the project have the power to sack beneficiaries if they are not performing adequately as employees. The municipality has the power to sack the managers if they are not performing adequately and will create regular inspections every month to check accounts and progress with the project.
The procedures of the farming and marketing will be defined and maintained by the managers, in consultation with the beneficiaries.
There will be regular meetings every week of all the members of the project that will plan the ongoing work of the project. Minutes will be taken that will be available to the Municipality and votes will be taken when there is a difference of opinion. All members and the two managers will have equal representation. The votes of this management committee will be regarded asadvice to the management team and will not be binding on the management. There will be a three year settling in period, in which the managers will be required to explain the rationale behind their final decisions and persuade the beneficiaries of the business necessity of these decisions. Nevertheless, during this period they will not be expected or required to take the advice of the majority.
After that, the council will regard persistent failure to take the majority advice of the full project as a sign that the management is not effective. They will then mediate to establish what is going on and provide counselling – with the possibility of firing some beneficiaries or managers if the problem persists. The aim is to establish a culture in which consensus and majority control of decision making is expected and also works to produce good business outcomes. I am assuming that this could be achieved after three years.
If this project remains successful after ten years and continues to expand its profits, the council may decide to take some of the profits of the project and invest them in other projects of a similar nature. If, after five years, the project is not able to provide R1500 per month to all employee beneficiaries and full professional salaries for the two managers, the Municipality may decide to reduce staff to achieve this outcome.
Rationale and Discussion:
The aim of this version of the project is to make the project work and ensure the morale, payment and training of the beneficiaries. The operation of the project is a combination of aspects of two kinds of social structure that we know can work in the Soith African communities – a government operated bureaucratic service provider (like a school) and a small business (like a shop or auto garage).
It is different from a business in that the management do not have the power to constantly increase their own profits and keep the wages of their employees low. It is different from a service provider in that it is providing a marketable product. It is like many of the other projects in requiring some considerable government funding to get started but this funding is not a one-off grant but an ongoing commitment from the Municipality, accompanied by its continuing ownership of the project.
The requirement that members receive a full salary of at least R1500 a month is designed to ensure that beneficiaries work hard for the project and maintain their commitment over a number of years. Anything less than the aged pension of R800 rands is totally incompatible with a successful project. The small size of the group of beneficiaries is essential to allow the project to actually produce an income for all employees in the long term.
The initial donation of equipment and training and the initial payment of staff is necessary to establish this project successfully. However in the long term, by 10 years, it is envisaged that this project will be totally self funding. The municipality retains ownership and will ensure that the project is run effectively by removing participants or managers if necessary.
The project still has some aspects of the cooperative form of most community projects in South Africa. The financial benefits of the project flow back to the beneficiaries of the project rather than being siphoned off by a profit making ownership elite. Decision making in the project is always consultative rather than top down. After a three year settling in period, it becomes fully democratic, with the continued supervision of the municipality to ensure this outcome.
There is a strong possibility of vandalism or theft of project equipment. Members of the community at large will feel that government support is unfairly being directed to these 10 beneficiaries. If the project can continue for at least ten years, this resentment will fade and it will just appear to be yet another business or government service.
In the mean time, for at least the first three years, the staff of the project will be rostered on two nights per week each to stay at the project and defend their property. Alternatively, one of the ten project members will be appointed a permanent caretaker and provided with accommodation and two dogs. All equipment will be insured by the municipality, which will also replace machinery or provide funds to repair any machinery that is destroyed by theft and vandalism for at least the first ten years – while the project is establishing itself as a successful enterprise.
Comments:
This is not a solution to community poverty and 45% unemployment. In a town of 19,500 people this is at best a solution for 10 of the poor. It also requires a considerable and ongoing commitment of Municipality funds for a ten year period. It is, however, absolutely what is required to operate a successful commercial project and ensure sustainable employment.
The problems of rural poverty require solutions that are different from this kind of business start up approach and that is what I consider in the various chapters of my book.
Nevertheless, projects that are designed like this can help to establish and train successful black business people and restore some of the racial balance of business operations in South Africa. This is how they should be viewed, not as a solution to rural poverty.