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UNIVERSITEIT VAN WES-KAAPLANDUNIVERSITY OF THE WESTERN CAPE

This book must be returned on or before the

laste date shown below.Hierdie boek moet terugbesorg word voor of op

die laaste datum hieronder aangegee.

20 JUN 1996

1995 -12- 12

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THE DEVELOPMENT REGION AS OPPOSED TO THE "HOMELAND" AS

THE ESSENTIAL ELEMENT OF REGIONAL DEVELOPMENT pOLICY

~

I,r'

MOHAMMED IQBAL JAREDr-:

SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THEDEGREE OF MASTER OF ECONOMICS IN THE DEPARTMENT OF ECONOMICSAND MANAGEMENT SCIENCES .. UNIVERSITY OF THE WESTERN CAPE

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PROMOTER PROFESSOR A ROUX

FEBRUARY 1991


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UNIVERSITEIT VAN WES-KAAPLANDBIBLIOTEEK

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---- https://etd.uwc.ac.za/

PREFACE

CHAPTER 1

.\

!tCHAPTER 2

CHAPTER 3

CHAPTER 4

CHAPTER 5

CONTENTS

1

INTRODUCTION 2

THEORETICAL CONSIDERATIONS FOR REGIONALDEVELOPMENT 7

2.1 Diffusionist Approaches to RegionalDevelopment

2.2 Main Criticisms of the "Trickledown"Strategies

2.3 Regional Development in South Africa

7

1423

THE LEBOWA ECONOMY WITHIN THE REGIONALCONTEXT 353.1 History and political development 353.2 Overview of the Region G Economy 363.3 ·The sub-regions of Region G 423.4 Socio-economic characteristics of

Lebowa 463.5 Development Assistance 633.6 Industrial Decentralisation 673.7 Lebowa's present underlying strategies 733.8 Conclusion 84

ASSESSMENT OF PRESENT STRATEGIES' 89899294

100106

4.14.24.34.44.5

Objectives of Regional PolicyRegion GLebowaDevelopment ContextPossible evolution of a new framework

CONCLUSION 120

LIST OF SOURCES 125


- 1 -

\. PREFACE

The dLaaertacLon undertaken is limited to the mini thesisformat and is thus limited in depth. Research conducted forthis dissertation has been focused on an in depth literatureand statistical analysis. Basic statistical sources arederived from the Development Bank of Southern Africa'sinformation files compiled for Region G and Lebowa.Recently updated statistics, at present unpublished andunofficial, have also been utilised.

While the literature analysis has focused on both regionaldevelopment internationally and specifically within SouthAfrica, an important component of the research comprises of·discussions held with Lebowa officials and officials of theDevelopment Bank on the issue of regional development. Thegeneral conclusions of this dissertation have been arrivedat by the assimilation of ideas and findings of peopleinvolved in the development effort, especially regionaldevelopment, in South Africa.


- 2 -

CHAPTER 1

INTRODUCTION

This study is an evaluation of development strategies that

have been followed in South Afr ica. Lebowa is used as a

case study for an assessment of the present strategy. The

basic question is whether or not it is economically,

politically and socially effective to follow the "homeland"

development strategy. This approach places "homeland"

states within confined political borders. Development

policies are also confined to these borders. An alternative

is to follow a broader regional development strategy, that

spans across both political and economic borders. This may

provide a more feasible approach to development.

The present regional pattern of development, which focuses

mainly on industrial decentralisation, is discussed. The

evaluation of the present strategy explores various other

alternatives which may provide for a more effective regional

development policy. In this context an assessment of

'backward regions/homelands' is provided.

The central problem addressed is the country or 'homeland'

versus regional orientation. To understand the problem, the

core-periphery view on South Africa's regional growth(


- 3 -

pattern, is utilised. The PWV, Durban/pinetown and the Capemetropole areas may be taken as "core", where most of theeconomic activity takes place. One can also distinguishbetween the "inner-periphery", which is close to the core,and the "outer-periphery", further away from the core andwhich includes the Black Homelands. This core-peripheryapproach provides an understanding of the polarisationeffect, which results in the "homelands" becoming poorer,whilst the urban areas grow richer. The main criticism ofthe modernisation or diffusionist approach is that the

"II\

I"trickle-down" or spread-effect from the core to the otherregions does not really take place. Thus, regionalaspirations are not satisfied. The South African

,~f

Government's attempts to counter some of the forces ofconcentration have been questionable. Within the context ofthe diffusionist paradigm, trickle-down effects have notoccurred because of the super-imposition of a politicalideology onto this approach. Rather these areas are theresult of polarization (re-inforced by politicalconsideration) brought about by the concept of separatedevelopment.

It is clear that South Africa's approach to regionaldevelopment is in a process of change. This is mainly dueto the failure of the "homelands" strategy. Since the mid1970's it has become increasingly clear that the "homelands"could not really become economically independent (and


- 4 -

internationally recognised), and developmentstrategy concentrating on each

that the

uneconomic and inefficient."homeland" would be

Economists critical of this

unified economy.

planners and politicians.

approach have suggested that the whole South African economyshould be planned as one economy, even if the homelandsstill maintain political independence. The nine developmentregion mapping of South Africa, Regions A - J, came aboutas a result of attempting to address South Africa as a more

Up to now, the proposed role of the regions have not beenclearly stated. There is an element of disagreement between

Two different interpretationsexist at present. One gives the regions little significance,the other sees a key role for them. These may be summarizedas follows:

INSIGNIFICANCE OFRI!GIONg A-J

:Zo

No political tunetion atallHo.eland. vill .till re.ain

XEY ROLE FOR REGION A-J

3. Onlr .uperticial planningco-ordination vithin theregion

4. Onlr a ••• 11 WRegionalDevelop.ent Advi.orrCo•• itteeWGovern.ent tund. vill notbe chann.llad to region.directlr

5.

1. Ther could be the ba.i. tora nev SA tederation.

:Zo Regional boundarie. villavantuallr replace ho.eland.

3. Develop.ent .trategr i. tobe de.igned tor each ragion- .trong planning co-ordination.

4. Evolution into properregional ad.ini.tration •.

5. Channelling at govern.enttund. to region. vho candecid. to .pend the. accord-ing to their ovn .tratagr.


- 5 -

In evaluating the above two interpretations, it is clearthat the arguments are caught up in the dichotomy ofpolitics. Of importance is that politics and economicscannot be separated. Economic rationality suggests that in

Ir<II!

defining the "region" a geographical area devoid ofpolitical boundaries is the ideal definition. This willdefinitely entail abolishing all homeland states.

At present, due to the fact that homeland development is anintegral component of the present regional developmentstrategy, black national states regard the area within itsboundaries as the natural focus of its own, "nationalistic"regional development efforts. This leads in practice topolicies being adopted by the homeland states of non-co-operation within the region, thus effectively creatingdistinct economic borders. One of the major problems arisingfrom this is that the interdependencies of the region arenot taken into account, thus resulting in a duplication ofinfrastructure and an inefficient utilisation of theresources of the region. Due to politics, development co-operation between states within a specific region isconstrained, which in turn, has a negative effect ondevelopment at the regional level.

This dissertation will focus on Lebowa within the Region Gcontext. The need for a development strategy thatencompasses the region as a whole will be explored. The


- 6 -

study will show the relatively underdeveloped situation ofLebowa within the Region G context. It will become evidentthat the development of Lebowa depends on the development ofthe region as a whole. Co-operation between varioushomeland-states within the region should be an essentialelement of any regional development strategy. This mayentail a shift to a situation where the development goals ofthe region form the basis of development strategies ofparticular homeland-states within that region. This may, inturn, imply that "homeland" economic goals ought tocontribute to the development goals of the region. Forexample, the agricultural sector of Lebowa would then haveto be addressed as a component of the agricultural sector ofRegion G. The same should apply to the other sectors.This will provide for a more rational use of scarceresources and a more imaginative development strategy.


- 7 -

CHAPTER 2

THEORETICAL CONSIDERATIONS FOR REGIONAL DEVELOPMENT

The aim of this chapter is to outline the theoreticaldevelopment that has taken place in the sphere of regionalplanning. Important developments have taken place bothinternationally and in South Africa in the search foreffective regional policy. Important lessons of experiencefor Southern Africa can be gained by an evaluation ofregional development efforts in the international sphere.The implications and application of a regional developmentapproach for South Africa is the essential aim.

2.1 DIFFUSIONIST APPROACHES TO REGIONAL DEVELOPMENT

Regional planning has come of age. The failure ofregional planning during the 1950ls and 1960ls toreduce, and in the long term, eliminate majorinequalities between regions, and the failure toachieve success along these lines has givencredence to many of the critics of the traditionalapproach. Among the new ideas that are beginningto replace the former, are a growing awareness ofthe decisive role of natural resources insustaining lifei a new ecological ethici greaterconcerns with questions of equitYi a deeper


- 8 -

understanding of the contradictions between theinternational division of labour and theterritorial aspirations of new nation-states; anda reassertion of the principle of self-reliance atall levels (Friedman and Weaver, 1979,2). Thus,alternatives to the present strategies are soughtin order to create a self-sustaining mechanismthat would reduce inter-regional and intra-regional disparities.

One of the first attempts to model the process ofregional development is due to Friedman (1966),who tried to translate Rostow's model ofdevelopment into spatial terms. Friedman (1966)argued that "for each major period of economicdevelopment through which a country passes thereis a corresponding structure of the space

, : economy"•

Friedman placed particular emphasis on theexistence of a strong localizing or polarizingprinciple in the spatial organization of economicactivity. The fact that development occurs insome localities and less so or not at all inothers, has two important spatial effects:


- 9 -

Firstly, the pattern of economic

activity is inherently uneven.

Secondly,

tends to

the polarization process,

give rise to a pattern

comprising a core or centre and a

periphery or hinterland. Generally, the

periphery can be divided into two parts.

An inner or mobilized periphery

interacting closely with the core: and

an outer or immobilized per iphery wi th

weaker links to the core. This pattern

may occur at various levels: firstly, at

the international level or between

advanced industr ial nations and. poorer

countries of the third world. Secondly,

at the national level as between a major

urban region and the remainder of a

national domain. Thirdly, at the

regional or local level as between an

urban centre and its hinterland.

An important feature of this structure is that the

core tends to dominate the periphery in most

economic, political and social respects, so that

the latter stands in a dependent relationship to

the former.


- 10 -

The dynamics of the relationships between the coreand periphery may be expressed in two major flowsof resources and transactions between them. Theflow is either, predominantly from core toperiphery in the form of backwash effects, or inthe opposite direction. If the former flowpredominates then "deviation-counter acting"forces are operating to reduce the imbalance inthe level of development between core andperiphery. If the flow predominates in theopposite direction then "deviation amplifying"forces are at work to increase the imbalance.

In terms of Friedman's conceptualization, it isclear that the modernization paradigm is basedlargely upon the assumption that development in aspatial system can be achieved by the diffusion ofspread effects from the more to the less developedparts. The mechanics of this diffusion processin a national space economy has been described interms of the following impulses which aretransmitted from core to periphery:

a) Outwards from heartland metropolis toregional hinterlands;


- 11 -

b) From centres of higher level to centres

of lower level in the hierarchy; and

c) Outwards from urban centres into their

surrounding fields.

Explicit in Friedman's model of the spatial

diffusion of economic activity is the dominant and

innovative role played by the core (the city) in

the development and modernization of national

space economies. Thus, Friedman called for a

"strategy for deliberate urbanization" to promote

national development, particularly in developing

countries.

In Friedman' s later model he extends the core -

periphery model to include the diffusion, not only

of economic activi ty, and its associated pattern

of urban settlement, but also of socio-cultural

and poli tical modernization from core to

peripheral areas.

Thus, over time, the inequalities between core and

periphery are reduced. The core becomes the main

vehicle for achieving the spatial integration of

the national domain in which gross inequali ties

between core and per iphery of a physical,


- 12 -

economic, social and political nature are reducedto levels that ensure the system's futurestability, growth and development. Development inthe full sense of the word means the creation ofmore balanced spatial structures.

One useful consequence of Friedman's model is thatit generates a series of development regions whichcan be defined generically because it allowsregional development problems and possibilities tobe viewed " as classes of problems, therebyavoiding the needs to confront each small regionas a unique event".

The Regions are:

(I) The core (centre) region consisting ofone or more clustered cities and theirdaily commuting zones. The region has ahigh capacity of generating andabsorbing innovative change. It is thedominant centre and the remainder of thenational domain or periphery stands in adependent relationship to it.


- 13 -

2) The periphery comprises a number ofparts:

i) Upward transitional regionsareas favoured in terms of theirresource endowments, their locationrelative to core regions, theirhigh level of economic developmentand population immigration.

ii) Downward - transitional regions -areas whose economies are stagnantor retrogressing relative to thecountry as a whole. They supplythe bulk of migrant workers to thecore and the upward transitionalregions and resource frontiers.

iii) Resource frontier regions - zonesof new settlement in which "virginterritory is occupied and madeproductive", through mineral,agriculturaldevelopment.

or forestry

iv) Special problem regions areaswith peculiar development problemssuch as regions borderïng onforeign countries, water resourcearea, tourist and military areas.


- 14 -

Friedman points out that the spatial system must

be viewed in its entirety since problems of

regional growth (or decline) cannot be attacked in

isolation. Different policies and programmes will

have to be devised for each region, since each has

different resources, problems and possibilities

for development, but they must be seen as integral

and interrelated parts of the total spatial

system.

2.2 MAIN CRITICISMS OF THE "TRICKLEDOWN" STRATEGIES

As a result of the lack of development on the part

of the poor people, the diffusionist paradigm and

their policies came to be discredited. "Trickle-

down" theor ies of development have not worked as

expected.

THE DEPENDENCY SCHOOL

The major criticisms against the modernization

paradigm originated with the Dependency School of

Thought. The Dependency Paradigm. descr ibes the

world as a "core" of dominant nations and' a

"periphery" of dependent ones. Frank (1971)

states that the present underdevelopment ,of Latin

America is the result of its centuries long

participation in the process of world capi talist


- 15 -

development. The metropolitan centres of Europeand North America are regarded as centres ofexploitation sucking capital or economic surplusout of their satellite colonies.

The city-dominant thesis of the diffusion schoolis rejected since cities are seen as centres forcolonial domination in the service ofinternational capitalism, subjecting regional andnational hinterlands to economic "satellization"and exploitation. Growth centres, so important indiffusionist thinking, are considered to performexactly the same functions. They are viewed ascapitalist tools for extending control of monopolycapital to peripheral areas. As centres ofattraction in rural areas they merely intensifythe drain of labour and resources from theirhinterlands and as such represent the pursuit ofeconomic growth regardless of social cost.Instead of diffusing innovations and wealth to theperiphery, cities and growth centres in this sensedrain the periphery of its human and naturalresources.

The dependency approach is based on a notion ofpolitical economy where the interplay of politicaland economic factors are critical. Unlike the


- 16 -

diffusionist paradigm which sees developmenttaking place "in the setting of an implicitlyharmonious social order", the dependency paradigmassumes a clash of interests between thebourgeoisie on the one hand and the deprivedclasses on the other. The conflict arises as thedeprived classes begin actually to challenge thestructures of the existing socio-economic orderand exert influence on the whole development ofthe space economy. The dependency paradigm seesdevelopment as a revolutionary break in whichcapitalism must be replaced by socialism if a moreequitable structure of society is to be achieved.Thus, it is argued that continued allegiance tothe capitalist system will merely cause theinequalities between nations, between classes andbetween regions to persist since capitalismexpropriates the economic surplus from the manyfor appropriation by the few.

The dependency school also advocates self-reliancefor underdeveloped countries. This is a directresponse to the ethnocentric or Western-orientedstrategy implied by the diffusionist paradigm,Le •. industrial nations to provide aid andtechnical assistance as grants and loans, at leastuntil the country in question has reached theRostowian stage called "take-off".


- 17 -

In the framework of theunderdeveloped countries

dependency paradigm,should seek goals

appropriate to their own local resource endowment,their economic needs and value systems. Theyshould choose for themselves what kinds ofexternal relations they ought to maintain duringthe development process and what types of externalinfluence they should allow to permeate theirsociety.

While the dependency paradigm played an importantrole in the demise of the simplistic modernisationthesis, its own framework has not gainedwidespread adherence. The dependency paradigm hasits origins as a critique of diffusionist theory.It is therefore plagued by the mirror-image trapof attempting to create a paradigm through direct,polemical opposition to the old one whilstremaining problematic.

OTHER CRITIQUES OF MODERNISATION THEORYThe regional development framework of the 1950'sand 1960's have also attracted criticism from moreconventional quarters. The first concept whichinfluenced the diffusionist approach to regionaldevelopment was a basic assumption of neoclassical


- 18 -

economists that regional imbalances bet~een supplyand demand of production factors or commoditieswill even out automatically once the accessibilitybetween regions and the mobility of productionfactors and commodities is increased sufficiently.The second concept which heavily influencedconventional regional development policies wasthat of the polarization and "trickle-down"characteristics of development. These theoriesare closely related to the growth centre concept.These two processes did not, however, materialisein practice.

Among the reasons why the neoclassical equilibriumassumptions did not materialize are the selectivenature of the migratory process, thedifferentiated mobility of specific productionfactors, the inevitable differentiation ofaccessibility in a multi-regional urban system andthe unequal spatial distribution of external andscale economies (Walter St6hr, 1979, 218). Thisled to an increasing divergence rather than theconvergence of inter-regional disparities inliving levels in the context of the marketmechanism.


- 19 -

The expected "trickle-down" effects also did notmaterialize, particularly in developing countries.In effect, these impulses did not move "down" and"outward", but rather "up" and "inward". Fourreasons are given for this:

(1) The economic and power benefits ofinnovation tend to spread up and inwardthrough the urban hierarchy.

(2) Intersectoral propulsion led to aspatial concentration of activity inclusters rather than spatial diffusion.

(3) Business tended to concentrate their keyfunctions in large metropolitan areasand only relegated low-level routinefunctions to peripheral areas.

(4) In order to spread development, centralgovernment expanded its scale ofinfluence compared to that of lowerlevels of government. This eroded theorganisational and decision-makingcapacity of peripheral areas, animportant requirement of self-sustaineddevelopment.


- 20 -

This critique of the different frameworks wasextended to the policy sphere. Traditionalregional development policies have led to regionaldisintegration particularly of less developedperipheral areas. It is important to note thatregional planning revolved essentially around theidea of growth centres. This was based on theassumption that economic growth was a result ofindustrialisation. The earliest criticalobservations were made by HW Richardson (1971) ina review of the Spanish experience. Richardson(1971) argued that two conditions had to befulfilled for a successful application of growthcentre doctrine. Firstly, the number ofdesignated centres had to be kept small and,secondly, spatial priorities had to be maintainedunaltered over a long period of time. The resultof this was that Spanish planners had becomedisenchanted with growth centres as a tool ofregional policy.

Most critics agree on the following observations:

growth centre doctrine had always beenconceptually unclear;


- 21 -

planners applied the term indifferentlyto major urban-industrial complexes(core regions) and to small centralplaces in rural areas (growth points);

it was not clear whether the termreferred to centres that were undergoinga major phase of growth or citiesdesignated for their potential roleinstead of actual performance.

there was confusion concerning the waysin which growth centres might be used tohelp in the spatial allocation ofinvestment resources. The financialinducement offered by governments toprivate enterprise are usually too weakto achieve a permanent restructuring ofspatial organisation. (Friedman andWeaver, 1979, 1178).

The upstart of conventional regional developmentpolicies was regional disintegration, rather thangreater regional equality.

Under conditions of regional disintegration, lessdeveloped areas are forced to compete with more


- 22 -

developed areas by offering their abundantresources, mainly natural resources and labour,under practically any condition. In exchange theyreceive public transfers, capital investment andtechnology transfers, which reinforce regionaldisintegration by promoting the use of thesefactors for which there is demand in the large-scale markets, while neglecting the remainingresources (St6hr 1979, 222).

To summarize, the failure of conventional regionaldevelopment approaches to reduce and eliminateinequalities between regions, has been recognized.The alternatives that are being sought must relateto addressing basic needs and self-reliance. Thenotion of growth centres as the major tool ofregional development, and that economic growth wasa result of industrialisation, has beendisappointing. It was also recognized that"trickling-down" did not occur.benefits have flowed to the

Thus, no majorless developed

peripheral areas. Instead regional disintegrationoccurred. The basic thrust of regionaldevelopment therefore has to be altered to addressthe needs of those who need development most.This calls for a more integrated and bottom-upapproach.


- 23 -

2.3 REGIONAL DEVELOPMENT IN SOUTH AFRICA

The concepts associated with the modernisationparadigm came through clearly in Hobart Houghton's(1964) discussion of the South African case, i.e.a linear transformation from an initial state ofunderdevelopment to one of development, increasinginequality in the earlier stages of growth, theemergence of a dual economy, and the idea thatdevelopment of all parts of the country and allits people lies in the diffusion of modernizationand the absorption of the traditional sector bythe modern. The modernization approach has beentranslated into policy and strategy by thegovernment in its desire to develop the homelands.

The present South African space economy shows manyof the characteristics of Stage 3 in Friedman'smodel i.e. the industrial stage where capital,labour, entrepreneurs and industrial enterprisehave become increasingly concentrated in the coreareas. Where it differs from the model is in thesize of its downward transitional periphery,especially the Black Homelands, which lag wellbehind the general level of economic activity andwell-being achieved in the cores and in the upwardtransitional periphery.


- 24 -

In view of these differences, as well as thegovernment I s policy of separate development forBlack Homelands and the restrictions that wereplaced on the flow of Blacks as permanentresidents to the cities of White South Africa,national integration is a long way off.

For the purpose of analysis, the structure of theSouth Africa spatial system can be regarded asfollows:

a) The CoremetropolitanTown, Durban

comprisingareas of the

Pinetown;

thePWV,the

majorCape

minormetropolitan areas of Port Elizabeth,East London, Pietermaritzburg,Bloemfontein and Kimberley allconsidered together as the non-contiguous urban core of the SA spaceeconomy.

b) The Inner Periphery comprising therest of South Africa in White, Colouredand Asian ownership. -

c) The Outer Periphery comprising theHomelands or Black National States.


- 25 -

There have been three facets to governmentattempts to slow down the rate of polarization inSouth Africa.

i) Urban Containmentl

During the seventies a deliberateattempt was made to slow down the growthof main metropoli tan areas and the PWVregion in particular, by curtailing theflow of Black labour to their factories.By these measures it was hoped thatindustrialists would locate in or aroundthe Black Homelands. However, asMr H Oppenheimer pointed out: "there isa limit to which such policies can becarried out without damaging thenational economy". With so much of thenational growth rate accounted for bythe metropolitan areas, government foundit necessary to revise its strategy in1971. It stated that a developmentpattern would be sought for South Africawhich would divert sufficient activityto the decentralized areas withoutharming the interests and needs of theexisting metropolitan areas.


- 26 -

ii) Diffusion or Decentralisation!

A second strategy adopted by the

government related to promoting

development in the Whi te, Coloured and

Asian area of South Africa i.e. a

strategy of diffusion. The National

Physical Development Plan of 1975 was

directed at the White per ipheral areas

(inner periphery) and the main vehicles

proposed for diffusing development were:

a) To provide the necessary social and

economic infrastructure and

"climate" for private investment in

those areas; and

b) To identify "points of growth"

where this investment could be

concentrated with the maximum

impact.

Regarding the latter, a hierarchical

pattern of centres were proposed.

Firstly, planned metropolitan areas i.e.

the recently developed harbours of

Richards Bay and Saldanha and a


iii)

- 27 -

revitalized East London/King WilliamsTown complex. Secondly, there weregrowth poles i.e. towns or complexes oftowns which without muchcould,stimulus, sufficient growthcommandpotential to develop and support a largepopulation. These poles were meant tobe far enough from existing metropolitanareas to develop into independent citiesin the future. These towns were mainlythe major country towns that have shownconsiderable growth in recent years.Thirdly, principal towns were identifiedin which "regional services" as opposedto local services could be concentrated.Fourthly, the hierarchy also containedgrowth points which were placed on theborders of Black Homelands, and wereintended to provide jobs in white areasto Blacks residing in the adjacentHomelands.

Homeland Development:

The third component of the strategy hasbeen to concentrate on the developmentof the homelands or Black periphery.


- 28 -

Again it is a diffusion strategy aimed

at diverting some private investment

from the richer nodes to the poorer ones

and at directing government investment

of capi tal and expertise towards these

areas. The objectives have been both

political and economic: poli tical in

that government wanted to slow down the

flow of permanent Blacks to the ei ties

and to create separate Black states;

economic in that the success of this

policy depended heavily on the creation

of work opportuni ties on a large scale

in the homelands.

In the minds of many people, the history of

regional development in South Afr ica is closely

intertwined with the evolution of separate

development. Industrial development in South

Africa and the exploitation of the country's rich

mineral resources proceeded at such a rate during

the past century that areas character ized in theII

t 19th century by relatively self-sufficient

pastoral conditions have come to depend on

earnings through labour migration and grain

purchased from SA suppliers (Arrow: 1986,1).


- 29 -

The perception that South Africa, as a labour-surplus economy, needed to promote socio-economicdevelopment in less developed regions throughindustrial decentralization came to the foreduring the 1950's. By the 1960's the nationalistgovernment had clarified a policy of separatedevelopment which appealed strongly to white fearsof working class competition and blackurbanisation. The promotion of a regionaldevelopment strategy, not merely for the purposeof stimulating socio-economic development in lessdeveloped areas, but for attaining politicalobjectives associated with the ideological stanceof government, is to a large extent responsiblefor the adoption of policies and strategiesoperational at present. The policy of attractingindustries from developed areas to selecteddecentralized points was strongly emphasised as aninstrument of regional development. However bymid 1970's it had become apparent that theachievements of the border industries policy hadbeen modest. One analyst argued that theconstraints on metropolitan job creation had"destroyed more jobs than had been created inborder industries" (Bell: 1973).


- 30 -

With the new regional development ini tiative of1982, drastic changes were brought about. Theseincluded a new set of geographic regions, cuttingacross existing political boundaries; a generouspackage of short and long termconcessions/incentives; a complex network ofregional advisory committees; inter-governmentalliaison bodies and multilateral technicalcommittees.

It has become apparent that the 1982 policy hasnumerous weaknesses. Drawing on the work ofMaasdorp (1985) McCarthy (1985), Addleson and'Tomlinson (1985); Wellings and Black (1986), themajor weaknesses include the following: Firstly,at a theoretical level, the policy has notaddressed itself' to the question of how manygrowth centres the economy can sustain, or morespecifically, how much government assisteddecentralisation the economy can sustain. It isclear that too many points have been identified,thus fracturing the impact of the policy.

A continued pre-occupation with separatedevelopment is the second major problem with the1982 policies.


- 31 -

"It operates within an importantideological constraint, that is, theimperative of 'homeland' developmentsets the limits for the identificationof regions. The ten homelands aredivided among eight regions each ofwhich requires at least one growthcentre, and this is more than one mightregard as optimal, given the pastexperience not only in South Africa butabroad (Maasdorp, 1985, 224)".

The third problem is one that has continued toplague government policy since the initial stagesof industrial decentralisation. Limits are stillplaced on growth in the metropolitan regions. Itis argued that overconcentration exists in theseareas. The costs incurred by these limitationsare carried by the taxpayers in subsidisingdecentralisation.

,The cost implications of decentralisation is theforth area of criticism. Wellings and Black(1986) note that the cost of creatingdecentralized jobs is about four times the cost ofequivalent jobs in the city. Further, they notethat their surveys have revealed that:


- 32 -

"the provision of incentives is the mostimportant factor influencingindustrialists decisions to invest atgrowth points (Wellings and Black, 1986,14)".

Fifthly, the cost implications are exacerbated asexpectations are raised by an area's designationas a development point, and the influence ofpolitical lobbying, all contribute towards theestablishment of infrastructure which cannot bejustified in terms of job and income creation.

Finally, too much emphasis is placed on industrialdevelopment. Some regions and sub-regions haveonly limited potential for industrial development.

It is now apparent that the search for alternativeregional development policies is a major prioritywithin the South African development scene. Thisnew policy must recognise the fact that the SouthAfrican spatial economy comprises an integratedwhole made up of a number of broadly definedregions. In this context there is no place forpolitical entities. Secondly, a market-relatedapproach to regional development; must be adopted.


- 33 -

Thirdly, local people must be involved in thedevelopment process. Implied in the above is aregional development policy based on comparativeadvantages and aimed at balanced sectoraldevelopment that encourages an efficientallocation of resources. This should be supportedby socio-economic development such as education,training, health and housing.

The underlying approach should be a combination oftop-down and the bottom-up approach which hascommonly been linked to the basic needs approach.This approach supports (on both national andregional levels) a comprehensive and integratedapproach to development: recognises the interplayof economic and non-economic forces indevelopment: focuses on people and their needs(especially the satisfaction of basic needs on aregional level); holds that development isendogenous in nature and that it should thereforebe stimulated from within and from below: givespriority to the use of appropriate technology andthe stimulation of small-scale and labour-intensive activities: emphasizes the specificrole of integrated rural development: and allots asignificant role to the urban informal sector indevelopment.


- 34 -

However, despite government policies to achieve amore evenly distributed national settlementpattern, polarization of economic activitycontinues as the dominant process. The core areacontinue to show rapid growth. While the economicgrowth rate of the homelands is rapid, the volumeof activity in so low relative to the total thatan economic dispersion of important proportionscannot be assumed.

The present status ofthat these strategiesbasically ineffective.

regional development, isand policies have beenThere are calls for

abandoning industrial decentralization as a toolfor regional development, which has so fardominated the strategy. There is the realizationthat the politics of South Africa is aconstraining factor and that economics andpolitics are interdependent. Of importance thenis the realization that integrated regionaldevelopmentsense. In

should be strivedsum, there is

in its truefor an

forthe call

alternative approach to the present regionaldevelopment strategy.


- 35 -

CHAPTER 3

THE LEBOWA ECONOMY WITHIN THE REGIONAL CONTEXT:

FACTS AND TRENDS

3.1 HISTORY AND POLITICAL DEVELOPMENTS

The population of Lebowa is collectively known asthe North- Sotho. The North-Sotho consists of anumber of tribes, of which the most powerful groupis the Pedi.

The North-Sothoagriculturalists of

were traditionallya subsistence nature.

However, increasing pressure on the land reducedthe ability of this type of agriculture to copewith the needs of the inhabitants. This factorled to the Pedi subjugating surrounding t~ibes fortheir land and establishing themselves in thenorth and north-eastern parts of the Transvaal,known as Lebowa (Leseme and Fenyes, pg 172).

The major political landmarks which characterizethe development of Lebowa as a separate entitystarted in 1913, with the Bantu Land Act thatlegally recognised the areas inhabited by the


- 36 -

North-Sotho. In 1936, the Bantu RepresentationAct and Bantu Trust and Land Act provided forseparate political development and an increase ofthe recognized homelands' territory. By 1951 theBantu Authorities Act made possible a uniformsystem of local and central management (tribal,community, regional and territorial) authorities.In 1962, a Tribal Authority was instituted for theNorth-Sotho and by 1969 executive powers becamevested in an executive council. The TribalAuthority obtained the status of a LegislativeAssembly in 1971, and in 1972 Lebowa was declareda self-governing territory within Southern Africa.

The implications of the legislation was that theway was paved for separate development withindefinite political boundaries. The idea was thatsocial, political and economic interaction had totake place within these boundaries. There waseven some hope that the territory could achievesome kind of economic independence.

3.2 OVERVIEW OF THE REGION G ECONOMY

Region G consists of the following parts of SouthAfrica; Northern Transvaal, Venda, Lebowa andGazankulu• The region has a total land area of119 606km2 with a population of 4 061 000 (DBSA,1986).


- 37 -

Gross Geographical Product (GGP)

In 1986, Region G had a GGP of R4 781,5 million atcurrent factor cost, amounting to 3,8 per cent ofthe aggregate Southern African GGP. Region Gincreased its share from 2,4% in 1970 to 3,5% and3,8% in 1980 and 1986 respectively.

Table: Development Regions : Percentagecontributions to aggregate GGP (Currentfactor cost) 1970: 1980: 1986.

YEARREGION 1970 1980 1986

A 15,5 12,3 12,5B 2,2 3,7 3,1C 7,0 7,4 6,20 7,5 6,5 7,0E 13,9 13,2 13,9F 4,9 7,5 8,5G 2,4 3,5 3,8H 42,5 38,2 39,2J 4,0 7,2 5,8

Source DBSA, 1988

From the above table it is evident that onlyRegion B with a share of 3,1%, has a smallereconomy than Region G. The dominance of Region His also evident. It contributed almost 40%towards the aggregate GGP.

Growth In GGP

The GGP of Region G, at constant 1980 prices,increased at an average annual rate of 4,4%


- 38 -II.,I,

between 1970 and 1986. This is a relatively rapidgrowth. rate, and is certainly above average forthe country as a whole. The contribution ofRegion G to national GGP therefore increased from2,4% in 1970 to 3,8% in 1987. The growth rat~s inthe GGP of Region G are depicted in the tablebelow, disaggregated by the type of economicactivity.

Table: Region G : Average annual growth in GGPat current factor cost : 1970-87

-----------------------------------------------------I 1970- I 1975- 1980- I 1970-

1975 1980 1987 1987

-----------------------------~---------------------Agricultur. 19.7 13.9 13.8 15.5Mining 7.1 60.9 8.0 ;U.l

Manutacturing 19.1 17.3 20.1 19.0Il.ctricity 14.1 18.8 24.6 19.7Con.truction 32.4 13.5 23.8 23.1Co ••• rc. 14.5 16.5 19.6 17.1Tran.port 16.4 20.1 19.1 18.6Finane. 20.9 17.4 20.6 19.7Co •• unity andSocial S.ryic •• 18.5 18.8 26.0 21.6

---------------------------------------------------I 16.8..........•................•...•.....................TOTAL 10.5 16.2 19.5

seu eee : DBSA. 1988

From the table above, Region G registered anaverage annual growth rate of 19,5% between 1970and 1987. Between 1975 and 1980 Region Gregistered an average annual growth rate of 27,1%,and 16,2% between 1980 and 1987. Of significanceis the decline in growth of the Mining Sector.During the period 1975-1980 the Mining Sector


- 39 -

achieved the highest growth rate of 60,9%.However, between 1980/1987 it recorded an averageannual growth rate of 8,0%.

Sectoral Contribution to GGP of Region G

Table: Region G : Percentage contributionstowards GGP (at current 1980 prices) persector; 1970-1987

-------------------------------------------------------ITOTALRBGIO. G

1970 1978 1980 1987 I-------------------------------------------------------Agriculture 23.0 23.7 15.0 13.0Mining 20.7 9.4 43.6 26.1Manufacturing 8.0 9.3 5.9 7.4Blectricity 1.5 1.8 1.0 1.5Conatruction 3.0 4.4. 3.2 5.0Co •• erce 12.5 11.7 7.3 8.9Tranaport 6.2 7.1 4.6 5.5rinance 4.7 8.4 3.8 4.9Co •• unity andSocial Ser'l'icea 20.4 Z4.2 15.7 27.6

---~---------------------------------------------------ITOTAL I 100 100 100 100..........••...........................................Source : Adapted fro. DBSA. 1990

The Community and Social Services Sector, with thelargest percentage (27,6%) contribution to currentGGP in 1987, should be regarded as the mostimportant sector in the economy of Region G interms of sectoral contribution. The secondlargest contrIbutor is Mining Sector. TheAgriculture Sector accounted for the third largestsector in terms of contribution to the GGP ofRegion G


- 40 -

Agriculture

Since 1980, agriculture has been the third largestsector of Region G. It was the major contributorin 1970. However, it relinquished its first forthird position to 15,0% in 1980 and 13,0% in 1987.

The potential of agriculture as employment creator

is of special significance in Region G.Agriculture is the most labour-intensive industry

and many of the rural poor seek employment in this

sector. But it should be borne in mind that most

of the productive agriculture is found in the

"White" areas of Region G and employment is sought

in these areas.

Mining

If the sectoral contribution to GGP of mining is

taken into account, then it emerges as the major

sector in Region G. It has become the sector with

the highest contribution between 1980 to 1986. In

1970 it accounted for 20,7% of the GGP and in 1980

it accounted for 43,5%. In 1987 the mining sector

occupied the second place accounting for 26,1% of

the GGP. Although the relative share of mining

has declined somewhat in the 1980's, it has

remained the major contributor to GGP in Region G.

The outstanding performance of this sector can


- 41 -

be ascribed to new overseas markets beingexploited in 1980, causing certain mines to morethan double their annual production. Previouslyunprofitable commodities became profitable as aresult of substantial price hikes experienced onworld commodity markets. This indicates thestrong link and dependence of the mining sector onworld markets.

Community and Social Services

Since 1970, this sector has increased itcontribution towards aggregate GGP of Region G ata high rate. This sector held the second positionin terms of contribution to GGP since 1972 to1986. In 1987 this sector held the first positionand contributed 27,6% of the GGP.

The relative growth of the community and socialservices sector indicates that some governmentsupport is given to basic needs such as health andeducation. On the other hand, this trendindicates a certain lack of self-sustainingeconomic activity in Region G.

Essentially , the economic activity of Region G ischaracterised by its underdeveloped secondary and


- 42 -

tertiary sectors and a largely 'subsistence' basedagricultural sector. In general Region G ispoorly connected to the major South Africanmarkets and specifically to the PWV.

3.3 THE SUB-REGIONS OF REGION G

Population

The table below provides an indication of thepopulation in terms of the sub-regions in RegionG. The sub-regions are demarcated according tothe Transvaal portion, Lebowa, Venda andGazankulu.

SUB-REGION 1980 1985 1987

Lebowa 1 761 768 2 306 236 2 566 898Gazankulu 490 258 624 535 688 550Tvl. Portion 381 324 497 750 489 774Venda 517 210 459 819 495 429

TOTAL 3 150 560 3 888 340 4 240 651

The population of Region G has expanded rapidly.Between 1980 and 1987 it increased at an averageannual rate of 4,3%. Lebowa accounted for thelargest population in Region G (60,5% of theRegion's population). This reflects a situation


- 43 -where the most productive sub-region, namely, theTransvaal portion contained the smallestpopulation (11,5%), while the most economicallybackward sub-region, Lebowa, accounted for thegreatest population.

Sub-regional Sectoral Contribution to GGP ofRegion G

To understand Lebowa's economic role within RegionG, it is important to gain insight into itssectoral contribution towards the GGP of Region G.Of importance also is to understand this sectoralcontribution in relation to the other "sub-regions" of Region G.

The table below indicates the sect.oralcontribution of each 'sub-region' or territory tothe GGP of Region G. More specifically, the tableshows the percentage contributions of the varioussectors of the sub-regions to the totalcontribution of sectors of Region G. Thus, thesectoral contribution of Lebowa's agriculturalsector is taken as a percentage of the totalagricultural sector of Region G.


- 44 _.

Table: Sectoral contribution of 'sub-regions' to GGPof Region G at constant factor cost.:

------------------------------------------------------------------------------------------------VENDA " LEBOWA " GAZANKULU " TVL. PORTION(RSA) "

1980 1985 1986 1980 1985 1986 1980 1985 1986 1980 1985 1986--------------AGRIC/HUNT/PORESTRYIP'ISH 2." 6.50 6.06 6.13 6.54 6.34 6.45 11.18 11.28 84.96 75.70 76.29

MINING II:

QUARRYING 0.02 0.43 0.45 4.48 2.78 2.60 0.08 0.23 0.22 95.40 96.50 96.70

MANUPACTURING 4.34 5.96 5.98 18.90 21.20 20.90 7.55 12.40 12.62 69.14 60.37 60.40

ELEC/WATER/GAS 0.00 3.78 3.60 4.05 9.19 8.42 0.05 0.00 0.00 95.90 87.00 87.90

CONSTRUCTION 4.28 17.70 17.60 21.48 25.65 28.38 12.08 12.60 13.90 62.14 43.97 40.00

COMMERCE/CATERING/ACCOMMODATION 3.16 5.83 5.81 8.99 11.99 12.50 2.66 3.54 3.76 85.17 78.60 77.90

TRANSPORTSTORAGECOMMUNICATION 1.37 2.76 2.69 8.87 15.12 15.40 3.74 5.67 6.09 86.00 76.40 75.70

PINANCEINSURANCEREAL ESTATEBUS. SERVICES. 6.08 5.00 5.42 13.84 16.06 16.60 3.40 7." 7.77 76.60 71.47 70.18

COMMUNITY/SOCIAL/PERSONALSERVICES 9.60 12.46 11.85 25.34 30.68 31.83 9.36 11.30 11.12 55.68 45.50 45.18

--------------TOTAL 2.79 5.14 5.33 10.28 12.77 13.27 3.77 5.77 6.11 83.14 76.09 75.27

The table above indicates that the Transvaal portion of

Region G. contributes the major portion of the GGP of

the Region. The same applies to each of the sectors.

The Transvaal sectoral contribution to the total

agricultural sector of Region G was 76,29% in 1986. In

the case of manufacturing, commerce and transport the


- 45 -

Transvaal portion contributed 60,4%, 77,9% and75,7% respectively.

In the case of Lebowa the sectors which areimportant relative to production in the region,are community, social and personal services,construction and manufacturing. The relativeprominence of these sectors in the Lebowa economycan be related to government intervention, throughthe creation of a state bureaucracy, the focus oninfrastructural development and emphasis onmanufacturing through the industrialdecentralisation effort.

While total contribution of the "sub-region" toGGP of Region G also increased, it is important tonote that this increase has taken place from a lowbase. The poor relative performance of

ijI'II

agriculture and mining in Lebowa clearly inhibitedthe relative growth of the Lebowan economy as awhole.

More generally, the 'black areas' of Region Garecharacterized by, low training levels, high infantmortality rates, poor health services, poorlydeveloped infrastructure, food shortages,widespread malnutrition diseases and housing


- 46 -

shortages. In contrast, it should be noted thatwithin the South African portion of Region G, bothinfrastructure and economic activity is much moreadvanced.

3.4 SOCIO-ECONOMIC CHARACTERISTICS OF LEBOWA

I

Lebowa is spread over a large part of the central,north-eastern and eastern Transvaal. ~ebowa isdependent on the regional economy and the PWV.:.l~his interdependence is promoted by thetransportation link that exists between the PWVarea and Pietersburg;) At its closest point Lebowais more or less l50km from Johannesburg, SouthAfrica's industrial, commercial and financialheartland with the furthest point about 300kmaway.

It's close proximity to Pietersburg,Potgietersrus, Tzaneen and Phalaborwa (growthpoints) and the White agricultural districtsresult in large scale migration and daily andweekend commuting by many of its people. Migrantoutflows specifically to the PWV are extremelyhigh, reported at 245 000 in 1987 (DBSA : 1988).This situation has its negative side-effects on


- 47 -

the Lebowa economy as it prevents the developmentof entrepreneurial skills within Lebowa. Afurther result of this situation is also the highleakage of purchasing power to adjacent whiteareas.

Two industrial development points have beenidentified in Lebowa, namely Seshego andLebowakgomo. At present the focus is primarily onSeshego due to its location and proximity toPietersburg. Although there is large scaledevelopment at Lebowakgomo as the administrativecapital of Lebowa, industrial development does notseem to receive the same priority as in Seshego.

The fact that Lebowa is not consolidated into asingle territorial unit has several implications.To administer such a territory creates problemsfor the Lebowa Government. The drawing up of anational development plan with the hope ofintegrating the economy meets with many obstacles.

Human Resources'

The total de facto population of Lebowa in 1986was estimated at 2 290 000. The majority of the

\

de facto population, ~mely 94%, were settled inthe rural area!)


- 48 -

~n estimated 53% of the de facto population in1986 was in the age group 0-14 year~~% in theage group 15-64 years and 3% in the age group 65years PluSJ -Of the total de facto population in1986,~% were male and 56% were female~ The factthat in the 15-64 year age group mostly morefemales than males were present, indicates a highdegree of male absenteeism from the territory.This is mainly due to out-migration of peopleseeking employment opportunities elsewhere.

Level of Education

~ 1986 an estimated 1,3 million or 59% of the defacto population had received some formaleducation to a level varying between Sub A and auniversity degreaJ

An estimated 946 000 persons or 4,1% of the totalde facto population in 1986 had received someprimary educatiolld 378 200 or ~% had receivedsome secondary education and 4"4 i111i1:> or l..Q. 6% hadreceived some tertiary education (OSSA : 1988~

The above figures indicate that the need for moreeducation in Lebowa is significant. ~he provisionof education is therefore seen as a developmentpriorit0


- 49 -

Population Settlement

As has been indicated, 94% of the de factopopulation in 1986 were present in the rural areasand~ in the urban areas_j Three different formsof rural settlement may be distinguished inLebowa.

Traditional villages are areas which have not yetbeen planned agriculturally. No services areprovided in these areas. The number of villagesin this category have declined in recent years dueto the betterment programme.

The second category of rural settlement are socalled "betterment" villages. These villages arelinked to the agricultural planning programme andtheir administration is under the chief and tribalauthority in collaboration with the Department ofAgriculture and Environmental Conservation.

The third type of rural settlement are closersettlements. These are the result of theresettlement programme. In closer settlementspeople are not provided with farming rights. Itis a semi-urban environment which is characterisedby a complete absence of locally available jobopportunities.


- 50 -

In September 1985, there were 14 proclaimed townsin Lebowa with an estimated population of 169 000and a total number of 19 479 houses. Between 1985and 1987 the population in these towns increasedat an average annual rate of 9,5 per cent, whilethe number of houses increased at only 3,7 percent. This resulted in an increased occupancyrate, from 6,3 in 1979 to 8.7 in 1985.

The towns are in most cases provided withservices which include roads and drainage systems,water supply, sanitary services, schools, welfarebuildings, sport facilities, public buildings andelectricity. In 1985, 68 per cent of the houseshad electricity installed, 97 per cent had flushlatrines, while piped water was available on allthe stands. In the towns of Seshego andLebowakgomo, approximately 89 and 83 per cent oftheir respective houses had electricity iristalled.

Labour and Employment

It is useful topotentially activeforce:

distinguish between thepopulation and the labour


- 51 -

The potential de facto economicallyactive population consists of the defacto population in the 15 to 64 yearage-group, plus all migrant labourers;and

The labour force consists of personsemployed in Lebowa, persons employed inSouth Africa adjacent to Lebowa but whoreside in the latter country(commuters), persons who are absent fromLebowa on a semi~permanent basis and areemployed outside the country (migrantworkers) but whose families still residein Lebowa, and persons who areunemployed.

The potential economically active populationnumbered an estimated 1 265 000 persons in 1986.

During 1986 the labour-force numbered an estimated881 000 persons, representing 70% of the estimatedpotential economical~y active population. Theformal sector economy in Lebowa providedemployment to approximately 186 000 or ~l% of thelabour force...:JThe greater part of the laboursupply were thus compelled to seek employment inneighbouring South Africa as commuters andmigrants or to enter the informal sector.


- 52 -

It is estimated that 78 000 people had to travelon a daily basis between Lebowa and places ofemployment in South Africa adjacent to Lebowa.Approximately 79% of these transfrontier commuterswere employed in the northern Transvaal, 14% onthe Highveld and the rest in rural and othersmaller urban areas of South Africa.

Official statistics indicate that migrant workersnumbered 175 000 in 1980. It is estimated thatthe number of migrant workers may have numbered287 000 in 1986 (Source OBSA : 1988). The largestnumber of migrant workers are employed on the WestRand (30%), followed by Northern Transvaal (19%)and the East Rand (17%).

It is further estimated that 330 000 people mayhave been unemployed in the territory. Thisrepresents 37% of the potential labour force.Unfortunately information quantifying employmentin the informal sector in Lebowa is not available.However, if the norm of 22% (Kirsten, 1988) istaken as a guideline, then 278 300 of thepotential labour force are employed in theinformal sector. This figure would include thoseinvolved in subsistence agriculture. Although


- 53 -

exact statistics are not available, a largepercentage of those employed in the informalsector are classified as unemployed.

Estimates on employment by type of economicactivity in Lebowa in 1986 indicates that thelargest number of the de facto economically activepopulation were employed in community, social andpersonal services (34%) followed by agriculture(20%) and the wholesale and retail trade (15%).The following table presents a breakdown ofemployment of the de facto population by economicactivity.

Table: Employment of the de facto economicallyactive population, 1986

··PERCENTAGESECTOR PERSON EMPLOYED

PER SECTOR- Agriculture 20,0%- Mining 7,0%- Mamifacturing 9,0%- Electricity 0,5%- Construction 10,0%- Commerce 15,0%- Transport 4,0%- Finance 0,5%- Community & 34,0%

Social ServicesTOT A L 100,0%

Source: DBSA 1988

Gross Domestic Product (GDP) and Gross NationalProduct (GNP)


;!

L

- 54 -

~he GOP of Lebowa at constant (1980) pricesincreased at an average annual rate of 11,2and 8.6 per cent per annum between 1970-1975 and1980-1987 respectively and decreased by 1.6 percent between 1975-19~ The GOP at factor costand constant (1980) prices amounted to R253,3million; R420,1 million; R396,0 million and R707,5million respectively in 1970, 1975, 1980 and 1987.

Table: ' Average Annual Growth Rate1980 prices)

(Constant

YEAR PERCENTAGE

1970 - 1975 11,21975 - 1980 (1,6)1980 - 1987 8,61970 - 1987 6,2

It is evident from the table, the average annualgrowth rate of GOP for the period 1970-1986 was6,2%. This may be regarded as a high growth rate.However, compared to the other national states inSouthern Africa, Lebowa has experienced the lowestgrowth rate in GOP (OBSA: 1988).

An analysis of the contribution of the varioussectors towards the GOP at factor cost and currentprices indicate that community, social andpersonal services, including the public sector,


- 55 -made the highest contribution towards the productbetween 1970 and 1986. Ouring 1987 this sectorcontributed 54,8% towards the product, followed bycontributions of 9,1% and 10,3% in the case of themanufacturing and construction sectorsrespectively.

The primary sectors i.e. agriculture and miningshowed fluctuating contributions to the GOP,alternating between second and third positionsfrom 1970 to the early eighties. Since then theimportance of agriculture's contribution decreasedto reach eighth position in 1987, while miningreceded to the fourth position. Interestingly, themanufacturing and construction sectors ascontributors to GOP increased from fourth andseventh positions in 1970 to second and thirdpositions in 1987 respectively.


- 56 -

Tabla: Sectoral Contribution to ODP ot Lebovaat Current tactor co.t : 1970-87

1970 1980 1987ICOIIOMIC SICTOIl ----------------- ----------------- ----------------

R'nnn tt R'OOO tt R'OOO "Agriculture. hunting. 8 316 21.2 17 621 8.7 49 000 !S.4tore.try and ti.hing

Mining and Ouarrying 7 !S76 19.3 39 331 19.7 40 800 4.4

Manutacturing 4 760 12.1 22 036 10.8 83 900 9.1

Ilectricity, Oa. a 12 1.0 826 0.4 3 900 0.4Water

Con.truction 1 7!S2 4.!S 13 !S34 6.6 94 700 10.3

Trad •• catering aacco ••odation 2 296 !S.9 12 687 6,2 !S4 !SOO 5.9

Tran.port. .torage aco••unication 573 1.!S 8 160 4.0 41 400 4.!S

Finance. in.urance.real e.tate abu.ine ••• eryice. 3 5!S6 9.1 10 34!S !S.1 46 700 !S.1

Co••unity. .ocial aper.onal .eryice. 10 393 26.!S 80 041 39.1 !S03 600 !S4.8

TOTAL 39 234 100 204 !S87 100 918 800 100

As can be deduced from the table above theCommunity and Services sector was dominant in itscontr ibutions towards GOP since 1970. The highcontr ibution of the government sector is mainlydue to the priority placed by the 'homeland'government to expand its public sector.major employment opportuni ties are sought in the

While

agricultural sector, this sector has decreased interms on its contribution to GOP.


- 57 -

Since 1970, the GNP at constant factor costincreased at an average annual rate of 7%, fromR602,1 million in 1970 to R1775,7 million in 1986.

r

The GNP is almost three times as high as the GOP.This is mainly due to the contributions ofcommuters and migrant workers to the GNP.Commuter and migrant income contributed 17% and50% respectively towards the GNP in 1986. Theenormous dependence of the Lebowa economy onearnings outside its boarders is thereforeundeniable.

Real per capita GNP increased from R23l in 1970 toR362 in 1986, representing an average growth rateincrease of 3% per annum. This is a relativelyrapid per capita growth rate. However, most ofthis growth occurred in the 1970-75 period. Inthe subsequent period per capita growth slowedsignificantly.


/I<\

( Table 5.9- 58 -

Lebowa : Gross ~,tiona1 Product (GNP)at factor cost : 1970, 1980 - 1986

DETAILS CONSTANT 1980- PRICES

bNP: TOTAL R'OOO---1970. 602 1481975 906 0031980 1 201 7801986 1 775 772

GNP per Capita: Rand--~970 2311975 3081980 3231986 362

lPercentaqe averaqelannual increase PercentageGNP : Total

1970 - 1975 8,21975 - 1980 5,71980 - 1986 6,61970 - 1986 7,0

GNP per capita

1970 - 1975 5,91975 - 1980 1,01980 - 1986 1,91970 - 1986 3,0

1) GNP comprises GOP ~ foreign factor incomes(such as investment income and remittances fromforeign countr ies accruing to residents) lessthe income earned in the domestic economyaccruing to persons in foreign countr ies. Incalculating the value of each of these elementssome assumpt ions and est imates had to be made,especially regarding the estimated number ofmigrant workers from the country workingelsewhere as well as the amount of their incomesto be included.


- 59 -Income and Expenditure of Households Income

In 1986, it was estimated that there were 341 325households resident in Lebowa. The average sizeof a household was 6,8 persons and varied from ahigh of 7,5 persons in the Naphuno district to alow of 5,2 in the Namakgale district.

It is further estimated that the total income ofhouseholds amounted to Rl 788 million. Theaverage income per household in Lebowa in 1986 wasestimated at R5 459 per annum. The correspondingfigures for the urban and rural areas amounted toR9 781 and R4 665 respectively. The averageincome varied from approximately R13 000 in theNamakgale district to R3 000 in the Bochumdistrict.

An estimated Rl 699 million, or approximately 95%of income was available for expenditure onconsumer goods, educational and medical services,transport and communication, taxes, insurance andsavings. The table below presents an indication ofthe income and expenditure of households for 1986.


- 60 -

Table: Income & Expenditure of Households, 1986

EXPENDITURE %

Food, Beverages 34,2& TobaccoClothlnq & Footwear 7,7Rent, Fuel & House- 16,8Hold ExpensesFurnlture & House- 7,7hold EquipmentMedlcal SerVlces 1,7Educatlon 3,1Transport & 4,7CommunicationSaVlnqS 14,9Mlscellaneous 5,9Taxes & Insurance 3,3

The territory experienced a high leakage of

purchasing power of some 62%. Only 38% of the

total expenditure was incurred inside Lebowa. The

highest leakage factor was experienced in Seshego

(70.8%) and in Mokerong (65.6%) and is due to the

proximity of the towns of Seshego and Mahwelereng

to towns in South Afr ica (Pietersburg and

Potgietersrus). The highest retention factor was

exper ienced in Bolabedu and Mapulaneng, due to

their relative isolation from towns in South

Africa. This high leakage is a major factor

inhibiting the development of tertiary sectors in

Lebowa.

An estimated 34% of total expenditure was incurred

in purchases of food, beverages and tobacco, while


- 61 -

17% was used for rent, fuel and householdexpenses. It is interesting to note that 15% oftotal expenditure was saved, while 8% was spent onclothing and footwear.

Revenue and Expenditure of the Central Government

Revenue and Grants

Total revenue generated and grants received by theLebowa Government increased from R245.4 millionduring the 1982/83 financial year, to an estimatedR382,8 million during 1986/87, representing anaverage annual increase of 11,8 per cent in thetotal revenue base of the Government.

For the 1986/87 financial year, provision was madein the estimates of revenue to raise a totalamount of R696.3 million, of which R149.l millionor 21 per cent had to be collected from the ownrevenue base of the Government in the form of tax(110.7 million or 16 per cent) and non-tax revenue(R38.4 million or 5 per cent). The remainingR547.2 million or 79 per cent was obtained in theform of grants according to agreements concludedbetween the Lebowa and SA Governments.


- 62 -

With regard to the tax base of the Government,personal income tax constituted the major sourceof revenue, having to contribute just more than 89per cent of the total tax revenue with theremaining 11 per cent to be collected in the form

I

~

of general sales tax (nearly 6 per cent) and othertaxes (5 per cent).

Expenditure

Total expenditure of the Government increased fromR250 million during the 1982/83 financial year to

I, an estimated R396,4 million during 1986/87,representing an average annual increase of

lapproximately 12,2 per cent in Governmentexpenditure. During the latter year the provisionfor current expenditure amounted to R455.l millionor approximately 63 per cent of total expenditure,while the provision for capital expendi tureamounted to R74.4 million or 10 per cent of totalexpenditure. The remaining amounts were allocatedas transfer payments

The revenue base of the government increased at anaverage annual rate of 29,7% between 1982/83 and1986/86, whereas the expenditure base increased at


- 63 -

an estimated 30,3\ dur ing the mentioned per iod,which in practice resulted in an annual financialdeficit. This deficit, increasing from R4,5

million in 1982/83 to an estimated R24, 7 millionin 1986/87.

3.5 DEVELOPMENT ASSISTANCE

~I The development programme of DSSA consist of

project investment, technical assistance andguarantee programmes.

Diagram: Major Sources of Investment for theLebowa Development Programme

FDWl:IN; '!HE D.E.VELOPMEN!'PRCX:;RAMME, 1986

I~.

t:

Investment

TechnicalAssistance

OSSA PRIVATEINSTI'IUI'IOOS

R'm

o 20 60 10040per cent

80

Source DBSA: 1988


- 64 -Since its inception and up to 16 April 1987, DBSAhas been requested by the Lebowa Government toparticipate in financing development programmes inthe territory consisting of 42 projects with atotal investment value of approximately R18l,1million. The Lebowa Government indicated that it

\\

could contribute approximately R27,2 million or 15per cent towards the total cost, requesting DBSAto provide an amount of R133,7 million or 74 percent in the form of loan capital and technicalassistance. The remaining amount, namely R20,2million, was to be contributed by private sources.During the abovementioned period, no guaranteeswere provided by DBSA for loans made to the LebowaGovernment.

The number of projects being developed in theterritory are in different phases of the projectcycle and their implementation can extend over anumber of years. A single project can involvemore than one loan simultaneously. On 16 April1987, the number of loans granted to Lebowa byDBSA numbered 68. Forty of these loans were inthe appraisal phase, six in the negotiation phaseand 22 in the implementation phase.

he single largest amount, namely R38,9 million,is being spent on industrial development in theterritory. This is followed by an expenditure of


65million on water resource development, R30

on agricultural development, R24,5 milliondevelopment of transportation, and R20,6on integrated urban development.

FUtCI'ICNAL crASSIFlCATlOO OF ~, 1986

I,__,~,,' ,.. ..... ',. ,..

Industnal. . .. . ... . ....---...........

Irtegrated urbanTransport

water resources Agnculture Hl.:man resources=Otner

Source 1988DSSA


- 66 -

Examples of projects supported by DBSA in thecategories outlined in the diagram above includethe following:

Seshego Industrial Park Construction ofstandard factory buildings and provision ofinfrastructure in Seshego industrial area.

Marishare/Jane Furse Road The upgrading andresurfacing of an existing section of gravel roadin the Nebo district of Lebowa.

Tours Dam: Construction of the Tours Dam. Thedam is part of the greater Tours irrigationproject in Lebowa. Besides the irrigationcomponent (coffee), the dam supplies water to thesurrounding primary areas.

Lebowa Farmer Support Programme I: Comprehensivefarmer support programmes for 350 farmers in theMapulaneng district and 680 farmers in the Nebodistrict of Lebowa.

Local Authority Institution Building: The re-instatement and further upgrading of existinglocal authority administrations in proclaimedtowns to promote sustainable development withinurban areas in Lebowa.


- 67 -

Lebowa Teacher Training Strategy: Appointment ofconsultants to develop an appropriate teachertraining strategy.

3.6 INDUSTRIAL DECENTRALISATION

Overview

The Regional Industrial Development Programme(RIDP) is a key element of the regionaldevelopment policy. Significant resources havebeen allocated to the programme. The table belowprovides information on employment, investment andthe number of projects in various regions sincethe inception of the RIDP.

Table Projects, employment & investment,1 April 1982 - 31 March 1987

REO lOll'DEVELOPMEIIT PROJECTS BMPLOYMEIIT IIlVBSTMBIITPOlIlTS R'OOOI

REOIOII A 271 6 868 300 791RBOIOII B 74 3 009 67 268RBOIOII C 328 23 021 189 102REOIOII D 518 35 160 1 062 790REOIOII E 564 41 875 740 029REOIOII r 123 5 248 107 732RBOIOII 0 381 16 270 195 775RBOIOII H 127 6 988 125 475REO lOll J 95 8 095 192 800WALVIA BllY 10 638 22 2740 R A- li Dor 0 TAL 2 491 147 172 3 '204 027


- 68 -

In terms of employment creation, the regions thatgained the most benefit were the regions whichwere originally prioritised in terms of need, i.e.Region E (41 875 jobs); Region 0 (35 160 jobs),Region C (23 021 jobs) and Region G (16 270 jobs).The four mentioned regions together accounted for79% of total employment created within the RIOP.These four regions also performed best in percapita employment terms.

It is also significant that the lOP's located inthe TBVC states and self-governing territoriestended to receive the major share of jobs. Fromthe table below it is evident that 61% of all jobscreated by the RIOP occurred in these areas.Reasons for this are the more attractiveincentives available at these growth centres,their lower wage levels, and their unskilledlabour supplies.

Table Labour supply & RIOP employment by area,1987

CATEGORY LABOUR SUPPLY RIDP EMPLOYMENT

rBVC STATES AND 27 61SELF-GOVERNINGTERRITORIES

~EST OF S.A. 73 39


[

- 69 -

While it seems that the RlOP has achieved successin directing employment towards the TBVC and self-governing territories and in general towardsregions in greatest need of development, it isstill unfortunate that employment creation hasbeen small in comparison to labour supply.

Lebowa and the RlOP

The table below provides an indication of theperformance of the lOP's of Lebowa within theRegion G context in terms of projects, employmentand investment.

Table : Region Ginvestment

Projects, employment and1 April 1982 31 March 1987

ISOlO. 0DSYSLOPMS.TPOl.T

PROJSCTS(R'OOO)

Oiyani 6 201 2 229UIi!!U!.lsIl2a2 .u.. U1... L..UJ!_

Loui. Trichardt 23 78t 13 tt2Me ••ina 16 165 1 675Mkhuhlu 7 699 5 12tMura1eni 1 123 750.kovankova t9 2 889 17 279Pieter.burg 80 1 896 t7 092potgieter.ru. 57 1 332 Z5 36tS••heIl2 u.. L..!1.1... Z5 5UThohoyandou 22 2 Ot8 Z5 993Taaneen 26 784 7 605Other 35 1 tOS 19 291

TOTAL 381 16 270 195 775


- 70 -

The impact of the RIDP on Lebowa is bestascertained in terms of the employment creationimpact. Within Region G the two Lebowadevelopment points, namely, Lebowakgomo andSeshego together accounted for 3 944. Thisaccounts for 24% of the total jobs created ofRegion G. When compared to the other developmentpoints within Region G, Seshego achieved thegreatest success in terms of employment creation.Only the Gazankulu development point, Nkowankowa,compares favourably in terms of employmentcreation (2 889 jobs)

It may also be useful to compare the impact of theRIDP on the various "homelands" in Region G.Total employment created in the development pointsof Lebowa amounted to 3 944 jObs, or 24% of totalemployment created in Region G. This was followedby Gazankulu with total employment amounting to3 789 or 23% of total employment in Region G.Employment in Venda amounted to 2 171 jobs, or 13%of total employment. Only the South Africanportion of Region G achieved more success thanLebowa with 1 017 more jobs created at SouthAfrican development points than those of Lebowa.


- 71 -

Since regions varying in size, the number of jobscreated provides little indication of the impactof the policy. An indication of the regionaldistribution of both employment creation andlabour supply assists in indicating the impact ofthe policy. It is clear from the table below thatthere are clear differences in employment creationand labour supply.

Table: Relative Employment By Region: 1987

Regional Shares Ratio

Region Employment Labour Supply Col.ljCo1.2*

A 4,7 11,4 0,4B 2,0 2,5 0,8C 15,6 8,1 1,9D 23,9 10,9 2,2E 28,5 20,0 1,4F 3,6 6,2 0,6G 11,1 6,4 1,8H 4,7 29,2 0,2J 5,5 5,4 1,0

*Note: The last column of the table shows theratio of the two shares, and thusprovides an index of job creationrelative to size. Regions with a ratioin excess of one are those thataccommodated a relatively greaterproportion of the jobs created in termsof the RIOP.


- 72 -

Region H, for example, has a large proportion oflabour supply but only a small percentage of jobswere created under the RIDP. The region wherethe relative impact of the programme was greatestwas region D. This is followed by regions e,E andG, all of which gained in relative terms.Regions A and H, on the other hand, emerges asthe regions where the relative impact of theprogramme was the least.

The above summary of employment creation indicatesthat the TBVC states and self-governingterritories achieved some benefits from the RIDP.However, the fact that the employment createdcannot match the labour supply is cause forconcern.

Even more problematic is that these results wereachieved with relatively large applications ofresources. It is conceivable that more could havebeen achieved if their resources had been appliedto other sectors. This is certainly the conclusionof a recent evaluation of the RIDP. The Report ofthe Panel of Experts on the evaluation of theRegional Industrial Development Programme (RIDP)also claims that the secondary benefits of


- 73 -industrial expansion is not experienced in themajority of development points themselves. Thesesecondary multiplier effects are felt outside thedevelopment points. There is also little evidencethat activities in rural areas received stimulusfrom growth at development points. This is ofimportance since RIDP is being used as aninstrument to promote economic development in theunderdeveloped peripheral areas, particularly the"homelands". The application of a single policyinstrument (industrial decentralisation) inaddressing development must therefore be reviewed.

3.7 LEBOWA'S PRESENT UNDERLYING STRATEGIES

The Lebowa government's present developmentstrategy is basically guided by its White Paper onDevelopment Policy. The concept of development inthe White Paper refers to physical, social andeconomic development actions required for economicgrowth and overall development progress.

The aim of development is defined as follows:

creation of employment and income;better utilisation of own manpower;stopping outflow of manpower;upgrading the manpower for own use;


- 74 -

mobilisation of savings for investment;encouraging "outside" investment inLebowa;development of an export base.

The principles underlying the policy guidelinesare as follows:

I,External resources must be used if theinternal resources do not comply withdevelopment needs.

Acceptance that the tempo of developmentis dictated by the quality andavailability of resources and not byneeds.

A development strategy based on theavailability of resources must beutilised, which means that labourintensive rather than capital intensivestrategies are of importance.

High priority is given to thedevelopment of human potential.


- 75 -

Development must take place in terms ofthe community development approach.

Support for the system of the marketmechanism.

On the issue of regional development, the LebowaGovernment in its White Paper confirms its supportfor the regional development approach, as"economic co-operation across political borders ina rational way to utilize resources to theadvantage of-all the people of the region to avoidunnecessary duplication". (White Paper; 1986).In this regard the following strategy for theimplementation of a regional development approachis outlined:

Areas of co-operation across borders areto be identified within all sectors ofthe economy.

A formula to determine the basis for thesharing of decision making, developmentcosts and taxation income generated inthe areas of co-operation, is to bedetermined.


- 76 -

The regional development approach is tobe applied to the development ofregional infrastructure e.g. roads, raillinks, water, power and telecommuni-cation development.

Rural and Agricultural Development

In the policy guidelines of the White Paper, abroad rural agricultural development approach isfollowed, rather than an overemphasis onagriculture development only. The intention is todivide the rural population into target groups.Specific development programmes for each group areto be devised.

The first group consists of bona fide farmers. Itis hoped that they could be placed at agriculturalproductionidentifiedpotential.

growth points.as areas with

Thesehigh

points areagricultural

These farmers are further supported byan integrated agricultural infrastructure.

The second group are farmers who hold certain landrights, but are not engaged in full-time farmingsince alternativeavailable. The

employmentservices of

opportunities arethe agricultural


- 77 -

infrastructure will be made availablegroup only after the full requirementsagricultural growth points have been met.

toof

thisthe

The final group are people dependent for alivelihood on the rural sector but who do not haveany land rights. The suggestion is that theaspirations of this group will be met by makingavailable employment opportunities in the. ruralsector; for example in labour intensiveagricultural, physical infrastructural and socialservice project.s; 00

Mining Development Policy

Strong emphasis is placed in the White Paper onthe role of mining in stimulating economicdevelopment. The following strategic principlesare presented:

Private sector must beparticipate actively

encouraged toin developing

Lebowa's mineral potential in accordancewith the government's policy of non-intervention in the matters of theprivate sector;


- 78 -

The government will, where miningpotential has been established, providethe necessary physical infrastructure;

The government will give benefits tocompanies that undertake furtherprocessing of mineral inside Lebowa.

~\ Industrial Development Policy

The policy encourages outsideensure industrial· developmentaspires to the following strategy:

investors. Tothe government

Industries must be established inconcentrated growth points to facilitatethe positive effects of the economies ofscale, forward and backward linkages andmaximize the multiplier effect.

The authorities are to co-ordinateplanning in deciding on the location ofindustrial growth points, in terms ofagreed priorities. The objective shouldbe to avoid duplication and unnecessarycompetition in the interest of theregion. Where justified by economic


- 79 -

considerations, industrial growth pointssituated on different sides of politicalborders, could be developed as economicco-operation projects.

In the consideration of differentinvestment proposals, preference will begiven to those industries which arelabour intensive and use local resourceinputs.

The required physical infrastructure forindustrial development must be plannedand provided when required so as not toretard the establishment of industries.

The Lebowa Government undertakes, wherefeasible, to purchase goods and servicesfrom local industries.

The establishment of small scaleindustries must also be promotedthroughout the country, at places wherethe available physical infrastructurecan accommodate such small industries,without requiring growth pointdevelopment.


- 80 -

Variousaccording

levelsto

of smallthe

industries,degree of

sophistication of participants, must beprovided for.

Commercial Development

In the White Paper, the important role of thecommercial sector in terms of taking advantage ofthe purchasing power and the stimulation of theentrepreneurial class is emphasized. Theimportant policy principles are as follows:

Service centres must be set up in townsso that business facilities areconcentrated;

Central measures such as licensing andhealth regulations must be applied toencourage co-ordinated development.However, adjustments must be made sothat the spontaneous development of theinformal sector is encouraged;

The necessary training and advisoryservices must be made available to thecommercial sector.


- 81 -

Health and Social Welfare Policy

The Lebowa government accepts responsibility forcontributing towards the health and welfare of thepopulation. However, it argues that governmentspending on social services cannot be allowed atthe cost of investment in direct economicdevelopment. The first priority of the governmentis to provide for health services, whilst thepayment of pensions is a second priority.

POlicy for the Development of PhysicalInfrastructure

The Lebowa government is convinced that theavailability of well-planned physicalinfrastructure is a pre-requisite for theefficient development of the country. Therefore,it believes that thorough planning must precedeconstruction to ensure that these service areprovided where the highest priority exists andwhere the maximum utilisation can be effected.Labour-intensive construction methods should beemployed as far as possible.


- 82 -

Settlement Policy

The Lebowa government is convinced that theorderly settlement of people can make an importantcontribution to economic development, the remoyal..of non-farm labour. from the agricultural sectorand the creation of concentrated internal markets.Different types of settlements are beingestablished to meet different needs, although thepreference is for fewer larger towns rather thanmore small ones.

Population Policy

•. The Lebowa government is convinced that the rate

of population increase must be kept in line withthe available resources for development andendorses the principle of family planning •

•

Labour Regulation Policy

The Lebowa government determines that as long as acertain percentage of Lebowa citizens is dependent•on employment outside the country, the regulationof labour flow must be carried out in an orderlyway so as to provide the greatest possiblestimulus for the economic development of Lebowa.


- 83 -

The first priority is to fill local vacancies fromthe available labour force.is to place workers intravelling distance from home.

The second priorityemployment within

Only after theseneeds have been met should surplus labour be madeavailable to White areas as migrant labour. Inpractice this implies that Lebowans should enjoyfirst priority when competing for employmentopportunities within the Lebowa economy.

Financial and Fiscal -Development-Policy

The Lebowa government determines that thenecessary steps must be taken to mobilise savingsfrom earnings for capital formation as well as fordevelopment investment, and that income earnedoutside the country must be retained for theeconomic development of Lebowa. The basis andscope of taxation must be gradually extended andthe system for tax collection must be improved.In the allocation of tenders the governmentaffords first choice to Lebowa-based industries.


- 84 -

Government Budgeting Policy

The Lebowa government is convinced of theessential role which government spending plays indeciding the pace and direction of economicdevelopment, especially in the present developmentphase in which a government plays a leading rolein stimulating economic development. All effortsmust be made to make the country less dependent onfinancial aid from other governments. In thedetermination of budgeting priorities, priority isgiven to those programmes that provide the basisfor future development.

3.8 CONCLUSION

The policies outlined above are the basicguidelines for development actions and strategiesfor Lebowa. It is clear that these policiesemphasize development in Lebowa per se. In otherwords, they basically favour the "island"approach. One of the major motivations of thepolicy is to ensure that manpower is not lost orthat Lebowa is not just seen as a labour reserve.While the policy expresses support for regionalco-operation, this must clearly only occur ifregional co-operation is first and foremost


- 85 -

beneficial to Lebowa. In practice it is apparentthat regional co-operation is not easily acceptedbetween national states. This is seen in caseswhere projects cannot proceed due to the factthat it requires co-operation between homelandsThis provides a clear indication of the fact thatpolitical borders are seen as more important thaneconomic borders. Political motivations thereforegain precedence over economic ones.

/

It is also important to note that the White Paperhas an urban bias. This is seen in the greatemphasis it places on m1n1ng, industrial,commercial and infrastructural development. Incontrast, its rural and agricultural policies donot pay enough attention to advancing ruraldevelopment as the major sector. Theestablishment of towns and industrial developmentpoints has meant that there is greater emphasis onphysical planning instead of stress on sectoralobjectives. Although the major portion of theLebowan population are classified as rural and theagricultural sector is regarded as the economicbase, this sector has progressed little.

Lebowa development policies has done little toaddress the poverty and economic stagnancy that itis experiencing. It is clear in· the Lebowasituation, as in the other homelands, thatconventional strategies are applied with limiteddevelopmental results. Economic growth is thegoal on which.emphasis is placed. The consequenceis emphasis placed on large scale provision of


- 86 -

development and moderndevelopment,

commercialurban

andinfrastructure, industrial

agricultural projects. On the whole, grassrootsrural development has been neglected. It is clearthat development programmes in the sphere ofrural development, small farmer development, smallbusiness development, development of the informalsector and appropriate technology received a lowpriority in the development policies andstrategies.

A further eritique of the policies is that itignores Lebowa's interdependence with the broaderSouth African economy. To a large degree homeland

. . .

planning for economic development is tainted bythe "separate development" idea. This idea hasled to the fact that homeland economic problemsare viewed as problems that must be solved by thehomeland concerned and within the boundaries ofthat homeland. Thus, by forcing people to live inhomelands that are not large enough or wellendowed with resources to support largepopulations, the South African Government hasforced homeland states to adopt policies that failto take into account that South Africa andhomeland economies are interdependent and that toaddress the problems of underdevelopment oneneeds to plan for the total South African economy.


- 87 -

Further it is clear that a strong resettlementobjective which places a strong emphasis onurbanisation is present in the developmentpolicies. The establishment of towns andindustrial growth points has meant that a greateremphasis is placed on physical planning ratherthan to stress sectoral objectives. Although itis argued that border industrial growth would leadto development in the adjoining homeland, thehomeland regions I s capacity for development e.g.its natural resource base was not a principalfactor in selecting growth points.

The Lebowa government I s urbanization policy hastended to focus on the establishment of new towns(often as growth points e.g. Lebowakgomo) ratherthan encouraging the establishment and growth ofgenuine urban economic functions in the largecentres. A more dynamic policy focusing on theestablishment of genuine urban economic functionsin large homeland towns would be appropriate.Income leakages could be minimised if a wide rangeof retail and other services, competitive with"white" cities were to be established in thesetowns.


- 88 -

The government has also been slow in offering

security of tenure and family housing and has

therefore not encouraged permanent rural-urban

migration. Migration trends are manifested in

squatter settlements in the homelands that are

close to metropolitan centres. An effective

urbanisation policy is important as it may hold

the key to the possibility of land reform. If

migration is encouraged household heads are

persuaded to choose between permanent urban

employment and full-time farming, rural population

pressure could be reduced and appropriate land

reforms instituted.

It is important that planners and policy makers in

the homeland face up to the fact that they are

concerned with Third World problems. As such

policies should be designed specifically to

address these peculiar problems. Of importance

firstly in this regard is to take into account

that the goals specified by the South African

government which are aimed mainly to uphold the

"apartheid" ideology must be dropped. The notion

of an integrated South African economy must be

accepted. It is within this context that

planning priorities are to be identified.


CHAPTER 4

ASSESSMENT OP PRESENT STRATEGIES

The analysis undertaken in Chapter Three has described theeconomic trends of the Region G economy and has attempted tosituate the Lebowa "economy" within this regional context.The aim of this analysis has been to assess the significanceof the Lebowa "economy" within the Region G context. Thisis important since the Lebowa economy has often beenapproached as independent of the broader social, economicand political sphere of- South Africa. Thus far, thedevelopment of Lebowa has been regarded as taking placewithin an "island". This development approach has ignoredthe fact that the Lebowa "economy" is an integral componentof the Region G economy.

4.1 OBJECTIVES OF REGIONAL POLICY

The Regional Development policy (1982) has as itsmain objectives the promotion of a more balanceddistribution of economic activities in SouthAfrica. Secondly, to develop the developmentregions according to their resource endowment,sectoral mix and relative development needs. Thedevelopment of these regions to their fullpotential was to be achieved through a multi-


- 90 -

sectoral approach derived for each region from itsparticular resources and needs of its population.

The DBSA adopted the approach as set out in theRegional Development Policy (1982) as this policyis based on the view that South Africa has aunitary economy and that industrial development isonly one element of a comprehensive regionaldevelopment strategy. This approach, based on co-operative economic development on a regionallyintegrated basis, is clearly incorporated into theRegional Development Policy (1982). The view isthat policy should include a focus on people,integration on a regional basis, greater localinvolvement and the satisfaction of basic needs ona territorial basis.

Successful regional development policy will alsoneed to be comprehensive and appropriate innature, focusing not only on industrialisation anddecentralisation but also on other sectors, aswell as on direct measures to alleviate poverty,on raising productivity in the less developedsector and on minimising conflict between thesectors. Cognizance must also be taken of thepossible need for permanent migration from certainareas.


- 91 -

Numerous weaknesses of the 1982 RegionalDevelopment Policy are noted. Firstly, at atheoretical level, the policy has not addresseditself to the question of how many growth centresthe economy can sustain. Secondly, the 1982policies are pre-occupied with separatedevelopment. It is obvious that the 1982 policiesare still plagued with the problem of attainingviable homeland development. Thirdly, the 1982policy again refers to the problems of over-concentration experienced· in the metropolitanregions, but those problems are not defined orproved. The cost implications of decentralisationis the fourth area of weakness. Fifthly, the costof job creation in new growth centres has beenexacerbated by the selection of sites fordecentralization which have in some instances hadno existing infrastructure.

The Regional Development Policy (1982) emphasizesthat the different regions, because of theirparticular circumstances, should have differentpriorities, depending on their own strength andweaknesses. Region G should place emphasis onagricultural development. In this regard it isclear that this is not happening at present; each


- 92 -

national state in Region G provides its own socialservices and infrastructure. It would be moreappropriate if the existing infrastructure wasutilized to its optimum. Resources are scarce,and therefore attempts should be made to preventthe duplication of infrastructure and investment.

4.2 REGION G

In terms of the Gross Geographical Product (GGP),Region G is one of the smallest regions ofSouthern' Africa. The region has howeverexperienced a good average annual growth ratebetween 1970 and 1987. However, the regionexperienced a high population growth rate of 4,3%between 1980 and 1987. The major sectors, in termsof contribution to GGP of Region G has beenmining, followed by community and social servicesand agriculture. Major attention has been give tothe promotion of the community and servicessector, while the agricultural sector has beenneglected. This is of significance as the RegionG has a comparative advantage in agriculture. Forinstance 8% of the population were classifiedurban, while 92% were rurally based in 1986.


- 93 -

Turning to the various sub-regions of Region G,the Transvaal portion is dominant as the majorcontributor to GGP. The black states were oflittle significance in terms of theircontributions. The only sector where Lebowa couldmatch the Transvaal portion was the community andservices sector. The intra-regional imbalance isalso evident with regard to population. Lebowaaccounted for 60,5% of the population in Region Gand contributed only 13.27% to the GGP of Region Gwhile11,5%

the Transvaal portion accounted for onlyof ~he population and contributed 75,27% to

the GGP of Region G.

A major reason for the lack of development in theBlack areas has been due to the developmentpolicies that they have adhered to. Thesepolicies have been "state" based with the majoremphasis being placed on their public sectors andthe development of unnecessary infrastructure andon encouraging industrial activity, whileneglecting rural development. The idea ofregional co-operation has been neglected since,the political aspiration of the black states havebeen emphasized in the regional context. Regionalco-operation has only be accepted if the blackareas obtained any benefits from it.


- 94 -

4.3 LEBOWA

Lebowa is a supplier of labour in the firstinstance. This fact underlines the strongdependence of the country's labour force onoutside employment. This is further reinforced bythe fact that Lebowa has a growing potentiallabour force and a high male absenteeism rate.Employment within Lebowa is mostly found in therelatively unproductive sectors, ie. services andagriculture. The· importance of the agriculturalsector as provider of employment opportunities isindicated in' the fact that 94% of the de factopopulation are rural. The fact that theagricultural sector's contributions to GOP hasdecreased since 1970 to 1986 seems to indicatethat income earning opportunities in this sectormay be limited.

In terms of contribution to GOP, the community andservices sector has been dominant since 1970. TheGOP of Lebowa between 1970 and 1986 experienced anaverage annual growth rate of 4,3%. This was to alarge extent due to artificial growth of thepublic sector. The contribution to GOP of mostother sectors declined sharply.


- 95 -

The high growth of GNP (from Rl09,4m in 1970 toR204l,4m in 1986), on the other hand, is mainlydue to the contributions of commuters andmigrants. Real per capita income between 1979 and1986 therefore experienced an average increase of3% per annum.migrants, cannotLebowa economy.

The importance of commuters andbe under-estimated within the

An analysis of expenditure patterns indicate thata large percentage- (34,2%) is spent on basic needgoods, such as food, beverages and tobacco. Afurther 17% is spent on rent, fuel and householdexpenses. It is interesting that only 38% of thetotal expenditure was incurred inside Lebowa.High leakage factors were experienced specificallyfrom towns that served as dormitories to towns inSouth Africa. Examples are Seshego which is thedormitory town of Pietersburg and Mahwelerengwhich is close to Potgietersrus. This highleakage factor has often been noted as theinhibiting factor in Lebowa's development process.

The composition of Government expenditure providesfurther indication of long term developmentpriorities in Lebowa. During 1986/87, 63% of


- 96 -

total expenditure was allocated for currentexpenditure, while provision for capitalexpenditure amounted to 10%. This low capitalallocation indicates that very little is spent onlong term development projects. It's major focusis to ensure that its public bureaucracy ismaintained.

In terms of the financing sought from theDevelopment Bank of Southern Africa (DBSA), Lebowahas placed major emphasis on infrastructuraldevelopment. DBSA has basically supported therequests of Lebowa with it's emphasis on urbandevelopment, rather than rural sectors. Thissupport has also not taken place within theregional context. Thus, emphasis has been onfinancing of projects that are "state" related,while ignoring regional integration. This has ledto massive infrastructural duplication and thewaste of resources on unproductive sectors. Ithas emphasized the stimulation of artificial urbanareas, industrial and commercial centres andneglected the problem of rural poverty.

The above analysis points to the fact that Lebowa,as a separateadequately.

economicAlthough

entity,present

cannot performpolicies and


- 97 -

strategies are supposed to be regionally based,this regional emphasis has not come to the fore inpractice. Lebowa has therefore ignored itsregional advantages. Most sectors of the Lebowaeconomy are stagnant. Only the public bureaucracyseems to expand.

Co-ordination between the 'black areas' inRegion G have also been negligible. They allregard themselves as independent entities and thustry to obtain the full package that goes withthis independence. This. has resulted in theduplication of infrastructure and developmentalprojects, often in areas where there is littlepotential. Political boundaries are still moreimportant than economic ones. 'Each wants forhimself', has been the underlying developmentphilosophy of the national states in Region G.

As a result of this philosophy, Lebowaspecifically has approached its developmental withan urban bias. Major emphasis has been effortsplaced on township and residential development,huge infrastructural projects and industrialdevelopment. Minimum attention has been paid torural communities and their needs.


- 98 -

The urban bias is particularly evident in relationto the Regional Industrial Development Programme.The RIDP through the concept of growth poletheory, has encouraged small town development inthe guise of growth points. Emphasis on smallertowns or isolated locations have ensured amisallocation of resources. Through its emphasison industry, a neglect of the other sectorsespecially agriculture had emerged. The urbanbias is further seen in that the RIDP associatedindustrialisation with growth. Further, theprogramme has directed the major share of the jobstowards the growth centres. Many of these growthcentres/development points, in turn, have littlecontact with the local economy and fail togenerate effective multiplier effects. Very oftenlabour is the only local linkage, while capitalgenerated through production generally flows outof the area, seldom being reinvested for localadvantage. The RIDP, thus, envisaged thatexpansion of the modern, urban-industrial economywould result in development of the homelands.

The urban-rural gap will continue to increase aslong as the primary sectors of the economy(agriculture and mining) continue to shed labouror are unable to absorb their share of the labour


- 99 -

force growth. The other sectors of the economywould have to create employment at a rateexceeding the labour force growth. Given presenttrends this seems unlikely. The burden ofunemployment is likely to be borne mostly by therural population.

IfI

The general trends which are seen to emerge arenumerous. The first, as is clear in Lebowa, is thegrowing incomes generated outside of Lebowa. Thesecond trend to emerge is that employmentopportunities are becoming increasingly scarce inLebowa. A third trend to emerge is the gap inincomes and living standards between the urban andrural areas of Lebowa. This gap is the result ofincreased opportunities for urban employmentlocally or across-borders, as well as theconcentration of public expenditure and socialservices in the towns. The fourth trend to emergeare growing forces making for urbanisation. Thiswidening urban-rural gap is clearly a result ofdevelopment policies which reflect an urban bias.


- 100 -

4.4 DEVELOPMENT CONTEXT

South Africa and the homeland states form oneeconomy. Nevertheless, regional differences inrespect of development needs and resourceendowments do exist. It was recognised by theRegional Development Policy (ROP) that in theformulation of policy to promote development, suchregional differences were to be taken intoconsideration. However, the Regional DevelopmentPolicy (ROP) emphasized industrial development.In most other respects it seems as if theunfolding of the regional development policy hasmade little progress since 1982, and that few newinitiatives on the non-industrial elements of thepolicy have emerged.

Subsequently, developmentsaffected the environmentdevelopment policy has toplace:

which have seriouslyin which regionaloperate have taken

The deterioration of law and order tosuch an extent that the South AfricanGovernment declared a general state ofemergency in June 1986.


- 101 -

The acceptanceauthorities of

bya

the South Africanpolicy of orderly

the abolishment ofurbanisation andinflux control.few years play

This can in the nextan important role in

redirecting the emphasis in theimplementation of the regionaldevelopment policy back to the points ofdeparture adopted in 1982 which werenever really implemented, but wereintended to concentrate on developmentactivities in centres with the requiredpotential.

Economic factors such as the continuingeconomic depression, the beginning ofinternational economic sanctions againstSouth Africa, the outflow of foreigncapital and the adverse turn in theinternational financial situation ofSouth Africa. These factors, combinedwith the high rate of inflation and alack of business confidence, will hamperthe South African economy I s return tothe high growth rates experiences inearliest decades.


- 102 -

At the time of the introduction of theregional development policy, thinking inSouth African government circles centredon the idea of a constellation orconfederation of states. Since then thethree-chamber parliamentary system hasbeen instituted and the principle ofpower-sharing with Blacks has beenaccepted.

The questions raised by the above for developmentin general and for regional policy in particularare many. To name a few:

Are changes in the regional developmentpolicy not required to comply with thesechanges in the situation and inpolitical thinking?

Will a continuation of the presentsecurity situation not burden the SouthAfrican Treasury to such an extent thatfunds for development projects willbecome increasingly difficult to obtainand should thus be allocated with muchmore discretion?


- 103 -

How can such limited funds fordevelopment, for both the public and theprivate sectors, increasingly beallocated especially to areas with thebest potential for development, withavailable facilitiesinfrastructure, and withneed for development?

such asthe largest

In promoting grass-roots development,how can the many development agents findways' and" -means····tooperate throughavailable informal or alternativestructures? To be able to do this, afurther depolitization of developmentprogrammes, structures and institutionsis ~ sine qua non, but is it possible?

Can local or regional authorities suchas regional services councilsincreasingly take responsibility fordevelopment work, even with limitedfunds? This could be an opportunity todepoliticize development work, toundertake grassroots and bottom-upactions and even to gain legitimacy onthe local level, but it will also put a


- 104 -

heavy burden on local expertise which isalready very scarce and will becomeincreasingly so.

~s essential that development programmes shouldbe aimed at those who need it most. If the needsare highest, and the most urgent in the urbanareas, then they should receive correspondingmore attention compared to development activitiesin the rural areas:1 Trends that have emergedhave indicated that a growth in the urbanisationprocess is inevitable.· -This trend has alreadybegun to manifest itself in the high migrancyrates, growth of the informal sector and blacktowns around white metropolitan areas. It isforeseen that future development efforts will haveto focus on these urban areas. In this context,development efforts will have to focus on aspectssuch as adequate health, housing and education inurban areas. l:rovision of infrastructure togrowing black towns and squatters areas and accessto employment opportund t Iee', both in the formaland informal sector~

It is clear that any development policy can onlybecome functional when the economy flourishes andlaw, order, security and stability have returned.

I

I

l https://etd.uwc.ac.za/

- 105 -

This will only happen when the present issuesrelating to the political system in South Africaare addressed in such a way as to gain the supportof all its people. Although this must receivepriority, a development policy based on the aboveelements must be given consideration.

Given the factual analysis undertaken on bothRegion G and Lebowa a new policy must depart fromthe basis of the present political and economicsituation in South Africa. It must also take intoaccount the present development situation inRegion G. As the factual analysis has revealed,the "white" portion of Region G has dominated theeconomic scene. ~ebowa in this context is merelya labour reserv~ Within Region G the politicalboundaries of the national states are not easilythrown aside and must, therefore, be acceptedwithin the present system. Factors which alsohave to be taken into account are the urbanisationprocesses, the poverty situation in the ruralareas and the negligible growth of most economicsectors in Lebowa.

To address underdevelopment in Lebowa it isessential that it's development policies andstrategies are compatible to supportingdevelopment in Region G. These policies and


- 106 -

strategies must take cognisance of the trends thathave been identified. t!he new policy must acceptthat Lebowa is a rural area with rural potentia~The strategy must emphasize the need forurbanisation on a regional basis and make thisprocess easLe r; li'hoseseeking to leave the ruralsituation must be allowed to make the decision toleave. Development should then concentrate onthose who remain behind in rural Lebowa) It isclear then that~ new 'strategywill have to decideon the mix between urban and rural developmen.:.:)In the case of Region G it is clear that majordevelopment emphasis for the national states willfallon the side of the more rurally-baseddevelopment effort, while the White areas of theRegion will favour an urban effort. Within theblack national states of Region G, the importanceof satisfying basic needs is an essentialdevelopmental action. Policies and Strategieswithin the Region would thus entail jointagreement that the rural development approachshould be encouraged in the national states and anurban bias in terms of a development approach befavoured in the "white" areas of the Region.

4.5 POSSIBLE EVOLUTION OF A NEW FRAMEWORK

Suggestions and ideas on achieving successfuldevelopment have been expressed by many experts inthe field. A summary of these views can only betouched upon here. Arrow (1986: 15) notes, "Apre-occupation with the spatial politics of afailed strategy of ethnic divisions and racial


- 107 -

domination cannot be allowed to haunt regionalplanning today". In South Africa there is growingagreement that the main objective of socio-economic development should be the alleviation ofpoverty and unemployment. This entails theintegration of blacks, who constitute the largestpercentage of the poor, into the South Africaeconomy.

It is also important that the development of eachregion should contribute to an increase in thetotal welfare of .South --Africa, and that- urbandevelopment should be integrated within theregional strategy. Satisfaction of basic needs ona regional level is of importance. There is ademand now for a more rational economic and cost-effective approach to regional development.

~row (1986: 16) notes important requirements fora regional development strategy for South Africa.e:irstly, the focus of an overall developmentstrategy must be the alleviation of poverty andunemployment through addressing intra-regionalimbalances in economic infrastructure andactivitl:.} ~condly, uncertainty regardingpolitical boundaries and regional autonomy must bereplaced with democratic institutions of local and


- 108 -

regional government which will be accountable bothin terms of national resource allocationconstraints and local endowment~ (.!_hirdly,monetary and fiscal policy measures need to beaddressed both in the light of their role insustaining economic stability and recovery and inview of their implications for industrialtechnological choice in a context characterized byhigh unemploymen~ ~ourthlY, the presentindustrial incentives package should be replacedwith an approach which avoids subsidising enviableindustries, promotes small business and enhancesregional development in all its aspects~ ~ifthlY,greater support is required for social andphysical infrastructural development whereappropriate, through labour-intensive means, inless developed areas~ l:inallY, socio-economicdevelopment in a regional context should befinanced in a manner consistent with the long-termneeds and debt-capacity of economically coherentregions~

Suggestions for a new policy have also been madeby Coetzee (1986) of the Development Bank. He hasnoted that in spite of some sound objectives onwhich the present strategy is based, it stillfocuses too much on the development of growth


- 109 -

points (lOP's). Industrial development growthcentre strategies have only met with limitedsuccess, both internationally and in South Africa.He calls for a more comprehensive and bottom-upapproach to regional development. He however,points out that it will not be possible tofinalize the regional development policy beforeclarity is reached on the future politicaldispensation of South Africa.

Coetzee (1986) provides a number of reasons why afurther revision----of . the· regional- developmentpolicy may be necessary. Firstly, there has beena growing disillusionment with growth centre orgrowth pole strategies as a means of addressingregional imbalances and disparities. In LOC's theoutcome of growth centre approach has stimulatedthe search for alternative approaches.

Secondly, growing consensus in SA that the presentregional policy still places emphasis onindustrial development at growth points and thatit has not succeeded in reducing the number ofgrowth points. Also the other sectors ofdevelopment have, as a result, not received enoughattention.


- 110 -

Thirdly, the relative contribution to the totalnumber of jobs needed in South African DevelopmentArea (SADA) will still be insufficient. Coetzee(1986) notes that this begs the question: "Doesthe limited degrees of success achieved stillmerit the cost of enticing industrialists tolocate at decentralized growth points?"

Fourthly, an analysis of the space economy of SADAreveals the dominance of the metropolitan coreareas vis-a-vis the inner- and outer- peripheralareas. Coetzee (1986) correctly observes thatthis pattern of the geographical economy of SADAis unlikely to change in the foreseeable future,especially since:

1. The outer-peripheral areas (TBVC andself-governing states) are still heavilydependent on the core areas for capital,financial transfers, job opportunities,etc.

2. The inner-periphery and parts of theouter-periphery have become functionallyintegrated with· the metropolitan coreareas, thus leading to an even furtherextension of the influence of the coreareas.


- III -

Fifthly, since the implementation of the strategythe magnitude and significance of the contributionof Black urbanisation to the development processhas come more clearly to the fore in policy-makingcircles. It is pointed out that it is nownecessary to redefine the role of metropolitan andurban areas within the regional context.

Finally, a factor that will shape the futurecontext of regional development strategy more thananything else '-is -the constitutional-politicalcore. It is clear that regional developmentobjectives are derived from the politicalobjectives of the state. In the past, and stillto a great degree at present, regional developmentobjectives in SA were derived from the state I sobjective to strengthen the legitimacy ofapartheid, in the guise of the devolution of powerto the homeland states.

It is further pointed out that if, hypothetically,the constitutional dispensation advances in thedirection of a system with federalcharacteristics, then the regional developmentobjectives may again be adapted to the overallpolitical objectives of the federal state. This


- 112 -

is therefore, the reason why an appropriateregional development policy cannot be finalized atthis time. The practical approach at this pointin time is to learn from the present theoreticalshortcomings and problem areas of the presentpolicy and the tendencies in the space economy ofSADA.

Stemming from the discussion thus far thefollowing conclusions can be reached. It is clearthat the stated objective of a comprehensiveregional development strategy has not beenaddressed in South Africa up to now. It ispointed out that as a general principle, itshould be accepted that the development of eachregion should contribute to an increase in thetotal welfare of SADA and urban development shouldbe integrated within the regional strategy. Moreof a bottom-up approach should be adopted and eachregion should develop its own strategy.Development co-operation on a sub-regional levelshould be enhanced. Of importance is thesatisfaction of basic needs on a regional level.Joint planning, decision making and action betweenthe different sub-regions in each region areessential for successful regional development.


- 113 -Finally, the high population growth rates and thehigh unemployment rate in SADA, coupled with thegrowing needs of the population, demand a morerational economic and cost-effective approach toregional development. To the extent that growthcentre strategies will still be of some use, itshould rather concentrate on stimulating growth inthe intermediate cities and a few other majorgrowth points. If the loss of growth points inthe national states is politically sensitive inthe short run, this could be compensated for byrural development projects and investment in basicneeds projects such as education, training andhealth.

A similar approach is followed by Thomas (1986).He also claims that a critical assessment of theregionalstill:-

development policy reveals that it is

focusing on industrial decentralisation.

based on the homelanddistinction.

white area

almost totally devoid of effectiveorganisation structures within the ninedemarcated economic development regions.


- 114 -

is caught up in the dichotomy ofpolitics and economics.

Thomas (1986) basically addressés the question ofa post-apartheid regional development strategy.In advising the "new" South Africa, he lists threekey assumptions about such a state:

1. All South Africans within the pre-1976boundaries have full citizenship rights,which enable them to participate in allrelevant political decision makingprocesses.

2. Deliberatereintegrate

stepsthe black

are taken tohomeland states

into white South Africa, within a newtype of federal structure.

3. Explicit, racially based control of themovement of people between the differentareas, region or "states" of such afederal South Africa is not allowed.


- 115 -

He thus takes as a starting point a federal systemwith some form of multiracial government.learnt from efforts to promotedevelopment are regarded as importantidentification of a future framework.observations are:

Lessonsregionalin the

The

Finality in the geographic demarcationof states will be difficult - and shouldtherefore probably not be attempted atan early stage.

As far as possible future federal satesshould include formerly black and white'governed' areas, with state levelgovernments incorporating all races.

The recently adapted grid of ninedevelopment regions has not (yet)captured the imagination of either blackor white leaders, though it could stillfuncti~n as an important catalyst in theevolution of politically acceptable andadministratively .feasible federalstates. To successfully play this rolea few further adjustments should beundertaken (e.g. the shifting of


- 116 -

Region D's eastern boundary to thesouth-western edge of Natal-KwaZulu).

To be acceptable on a broader base, asystem of federal states will have toincorporate a fairly extensive system ofdevelopment subsidisation of the lessdeveloped regions by the federal budget,ie interregional revenue redistribution.

With such a federal structure regional economicdevelopment efforts or strategies attain aparticular meaning, which can be summarised in twoparts:

Within each statedevelopment of

the interaction andthe different

metropolitan, urban and rural areas orsub-regions has to be monitored and, asfar as practically and financiallypossible, supported, in order tostrengthen the development in the stateand, thereby, also the country'sdevelopment.


- 117 -

On a national level economic developmentin the regionally differentiated wayalso has to be monitored and supportedwith the maximisation of overall job-creation, basic need satisfaction andeconomic growth, and a reduction in theinequality of regional developmentstandards accepted as mutual goals.(Thomas OSSA, Jour Vol 3, No 3).

The evolution of a new framework is clearlyindicated in ·the··views of the··authors mentionedabove. The opinions expressed indicate adisillusionment with growth points; the need toaddress the political situation; emphasis on othersectors, besidesacceptance of blackintegrate the homelandseconomy and the needneeds.

industrial development;urbanisation; need tointo the South African

for investment in basic

It is now important that the evolution of a newframework must encompass the addressing of theneeds of all people in South Africa. This willinclude the need for progressive empowerment ofthe poor to do more and also the need forpolitical empowerment. Thus the goal of regional


- 118 -

policy should be the promotion of self-sustainingeconomic growth and development of an integratedSouth African economy.

The basic needs or self-reliance approach mustplay an important part in the process ofestablishing a new framework for regionaldevelopment. This approach holds that theinvolvement of local people in the developmentprocess is essential. It must, however, beremembered that the implementation of basicneeds/bottom"'upstrategies to regional developmentrequires transformations of institutional,political and economic structures. The importanceof the metropolitan and other urban areas insustaining growth and development should beaddressed. In this regard the integration ofurban and industrial development and socio-economic development, such as health, housing andeducation must be included as an element of newframework to regional development.

The regional development policy should not favoura particular sector or· region/sub-region at theexpense of the South African economy. Regionaldevelopment must be supportive of the broaderdevelopmental goals of South Africa. Thus, the


- 119 -

effect of macro-economic policies on regionaleconomic development should also be taken intoaccount. In broad, regional development policymust include strategies for sectoral developmentas well as strategies for regional development.

The regional development strategy implied is thatsuch strategies should emerge from the locallevel. Consensus must be reached by "blackstates" in a region as to their particulardevelopment needs, in conjunction with the "whiteareas" in the region. From this a CoherentStrategy should be formulated for the region.This strategy will enhance the effective economicdevelopment of the region taking intoconsideration the development priorities of thepoorer areas i.e. black states. This strategywill start off by identifying the potential andconstraints of each sector within a specificregion. Thereafter, sectoral strategies will beformulated, with inputs coming from local levels.Specific black states in that region will takecognisance of potentials and constraintsidentified at the regional level and theirstrategies will be formulated to support theoverall potential of the region. Thus, theregional and local levels are the levels throughwhich development takes place.


- 120 -

CHAPTER 5

CONCLUSION

The central theme of this dissertation has been that theregional approach to development should be taken instead ofthe "state" or homeland approach. Within the presentpolitical system, taking "homelands" as given, a strategyfor their coherent development needs are to be devised.There is a question on whether the development strategies of"homelands" should be independent of the economy of SouthAfrica, or should incorporate the fact that homelandeconomies are an integral part of the South African economy.If the latter idea is favoured, then the relevance of theregional approach becomes,considerable.

This dissertation recognises that the "homeland" policieswere introduced for political reasons. The major politicalaim was the entrenchment of the policy of separatedevelopment. To ensure that "homelands" would becomeentrenched it became necessary for some economic support tobe provided by the South African Government. With theindustrial decentralisation approach it was envisaged thatindustries would locate on the borders or within the"homelands". It was thought that these employmentopportunities would curtail the large flows of blacks to theSouth African metropolitan areas. On the political front itwas argued that South African blacks could now exercisetheir political rights within their own "states". In thisway, it was hoped that both the political and economicaspirations of blacks in South Africa would be met.

The creation of the nine development regions created afurther set of boundaries, which the "homelands" have not


- 121 -come to grips with. The fact that the S.A economy wasinterdependent and integrated came to the fore with thecreation of development regions. This meant that"homelands" had to co-operate within the regional sphere inits attempts at development. However, the politicalboundaries of the "homelands" made it difficult, evenimpossible, to attain any form of co-operation. Thedevelopment of the "homelands" have been undertaken as ifthey are independent of the broader South African socio-economic and political scene. The development strategies of"homelands" have therefore been "homeland-specific". On theother hand, the independent efforts of "homelands" withinregions do not contribute to regional development. Aninefficient resource utilisation within regions thereforeresult.

The empirical analysis of the dissertation has focused onRegion G and Lebowa. The socio-economic analysis that hasbeen undertaken indicated the interdependence of the"homeland" economies within Region G.imbalances also came clearly to the fore.

Intra-regional

Within the Region G context, the three black "homelands"accounted for the largest population concentrat Lons ,However, the contribution of these "homelands" to the GGP ofRegion G was negligible in comparison to the "white" orTransvaal portion. Furthermore, economies of the"homelands" are characterized by subsistence agriculture andunderdeveloped sec9ndary and tertiary sectors. In additiontraining levels are low, infant mortality rates high, healthservices poor and basic infrastructure lacking.

As a case in point, Lebowa accounts for approximately 60% ofthe total Region G population, but for only 13% of the totalGGP. The Lebowa economy is further characterised by largesubsistence agriculture. The primary sectors i.e.agriculture and mining showed fluctuating contributions tothe GDP of Region G, thus indicating the diminishing


- 122 -potential of those sectors. The interdependence of theLebowa economy with that of Region G is further seen in thelarge portion of the Lebowa labour supply (approximately30%) that seek employment in neighbouring S.A. as commutersand migrants or in the informal sector. Commuter andmigrant incomes contributed 17% and 51% respectively to theGNP in 1986. It is estimated that at least 22% of thepotential labour supply are employed in the informalsector.

The structure of the Lebowa economy further typifies theunderdeveloped situation of the "homelands". There is ahigh unemployment rate of approximately 37%. The dominantsector is Community, Social and Personal Services. Thedominance of this sector can be ascribed to thebureaucracies that were established to take care of theadministration of the Lebowa "homeland-government". TheLebowa economy is also characterised by an urban-ruraldichotomy Household incomes are higher in urban thanrural areas. Lebowa government policies have favoured anurban bias, while the policy of ~ndustrial decentralizationhas focused on modern, industrial development as the"engine" of growth. While the policy of industrialdecentralization has provided limited benefits to Lebowa, ithas 'not met its goal of employment creation. Rather, it hascontributed to larger urban-rural distortions.

"Homeland" governments have also misconstrued the concept ofregional development. As a result "homeland" developmenthas always been synonymous with regional development.Besides various weaknesses in regional development policieswere identified. Regional policy still focuses on:

industrial decentralisation efforts;

largely based on the homelands "white area"distinction;


- 123 -

devoid of effective organisational structureswithin the nine development regions; and

caught up in the dichotomy of politics andeconomics

At result of these problems the search for an alternativeregional development strategy has been initiated.

It is essential thatdevelopment policy take

the search for a newcognisance of the fact

regionalthat the

economic development of any region is the result of theinteraction of the resource endowment, demographic balanceand deliberate economic intervention within the region andbetween different regions. In this regard the homeland-orientated regional development strategy is inappropriate.The existence of black states makes the search for aneconomically rational and politically acceptable regionaldevelopment strategy a continuous failure. It has to berealised that for regional development strategy to beeffective, it is essential that the re-integration of theblack states into "white" South Africa be the foremostelement in the policy.

It is also essential for the regional development strategyto emphasize self-sustaining economic growth and developmentof an integrated South African economy. In addition, itmust address basic needs, black urbanisation and emphasise


- 124 -sectors besides industrial development. What is implied isan approach that can integrate urban, industrial and socio-economic development. The regional development strategymust also take national economic goals into account. Inthis context, regional and sectoral strategies must bedesigned. Local level involvement in these strategiesshould be facilitated. The regional development strategiesmust be based on the comparative advantages of regions andaim at balanced sectoral development. In this manner a moreefficient allocation of resources my be encouraged. Withinthe regional development strategy, the importance of theurbanisation process and the leading role that themetropolitan and other urban areas play in sustaining growthand development, must be realised. But, it is alsoessential that the regional development strategy shouldintegrate a market-related and basic needs approach.


AHLUWALIA, MONLEK.S

BARRAT, J, ET AL

BOTHA, SJ

BOPAPE, M

BENBO

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- 125 -

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