This resource is hosted by the Nelson Mandela Foundation, but was compiled and authored by Padraig O’Malley. It is the product of almost two decades of research and includes analyses, chronologies, historical documents, and interviews from the apartheid and post-apartheid eras.
6. Policy implications
Consequences for policy from the inequality measures shown in the tables derive both from differences between each region and South Africa, and from differences between groups of districts within the region. Both Regions E and F appear to be overall more unequal than the country as a whole, so that redistributive policies sufficient to reduce inequality nationally may be less equalising in the region. The region needs a specifically intraregional redistributive policy to complement national efforts.
Since RIDP-type activities are the main, if not exclusive, source of formal sector employment in the poorer subregions of KwaZulu/Natal, national policy will affect intraregional inequality to the extent that it affects these specific sectors. As discussed earlier, liberalisation is likely to lead to contraction of these sectors. Therefore, intraregional inequality will increase unless counteractive policies of job creation are implemented.
Region F is specialised in extractive and beneficiation activities. These sectors tend to be competitive on the basis of cost. Liberalisation will have contradictory effects on these sectors, with the net benefit or loss dependent on the specific import and export structure of production. For example, while liberalisation may reduce the cost of imported intermediates by lowering import duties, if the rand depreciates the cost reduction is mitigated. Overall, however, the sectors in which Eastern Transvaal is strong appear to be less vulnerable than the sectors in which Region E is specialised.
What the strength of Region F relative to other regions implies for intraregional inequality depends upon the structures of production in the key sectors. In general, the production in which the region is concentrated is highly capital intensive, limiting its ability to generate employment growth. In addition, competitiveness of the main sectors depends crucially upon maintaining low costs of production. This in turn requires wage restraint, which will dampen any equalising effect of growth of the extractive and beneficiation sectors. Nonetheless, possibilities for growth and potential improvement in intraregional distribution are more positive in Eastern Transvaal than in KwaZulu/Natal under present conditions.
Additional policy implications derive from results of the larger study not presented here. The first important conclusion from the larger work is that while Eastern Transvaal may be better placed with respect to growth, it like KwaZulu/Natal is specialised in sectors which have been declining or stagnating at the national level. Moreover, the dominant sectors in both regions have been heavily subsidised and are likely to be negatively affected by reduction of government support. A second policy concern involves the import and export dependence of each region. As Region E has been a relatively successful exporter to the rest of South Africa, renewed growth nationwide will help this region's economy disproportionately. At the same time, it is less dependent on imported intermediates than other regions, even in the key textile, clothing and footwear industries. Thus, liberalisation accompanied by rand depreciation will not hurt manufacturing in this region as much as elsewhere. For Region F, on the other hand, key sectors are highly import dependent and exports are mainly directed outside the country. Moreover, Region F may be disadvantaged by its specialisation in mining, because 60 per cent of the income generated in the region flow out in the form of company savings and dividends to holding companies outside the region (Ligthelm & Wilsenach, 1990; RDAC:F, 1991).