I would like to start by saying a big thank you to Mr Maponya for inviting me to this special evening. Dr Maponya is an exemplary of a person who is committed to the development of South Africa and its people. He embodies the ideals of how to contribute to the economy and local development in a fair and transparent manner. He models that an inclusive economy, that generates jobs and creates opportunities is possible, even under the most difficult circumstances. I also want to say thank you to Mr Sam Tsima for enabling this event and to Paddy Paisley for putting us in contact.

You may have asked yourselves why a director of an INGO (International Non-Governmental Organisation) focused on fighting poverty and injustice is addressing you on a lecture about entrepreneurship? The reality is that the creation of an inclusive society requires both poverty eradication measures and incentives to entrepreneurs. Based on my Brazilian experience, I would like to discuss how both these processes are interdependent and can support each other. Tonight I will talk about entrepreneurship in a wider context of building a more equal and just society. It is about building an environment for inclusive growth together.

This paradigm change is crucial in a world where the 200 wealthiest people around the globe own more than the entire African economy. It is clear that this trickledown economics has not worked to reduce inequalities. This unprecedented level of inequality is now becoming an impediment for sustainable growth. Institutions like the IMF and OECD and even the world economic forum have recognised inequality as one of the biggest challenges of our time. At the UN Sustainable Development summit in September, all governments adopted an agenda for social justice, the Sustainable Development Goals (SDGs). One of the goals is on inequality. I believe that promoting entrepreneurship is one of the measures that are required to fight inequality.

Let me give you an idea of who ActionAid is and how we work with the poorest communities to ensure their rights and build sustainable local development and inclusion.

On my experience on ActionAid, and particularly in Brazil; I will dare to say that eradicating poverty and hunger is not just a distant dream - it can be done. In the past decade, extreme poverty was reduced from 8.3% of the population in 2002 to 1.1% in 2013, and it continues to fall. In that period, 15.6 million people moved from living in hunger to having access to food supplies and over the years; 35 million Brazilians moved out of poverty and into the middle class. This all sounds quite impressive but a number of challenges still persist in Brazil, a country now dealing with economic stagnation and consequences thereof.

Brazil’s poverty eradication achievements were a result of a combination of factors: an active role of the state in implementing social policies, job creation, real increases in minimum wage and support to entrepreneurism. No country experience can be “exported” as a recipe to other countries, due to the vast differences in history and context; however, I believe that some principles of Brazil’s experience can bring valuable reflections to South Africa. So what can we learn?

The crucial role of social policies: The welfare system in Brazil is complex, combining public pension (retirement by age or special conditions), public education and public health. This system was strengthened over the past 13 years. In addition, there was the creation of a cash transfer program that now benefits 14 million families and a number of new state programmes such as the housing program that delivered more than 1 million new houses and 800,000 cisterns to ensure access to water in drought-prone areas. The state had to improve its coordination capacity and also create a unified registry, to ensure that all citizens below the poverty line could access federal programmes. Cash transfers also had an important impact on local economies, increasing economic activity in the poorer villages and regions.

Job creation and increases on minimum salary: During this time, we had a strong emphasis on job creation (18 million jobs created between 2002 and 2012). The minimum wage had a real increase of 72% from 2003 to 2013. The combination of formalised jobs (with all the social security benefits which this encompasses) and improved salaries had a crucial impact on poverty reduction.

Entrepreneurialism and technical and vocational education: Supporting the economic activities of poor communities on both rural and urban areas has been incredibly important. A credit program for small holder farmers was increased substantially (400% from 2002) and benefited 3.5 million small holder farmers. A new procurement policy made it compulsory for public schools to buy at least 30% of the food required for the schools’ feeding program from poor farmers’ produce, creating a vast institutional market for the farmers with predictable prices and diverse demand. In urban areas, the focus has been on capacity building.

A new program for professional courses was created, Programa Nacional de Acesso ao Ensino Técnico e Emprego (PRONATEC), which combined expansion of the professional education system and provision of free professional courses to the poorest. 8 million people attended PRONATEC courses and an estimated 60% of these people now have jobs. 400,000 cash transfer beneficiaries became individual entrepreneurs. The professional capacity building is conducted in partnership with SENAI, a 60 year old institution focused on professional education. SENAI is managed by the national industry confederation that retains 1% of workers’ salaries to provide high level professional education to workers in the Brazilian industrial sector. It has already trained more than 12 million workers and has 2.3 million enrolments a year for technical and vocational courses.

These principles and strategies were not just ideas originating from one political party alone. In fact, they were a result of decades of popular movements’ mobilisation, organisation and knowledge development. For an example: the smallholder farmer credit policy was a result of at least ten years of mobilisation by peasant1’s movement, which had been claiming the need for such a policy since the late 80’s. After many peasant marches throughout the capital and huge mobilisations across the country, the peasantry achieved the right for a specific credit with special conditions.

After that, mobilisations continued until the conditions and volume of credit were adequate. When a government with social commitment took office, there was already a strong social movement with clear proposals and demands that could be brought to negotiations. A similar situation occurred in relation to social security, job creation and minimum wage advances. In other words, workers movements’ capacity to mobilise and present policy proposals was crucial in achieving transformational changes.

I now live in South Africa, one of the most unequal countries in the world. On the positive side, with over 35 protest actions per day, it is certainly a country of active citizens!

South Africa has a long history of colonisation and apartheid which has systematically entrenched inequalities based on race and gender. Inequality has increased since the fall of apartheid. In fact, according to Oxfam; the two richest people in South Africa own the same wealth as the bottom 50 percent of the population.
The African Economic Outlook’s (AEO) 2013 report highlights how growth has been accompanied by insufficient poverty reduction, persistent unemployment and increased income inequalities. In South Africa, one in four people still go hungry to bed. Despite South Africa being an upper middle-income country, millions of people live in dire poverty and destitution, while a few elite continue to profit and prosper.

The government of South Africa, in recognising this, has made inequality a national priority together with unemployment and poverty. One of the biggest barriers to reducing inequality in South Africa is the issue of land: ownership and access to land as a productive asset and the means of production.

This inequality context in South Africa is widely recognised and accepted by most people living in the country and beyond and there is increasing agreement that inequality is bad for society and also bad for the economy. The contestation lies in the question of what strategies can be used to effectively reduce inequality. Some bold and decisive steps need to be taken in order to ensure a substantial reduction in inequality in South Africa. Some ideas:

1) Stopping the illicit flow of funds (According to the Mbeki panel on Illicit Flows from Africa, over 50 billion USD leaves the continent annually as Illicit Financial flows. Stopping the flows will ensure more revenue which will boost the South African Government’s public purse. The review of tax policy in South Africa via the Davis Tax Committee provides a good opportunity to ensure that high net worth individuals and multinational companies pay their fair share. We also need to ensure these resources are effectively used to warrant quality public services that are gender responsive. A key factor to reducing inequality and ensuring it is not generational is universal access to free and high quality public health and education. Private services drain public services and limit access. At the recent African National Congress meeting, there was an agreement that a wealth tax should be investigated in South Africa. This is a direction that the government needs to explore to ensure a redistributive agenda. There is a need for a Global Tax Body to curb illicit flows and to close loopholes and tax havens. The recent student movement #FeesMustFall is an example of active citizenship that continues to ensure the right to education if not infringed.

2) Lack of land reform is the central stumbling block to reducing inequality in South Africa. Beyond land redistribution, land reform is not located within a broad strategy of rural development and consequently cannot realise its full potential in transforming social relations, combating rural poverty and promoting rural development. Women accessing, controlling, owning land and having the means of production will unlock the potential to fundamentally reduce inequalities. In October next year, rural women from across the continent will travel to Kilimanjaro to make a clear statement on this critical issue, and will engage with policy makers across the continent to ensure women have greater ownership of land and the means of production.

3) The current minimum wage research and policy process in South Africa needs to be supported. As it is the case in Brazil, the minimum wage is the bedrock in reducing inequality. It is also imperative that the wage gap between men and women is eliminated as a matter of urgency.

4) Support to entrepreneurship and vocational training. Credit and investment to small and medium enterprises and massive training. Dr Maponya’s leadership in this field is absolutely crucial and will certainly help in moving the entire sector.

5) Collective action by civil society organisations, trade union organisations, faith groups, peoples’ movements to ensure implementation are what will turn the tide against inequality. 35 protests per day, workers striking regularly and more recently, students protesting around fees is a clear sign of discontent.

The combination of social policies, job creation and entrepreneurism are interrelated. The government’s political commitment and willingness is equally interrelated to the capacity of civil society and workers’ movement to claim their rights. When those policy components coalesce with civil society mobilisation; policy changes are implemented and profound societal changes can happen. These changes require strong political will, huge mobilisation of civil society to shape programmes and hold government to account, and strong engagement with the private sector as part of the transformation.

I believe that these components can be further developed in South Africa and the example of Dr Richard Maponya Institute and its engagement on professional development and support to entrepreneurialism can inspire stronger commitment from all.

Thank you.