FABCOS & TIPS - 1 November 2008

TIPS was commissioned by FABCOS (The Foundation for African Business and Consumer Services) to undertake a study on the impact of fuel and food price increases on small business. As FABCOS has a large constituency of informal or previously informal businesses, a strong emphasis was placed on the impacts for informal businesses. Some key outcomes are highlighted below:

Fuel Prices

The main effects of high fuel prices can be observed within the macro-economic framework. The first impact reflects the role of transportation in determining the price of goods: South Africa is a large country, and highly dependent on the transportation of goods by road (given the currently very poor state of the rail network). Most micro enterprises are dependent on hired transport to fetch items from wholesalers and/or manufacturers. Although the cost of these services increases as the fuel price increases, there is good evidence to suggest that these prices are both downwardly "sticky" (i.e. that they do not go down when the petrol price declines) and that transport service providers take advantage of general perceptions about rapidly rising fuel prices to increase their margins. The result is that small business owners who are dependant on these forms of transport probably face disproportionate transport costs increases, compared to bigger businesses that control their own logistics. This reduces the competitiveness of the smaller businesses.

The second impact is through the regulatory response to inflation. Higher interest rates reduce the disposable income of consumers, by raising debt service costs. As consumers spend more of their disposable income on servicing debt, so they have less to spend on other items.

The third issue for small businesses arising from higher inflation is that, generally, they are not in a position either to negotiate price concessions from manufacturers or wholesalers or to pass inflationary costs on to their consumers. While it is, of course, true that lower consumer expenditure affects all business; small businesses are generally in a much weaker position to ride out periods of reduced consumer spending. The smaller the business, the more vulnerable it is to this.

To date, the ability of many small retail enterprises to survive has been based in large part on their proximity to their clients (convenience), and the (rising) cost of travelling to shop at a large retail centre. However, the official development policy of most Metros in South Africa is to encourage large retailers to penetrate enter the townships, and this is having a considerable impact on the ability of small traders to survive. These small businesses are not opposed to anti development in the townships per se, but they do feel a certain level of resentment towards economic planners who trumpet the necessity of encouraging small business development on the one hand, whilst but on the other hand encouraging development that puts those enterprises at considerable risk.

Food Prices

According to Statistics South Africa, food's weight in the Consumer Price Index (CPI) is just under 21%. As such, an increase in food prices will have an impact on general price levels. However, we should not confuse the official weighting of food in the CPI with the actual role of food in monthly household expenditure for many South Africans. Given that South Africa has one of the world's worst distributions of income, there is really no such thing as an "average" consumer. In general terms, the poorer a person, the greater the share of their income that they will spend on food, and the greater the impact on their disposable income of food price inflation that exceeds the rate at which their wages are increasing. Data indicate that the very poorest South Africans spend as much as 80% of their income on food.

Whilst general prices have increased steadily over the past five years, the data show that food inflation (CPI-F) generally increased faster than general inflation, but has done so in particular since the end of 2005. Except for the periods between August-October 2005 and the same period in 2006, food inflation has tended to be higher than the general price level (CPI) of all items. In particular, for the period between September 2007 and 2008, the gap between the two has been widening, implying that more price pressure is being observed in food than for other items.

Another key issue is that for the period between November 2005 and 2006, price increases in rural and urban areas were similar. However, since early 2007, rural prices have tended to grow faster than urban prices. The fact that rural populations spend roughly double (IES, 2006) on food compared to urban groups leaves rural populations at a disadvantage since generally have less disposable income than urban populations.

The two main impacts of rising food prices on micro enterprises are a direct impact (through the erosion of purchasing power of their clients) and an indirect impact (through the erosion of the businesses own purchasing power).

In terms of the direct impact on business through the erosion of their clients' purchasing power, the first point to be made is that the small enterprises that we are considering tend to have lower-income people as their main clients. When food prices are rising more rapidly than the "official" rate of inflation (which sets wage and social grant increases) then these people will have less non-food disposable income and may be forced into actually purchasing less food. Both of these are bad news for small business.

The indirect impact of rising food prices on small businesses comes via the reduction in the disposable income of the business owner. Most of the small businesses under consideration are owned by people who do not fall into the high-income category. Therefore, they tend to spend a relatively high portion of their income on food, and higher food prices mean less income available for other items. The reason why this is important is because most of these small businesses finance their expansion and cash flow requirements from their own savings, and are not able to source other types of finance. Therefore, a reduction in disposable income means less money is available for investing in the business or helping to ride out adverse business periods. This makes small businesses relatively more vulnerable than other type of businesses to adverse price changes.

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TIPS was commissioned by FABCOS (The Foundation for African Business and Consumer Services) to undertake a study on the impact of fuel and food price increases on small business. As FABCOS has a large constituency of informal or previously informal businesses, a strong emphasis was placed on the impacts for informal businesses. Some key outcomes are highlighted below:

Fuel Prices

The main effects of high fuel prices can be observed within the macro-economic framework. The first impact reflects the role of transportation in determining the price of goods: South Africa is a large country, and highly dependent on the transportation of goods by road (given the currently very poor state of the rail network). Most micro enterprises are dependent on hired transport to fetch items from wholesalers and/or manufacturers. Although the cost of these services increases as the fuel price increases, there is good evidence to suggest that these prices are both downwardly "sticky" (i.e. that they do not go down when the petrol price declines) and that transport service providers take advantage of general perceptions about rapidly rising fuel prices to increase their margins. The result is that small business owners who are dependant on these forms of transport probably face disproportionate transport costs increases, compared to bigger businesses that control their own logistics. This reduces the competitiveness of the smaller businesses.

The second impact is through the regulatory response to inflation. Higher interest rates reduce the disposable income of consumers, by raising debt service costs. As consumers spend more of their disposable income on servicing debt, so they have less to spend on other items.

The third issue for small businesses arising from higher inflation is that, generally, they are not in a position either to negotiate price concessions from manufacturers or wholesalers or to pass inflationary costs on to their consumers. While it is, of course, true that lower consumer expenditure affects all business; small businesses are generally in a much weaker position to ride out periods of reduced consumer spending. The smaller the business, the more vulnerable it is to this.

To date, the ability of many small retail enterprises to survive has been based in large part on their proximity to their clients (convenience), and the (rising) cost of travelling to shop at a large retail centre. However, the official development policy of most Metros in South Africa is to encourage large retailers to penetrate enter the townships, and this is having a considerable impact on the ability of small traders to survive. These small businesses are not opposed to anti development in the townships per se, but they do feel a certain level of resentment towards economic planners who trumpet the necessity of encouraging small business development on the one hand, whilst but on the other hand encouraging development that puts those enterprises at considerable risk.

Food Prices

According to Statistics South Africa, food's weight in the Consumer Price Index (CPI) is just under 21%. As such, an increase in food prices will have an impact on general price levels. However, we should not confuse the official weighting of food in the CPI with the actual role of food in monthly household expenditure for many South Africans. Given that South Africa has one of the world's worst distributions of income, there is really no such thing as an "average" consumer. In general terms, the poorer a person, the greater the share of their income that they will spend on food, and the greater the impact on their disposable income of food price inflation that exceeds the rate at which their wages are increasing. Data indicate that the very poorest South Africans spend as much as 80% of their income on food.

Whilst general prices have increased steadily over the past five years, the data show that food inflation (CPI-F) generally increased faster than general inflation, but has done so in particular since the end of 2005. Except for the periods between August-October 2005 and the same period in 2006, food inflation has tended to be higher than the general price level (CPI) of all items. In particular, for the period between September 2007 and 2008, the gap between the two has been widening, implying that more price pressure is being observed in food than for other items.

Another key issue is that for the period between November 2005 and 2006, price increases in rural and urban areas were similar. However, since early 2007, rural prices have tended to grow faster than urban prices. The fact that rural populations spend roughly double (IES, 2006) on food compared to urban groups leaves rural populations at a disadvantage since generally have less disposable income than urban populations.

The two main impacts of rising food prices on micro enterprises are a direct impact (through the erosion of purchasing power of their clients) and an indirect impact (through the erosion of the businesses own purchasing power).

In terms of the direct impact on business through the erosion of their clients' purchasing power, the first point to be made is that the small enterprises that we are considering tend to have lower-income people as their main clients. When food prices are rising more rapidly than the "official" rate of inflation (which sets wage and social grant increases) then these people will have less non-food disposable income and may be forced into actually purchasing less food. Both of these are bad news for small business.

The indirect impact of rising food prices on small businesses comes via the reduction in the disposable income of the business owner. Most of the small businesses under consideration are owned by people who do not fall into the high-income category. Therefore, they tend to spend a relatively high portion of their income on food, and higher food prices mean less income available for other items. The reason why this is important is because most of these small businesses finance their expansion and cash flow requirements from their own savings, and are not able to source other types of finance. Therefore, a reduction in disposable income means less money is available for investing in the business or helping to ride out adverse business periods. This makes small businesses relatively more vulnerable than other type of businesses to adverse price changes.

Most economics curricula deal with macroeconomic tools for studying the economy as a whole and microeconomic tools for studying the behaviour of individual agents or markets. However, practical public and private sector economic analysts often need to focus on the industry/sector or meso level of economic activity. Key sector analysis, sectoral impact studies, partial and general equilibrium trade and industry analysis are frequently conducted both in the public and the private sector.

Input-output (IO) and social accounting matrix (SAM) analysis are used on a regular basis as tools for such meso-level economic enquiry. Researchers use these tools to analyse the impact of policy-related and other changes on the economy. Such tools can also be extended to address broader concerns, such as the impact of policy on the environment or on energy requirements. Economic modelling techniques that capture economy-wide impacts of policy changes are increasingly being used in South Africa's academic, consulting, research and policy environments.
To cater for the rising demand for these techniques, Trade and Industrial Policy Strategies (TIPS) started offering a one week introductory workshop in economy-wide policy impact analysis in 2001. We are pleased to announce that the eighth offering of this popular workshop will be held in Pretoria from 23-27 February, 2009.

The workshop is designed and presented by academics and experts in the field of economy-wide policy modelling. Lectures are used to introduce the theory and to provide insight into the scope of research possible using the particular modelling technique. More importantly, each lecture is followed by hands-on exercises where the theory or model is applied using economic data from South Africa and other Southern African countries. Apart from imparting the practical skills needed to apply the theory, these exercises familiarise participants with key features of economies studied. Participants also present brief group projects using the modelling tools learnt during the workshop.
By the end of the workshop, participants will be equipped with sufficient theoretical and practical skills to engage in impact analysis. The workshop also provides a useful basis for process managers who have to digest such analysis, even though they may not undertake it themselves. It also provides a solid grounding for those who wish to enter into the field of computable general equilibrium (CGE) modelling. For these participants, a CGE modelling workshop will be offered at a later stage.

Workshop fees: R10 000 (excluding VAT) for South African and SADC participants, US$1 500 for participants outside SADC. To ensure that the workshop is pitched at the correct level, we invite interested participants to submit short CVs to denves@xtra.co.nz before 9 January 2009. To secure a place upon acceptance, participants will be required to make a non-returnable deposit of R2 000 (US$250 for participants outside SADC) before 1st February 2009. Full payment of workshop fees must be received by 23rd February 2009; a 10% discount will be given should full payment of the fees be received by 10th February 2009.

Further information on registration, accommodation and required preparation can be obtained from the workshop conveners:
Dirk Ernst van Seventer   (denves@xtra.co.nz) or Rob Davies rdavies@hsrc.ac.za

Workshop Program

The workshop programme is revised and developed each year to take into account new issues and the interests of participants. The following, based on past workshops is for illustrative purposes.

Reading List

• Miller, R. and Blair, P. (1985) Input-output analysis: Foundations and extensions, Prentice Hall.
• Chapter 2: Foundations of Input Output Analysis
• Chapter 4: Multipliers in the Input-Output Model
• Chapter 9: Selected topics (sections 9.1 – 9.3 & 9.6 only, pp 317 – 327 & 351 - 357)
• Reinert, Kenneth A., and David W. Roland-Holst. (1997) Applied methods for trade policy analysis, Cambridge University Press, Cambridge, UK.
• Chapter 4: Social Accounting matrices
• Sadoulet, Elisabeth and Alain de Janvry. (1995) Quantitative development policy analysis, Johns Hopkins University Press.
• Chapter 10: Input-Output Tables, Social Accounting Matrices and Multipliers
• United Nations. (1999) Handbook of Input-Output Table Compilation and Analysis, Studies in Methods, Handbook of National Accounting, Series F, No 74, Department of Economic and Social Affairs, Statistics Division.
• Chapter I: Basic input-output symmetric model
• Chapter XII: Impact analysis

You are kindly invited to the following Development Dialogue Seminar:

Note that a light lunch will be provided afterwards.

About Prof. Carlo Pietrobelli :

Carlo Pietrobelli is Professor of International Economics at the University of Rome 3, Italy, where he directs the Research Centre on the Economics of Institutions (CREI, http://host.uniroma3.it/centri/CREI). He is also Delegate of the Rector for promoting University-Industry linkages and Head of the Industrial Liaison Office of the University of Rome 3 (since 2005). He holds a PhD in Economics from the University of Oxford and a Doctorate in Economics from the University of Rome 'La Sapienza'. He has held positions in several Italian and foreign Universities and is a regular advisor to international organizations such as the European Commission, the World Bank, the Inter-American Development Bank, IFAD, UNIDO, UNCTAD, ECLAC, OECD. His fields of expertise include industrial policy, industry, technology and trade in developing countries, Science and Technology Policies, Clusters, Networks and Value Chains, Design and Evaluation of Development Programs and Projects Upgrading to Compete. Clusters and Value Chains in Latin America (with R.Rabellotti), Cambridge Ma.: HARVARD UNIVERSITY PRESS 2007; Linking Local and Global Economies: The Ties that Bind (with Á. Sverrisson) London and New-York: ROUTLEDGE, 2004; Failing to Compete: Technology Development and Technology Systems in Africa (with Sanjaya Lall), Cheltenham, UK and Lyme, US: Edward ELGAR, 2002; The Global Challenge to Industrial Districts: SMEs in Italy and Taiwan, (with P. Guerrieri and S. Iammarino), Cheltenham, UK and Lyme, US: Edward ELGAR: 2001; Industry, Competitiveness and Technological Capabilities in Chile. A New Tiger from Latin America?, London and New York: MACMILLAN and ST.MARTIN'S, 1998.

Contact details

CREI, University of Roma Tre, Via Ostiense 161, 00154 Rome, Italy
Tel: � 06 57332476 Fax: 39 06 57332511
Email: c.pietrobelli@uniroma3.it
Website: www.pietrobelli.tk

TIPS, in collaboration with the Overseas Development Institute and as part of its AusAID-funded Southern African Trade Development Programme, in March 2008 held an EPA workshop at its office in Pretoria.

The objectives of the workshop were to present the content of the Southern African Development Community (SADC), East African Community (EAC) and Eastern & Southern Africa (ESA) EPA trade arrangements with the European Union, including trade liberalisation details, trade defence mechanisms and infant industry protection.
The workshop was also designed to inform the participants on outstanding EPA-related issues to be negotiated in 2008, look at various EPA variations and help participants to consider the alternatives to EPA deals whilst taking into account the status of the countries (e.g. least developed countries) and the complexities of the trade losses associated with trade regime change compared to others.

Particular attention was paid to skills training with regard to the complexities of such assessments and concrete examples of country case studies were applied. As such, the workshop aimed to raise awareness of the various dimensions to consider when assessing the EPA deals and to help participants think about and evaluate the implications for regional integration in a SADC (and EAC and COMESA) framework.

The workshop was conducted mainly by Dr. Mareike Meyn from the ODI.

Wamkele Mene of the Department of Trade and Industry (the dti) presented South Africa's perspective in the SADC-EU EPA negotiations.

Participants included government officials (from the dti, National Treasury, the Departments of Agriculture, Foreign Affairs and others) involved in the conduct of trade policy and trade negotiations – whether at WTO bilateral or regional level – and officials in development Ministries whose tasks increasingly include keeping track of ongoing trade negotiations and the performance of their sectors.

Researchers in academia, think tanks and regional research networks concerned with trade and trade negotiations also participated in the workshop.

Programme

The Community Work Programme means we cannot put a board on the gate that says: 'No Job.' Instead we need a board that says:

Jobs are Here!
We Need People!'

King George Mohlala
CWP Project Manager, Bokfontein.

Contents

1. Attendance
2. Purpose
3. Key Themes from Site Reports
4. Monitoring and Evaluation Report
5. Discussion of Key Design Issues
6. Summary of Action Points 

1.Attendance

The workshop was attended by delegations from each Community Work Programme site, by representatives of the Implementing Agencies (Aktivity, Teba Development and the IDT), Khanya aicdd, the Alfred Nzo Municipality, DSD, DWAF, and the Second Economy Strategy Project, with participants from EPWP, DPLG, and Shisaka joining us on Day 2.

2. Purpose of the Workshop

The purpose of the workshop was defined as follows:

• To consider outcomes and impacts of the pilots to date
• To identify key lessons from implementation thus far
• To identify key design issues necessary to strengthen delivery and improve outcomes
• To clarify how best to manage the interface with existing programmes, local government and IDP processes;
• To consider how best to institutionalise the CWP to go to greater scale as a government-funded programme;
• To provide information on processes underway that will determine the future of the programme.

In addition, the workshop had a report on the Expanded Public Works Programme (EPWP) Conference on 2-3 September. The CWP is now included as part of EPWP Phase 2.. The following main issues and concerns were raised in the Commission on the CWP: at this Conference:

• How the CWP should link to local government and Integrated Development Plan (IDP) processes;
• The nature of the work, the scope to sustain useful work at this scale at the local level;
• The framework of technical support, eg for infrastructure where applicable;
• The scope for the CWP to scale up faster than currently projected.

Addressing these issues was included as part of the deliberations.

3. Key Themes Arising from the Community Work Programme Site Reports

The agenda on Day One was focused on detailed reports from each CWP site. These reports painted a detailed picture of community development in action, including its many challenges: how some of these have been overcome, and those that still remain. But the overall message was one of strong positives and lots of commitment.

3.1. The CWP is working: and work is impacting on poverty:

In relation to poverty impacts and the extent to which the CWP is achieving its purpose, the following trends were highlighted:

1. Attendance rate increases are very rapid; (see graphs attached in Addendum 2)
2. 'Useful work' is being identified by communities and people are seeing the outcomes of their decisions.
3. There are tangible improvements in the quality of life where the CWP is operating: most marked in Bokfontein, with borehole water (instead of water trucked in weekly) and a road, controversial as the road may be!

Now that we have a borehole right there in our community, people come and get water day and night, left and right.'

1. The team-leader/supervisor structures are creating leadership opportunities;
2. Project managers believe the CWP is having an impact on alcoholism, drug use, sexual abuse and crime. These are issues that will have to be verified over time by the Monitoring ዶꖹꭢ� (M�).
3. Self respect and dignity:

The mindset of the community has changed: we are not beggars but people with ability. People have started think: 'my community needs me.'

1. There is smoke from every house at night: mothers are preparing food for their families.' Bokfontein Report.

The M� report emphasized that the CWP's impacts on poverty cannot be measured in 'money-metric' terms alone. Much of the feedback focused on these less tangible issues of empowerment, social cohesion, self-esteem and dignity: as well the more measurable impacts on incomes and consumption.

3.2. The nature of work

Work varies in each community, but some common themes emerged: food gardens; support to vulnerable households; auxiliary services to home-based care (cleaning, provision of labour to sustain household food security); maintenance and repairs to classrooms, cutting long grass, fencing.
Apart from how ‘work' relates to IDP's, there were other issues about the nature of work:

• So far, the pilots have managed to find useful work for up to 1,000 people a week: but this is a lot of people to keep meaningfully engaged;
• There is a risk of deploying more people than are really needed for the job: this needs to be avoided. For core activities, it is suggested that standard ratios be developed as benchmarks eg for home based care, for food gardens, etc. to avoid ‘slippage'.
• There is a need to develop a ‘core menu' of work activities that are recurrent.

See below for the issues around the links between this work and existing commitments in eg the IDP. 

3.3. Links to local government and IDP processes

This was a key theme of discussion. Apart from Bokfontein (where the municipality has given its formal support but remains somewhat distant in practice), relations with municipalities are good, even where there was some hesitation at first. Such partnership is key to success.

In Alfred Nzo and Munsieville: the ward committees are where ‘work' is identified and prioritised. In Munsieville, this take place weekly; in Alfred Nzo, there is a strong partnership also. This makes the link between local identification of needs and the translation of this into ‘work' very direct, with strong positive effects on the ‘return on investment' in participation for communities. This has potential to deepen and sustain local participation in ward-level structures between the annual IDP processes in ways that are aligned with and supportive of such processes.

At the same time, the fact that the CWP has to deliver work at scale every week acts as a catalyst for action and delivery, galvanising additional local resources and translating into continuous and highly visible delivery every week.

‘No-one can ignore the CWP: it is there every week, it is working every week, it is improving the life of the community every week. Everyone can see the difference.' Mfanafuthi Khanyile, Project Manager, Munsieville.

The reports also highlighted different kinds of work taking place, with different implications for relations with local government. Each of these types of scenarios exists currently (and often concurrently):

1. The CWP is doing work that is very local – such as cutting the long grass – that is below the radar of the IDP – but initiated by ward committees;
2. In some cases, the CWP is able to help implement ‘unfunded mandates' in the IDP's;
3. In some cases (Munsieville and Alfred NZO) there is co-funding of initiatives by local government;
4. There are however cases where the CWP is being used to do things the municipality should be doing but is failing to do: or things for which eg schools and clinics are supposed to have budgets for: but they say they don't know how to access these budgets. It was recognised that funding the CWP to do such tasks is a form of double funding which National Treasury would never agree to -  nor should it: although clearly, communities see this as a way to get delivery when the municipality is failing.
5. The issue of displacing existing jobs needs to be explicitly avoided/ managed, although it is not a significant issue at this stage: it arose briefly in relation to waste collection in Munsieville, and was resolved.

3.4. Links to national programmes

It was noted that many of the priorities identified at local level relate to existing national and provincial programmes, but where delivery is not currently reaching this level.

How do we link these? This would need the support of local authorities also. Can we develop protocols to do so?

3.5. Significant issues arose around banking.

All sites experienced problems with payment systems:

• Munsieville had to terminate the contract with the first bank used; in addition to delays and frustrations, there were instances of fraud where bank clerks had added funeral policies and life assurance deductions without the knowledge of account holders (for a commission). This lead to staff dismissals at the bank concerned,. Problems were significantly reduced by changing to a different provider.
• There were problems that many people had opened Mzansi accounts, but these go ‘dormant' if unused for a mere three months. Participants provided these account numbers in good faith, only to have the money bounce.
• Some participants would check the ATM up to 8 times on the day funds were due, and be shocked to have R20 out of R70 deducted ‘for nothing'.
• In Matshamhlope, the taxi to Matatiele to draw the money costs R70 – more than the daily rate there; a group account is being considered, but the risks of carrying large amounts of cash remain.
• In Bokfontein, the bank sends a mobile unit to the site, and people get paid out by the bank in cash. This is harder to negotiate in remote areas.

Predictably, these problems were worst in the most rural site, Alfred Nzo.
Also predictably, participants blame the CWP not the banks. When an exasperated CWP project manager asked why this was so, the reply was: 'Because it is easier to fight you than to fight the bank!'

The impacts on the programme were significant, with measurable drops in attendance while these issues were resolved. As part of the wider roll-out, it will be necessary to engage with the banks to avoid such problems, and to  addressing the issues that arose that clearly still serve to limit access to banking services for poor people.

3.6. Big picture design issues about targeting

The need for clarity on targeting was raised.

3.7. The wage rate

The wage rates were set locally and vary in each project, between R50 – R70.  While this avoided the CWP setting a rate, it raises its own problems now. It was noted however that rather than all targeting the top rate, we need to take into account the impact the EPWP wage incentive base rate will have on funding, as any increase on the base rate that is set may lead to a later requirement of additional sources of funding to top this up.

3.8. The need to formalize institutional arrangements and create certainty for future contracts and funding.

The pilot phase has been characterized by short-term contracts and lack of certainty all credit to implementing agencies for achieving what has been done under these conditions of risk. The potential has now been demonstrated: the challenge is to institutionalize the CWP and scale it up. How?

This will create a range of opportunities, such as for more formal links to training processes, for longer-term agreements with municipalities, and departments.

In this process, there is a need to assess compliance issues in terms of health and safety, workmen's compensation and UIF: taking into account the wider Expanded Public Works Programme framework.

4. Report on Monitoring and Evaluation (M�): Khanya aicdd

The M� is being conducted by Khanya aicdd. The key deliverables of the M� System are:

• A tailor-made participatory monitoring & evaluation system that tracks the activities and outcomes of the pilot projects;

• An IMS (Information Management System) that will ensure regular and accurate quantitative and qualitative data collection by the Implementing Agents. Key to the IMS is the putting in place of an electronic participant registration system;

• A qualitative impact assessment that consolidates the lessons from the pilots and draws out their implications for the roll out of the broader Community Work Programme.

Data is still being processed; some initial findings:

• 31% participants have missed 1 or more workdays, mostly because of illness and funerals, and other family commitments
•  64% of the participants in our sample had cellphones
• 45% of respondents in the sample lived in de facto female headed households
•  61% of sampled households have members who are recipients of a grant or pension
• 37% of sampled households have no children under 14yrs of age in the place of residence
•  53% of sampled households have at least one child support grant and on average each h/hold in receipt of CSGs, get just over 2 of these grants 

Payment delays still affecting Alfred Nzo at the time of data-collection meant some people had not yet being paid, affecting data on how income had been spent. However, taking this into account:

• Respondents had spent their CWP income as follows: 58% had spent it ‘mostly in formal shops in town', while 42% had spent it ‘mostly in small businesses in the local community'

• Food was priority # 1 for 68% of respondents for spending their CWP income; another 13% listed food as their 2nd or 3rd priority purchase with CWP income

• Significantly, 11% had prioritised saving their CWP income, frequently towards ‘buying a house' or starting a business, often ‘back home.'

It was also noted that in Bokfontein, one respondent had passed up a piece job to work in the CWP, because although the piece job paid more, transport costs to get there meant the CWP would leave him with more in his pocket. In another case, the respondent said they had used the CWP money to pay for transport to go and look for other work.

The M� report raised a range of key design issues, most of which echoed the wider themes emerging form the site reports and addressed on Day 2.

5. Day Two: Addressing Key Design Issues

Arising from Day One, the following issues were prioritized for the agenda of Day 2:

• The development of a protocol for engagement with local government
• Can we develop a core menu (but not a restrictive menu) of work options and look at the kinds of agreements required with departments?
• The issue of targeting: how much targeting do we do?
• The issue of scale and expansion going forward.

5.1. Developing a protocol for engagement with local government

National Framework issues

Input from the Department of Provincial and Local Government clarified the importance of the CWP engaging at a framework level:

1. The national Local Economic Development (LED) framework will allow the CWP to take root more effectively;
2. Amendments to the Local Governmentt Systems Act includes Ward-based development activities, spatially-based planning and funding 'all have a good fit with CWP' and will enable CWP, if we get it right.
3. There's a need a formal engagement with DPLG and the South African Local Government Association (SALGA)[eg for 'letters of endorsement' to take to local municipalities]
4. The need to understand and use - the intergovernmental relations protocol: in terms of the role of provincial departments, eg. DSD and its Sustainable Livelihoods directorate. So there's a need to formalise these relations also.

Engagement with Local Government

It was agreed that the CWP needs to clarify the kind of protocol it seeks to enter into with local municipalities, as well as a set of standard (but flexible)  terms for a ‘framework agreement' around how issues such as the steps to be taken where proposals from the wards are for work that is in the IDP, or for the creation of assets that require municipal maintenance.

The meeting developed a draft framework, which is attached.

5.2. Entering agreements with departments

The meeting recognised that while some proposals for work at the local level were very specific to local conditions, there were also some common trends emerging across the sites. In many instances (but not all), there are existing national or provincial programmes that support work in such areas. For example home-base care, food gardens, road maintenance, informal settlement upgrading.

It would assist the CWP if a set of core agreements existed at a framework level, that allowed the CWP to link up with such programmes in an agreed way, rather than each site navigating government systems on their own. Such linkages would also need to align with municipal processes of engaging such programmes, but the potential exists to create a ‘demand-side' pull on such programmes from communities, and to access resources. Rather than duplicate funding, this can help unlock existing allocations.

The active participation of Department of Water and Forestry (DWAF) in the CWP processes means that linkages here are the easiest to effect, and may help establish a precedent. All the non-urban sites could integrate environmental services as part of their ‘core menu' of work.

Opportunities highlighted include the following:

• Home Based Care and Early Childhood Development
• Community & homestead gardens [food security] and tree-planting
• Water and sanitation programme
• Waste management and larger Working for Energy prog
• Natural resource management and restoration programmes (Department of Environmental Affairs and Tourism, , DWAF, DoAgric)
• People's housing programme (PHP) and informal settlement upgrading
•  ‘Healthy lifestyles'
• Literacy programme
• Education: CWP at schools (eg. Teaching assistants)
• Developing school sports facilities and supporting schools sports [see work only as labour but more broadly as ‘service to the community']
• Aftercare and drop-in centres
• Emergency shelters
• Road maintenance

5.3. Targeting: how much do we do?

Here too, there is a spectrum of approaches. While the purpose is to reach those who need it most, this can be defined more or less broadly how poor is 'poor' - and there are different ways of achieving it. IN the pilot phase, different approaches have been used.

Working for Water/IDT have a formal, existing system for identifying vulnerable households, which they are using; in Alfred Nzo, vulnerable households were identified at ward level, and in Munsieville and Bokfontein, the programme has been open to anyone who wants to attend. While the outcomes will need to be monitored, at this stage, participants are mainly youth, with a high proportion of women. In Alfred Nzo, participation is overwhelmingly by young women.

The following was agreed:

1. The CWP should target spatially – targeting the poorest areas, possibly prioritizing the poverty nodes.
2. Where targeting involves selection, it raises many problems: but reliance on self-selection can do so too, and either way, outcomes need to be closely monitored;
3. The wage rate is an important targeting mechanism: taking CWP to scale requires an uncomplicated system. A low wage rate serves to target the really needy.
4. Willingness to work is a factor
5. While it would be wrong to exclude those receiving a child support grant, the CSG is meant to target the child, there is a policy issue about the inclusion of people receiving old age pensions. This should be taken up with DSD.
6. We need to be careful about social grant thresholds, particularly in respect of CSG means tests: we don't want to find that by participating in the CWP, someone receiving the CSG becomes ineligible. This needs further investigation with DSD's assistance.

5.4. Scale and expansion: balancing the urgency of need with capacity (and resources) to deliver:

While current proposals for scaling up for next year represent a more than 8-fold increase in scale ,not insignificant, this still falls below the ambition of the kinds of targets being set in eg the anti-poverty strategy. However, the key challenge next year is to institutionalize the CWP, to get framework agreements in place, and to build the capacity for a much wider roll-out. This groundwork matters more for large-scale expansion in the future than the number of new sites, although the envelope will be pushed as far as capacity and resources allow in this area also.

The workshop was followed up by a meeting with implementing agencies to look at detailed projections for expansion to new areas and sites.. In the workshop, the capacity of existing sites to expand was explored.

            Alfred Nzo:

1.  
   1. There's scope to extend the programme to a further 20 villages ie to triple it in Alfred Nzo, and it could be very useful to deliver the CWP across a whole local municipality and monitor the impacts over time, rather than a scatter gun approach within the district. The municipality would be keen: constraints have to do with logistics and management, rather than work opportunities
   2. Constraints relating to the distribution of villages/work sites, needs a planning framework for how to tackle the roll-out spatially, in terms of distribution across wards [working with 3000 participants/LM]
2. Munsieville:
   1. scaling up to elsewhere in Mogale City would be possible, because people are emerging well-versed in the CWP process from M'ville
   2. The Mogale City manager has requested this.
3. B'fontein: the possibility of replication across Madibeng municipality exists and could soften the stance of Madibeng municipality.

1. Existing implementing agents are also able to expand to new sites, including in other provinces.

1. It was agreed that now that core operating principles and practices have been established, a 'call for proposals' approach should be used to could expand delivery capacity.

1. In a side meeting with the implementing agents, the following was agreed:

1. 
   
   1. That assuming the pre-approved funds from DFID/Economic Cluster fund become available, the implementing agencies can start an additional 5 pilots in the period to March 2008;
   2. That (including these) the current projections for expansion in 2009/10 are an accurate reflection of what can be delivered by the existing implementing agencies;
   3. That a wider call for proposals could significantly increase the rate at which the CWP can be scaled up, and if resources can be made available, this should be done to test the scope for more rapid expansion, which would affect the figures for the following years.

6. Summary of Action Points

1. Develop an operations manual for CWP
2. Formalise and finalise the protocol and framework for Memorandums of Understanding (MOU's) with local government, building on the draft developed in the meeting;
3. Initiate formal engagements with DPLG and SALGA; strengthen alignment with DPLG's Local Economic Development strategy, in relation to ward-based planning and budgeting;
4. Develop a plan to institutionalise the CWP and build back-office and technical support capacity.
5. Develop standard procedures in relation to worksite health and safety, and issues of UIF, taking into account the EPWP framework.
6. Develop productivity benchmarks for core activities to prevent unproductive use of labour.
7. Initiate agreements with a set of targeted departments to assist the CWP to draw down on and assist delivery of existing programmes in government where applicable. DSD, DWAF/DEAT, Department of Health and others.
8. Formalise a technical support agreement between the 'Working for' programmes and each non-urban site: the demand for a range of environmental services is there in all the rural sites. Agreed in principle.
9. Develop a communications strategy for CWP. Start with better circulation of reports between implementing agents, and of M� information and feedback of insights gained.
10. Last but not least: tie up the funding contracts to create a clearer planning environment for the future!

This document is available as a PDF for download, which includes the Addenda: