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CWP’s role in enterprise development Risks and opportunities.

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Presentation on theme: "CWP’s role in enterprise development Risks and opportunities."— Presentation transcript:

1 CWP’s role in enterprise development Risks and opportunities

2 Briefly, back to basics….

3 Spatial inequality Human Capital Structure of Economy = ++ Economic Marginalisation Deepens Poverty Social alienation Economic Marginalisation Deepens Poverty Social alienation Economic marginalisation is deeply structural There are real constraints on people’s access into markets, on the terms of such access – and the returns. Employment matters too much to society to leave to markets alone. These structural factors place real limits on the scope for poor people to ‘self-employ’ their way out of poverty. Inequality frames economic marginalisation

4 A starting point: Yes, pathways into other forms of livelihood and employment do matter and CWP can support them. But there are risks. Part of the issue is about framing. – Some of the emphasis on CWP support to enterprise is based on a critique that CWP is not ‘sustainable’ and that its existence is only justified if it can show that it assists in the development of ‘sustainable’ jobs. – The whole rationale for CWP is based on a different logic: That full employment is an unlikely outcome in SA for a long long time to come, and is not ever likely. That in fact all over the world, employment in markets in shrinking and other ways of integrating people into society in productive ways matter for society. That there is a social value to labour – not just a market value. That there are many programmes targeting those trying to enter markets: it is in fact the dominant logic: the gap is those much more structuralyl marginalised – by inequality and the structure of our economy. Public employment is a valid part of the mix in a mixed economy

5 The focus on ‘exits’ Sometimes, an assumption that enterprise development will allow people to exit CWP, with this a ‘success factor’. Desirable as it is that people move on and up (and some do and will and should) there are also many who won’t – if we are targeting correctly. – Hard as this is to swallow, it is the truth. But this varies spatially. Diepsloot different from Matatiele. Many (most) come into CWP with existing livelihood strategies: that aren’t enough to lift them out of poverty. How does CWP strengthen and not replace these? Supplementing CWP income is key to poverty impacts. Even in context of this discussion, framing the issue less around ‘exits’ than around how to build a sustainable mix of livelihoods – with CWP part of what makes this sustainable: in the most marginal contexts. If ‘exit’ is the only measure, a range of other gains against poverty can be masked.

6 Risk 1: Losing focus on CWP’s core purpose CWP core focus is to create employment using public employment to deliver public goods in ways that build new forms of community development. This is a big task. It matters in its own right. It contributes to economic development in all kinds of ways. Do it well, first. Measure CWP by the quality of the useful work it delivers: and the processes through which it does os: not by how well it creates market-based employment.

7 Risk 2: CWP starts to be measured by the extent to which it contributes to enterprise development The reason CWP exists is because markets are currently unable to create employment at the scale required. The main strategies to solve this do not involve CWP creating market-based jobs. It is not an instrument designed to do so. It’s targeted at contexts in which market- based solutions are hardest. Its role is complementary to enterprise development strategies.

8 Measuring CWP in this way incentivises less pro-poor targeting. The poorest of the poor are not typically entrepreneurs. EPWP has already experienced this.

9 Risk 3: CWP distorts local economies with negative impacts on sustainable enterprise development Poultry entrepreneurs in Limpopo… Where CWP gets involved in trading, it has an unfair competitive advantage. It may destroy existing local enterprise. It may act as a barrier to the emergence of such enterprise. Poor local economies are fragile: CWP can crowd out ‘real’ entrepreneurs.

10 Risk 4: Creating perverse incentives for CWP to sell what it produces How is it decided that there are no more people who are hungry in a community and that CWP should now sell its ‘surplus’? Once CWP can benefit from selling the produce of its labour, a risk of losing focus on its public good mandate. Paprika is a public good?

11 Risk 5: Private capture of public labour We’ve seen CWP labour deployed in the private enterprises of co-ordinators. – Yes, we have. We’ve seen huge pressure on CWP to provide free labour (and tools and materials) to support ‘enterprise development’ and co-ops. A very thin line between support for members to engage in enterprise activity – and the capture of public funds for private gain.

12 Risk 6: Audit control CWP was designed with a very simple budget structure. Its relatively easy to manage – and to audit. But once CWP is involved in trading, there is no way to monitor what happens to that income. – Good PIA’s may think they’re doing so: but massive scope for pocketing the cash. – And massive scope for mistrust. A massive financial control risk. And requires a much higher level of financial capacity.

13 Risk 7: Patronage and Private Capture There are 1,000 participants on site. Which ones get to be supported to start an enterprise with public funds? Who benefits from direct CWP support to enterprise development? A whole new realm of potential patronage – and capture and conflict.

14 BUT

15 Many ways CWP CAN support LED and local enterprise development.

16 Trickle up economics CWP a massive injection into the local economy Regular and predictable incomes can translates into regular and predictable local spending. The basis for local enterprise development. An investment of billions.

17 Public goods with productive impacts India: massive investment in agricultural infrastructure. – Irrigation canals, earth dams, household water tanks, fencing, dipping facilities, erosion control, land rehabilitation etc. – Have we thought enough about how CWP can contribute to productive infrastructure at community level? – Beyond agriculture?

18 Plugging the leaks CWP as an active roleplayer promoting support to the local economy. Local procurement: a complex issue with cost implications but potentially important for LED. How prevent from just being another link in the chain = another expense?

19 CWP as a market Teba and the seedling nurseries: Providing a market for seedlings in CWP created economies of scale that enabled a viable local enterprise – supporting farmers outside CWP also. CWP purchasing services CWP partnering with local enterprise.

20 Work experience builds enterprise capabilities Work experience a vital platform Skills but also access to networks Exposure to opportunities CWP provides a connection to wider services – How actively is information on sme support services made available? – CWP as facilitator, enabler.

21 Regular income mitigates risk The hardest time for any new enterprise is the start-up phase: because of a lack of income. CWP provides a safety-net: regular income mitigates the risks of new enterprise creation Potentially massive contribution to supplementary activities.

22 CWP as incubator CWP can incubate new business opportunities - without trading Assist with ‘proof of concept’ – Eg waste recycling – Organic – Fencing

23 In sum: Yes, CWP can stimulate and support LED and enterprise development But it matters a lot how it is done. The greatest risks are: – That CWP becomes measured by an outcome that it is not designed to deliver – skewing its role; – When CWP becomes an entity involved in trading itself. – When CWP directly subsidises business activity. But there are a wide range of indirect mechanisms through which CWP plays a powerful role in LED and enterprise development.

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