2. CHAPTER TWO: CONCEPTUAL AND THEORETICAL FRAMEWORK
2.8 Local Economic Development and Poverty Alleviation
Poverty cannot be addressed through social structures separately; however economic structures also have an impact on social inequality. Poverty can be defined as absolute poverty, relative poverty and human poverty. Poverty implies a form of deprivation that entails people’s need not being fulfilled and a lack of resources to meet these needs (Townsend, 1979).The broad definition of poverty alleviation encompasses three concepts of poverty. The first focuses on the tangible notion of ‘things indispensable to life’ and the prejudiced perception of ‘needs indispensable to life’. The second concept distinguishes between the concepts of temporary and chronic poverty; this illustrates the different levels of poverty (Govender, 2010). Living comfortably can be differentiated from sustaining life or a socially accepted level of well-being;
therefore the third concept illustrates and discusses the concepts of relative and absolute poverty.
The poverty line is a threshold or critical cut-off point below which a person or household is considered poor (World Bank, 2002). Different levels of poverty require different solutions.
According to Rogerson (1999), measuring susceptibility to poverty will also assist policy makers in tackling this issue. Different backgrounds need to be taken into account in order to understand the dynamics of poverty. Poverty alleviation processes need to be updated in line with the challenges encountered by people at different stages of their lives. Policies to tackle poverty alleviation have adopted two main approaches. The first is to address poverty alleviation through macro-economic growth that targets specific communities such as poor areas (Rogerson, 1999:
513). Secondly, five frameworks are identified for poverty alleviation, namely, creating employment opportunities, structured ways of achieving better access to the municipal services,
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security through protection from crime, the coordination of natural disasters and integration (Rogerson, 1999).
Oosthuizen (2008: 1) identified three basic ways of understanding poverty: a relative, an absolute and subjective approach. Each takes different perspectives and experiences into account.
Relative poverty measures poverty in terms of the monetary value of the goods and services required to maintain a minimum standard of living. Absolute poverty refers to the absence of basic needs (Oosthuizen, 2008), while relative poverty captures aspects of the society as a whole such as the characteristics that define the community by identifying individuals whose standards of living are low relative to the entire society (ibid). Although transformation brought about change in all spheres of government in South Africa and granted autonomy to local government, local governments are still faced with huge service delivery backlogs (Kroukamp, 2006). LED strategies are therefore crucial to the transformation project.
While some LED projects have contributed to human development, their overall success rate has been comparatively low (ibid). While some projects created jobs and proved to be sustainable provided that they registered as legal entities, the majority of projects are only able to survive with continued infusions of public money. Previous studies have emphasized that poverty eradication cannot succeed without local government and the private sector intervening through LED strategies. This is necessary to generate more jobs, free up fiscal resources for poverty reduction programmes and reduce the risk of financial crises within local authorities (Kroukamp, 2006).
2.8.1 Common dimensions of Poverty in Africa
Poverty in Africa has several dimensions and varies according to region. Measures of poverty include gender, environmental degradation, and regional dimensions.
Gender
The World Bank (1996; 2005) notes that legal, regulatory, cultural and structural barriers have deprived women of education, political influence and access to financial, health, political and agricultural extension services (Mukaosolu, 2010). That said, Standing (1985) stated an opposing view, based on the significant aspects of gender and poverty that needs to be analyzed independently from the comparative analogy :furthermore the statistics have shown that the level
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of woman’s participation in market oriented activities, under poverty pressure and their domestic labour is not dispensed to gender status, discussed in (Mukaosolu, 2010). Additionally, results based on poverty and gender emphasizes a clear distinction of how scarcity of resources impacts the function of individuals by oppressing the poor from being established.
Economics and poverty
Economic measurements focus on the distribution of income and expenditure among individuals and households. Poverty cannot be measured without reference to the economy of a country.
Expenditure is often regarded as an indicator of a household’s welfare; it is a measure of direct consumption rather than income and reflects the degree of commodity deprivation (Govender, 2007). While expenditure is a reliable measure of the actual consumption of households or individuals, income varies over time and is therefore a less reliable figure (Govender, 2007).
2.8.2 Poverty in South Africa
South African poverty indicators are measured according to the standard of living of an entire household rather than an individual. Different interpretations of poverty employ different measures of income and consumption taking basic needs into consideration (Woolard and Leibbrandt, 1993:3). Poverty can have both social and economic dimensions. In South Africa, poverty has been measured against a poverty line as well as the factors that contribute towards poverty. Three indicators have been used to measure the social characteristics of poverty: health, education and basic needs. According to Mbuli (2008: 98), health can be measured in relation to poverty through (i) loss of production by sick individuals (ii) the financial costs of healthcare and (iii) the opportunity cost of caring for the sick. Therefore health and poverty are intertwined.
Economic structures are the assets-based indicators of poverty. Apart from income or consumption - which are typically used to define whether or not a household is poor - a number of other economic characteristics are associated with poverty, most notably household employment status as well as other productive assets owned by the household (Mbuli, 2008).
Unemployment is one of the challenges confronting South African and has resulted in a high rate of poverty.
25 Mbuli (2008: 94) argues that:
While a situation of unemployment may be considered a problem in its own right, it has been argued that the problem of unemployment lies most particularly in its correlation with poverty (Dewar & Watson, 1891:10).
Furthermore, precedent studies have shown that the relationship between poverty and unemployment affects not only households and individuals, but the community as a whole.
Poverty interlinks with other aspects of daily human activities. It is estimated that the number of people in South Africa living below the poverty line has increased since 2000. Hilliard and Msaseni (2000:67) note that an estimated 16.6 million South Africans lived below the poverty line in 1991; this number increased by 32% in 1993. By 2000, the number of people living below the poverty line had increased by 65%. Kroukamp (2006) notes that poverty is unevenly distributed across the country’s provinces: including the “Eastern Cape by 71% followed by Free State with 62%; The North-West ranked thirds with 61%; Northern province with 59%;
Mpumalanga with 57%; Western Cape rank at sixth position 28% and Gauteng at lower rank 17%” (Ricon, 2005:23).