National Building

Nation Building

Nation Building is a banner under which NGOs, multi-national companies and local communities can partner to create solutions which can be modeled and multiplied across South Africa.

In many ways South Africa can be said to be a nation in crisis. 43% of the population live below the poverty line. More than 70% of schools are not functional. It is one of the most violent countries in the world, with a woman being raped every 17 seconds. Clearly, this is a nation whose social fabric lies in ruins. It requires a relaying of its foundations and a rebuilding of its walls.

With Apartheid behind us and the liberation movement in power the new, democratic South Africa is now 15 years into what has been called "the greatest social experiment of our time". As Rajesh Latehman, coordinator of the National Welfare Forum, states, "now a deliberate attempt must be made if we are to build a society where the ideals that people were prepared to die for can actually be brought to life."

Nation building is not a political process or a moral process, but rather a social process. Nothing short of the complete reformation of society is required; not only what we do, but also what we think.

Economics

South Africa is ranked in the top six countries in the world for income inequality. South Africa is also the most violent country in the world outside a war zone. There is an obvious link between these two statistics.The nation thus, runs the risk of imploding due to vast deficiencies in our social fabric. The alleviation of poverty is a precondition for any Nation Building process.

Our Solution

Land Ownership

The housing sector has an enormous role to play in the revitalization of the South African economy. Renowned Peruvian economist, Hernando de Soto, argues that property rights are the key to long-term global poverty reduction. "In most developing countries, the vast majority of people live outside the legal economy, "de Soto says, "Because they lack property rights, they cannot access capital or credit, so they cannot grow their businesses. Without a legal framework, the market system fails."

The Problems Surrounding RDP Housing

Unfortunately, 45%-55% of households in South Africa are in need of housing. They are unlikely to be able to afford or access credit. The drive toward RDP housing has also not solved the housing crisis. The key pitfall of this program is that only restricted title is given for the first 5 – 8 years. Thus, there is no ability to leverage the asset by obtaining a bond on it. Lack of ownership also means lack of personal investment, which devalues the worth of the property. Thus, more than R200 billion worth of assets in the hands of the poor are unnecessarily "frozen". Furthermore, the system is open to abuse and corruption. Often the houses are sold for a fraction of their original value, a R130,000.00 house can often be sold for as little as R30,000.00.

Nation Building has developed plans and drafted amendments to legislation on the issue of RDP houses and submitted these to Government at a local and national level. To date, they have not been approved.

The key recommendations are as follows:

The immediate issuance of title and lifting of the 8 year ban. R200 billion of equity would be released into the hands of poor (at no cost to government).Allow resale (once per applicant), unlocking the true property value vs. the grey market value.Financier issues a loan on 75% of the house value for house extensions and entrepreneurial activity. Extensions to houses could be rented out.Financial literacy education releases the poor into the mainstream economy. (Applicants attend and pay for course and write exam on completion).Extract a levy for additional services, resulting in the automatic upgrading of townships, and increased stability and security.

For comments and suggestions, e-mail us socialmedia@sabc.co.za