Project Poverty Trading
If we asked ourselves "What did Apartheid leave us with"? When you strip it down to its basic form, the true legacy of Apartheid is a large amount of poverty.
Most of South Africa's poor today are the product of the Apartheid system of race-based economic exclusion. Under Apartheid, whites lived in a generally free-market capitalistic economy with private property rights and the ability to build their own wealth.
Under Apartheid, people of colour lived in a socialistic oppressive state-controlled economy with very few rights and no means of building their wealth and improving their lives.
Shared Black Tax
Many hard-working poor South Africans have fought and claw their way out of poverty, but it comes at a cost. If you are the first person in your family to get a job and be successful, you continue to struggle living paycheck to paycheck because your money is not your own. The majority of the income of successful poor South Africans will go to supporting their extended family. This is often referred to as Black Tax.
It's not a black-only concept but rather just how the poor survive. A better name would be poverty tax, and it makes it extremely difficult for the poor to break the bonds of the past as they are not able to create and build wealth as most of the income they earn is used to help their family survive.
If we as a nation going to fix South Africa, should we not build a country, systems and laws that allow for any South African to help pay for poverty tax and uplift people out of poverty.
Let The People Fix Apartheid
Everybody keeps looking at the government to save us and fix the past. It's sad but if we continue down this path, we going to be waiting a very long time. The only way forward is to empower the people to fix the wrongs of Apartheid themselves and to make it possible for everybody to participate in undoing the legacy of Apartheid.
A lot of white South Africans feel guilty about Apartheid, even if they had very little to do with it, often referred to as White Guilt. Why don't we give this guilt a path to restitution?
We need to ask ourselves how can a wealthy housewife living in Sandton help her domestic or nanny? What incentives can we create for middle-income South Africans living in Hout Bay to go down the road to Imizamo Yethu and say "how can we help"?
The only way we as a country are going to be able to get out of this poverty trap left by Apartheid is if every South African that wants to help, can participate in poverty alleviation.
We recognise that many South Africans are already helping where they can, but what if we can make it a part of our national identity where everyone is incentivised to participate in uplifting the poor.
Giving Poverty A Value
If the scare left by Apartheid is poverty then poverty needs to be the measuring stick we use for the solution.
To achieve this, we need to give the poor something of value. We need to make their poverty a tradeable asset that they can leverage and use as a vehicle to economic freedom.
What if we provide tax incentives for employing, helping or assisting the poor? What if our Sandton housewife could write off some tax based on what she pays towards her domestics son's schooling.
What if our Hout Bay residents as a group could donate money to improve the community of Imizamo Yethu, and they can write off a portion as a tax incentive.
What if companies are incentivised to hire poor previously disadvantaged youth, not because they black enough for BEE but because they are poor and the companies benefit by reducing their tax a little.
What Are We Trading?
The poor are simply trading their poverty and previously disadvantaged situation for a tax incentive that any South African can utilize.
This incentive would be targeted at middle to upper-income South Africans and companies, giving people the space and incentives to help the poor and in return, they are getting a better South Africa.
National Unity And Pride
By creating a system that benefits everybody, we are creating shared goals that will help reduce racial tensions and build a nation that everybody can be proud of and feel a part of.
Over time the use of shared goals can transform the people and makeup of a country where working together becomes the norm, and poverty reduction becomes part of our national identity.
South Africa does not have money to waste, so we need to be careful of abuse and conscious of fairness. So we would put a cap on the benefit. Our tax system works in a very similar way where we can do something but only to a point.
So we could say that the Poverty Trading value for a single person, living in poverty created by Apartheid has a maximum annual value of R100,000 per year.
This would be the maximum amount of tax breaks a single person can trade in a single year. At the beginning of each year, they would have the full R100,000 available, and then with each donation, job and assistance the Poverty Trading balance reduces. When they have received R100,000 worth of trades, they will have used up all their Poverty Trading value for that year.
We will also need to be some sort of limit on the maximum amount of tax incentives people can use when trading in poverty. There are many ways this could be determined. For simplicity, we suggest that each middle-income or wealthy South African can contribute a maximum of R30,000 and companies no more than 3% of turnover with a maximum of R30,000,000.
We need to strike a balance between paying taxes to run the country and Poverty Trading. We could start small and every year increase the amounts, easing into our new national identity. As poverty reduces and more people join the formal economy, the tax base will increase, and balance out tax breaks given by Poverty Trading.
Corruption Resistant System
The BEE system has been used as a vehicle for corruption, to the point that many arguing it has only benefited the politically connected and has done very little to help the poor. The reason BEE is so susceptible to corruptions is that BEE is a top-down system, where people at the top benefit first and the poorest at the bottom last, often not at all.
Poverty trading puts the poor first, making it a bottom-up system, where the most benefit goes to the poorest people. As a person moves up the ladder of wealth and moves out of poverty, the system flips around, and a person is more likely to start to contribute than receive. No system is corruption proof, but Poverty Trading being a bottom-up system and making it about poverty makes it a corruption resistant system.
Wealthy and politically connected people are no longer living in any form of poverty and so are not able to corrupt the system because they have no poverty to trade.
Not About Ownership
One of the key aspects that made BEE destructive is that it focuses on business ownership. In the BEE system, a family-owned white business is excluded from trading with the government because their whiteness is now measured and said to be a bad thing. This forces them to bring on a black business partner, somebody that is not family, undermining the entire concept of a family-run business, but if they don't do it their business suffers and struggles to survive and compete.
Participation in BEE for a small white-owned family business can be seen as a grudge purchase, something they are forced into, something that is uncomfortable and creates conflict.
Poverty trading is not about business ownership, but about assisting and uplifting the poor out of poverty. So participation makes a person feel good and motivates people to help more. Any business can participate, including white-owned businesses. The better their business does, the more they can participate, and the more they will want to participate. As they are then rewarded for uplifting the poor that work for them and live around them.
Sunsets, How Long?
One question that will always arise is how long should a system like this run for, how long should people be able to leverage Poverty Trading. We might want to limit the number of years a person can benefit, or we might put a Rand cap, the max lifetime amount a person can trade.
Before making such a choice let's for the moment use empathy to look at this from a different angle. A person that was oppressed by Apartheid, is affected in such a way, that it changes the entire trajectory of their life permanently. It affects their children and would affect their children's children.
In this way, Apartheid affected peoples entire lives, and because of this, we believe there should be no limit in time and Poverty Trading benefits only come to an end when a person dies.
No New Apartheid Victims
BEE and Affirmative action are about giving to one group of people at the expense of another. We want to take from the whites and give to the blacks. This creates conflict and in many ways continues the Legacy of Apartheid with new race-based laws creating new Apartheid victims, just with the roles reversed.
Poverty trading is about uplifting people disadvantaged by Apartheid but at the expense of nobody. Nobody is oppressed or disadvantaged, and participation is voluntary. In this way, Poverty Trading does not create new victims.
Poverty Trading reduces tensions between races and looks to build relationships and bonds as we look to address the past together as one nation.
Poverty Not Race
Current affirmative action and BEE laws are a measure of race. The blacker you are, the more points you get. White people start with zero points, black people get the maximum points with Indian and Coloured somewhere in between. If we want to be free of Apartheid we need to move away from race-based laws and systems.
There is no measure of race in the Poverty Trading, it's purely a measure of how poor you are. If you are poor and struggling you can benefit. This does not alienate Coloured or Indian people as they are treated equally in the Poverty Trading system.
Participation Is Optional
The great part of Poverty Trading is that nobody is forcing anybody to participate. It is a 100% opt-in system. If you are too proud to benefit from Poverty Trading, then you don't need to sign-up and don't need to participate.
If you don't believe in the system and don't want the tax benefits of trying to help the poor, then don't sign-up and participate.
If you have benefited from Poverty Trading to the point that you are now wealthy, you can decide to flip it around by becoming a contributor and looking to help the poor living near you.
Migrating From BEE To Poverty Trading
BEE has created a small economy around it, where people are employed because of the BEE system in the form of auditing and certification services. We believe this BEE economy to be very small in comparison to other industries. We don't want to lose these jobs. So a migration period will be required where companies offering services related to BEE, are provided time to move to Poverty Trading services.
We believe no more than two years will be required to wind down BEE and ramp up Poverty Trading, and for a few years, the two systems will overlap.
Poverty Trading services to help businesses manage and facilitate their participation and maximise their tax incentives will quickly grow into a new economic industry and this will very quickly exceed any economy that exists around BEE.
Low Barriers Through Technology
For Poverty Trading to work it must be simple and easy to participate and use. To make this possible technology will need to be leveraged as much as possible. We see a system where participants from both sides register, Poverty Traders would get a card with their picture and a QR code on it. Then we see an open and free platform being made available where companies and government departments can register and connect to offer services,growing the diversity of the syste.
An example of this could be where banks offer aPoverty Trading Merchant accoun and a mobile App. Imagine a person who wants to donate to a young security guard. The security guard has his QR code printed on his vest, and the person wanting to donate pulls out his phone and scans the code, enters the amount, and the donation is made. The more they pay the greater the benefit to both. So before he may give R5 or R10, but because it's a Poverty Trade they may give R100.
The transactions are automatically tracked and allocated to both parties on the platform, reducing paperwork and access to the system.
Such a system could be developed in the open, as an open-source project. Contractors and employees would work in the open, so there is no way of hiding bad code and increase trust in the system. Many large companies and even governments have moved to use open source development models, it's more secure, improves quality and has greater oversite.
Unemployment & Crime
The most desperate and poor also make up the majority of the unemployed in South Africa. This often leads the most desperate to turn to crime as a way of surviving.
By giving the most desperate, unemployed and poor a way of surviving in a way that is positive and constructive, the Poverty Trading system will do more than just uplift the poor out of poverty but also reduce crime as the unemployed now have a form of self-employment where there are no skills requirements.
The poor and unemployed can leverage the Poverty Trading system for as long as needed to get by and survive, and once they finally get a job they can transition into the formal economy and formal employment.
Building A New Nation
South Africa needs to forge a new path and create a new nation out of the ashes of Apartheid. Poverty Trading helps with nation-building, but not only by reducing poverty and addressing the past but also by creating a new national identity.
Poverty Trading encourages good behaviour, generosity and working together. As people start helping each other through Poverty Trading, bonds and friendships form that will completely change the nature and the face of our country.