How do poor people succeed in life

Why the poor in South Africa do not succeed in advancing

Red Bull is cool. The marketing machinery of the energy drink company also works in South Africa. The Austrian company sells one hundred million cans a year in the country at the southern tip of Africa. Considering the price of 15 rand - the equivalent of around one euro - a remarkable number. For this amount, the customer can also get the drink in this country. The economic output per capita in Austria is, however, a good seven and a half times as high as in South Africa. The brew is particularly popular in the townships, where the really poor live. And there are many of them. According to the World Bank, South Africa is one of the most unequal countries in the world. Around 70 percent of the 58 million inhabitants are considered poor. A quarter of the population has to live on one euro a day. One percent combines around 70 percent of wealth. The middle class is narrow.

In Cape Town, the lively port city at the foot of Table Mountain, you don't notice much of the deep trenches at first glance. "The port city has what it takes to become the new San Francisco," says Tim Harris with conviction. The South African is the head of Wesgro, an agency that aims to arouse interest among potential investors. He has convincing arguments on his side.

The metropolis of millions has blossomed into a small start-up hotspot, in 2014 it was named the world design capital, and tourism is flourishing. 300,000 people work in the industry. Cape Town is one of the wealthiest regions in Africa. The lifestyle is oriented towards the west. Traces of poverty can only be seen here and there - storage facilities for the night or belongings packed in garbage bags. Rich and poor are neatly separated, even if not necessarily far apart.

Khayelitsha, one of the largest townships in South Africa with almost 400,000 residents, is located on the outskirts in the Cape Flats. The Capricorn housing estate is not that big. People who live here or who urgently have something to do come here. Susanne French is one of them. The German flight attendant is leading a project that is mainly supported by Lufthansa. The primary school i-Themba opened in 2018, where 105 children are looked after. A flat building, fenced in and secured by barbed wire, in front of it a climbing frame that plays all of the pieces and looks like a foreign body in the dusty area. The state financed the property, and it also pays the teachers' salaries.

Anyone wondering why some things are not getting better despite many boom years will find answers here. 70 percent of Capricorns have no job, most of them are illiterate. The state gives them electricity and a little money. It is enough for a television set and the bare essentials. The children in school come from the poorest families, many are malnourished, have experienced abuse, and most of them wear the only decent clothes with the school uniform on. "The state is overwhelmed with education," says French. Private initiatives are "one of the main pillars in the field of education". In the long term, 700 children are to be taught here. A drop in the ocean.

The German economist Robert Kappel estimates that there are 13 million welfare recipients compared to around three times as many employees. Unemployment is high at 27 percent, and above 37 percent if you include those who have given up looking for a job. Youth unemployment is one of the highest in the world at 50 percent. According to Kappel, young people have practically no chance on the job market.

Horrifying numbers, not just for European ears, Tim Harris knows. In addition, there is a slump in growth. The government had to cut its economic forecast in half in October. The gross domestic product (GDP) is expected to grow by only 0.7 percent this year, while the deficit will rise to four percent. But it should get better. President Cyril Ramaphosa created a six-point plan to regain investor confidence. In 2017, foreign investments halved to 17.7 billion rand (one billion euros), and the outflow was six times as much. The currency has crashed. Road and dam construction projects are now to be started with the help of an infrastructure fund equivalent to around 24 billion euros.

Johannes Brunner, economic delegate of the WKÖ in South Africa, sees confidence in the 60 domestic companies that are represented here. Constantia Flexibles, Backaldrin or Alpla are among them, Strabag is building the highest bridge in Africa with a partner, Andritz handles the infrastructure area, KTM sells motorcycles and Red Bull cans, others grow wine. The prospects are good that Austria's exports to South Africa will rise again this year to 500 million euros, as most recently in 2013, said Brunner. "The economic slump did not come as a surprise," says KTM manager Franziska Brandl. At least keep sales stable.

Difficult Zuma legacy

We are heading in the right direction, says Africa expert Kappel. In fact, there are signals that something is moving: South African and international companies have announced investment projects worth millions. However, Kappel believes that a rapid U-turn is unlikely. Responsible for the first recession in ten years are not only the drought, which has hit agriculture hard - in Cape Town alone 40,000 jobs were lost in this sector - and companies that were on the brakes on investment. It took a lot of reforms that Jacob Zuma, the ex-president accused of corruption, neglected to do. Although climate change is having an impact, no improvement has been made to irrigation in the countryside, and the issue of energy efficiency has been criminally neglected. Many state-owned companies are bankrupt and raw material prices have fallen. To fight unemployment and poverty, economic growth of six percent was needed, says Kappel.

In addition, there is a complicated system called BEE - Black Economic Empowerment: the economic policy with which one wanted to overcome the consequences of apartheid, a kind of points system for international companies that rely on non-white suppliers or have black co-owners. 20 years have passed since it was introduced. "Much too bureaucratic," says WKÖ man Johannes Brunner. The BEE made a difference, replies Kappel. In the state sector, 70 percent of non-whites made it into top management, in the private sector it was only 13 percent. However, ANC members managed to climb particularly well. That opened the door to corruption. And: Government contracts were given preference to black people, even though they performed poorly. Productivity in the country has fallen. It didn't help the poor, said Kappel. In terms of economic policy, they have failed to promote medium-sized companies, 80 percent of the companies are micro-businesses that are just about to make ends meet. "There are 70,000 craftsmen from Europe in Cape Town. That would be lucrative for blacks," says Kappel. "The only thing is that there is no training."

Hopefully Ramaphosa will manage to implement reforms despite political opposition - and avert the sword of Damocles expropriating landowners without compensation, as an ANC faction has in mind. Not an easy task in view of the upcoming parliamentary elections in 2019. (Regina Bruckner, November 12, 2018)

The trip to Cape Town took place at the invitation of Austrian Airlines.