- by Ronald Eglin

Many of the people of Eastern Cape Province have generally perceived themselves as being trapped in a vicious cycle of poverty that can only be turned around with outside skills and resources. These outsiders are now struggling to survive in a faltering global economy. They are looking at their own survival needs and are not interested in coming to the rescue of the Eastern Cape. It is now time for us to look at ourselves for our own development. Prior to the present global economic crises, many economists and others promoted global free trade as the solution to all development challenges. Development was about entering the global market economy and selling your goods in this market and playing by global rules. The rallying cry for these people was ‘There Is No Alternative’ (TINA). This neo-liberal dream has now been shattered and many people are questioning that there must be an alternative. This article claims that there is an alternative - the new rallying cry is “Localisation Is The Alternative” (LITHA). What is a LITHA economy? In a March/April 2007 transformer article titled “from TINA to LITHA”, I introduced the LITHA approach and compared it to a TINA economy. The following table provides a summary of the differences between a TINA and LITHA development approach. The need for a LITHA economic approach is now more urgent than it was in 2007. From an economic point of view a LITHA economic strategy is very similar to an export substitution strategy where goods that historically were imported are now sourced and provided locally; and goods and services that were historically exported are now used for local consumption.

We need to invest our money in institutions that in turn invest in local businesses, or we need to at least campaign for larger externally owned banks to reinvest more in areas where people are depositing and saving.

Elements of a LITHA economy Businesses in a LITHA economy are predominantly owned by people living in the local area. They can be large or small businesses, and can be structured as non profit companies, cooperatives, family businesses, partnerships, etc. What is important is that the profits from the business are made by local people who in turn spend and invest these profits in the local economy. This aspect of local ownership is not elaborated on much in this article. A LITHA economy focuses on businesses that produce goods and services that draw on local resources and are provided to local markets. In moving towards a LITHA economy there are a number of questions that need to be addressed that relate to the type of sectors that are supported by a LITHA economy. How do we feed ourselves? Rather than relying on food to be imported for local consumption and for local food to be exported to international markets, local food needs to be grown for local consumption. We can no longer afford (economically and ecologically) to transport food from across the country and around the world. The Eastern Cape is lucky to have a varied climate that supports a range of food crops and animal stocks. The small scale organic agricultural sector, with family and locally owned agricultural businesses, farming on small holdings, can provide a much needed boost to the job creation efforts of the state in the province. This needs to be coupled with an overhaul of the present food distribution and market system dominated by a few large national chains, so that locally grown food can find its way to local consumers. How is our energy produced? At the moment, much of the energy used by the province is imported from other parts of the country (electricity from Mpumalanga’s coal fired stations) and other parts of the world (oil from the Middle East and other oil producing regions). The Eastern Cape does however have its own natural resources for the generation of energy: from the wind along the coast and mountain regions, the sunlight across the province and especially in the western interior, the hydro power in the rivers of the eastern part of the province, and the ocean currents and wave power along its coastline. Furthermore, crops grown across the region can be converted into biofuels and the methane gas from its waste disposal sites can be used for energy. Given that much of the exploitation of this renewable energy has yet to take place, this provides a unique opportunity for us to get the LITHA economy right in the energy sector. Government needs to play a key role in ensuring that a significant aspect of the investment and ownership of this new renewable energy sector is by locally owned businesses and entities (e.g. community development trusts). How do we move ourselves and our goods around? A sustainable LITHA economy will be one where there is less energy spent per person on moving people and goods. Such a society is achieved when we reduce the reliance on private motor vehicles, and shift to more energy efficient public transport system like trains and busses. The revitalisation of the taxi industry and the public transport industry needs to take into account where the owners of these businesses are located. We don’t want all the profits from the taxi industry fattening the wallets of rich. How do we house ourselves? Huge energy savings and greenhouse gas reductions can be achieved by reducing the need for travel in the first instance - by bringing people closer to where they want to be and jobs and goods closer to the people. Incremental approaches to settlement development, where households incrementally improve their houses and environments over time, makes it possible for smaller locally owned builders and material suppliers to get into the building industry. The construction industry lends itself to more labour intensive construction methods. Far more research is needed on how building materials are produced, where they are produced and who is producing and distributing them. The building industry needs to add value to local building materials and encourage local ownership within the construction sector. How do we spend and invest our money? Almost all the banks in the Eastern Cape where we deposit our hard earned savings are owned by national and international institutions. These banks also do not necessarily invest as much as they should in businesses and activities within the province. Your savings are probably supporting the development of some new shopping complex in Gauteng, and not the café down the road from where you live. In this way money leaks out of our local economy and is not available for further use. A LITHA economy places far more attention on supporting local savings and credit cooperatives (credit unions) and local banks. We need to invest our money in institutions that in turn invest in local businesses; or we need to at least campaign for larger externally owned banks to reinvest more in areas where people are depositing and saving. More attention also needs to be placed on encouraging all of us to spend our money in local businesses, so that each rand we spend can be used by someone else from the province to also spend on local goods and services. How does government spend its money? Government plays a key role in redistributing money from those regions that have money to those that don’t. Once government money comes into an area (e.g. through social welfare transfers and its investment in infrastructure and service delivery), it needs to make sure that this money circulates as much as possible within the local economy. Government can play a leading role in supporting a LITHA economy by, for example, ensuring that its procurement policies target locally owned businesses, using local resources for local consumption. Government has a key role to play in using its money to support local banking institutions (e.g. by depositing in and using the services of these institutions), and supporting all the other elements of a LITHA economy mentioned above.

There are many things that government can do to support a LITHA economy. Firstly government can support the smooth flow of information in the municipality, province or country. This includes information on what is happening in the area, and information on what governments’ future plans are. Government also has access to sector based information such as tourism, agriculture, energy, industry etc. that can be shared. Government census information and surveys provide useful information for businesses. A good place for government to start in improving information flows would be to place all its plans and research information in a coordinated web based database, making it easier for local businesses to access. Business will also have a better understanding of the socio –economic profile of the area making it easier for them to target their products and services to local needs. Government can also support research initiatives, conduct workshops, and distribute pamphlets, etc. Secondly, government can improve the process by which businesses are established and regulated. As a start, government needs to make it clear that they support local businesses. This message must come out in all government speeches and policy documents. A broad-based commitment to a LITHA economy would be a good place to start with all sectors and tiers of government supporting a LITHA economy. Local businesses need to be proud to be local. The establishment and support of ‘buy local’ and ‘proudly local’ business campaigns would be another key place for government to focus its efforts. Government can also look to find ways to simplify and improve the processes by which, for example, businesses are registered, business licences are provided and tax clearance certificates are issued. In short government must make it easier for local businesses to do business locally. Thirdly, government can use the tools at its disposal, through its role in overseeing developmental and spatial planning, to guide the direction of any future LITHA economy. Transport corridors and their associated transport routes, nodes and their associated modal interchanges, play a key role in shaping where economic activity takes place. Corridors provide more opportunities for small local businesses to access movement flows of potential customers. Multi-nodal urban patterns also provide more opportunities for local businesses to access markets compared to spatial patterns of the past where all economic activities were concentrated in a single central business district. Business precinct developments in townships, the creation of good quality public squares and pedestrian spaces around the town or city, and demarcated informal trading areas, all contribute to the creation of environments where people want to be and can participate in business exchanges. The land use management systems of government that deal with zoning, coverage, parking and other land use aspects are highly effective tools at government’s disposal, if used effectively, in supporting local businesses. One example is how agricultural zoning could be accommodated in and around the urban settlement, and another example is how home-based businesses and services are accommodated in residential areas. Fourthly, government can improve the provision of services like water, sanitation, and electricity; refuse removal, roads and telecommunications that are all highly important factors in the success of any business. A good road and transport infrastructure makes it easier for local businesses to engage with each other and with the local customer base. Rather than providing subsidised water, electricity, etc. to businesses owned by outsiders to the exclusion and/ or detriment of locally owned businesses, government can use its servicing policies and programmes to support local businesses. Government supported Wi-Fi and high speed broadband access also contribute to local businesses being able to access information. Fifthly, government can improve the provision of social and other facilities and services that help to create environments where people want to live. Human capital is needed both to keep businesses functioning as well as to provide markets for the businesses goods and services. The upgrading of informal settlements and slum areas, and the provision of basic tenure security and basic services and facilities to the poor is one way government is able to create environments where people want to be. All people, including the middle and upper income, like to live in places where they have access to jobs and employment, as well as where they have access to recreation opportunities like the sea, rivers, mountains etc., as well as shops, movies, and night life. People like to send their children to good schools and have access to good health care services in times of need.

A safe, secure and socially stable environment is also a highly sort after commodity for all, including businesses. Government plays a key role in the provision of all these services and facilities. Government also plays a key role in brokering a good working relationship between business and labour, through appropriate labour policies and laws. Sixthly, government can regulate the financial sector in ways that support local businesses. Local businesses will not be able to start and expand without access to a sound banking sector that provides savings, loans and investment opportunities. The way government regulates the banking and financial sector has huge implications for the success of the local economy. How government approaches its monetary (interest rates, etc.) and its fiscal (tax and expenditure) policies has huge implications for the success of local businesses. Finally, government can support markets in ways that make it easier for local producers and service providers to serve the local economy. Government can also use its own buying power to source from local producers and consumers. The concept of broad based black economic empowerment needs to be expanded to also incorporate a local empowerment element. It is no use supporting black businesses if these businesses are all owned by blacks that do not live in and support the local economy. Government needs to promote more labour intensive production practices that support employment of local labour. So, for example, instead of installing new state of the art sanitation systems that are built by outsiders, government could look at building sewerage treatment plants that rely on nature to do the dirty purification work and can be built and maintained using local skills. One of the most important markets where redirected government intervention is urgently needed is the agricultural produce market. Agricultural markets are not at the moment geared towards encouraging and supporting local businesses, with many of the produce sold at produce markets being imported from outside of the local area. Government needs to urgently review legislation and policy governing how these municipal markets operate. The transport system is important to get goods and services to the market, and government plays the leading role in creating and maintaining this transport infrastructure. Government can also play a role in opening up external markets to local businesses by promoting the produce from this region to external markets. Government also has a role to play in protecting local businesses from the inflow of goods and services from external sources that undercut local businesses. Taxes and subsidies are tools at governments’ disposal to influence the market. A LITHA economy provides a necessary and viable alternative to past failed development visions and strategies for the Eastern Cape. A LITHA economy is an economy that is primarily focused on locally owned businesses using local resources to provide for our food, energy, transport, housing and banking needs. It will require a concerted effort from government, the private sector, unions and communities to shift our economy towards a more LITHA economy. Government plays a pivotal role in driving this effort by facilitating the flow of information; reducing the bureaucracy in doing business; providing the spatial framework wherein businesses operate; providing the services needed for businesses to operate; building the human capital of the people and creating spaces where people want to be; influencing the financial markets; and facilitating the effective operation of local markets. Coincidentally, LITHA is also the Xhosa word for a ray of sunshine, which is an apt term for a new economic vision and strategy for the Eastern Cape that promotes a more sustainable economy