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Policy Brief 4 - Enhancing the Role of Public Entities in Rural Development

Public entities – state-owned companies (SOCs) and development finance institutes (DFIs) – play an instrumental role in implementing developmental policies and helping to drive South Africa’s infrastructure-led growth. They have the resources to change the development path of rural areas. A study by the Financial and Fiscal Commission (the Commission) assessed the extent to which public entities contribute to rural development. The study found that SOCs do not have a specific rural focus, unless such a focus is driven by their parent/sector department, and that investments by DFIs in rural areas is minimal and declining. To enhance the rural development role of public entities, in order to align with government’s infrastructure-led growth strategy, the
Commission recommends that a single champion for rural finance and development be designated, to guide and coordinate investments by DFIs in rural areas.

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Policy Brief 3 - National Land Reform Programme and Rural Development

South Africa’s land reform programme has not reached its policy objectives for various reasons; among these
are the failure by government to provide adequate services to make the redistributed land productive, and the lack of access to credit, equipment and technical assistance, which makes it difficult for land reform beneficiaries
to put land to productive use. The Financial and Fiscal Commission (the Commission) undertook a study into the land reform programme. The survey results show the land reform programme’s lack of success is illustrated by the drastic decrease in production since land was transferred. This has resulted in job losses, especially at sites where the crops grown were labour intensive and required expertise, and in land reform beneficiaries being worse off than those who did not benefit from land reform.

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2016 Policy brief 2Policy Brief 2 - Reducing Rural Poverty through Targeted Intergovernmental Transfers

Rural Despite programmes aimed at fast-tracking land reform and radically restructuring the country’s agrarian economy, South Africa’s rural areas are still characterised by poverty and inequality. Research by the Financial and Fiscal Commission (the Commission) found that, in rural municipalities, agriculture’s share of economic output is relatively small, but agriculture has significant influence on average incomes. Positive changes in per capital income or agricultural value-added has a positive impact on agricultural value-added and per capita income respectively in rural municipalities, but no impact in urban municipalities. The study also found that non-agricultural growth has a greater impact on poverty alleviation than does agricultural growth.

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2016 Policy brief 1Policy Brief 1 - Responding to South Africa’s Rural Development Challenge

Rural areas are demographically, economically and politically important, being home to 38% of South Africa’s population. Although government has had some impressive achievements since 1994, rural areas remain places of poverty and unemployment characterised by underdevelopment and poor socio-economic conditions. The Financial and Fiscal Commission found that certain conceptual, structural and fiscal challenges impede effective rural development spending and programmes. These are the lack of a common definition of “rural”, the complexity of concurrent responsibility for rural development, and the challenges of funding rural municipalities and provinces, which have limited economic activity and a narrow tax base.

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