Towards Community Empowerment

  Towards Community 

Empowerment   The Implementation of a Community 

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Development Corporation in  South Africa.   

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 Published by Afrisance Publications P O Box 101, Crown Mines. 2025 South Africa.

All rights reserved Copyright © 1999 Z A Cajee No part of this book may be reproduced or transmitted in any form or by any electronic or mechanical means, including photocopying and recording, or by any information storage and retrieval system, without written permission from the publisher.

First edition, first impression 1999 ISBN 0-620-24512-3

Book design and typesetting by Z A Cajee Cover design by Amina Cajee Typesetting in 12pt Printed and bound by Vista University Press, Mutual Park, Pretoria. Gauteng. South Africa. 

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 At the dawn of a new life, our practical actions must ensure that none can challenge us when we say – we are a nation at work to build a better life... …The Government commits itself to work in a close partnership with all our people, inspired by the call Faranani! – to ensure that we draw on the energy and genius of the nation to give birth to something that will surely be new, good and beautiful.

Thabo Mbeki

(National Assembly, Cape Town, 25 June 1999)

 Nation-building, the Reconstruction and Development Programme [RDP], the Growth, Employment and Redistribution [GEAR] strategy, and the African Renaissance are visionary strategies to lead South Africa out of the quagmire of poverty and backwardness. But these noble goals and strategies will become meaningless if there are no effective programmes of action towards achieving them. In the past five years several programmes and projects have been implemented both by government and civil society towards addressing the massive backlogs in socio-economic development in the country. However, as valuable as they may be, these efforts are 1

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still grossly inadequate to make any significant or widespread impact.

It is contended that the transformation of South Africa from apartheid to a democracy must also have accompanying restructuring of the way in which historically disadvantaged communities are organised and how they take charge of their own development. Central to restructuring efforts, it is argued, is the mobilisation, control, ownership, and management of the collective resources of the community, by the community, and for the community, as a way towards their empowerment and as a way to contribute to nation-building, RDP, GEAR, and the African Renaissance.

The question raised is how should communities empower themselves and what mechanisms should be used to achieve that empowerment. This research report is concerned about how communities in South Africa can empower themselves after decades of deprivation and destruction wrought by iniquitous government legislation and policies. The focus of the study is on the implementation of the internationally tried and tested Community Development Corporation [CDC] as an intervention or strategy towards community empowerment within one particular community in South Africa.

The research report is neither based on an in-depth survey of CDC’s nor an in-depth study of literature around CDC’s.

Rather it is based on a study of research reports of investigations into community development structures, the theory of community development and empowerment undertaken by others, my own dissertation on the implementation of an internationally implemented CreativityAction-Service programme in South African schools, and personal experiences. Where necessary relevant data was obtained telephonically, via the internet, and through personal 2

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contact with key informants involved in the area of community development. Data was also gleaned from relevant statutes, periodicals, and journals. The format of the research report is qualitative and descriptive rather than quantitative and experimental.

The purpose of the research report is fourfold: (a) to contribute to the growing knowledge on community empowerment; (b) to play an advocacy/activist role in providing an impetus to communities to empower themselves; (c) to provide a model for community empowerment; and (d) to contribute to the nation-building effort and the African Renaissance. The research report will be useful to students, workers, activists, academics, and professionals working in government and nongovernment organisations [NGO’s] in the area of community empowerment.

Part A of the report focuses on issues and concepts and comprises of three chapters. Chapter one is devoted to the clarification of concepts and definitions of terms used in the study. This is followed by a discussion on the rationale for community empowerment in the South African context in terms of its past, present, and future challenges in chapter two.

In chapter three the notion of Community Development Corporations is discussed.

Part B of the report focuses on implementation and comprises of eight chapters. In chapter four the literature around implementation strategies is briefly reviewed. Chapters five to nine are devoted to the examination and discussion of the implementation of a CDC in a specific community in South Africa. The conclusions drawn from the study are discussed in chapter ten, and recommendations for the way forward are reflected upon in chapter eleven. ___________________________________________________

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   There are several terms that are used in the research report and it is considered appropriate to offer brief definitions, explanations and/or clarifications at this stage. The terms discussed are “community”, “development”, and “community empowerment”.

 Various attempts to clarify the concept of community are offered in the literature. According to De Beer and Swanepoel (1998: 17) the term community is usually defined in terms of geographic locality, shared interests and needs, or in terms of deprivation and disadvantage. Thomas (1998: 4) does not offer a definition but says that communities can be subdivided into smaller communities on the basis of geographic location, past privileges - or lack thereof, race, class, religion, culture, or shared goals or interests.

A dictionary meaning of the term community is provided as: 5

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association, body politic, brotherhood, commonwealth, company, district, general public, locality, people, populace, population, public, residents, society, state, affinity, agreement, identity, likeness, sameness, similarity. (Harper Collins 1992: 110) Al-Ahsan (1992: 9-27) discusses at length the various connotations of the Arabic term “ummah” for community from a Qur’anic and Islamic historical perspective. The term variously refers to humankind as a whole, or sub groupings of humankind numbering as few as a single person or encompassing many persons, based on ideology, beliefs, values, a specific mission, followership of particular prophets or leaders, gender, tribes, nations, or a civilization. However, communities based on race or ethnic origin or any other unethical or immoral value was outlawed by the Qur’an. The Qur’an also affirms the notion of community in the following verse: There is not an animal that lives on the earth, nor a being that flies on its wings, but forms part of communities like you.

(An’am /Cattle 6: 38) One other term that has relevance to the understanding of community in the South African/African context is ubuntu.

This term in itself has a profound humanistic orientation and is embedded with key social values of compassion, group solidarity, respect, human dignity, and collective unity.

According to Mokgoro, ubuntu as a distinct African term may be viewed as the basis for a morality of cooperation, compassion, community-spiritness and concern for the interests of the collective… (1998: 50) 6

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From here it may be discerned that ubuntu also implies a group of people who work together for the benefit of individuals within the group and the group as a whole.

Because of the complexity and sensitivities of South African society, for the purposes of this research report and in the context of South Africa as a nation, the term community may be defined as follows: Any group of persons that identifies itself and are bound together on the basis of a common geographic locality, religion, ideology, belief, culture, language, positive ideals, shared interests, needs and/or values.

Examples of communities in SA may then include the Muslim community, the Christian community, the Mitchells Plain community, the Afrikaans speaking community, the Soweto Traders Association, the Pimville High School community, or a cricket club. Certain communities such as those that are race based or sexist are prohibited in terms of the South African Constitution’s founding provisions. (Constitution 1996: 3) But as Abrahams points out: Defining a community in South Africa is extremely complicated. Even during this, the post-apartheid era, strong references are made to black, Coloured, Indian, and white communities. (1998: 12) Communities are not necessarily structured or organised with clear leadership and authority lines and functions of key roleplayers. A school community may have a semblance of an organisation or structure. On the other hand, the residents of an area may not be organised because of a lack of a project or joint activity that might cause them to be working together and hence being organised. As De Beer and Swanepoel point out: ‘Community development invariably takes place through projects’. (1998: 49) Thus, any community has the potential for being organised and structured provided that there is some 7

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project or common interest that they share and wish to take action for their mutual benefit. The notion of development is discussed next. 

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The concept of development is complex and may connote different things to different people. There are as many definitions as there are authors on the subject. (Thomas 1998: 4; Van Wyk 1998: 8; Wetmore and Theron 1998: 36) Development has been variously conceptualised as being (a) contextually bound; (b) conceptualised by members of a given community; (c) value-laden, multidimensional and interrelated; (d) about making choices and setting goals; (e) about achieving the full potential of members of a community; (f) about active involvement and growing empowerment; (g) a cultural process encompassing the natural, environmental and social relations; and (h) about changes in the awareness, motivation, and behaviour of individuals, and in the relations between individuals, and between groups of individuals.

In summary development can be defined as process of continuous sustainable growth and progress in terms of both human and material quality, capacity, and resources with the aim of improving the quality of life of the participants. Human development may in turn be broken down into domains such as cognitive, aesthetic, spiritual, social, conative, affective, psychomotor and moral-ethical. (Cajee 1996: 37) These domains may be broken down further; for example the social domain might include economic and political dimensions.

Material development may refer to wealth creation, property construction, and other forms of tangible development. With regard to quality of life, Mears quotes the World Development Report as follows: 8

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A better quality of life generally calls for higher incomes for all, but in developing countries it involves much more. It encompasses education, higher standards of health and nutrition, less poverty, a cleaner environment, more equal opportunities, greater individual freedom and a better cultural life. (World Bank in Mears 1997: 179) Community development also needs to be holistic or integrated encompassing all the domains of human development according to the needs of a community. Integrated development refers to a process whereby several facets of community life are developed simultaneously, rather than in isolation, having due regard to the ecology and particular needs of that community. (Swanepoel & De Beer 1998: 4; Doi 1998: 5) In a disadvantaged community, there may be a need to have recreational facilities, youth development programmes, a clinic, employment opportunities for women, the development of telephone communications, and/or provision of markets for small traders. Development authorities cannot develop a golf course and spend R2million per annum on its maintenance for the benefit of an elite minority when there are other multiple priorities in the area, as in the case of the Lenasia. (Salojee 1999: 1) From a political perspective, community development may be either empowering or disempowering. This leads us to the notion of community empowerment.

 In the context of community development, the term community empowerment can be defined as a process by which members of a community organise themselves to mobilise, own, control, invest, and manage their collective resources. Central to this process is the pursuit of integrated development in accordance 9

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with the community’s values and aspirations to improve the quality of life of its members. (Adapted from Korten (1990)) Empowerment here implies that communities mobilise themselves, take their futures and destinies into their own hands, determine what development they need, and how they will pursue their goals underpinned with a strong sense of selfreliance and self-sufficiency, with or without outside assistance. It further implies collective action and engagement for individual as well as community strength and benefit, as the Qur’an states: O you who have attained faith, persevere in patience and constancy; vie in such perseverance; strengthen each other and be conscious of God, that you may prosper. (Aale Imraan/Family of Imraan/ 3: 200) The Qur’an also exhorts striving together as a means of achieving power, strength, abilities, resources and capacities.

(Baqara/Cow 2: 148) One of the characteristics of a community is that it comprises a whole that is greater than the sum of its individual members. It has a synergy and power of its own when individuals merge to form the whole. (Rosenberg 1988: 114) It is this merging that provides the energy and power to achieve greater heights than when working loosely in a disorganised fashion. As Helen Keller points out: ‘Alone we can do so little, together we can do so much’. (Quoted in Fisher 1995: 13) The process of community empowerment also has a strong transformatory theme. A constant struggle is inherent in empowerment efforts. Change from being in a state of disorganisation, fragmentation, and powerlessness to a situation where members of the community take charge, organise themselves and move further towards empowerment.

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On the other hand, community disempowerment refers to initiatives where outside agencies determine what, and how the community has to be developed without the participation and involvement of the community as in the case of apartheid’s community development programme. While the idea of empowerment embraces outside assistance, it does so to the extent that the community is helped towards becoming selfreliant. Currently, according to Wetmore and Theron development in a broad sense has come to mean a process of social learning leading to empowerment, through people’s participation in promoting self-reliance. (1998: 30) The next chapter deals with the rationale for community empowerment in the South African context. ___________________________________________________

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       

 The rationale for community empowerment initiatives in South Africa arises from the peculiar conditions and context prevalent in the country viewed from three particular perspectives.

These are (a) historical, (b) the post-apartheid era, and (c) new challenges and opportunities unfolding as we move into the new millennium. Each perspective is discussed below. 

Colonisation of South Africa by white immigrant settlers, western imperialism, and apartheid legislation and policies combined to produce huge disparities in various sectors of South African society over a period of about 350 years. The Asiatic Land Tenure Act of 1885 restricted Indian trade and residential rights to designated locations. (MAIK 1985: 6) The Land Act of 1913 resulted in 87% of residential, agricultural, and mining land being expropriated to a minority of white settlers whereas the remaining 13% of the land was left to 80% of the black (African, Indian and “Coloured”) population of the country. The Group Areas Act of 1952 uprooted thousands of 12

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families and created dormitory ghettoes in various parts of the country including areas such as Soweto, Lenasia, Chatsworth, and Eldorado Park. To this day these ghettoes are underdeveloped and are locations of social decay and economic deprivation. The Group Areas Act entrenched racial and unjust separation in housing, education, health care, social welfare, youth services and all other essential services necessary for healthy community development.

Successive colonial and apartheid governments ensured that the resources of the country were iniquitously spent on the growth, development and empowerment of the white population at the expense of and the neglect of its black population. The Job Reservation Act of 1956 ensured that certain jobs requiring higher skills were reserved for whites.

Recent unemployment statistics, which range from 14% to 40% in various provinces, point to the stark reality of past policies. Further, when comparing black unemployment to white unemployment the point becomes clearer: the white component of unemployment statistics is negligible compared to black unemployment. (SA Business Guidebook 1998: 69-77) Various education acts and the allocation of state resources to education ensured that white privilege and quality was maintained while black schools, universities and technikons went underresourced. It has been argued that apartheid education served to reproduce and maintain the socioeconomic status and unequal labour relations in the country in favour of white domination.

As is well known, the resources provided by the state for white education have always far exceeded those made available to black education. The result was, and continues to be, stark inequalities in the entire range of educational conditions school buildings, sports and other recreational facilities, staff13

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pupil ratios, qualifications of teachers, subjects taught and so forth. This in turn reflected in the quality of education available to Africans and the level of education they achieve as compared to whites. (Wolpe and Unterhalter 1991: 5-7) The matric results statistics over the past few years also bears testimony to past policies and injustice where African pass and exemption rates are still far below white achievement.

Although the racial breakdown was not available for 1997 and 1998, the national average has in fact worsened rather than improved since 1994. This suggests that African rather than white pass rates have deteriorated. (Table 1) Table 1: Matric results African (P=Pass P E E= Exemption) % %

White P E % %

National Average P E % %

1994 49 13 97 42 58 1997 47 1998 51 (Edusource, April 1995: 12, March 1998: 2, & March 1999: 5)

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The list of unjust laws can continue. But the direct and indirect result of these unjust laws was to disempower individuals and communities and to render them dependent, and, hopefully, in perpetual servitude to white “baasskap”. These policies combined to create huge disparities in the wealth and wealth producing capacity of its diverse populations.  After several years of struggle by the democratic movement, since 1994 South Africa’s statute books have been undergoing a purging and cleansing of unjust laws. New laws have been streaming in. The constitution, hailed as one of the best in the 14

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world, is in place with a strong sense of human rights. Those rights are still an illusion in many ways. The Group Areas Act is gone but the impoverished racially based group areas are still there. The SA Schools Act of 1996 was passed but the majority of school children still attend underresourced schools and poor matric results still plague black education. While great strides have been made in the area of black economic empowerment, the economy and the wealth of the country is still largely in white hands. The latter fact prompted President Mbeki to boldly proclaim in the National Assembly, Cape Town, that ‘South Africa is a country of two nations’, the one privileged and wealthy while the other poor and impoverished, the one white and the other black. (Mbeki 1998: 71) At the economic level, several new state initiatives have been taken to address economic imbalances and to bring blacks into the mainstream of the economy. The establishment of Khula Finance Enterprise Ltd. [Khula] and Ntsika Enterprise Promotion Agency Ltd. [Ntsika] are cases in point. The promotion of black economic empowerment by the Industrial Ltd. [IDC] by making Development Corporation entrepreneurial finance available was mooted recently. The Small Business Act of 1997 was also passed as enabling legislation to remove barriers and facilitate the entry of blacks in the area of small medium and micro enterprises [SME].

Apartheid era state created organisations such as the Independent Development Trust [IDT], Development Bank of Southern Africa [DBSA], and the Land Bank, began to play new transformed roles focussing their development strategies on historically disadvantaged communities.

Despite these positive moves by government, the process of transformation is slow. This may be attributed to (a) the economy is still largely skewed in favour of whites; (b) GEAR targets are not being met due to a variety factors including the 15

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Asian contagion and emerging market turmoil; (c) growing unemployment because of globalisation and the entry of SA into the global markets; and (d) despite government reprioritisation of development expenditure in favour of the previously disadvantaged, it is estimated that 140 billion rand is needed to redress past imbalances.

The burden on government is thus enormous and should still take some time before the effect of the GEAR strategy is meaningfully felt. In the meanwhile, the question is whether black communities in South Africa should wait for something to be done for them by government, or should they initiate community empowerment programmes to take control and help themselves in partnership with government. It appears that affected communities in SA have very little choice. In the current post-apartheid reconstruction era, communities have very little option but to initiate community empowerment programmes at grassroots level. As Mears suggests: In future local communities will have to take charge of their own socio-economic development needs, because the only real development is self-development. Government and big business are essential for giving support, but local initiative is the engine driving such development. (1997: 184) This view concurs with experiences elsewhere. Patricia Wilson asserts that the embrace of empowerment across the political spectrum coincides with the decline in faith in formal hierarchical institutions, whether governmental or corporate, to address the needs of the poor and the middle-class. She points out that income polarisation, working poverty, and middleclass displacement, and the downsizing of state and corporate sectors have been increasing and puts more pressure on smallscale decentralised approaches. She asserts: 16

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As formal economic and political structures respond less and less to low-income and middle-class needs, civil society organises itself to a greater degree, to the point where the socalled third sector is recognised as a major player .(Wilson 1996: 619) The phenomenal growth in the NGO sector in South Africa during the apartheid era, where it is estimated that 60000 organisations were spawned, bears testimony that communities in SA, despite the iniquitous policies of government were able to play a significant role in social welfare, education, health care, and other areas of socio-economic upliftment. Now with a supportive government, enabling legislation, corporate and private sector support, and community resources, communities in South Africa have the same resilience and collective power to develop and empower themselves as they have done in other endeavours. However, intervention in the process of empowerment is needed by facilitators, community workers and leaders who can initiate and help the empowerment process at grassroots level.  It is evident that government is under tremendous strain in fulfilling many of its key 1994 election promises including “jobs for all” and “houses for all”. While many housing units may have been built in the last five years, there is still a large shortfall. In Lenasia, for example, to date the burgeoning informal community in Thembelihle which was established in 1988 has not yet been provided with proper alternative housing or services. The Presidential Jobs Summit held on 30 October, 1998 was an attempt to address the growing unemployment problem in the country. The Job Creation Trust which was founded in March 1999 by the trade union movement and supported by the state is another indication that unemployment 17

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or joblessness is a major problem that continues to plague both the state and civil society.

These and other problems have to be solved. President Thabo Mbeki has called upon the whole nation to contribute to nation-building efforts: …this is not a task that can be carried out by government alone. The challenge of the reconstruction and development of our society…faces the entirety of our people… the government commits itself to work in a close partnership with all our people… (Mbeki 1999: 8) This scenario challenges communities to rise, mobilise, organise and empower themselves to do what government had intended to do. This is not a move for relegating government to the back seat. On the contrary it is doing what is expected of communities to do. Having won the battle against apartheid as a nation and as communities, has not ended the struggle for creating a culture of economic self-sufficiency and selfreliance. The struggle continues, but this time with the support of government and all its relevant agencies.

The opportunities for community empowerment abound. Every single community in the country now has the free and unfettered opportunity to enter into the mainstream economy and to work towards transforming their conditions. Groups have in fact established consortiums, investment clubs and empowerment companies to invest in equities in both listed and unlisted companies. Examples of these are JSE listed Brimstone and Sekunjalo, both being based in the Western Cape. However, the formation of black economic empowerment [BEE] companies has not gone without criticism. The issue raised recently was whether BEE was 18

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‘mass empowerment or an enrichment process for a few fortunate patriots’. (Business Report 12 March, 1999: 10) The concern is whether these initiatives are having a desired beneficial impact on the respective communities at grassroots level. Much of the capital for such investments is leveraged either from established financial institutions or vendors or both as in the case of the acquisition of Johnnic. Real empowerment thus becomes questionable and illusive. The Black Economic Empowerment Commission, a private sector initiative, was formed to investigate and report on this issue.

The recent ‘iGoli 2002’ initiative of the Greater Johannesburg Transitional Local Council which intends to address its ailing finances has identified three cornerstones of its strategy: (a) privatisation (b) corporatisation, and (c) the formation of utility companies. (The Star, 23 March, 1999) It is expected that communities will play a meaningful role in the fruition of this initiative, provided that communities are organised and geared to accept these challenges.

For the future, one opportunity that cannot be ignored is local economic community empowerment through empowerment projects that are likely to have direct beneficial impact to the respective community. Broadly what is needed are strategies for both local community-based capital mobilisation and investment that are likely to contribute and lead to community empowerment. The strategy suggested here for this dual purpose is the formation of Community Development Corporations.

The next chapter deals with the idea of Community Development Corporations. ___________________________________________________

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In this chapter a Community Development Corporation [CDC] is briefly defined followed by local and international historical background with case studies. The role that CDC’s can play in SA is also discussed.  A CDC is a profit or non-profit company, trust, co-operative, or other juristic entity, owned and controlled by members of the community, and founded for the purpose of mobilising community capital and investing in community beneficial projects. As Walker and Weinheimer point out: CDC’s are self-help organisations, governed by residents, businesspeople, and other leaders of the communities they serve. They plan improvements to solve local problems, building on neighbourhood assets. (1998: 1) The Gauteng Provincial Government [GPG] defines CDC’s as 20

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being community based, representing local residents and their agendas. However the extent to which this occurs varies between one CDC and the next. (GPG 1998: 7) The CDC is similar to the concept of a community foundation in that the organisation is constructed with a view to serving community interests including the welfare of its members.

Community foundations often survive on grants from the corporate sector with little or no financial contribution from the beneficiary community.

CDC’s have both direct and indirect benefit to investors and the community. Benefits include the creation of wealth, ownership of resources, control over investments, provision of goods and/or services, and the determination of any other beneficiaries that would contribute to the integrated development of that community. The capital of CDC’s may be mobilised from a variety of sources including the state, donors, and the corporate sector but mainly from members of the community.    The idea of CDC’s appear to be much developed in the USA. According to the investigation into community development structures by the GPG, CDC’s feature in the USA, Canada, and Europe. Its study focused on CDC’s in the USA. Since the 1960’s more than 3000 CDC’s were established in communities around the USA. CDC’s are now located in every large and medium-sized city in the USA. (GPG 1998; Walker and Weinheimer 1998: 2) Opposed to top-down models of development, the CDC is viewed as a ‘locality-sensitive’ model that seeks to empower communities and provide a variety of benefits to its members. These include safety, economic upliftment, housing, and well-being. (Robinson 21

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1996: 1647) The main activities of the established CDC’s fall into five categories according to Vidal’s study of 130 such entities in the USA. These are: (a) housing, (b) commercial real estate development, (c) business enterprise development, (d) social services, and (e) advocacy work generally within a geographically based community With private and public support, CDC’s have increasingly become involved in providing, at times in partnership with others, an array of ‘community-building’ activities. These include job training, childcare, youth counseling and programming, cultural arts projects, and community advocacy and organising. (Vidal 1992) According to Walker and Weinheimer, CDC’s are now the most productive developers of affordable housing for lowincome residents, outstripping private and public housing agencies. (1998: 1-2) CDC’s play a significant role as a ‘leadership incubator’ similar to the role that civic organisations played in the apartheid era. According to Robinson, CDC’s are active incubators of neighbourhood leadership and sometimes provide a starting place for ascent to higher government posts.

(Robinson 1996: 1658; Shubane 1994: 34) In the USA, CDC’s have also been successful in playing the role of ‘political watchdog’. They have through their lobbying groups been successful in enacting and implementing policies that favour community empowerment. The Community Reinvestment Act of 1977 is a case in point. (Robinson 1996: 1659) Funding for USA CDC’s came mainly from state, local government, private corporations, banks, agencies, and other NGO’s rather than the community. Control of the CDC is vested in a Board of Directors who are voted in by a nominal fee paying community membership.

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Examples of CDC’s can be found elsewhere in developing countries. The Grameen Bank of Bangladesh established by Ahmed Yunus, an economics lecturer, is a well reported case of community economic empowerment. The project is targeted at rural Bangladeshi women. From a single person and 17 British Pound Sterling, the project now reaches 2,3 million branches and more than 12000 women through 1112 employees.

(Mail & Guardian 1998: 21; De Beer & Swanepoel 1998: 44) While CDC’s continue to have successes, there are also failures resulting in a body of criticism against the concept.

Some of major the criticisms leveled against CDC’s include (a) CDC’s tend to replace a community advocacy role with a mere service provision role. More business-like approaches in handling issues tend to alienate the very persons they set out to empower, for example, weeding tenants unable to pay rentals. (b) CDC’s will always experience financial crises because of a lack of grant funding and (c) successful CDC’s have ‘placeluck’ in the sense that they are located in communities that can fund and support the CDC. CDC’s therefore cannot be replicated in all communities successfully. (Robinson 1996: 1659) While CDC’s have been established in the USA for more than three decades, the concept needs to be further developed and adapted to the needs of communities in South Africa.  The concept of a CDC is not an entirely new one in South Africa. There are several cases of the emergence of CDC’s here. They may not specifically bear the words “CDC” in their names, but in essence and substance functions as CDC’s.

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In South Africa, one example of a CDC is what was up to most recently the gigantic Volkskas Bank (now incorporated into the ABSA Bank group) which began as a bank for the ‘financially and culturally impoverished’ Afrikaner farming community in 1934. (Volkskas 1979: 17-18) Other examples are Sanlam, the present day insurance giant which was established in 1918, and Federale Volksbeleggings, the Afrikaner investment arm which was established in 1939. The principal goal of these institutions was to mobilise Afrikaner capital for investment and economic empowerment. (Jones 1995: 127) Mynbou (now Gencor) (1895) originally started mobilising capital also within its own Afrikaner community primarily for their benefit in terms of capital formation and economic empowerment. (Volkskas 1979: 11) The Madressah Anjuman Islamia of Kholvad [MAIK] is another case in point. It started as a small non-profit organisation in Johannesburg in 1895 having mobilised 500 British Pound Sterling from members of the Kholvad (Gujerat, India) village community residing in South Africa. This initial capital was invested in fixed property in the then Malay Location in Johannesburg to support a community madrassah in Kholvad. Incidentally, that property was expropriated by the then government in terms of laws applicable to Asians.

Later more capital was mobilised from members and further income producing properties that were to serve the community were acquired in Johannesburg. The purpose of these investments was to support their religious institutions. Today the organisation’s service includes (a) financial support for religious institutions locally and in Kholvad; (b) provision of bursary loans to mainly, but not exclusively, students of Kholvad descent in South Africa and abroad; (c) the operation a water works and an electricity supply corporation in Kholvad; and welfare grants to the needy and destitute. (MAIK 24

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1998: 1-16); MAIK 1942: 1-30) Hundreds of community based organisations within the Hindu and Muslim communities throughout South Africa mobilised capital from their respective communities. This they did since their arrival in South Africa as slaves, indentured labourers, and traders up to the present time. Their investments included places of worship, community halls, schools, and shopping complexes. Most of these have been largely non-profit organisations.

There are also a few examples of for-profit organisations. The Rustenburg Mosque Plaza (1984) and the Nurul Islam Plaza (1996) were established by the Rustenburg and Lenasia Muslim communities respectively. Both these commercial plazas were financially structured to provide shareholders with equity ownership as well as donations to their respective mosques. Highpoint Centre, a commercial complex in Lenasia is owned by members from the Patidar Hindu community who successfully mobilised capital from its members on a monthly basis to make the investment. (Randall 1999: 13) Jaame Limited (1976) was probably the pioneer in promoting an Islamic investment company and mobilising community capital from over 8000 shareholders largely from within the Muslim community in SA. It was unfortunate that Jaame was forced to close its doors 12 years later due to a variety of factors including a malicious campaign against the company by obstructionists within the community amidst allegations of mismanagement. (Mahida 1992: 111; Kolia 1999: 1) Examples of CDC’s may also be found in South Africa’s rural communities. One example is that of ‘The Sikhulule Chicken Enterprise’ in the rural town of Noupoort, Northern Cape. The town which was devastated when Spoornet, the country’s rail 25

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operator, decided to vacate leaving a trail of destitution, unemployment, and the poverty of ‘constructive power’ of self-upliftment. The project gave the hope of self-employment to 41 women and was established with the help of Vista University’s CCD Women in Rural Areas [WIRA] and its funders. WIRA projects have been established in all nine provinces of South Africa and include bakeries, brick making, and handcrafts. (Dzingwe 1998: 9) This limited survey of the South African experience indicates that whereas many community based organisations exist to serve the community in social, educational, religious, and charitable fields, CDC’s engaged in formal and direct community economic empowerment are indeed very few.

(GPG 1998: 69-76) There is a need to go beyond various welfare type and community service organisations to formal community and economic empowerment structures.   International and local experience suggests that CDC’s have the potential to contribute to grassroots community empowerment. In South Africa, CDC’s can play a variety of beneficial roles within communities. These include: (a) Mobilising capital from members of specific communities.

Community capital is presently being tapped by national and international financial institutions and financial service companies . These entities are operating within communities and are not necessarily committed to ploughing back capital into the respective communities. In the USA a similar scenario prevailed until the Community Reinvestment Act 1977 was legislated which compelled financial institutions doing business in a community to reinvest in that community in a variety of ways including economic and social services.

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(b) Investing in projects that are likely to produce financial returns for members or investors as well as social returns for the whole community. For example, the fact that the Afrikaner community invested in Volkskas, the growth of that institution was a source of pride for that community. Similarly, a small shopping complex constructed with community funds in the neighbourhood adds value to that neighbourhood and provides financial returns. (c) Being vigilant for investment opportunities that are likely to create jobs for the community and channel community investments in that direction. (d) Being instrumental in creating wealth and in obtaining experience in community and economic empowerment especially in the fields of business, finance, management, and community service. (e) Being a uniting force within the community and helping it to create greater bonds and brotherhood/sisterhood among members of that community. (f) Creating loyalty within the community for community produced goods and services thus improving the financial viability for projects. (g) Becoming co-investors with other communities in black empowerment projects such as in state privatisation programmes, corporate unbundling, and broader community based projects. (h) Providing financial support for other community needs in terms of an integrated development policy. For example, setting up a youth leadership development centre as in the case 27

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of the ‘Make a Difference Centers’ set up by the NationsBank CDC in the USA. (NationsBank: 17) (i) Spawning small traders and SME’s and generally providing links with support agencies. (j) Promoting partnerships and joint ventures with big business in several sectors of the economy including technology, communications, healthcare, transport, tourism, and industry for the development of skills and the community economy. (k) Being the catalyst, incubator, and provider of leadership for greater and growing community empowerment. (l) Establishing specific business projects including housing loan companies, home improvement loan companies, small business venture capital funds, community equity funds, companies, insurance companies, financial service ‘incubators’, ‘empowerment zones’, and community development banks.

The foregoing roles are not necessarily exhaustive but merely an indication of the beneficial role that institutionalised CDC’s can play in local communities in SA. But innovative ideas have little value if they are not implemented or actualised.

This leads to the section on the implementation of a CDC in South Africa. ___________________________________________________

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    

  

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  

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In this chapter three interrelated concepts relating to implementation are briefly reviewed: (a) the notion of implementation, (b) the combination of critical factors needed for successful implementation, and (c) implementation strategies.  Implementation ‘consists of the process of putting into practice an idea, programme, or set of activities and structures new to the people attempting or expected to change’ (Fullan in Cajee 1997:8) Implementation is thus not a one-off event but a process comprising of several phases and practical steps within those phases. Because implementation is also about change which involves people, the success or failure of a project is largely dependent not only on its elegance and efficacy, but also the way it is put into practice. Hence, careful consideration will need to be given to the various phases and practical steps.

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 Fullan argues that evidence points to a ‘small number of key variables’ or ‘critical factors’ that influence successful implementation. These critical factors may include the leadership, vision, support of the community and the direct benefit that the project brings to the community. It is not the individual critical factors on their own that impact on the implementation process. It is rather the amalgamation, integration and collective interaction of all the critical factors that operate in concert or in combination. Moreover, according to Fullan ‘the critical factors form a system of variables that interact to determine success or failure’ of transformation needed. Hence for the successful implementation of CDC’s, a combination of critical factors is needed. (Fullan in Cajee 1997:8)  An implementation strategy refers to several explicit sequences of action steps within phases that is likely to actualise a particular project. The sequence of action steps that are needed for the implementation of a programme together make up the strategy. Various researchers have developed strategies, also known as models, appropriate for the development and implementation of innovative programmes particularly in educational change. (Dalin 1978; Havelock 1973; Schon 1971 cited in Kelly 1989: 126) At least five models have been suggested in the literature. These are known as (a) ProblemSolving (P-S), (b) Research Development and Diffusion (RD&D), (c) Social-Interaction (S-I); (d) Linkage; and (e) Mutual Adaptation and Development (MA&D). (Cajee 1997: 10-12) RD&D and MA&D are more suited to systemwide 31

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dissemination of programmes and taking to scale on a mass basis as in chain stores or across several sites around the country. The former is a top-down process and the latter a combination of both top-down and bottom-up, leaving space for peripheral contributions and creativity as well as research, development, and support at the centre. The S-I model is best suited for situations where members of a community are also members of networks comprising of associations, reference groups, other development or resource organisations which influences them to change in certain directions. The P-S model is best suited for idiosyncratic situations with special needs and which in turn needs empathy from outside resource persons to help find custom solutions. Linkage refers to a unifying concept of the aforementioned models with a strong P-S bias and bringing more remote expert resources to the problemsolving scenario.

It is beyond the scope of this research report to discuss each of the aforementioned models but suffice to say that the particular circumstances surrounding a community must be considered carefully before any model is utilised.

The implementation of a CDC in a specific geographically defined community in South Africa will be discussed next. ___________________________________________________

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    In this chapter the implementation of a CDC in a particular community is discussed. As stated in the introduction, one of the aims of the study is the provision of a model for community empowerment. For the purposes and limited size of this study, one community was selected from a large number of communities grappling with development problems. In this case, Lenasia as a geographically based community was selected as a model for community empowerment because of the author’s intimate knowledge of the area and its people having schooled, lived, and worked in the area for over 35 years. Hence, unless a reference is furnished, data is provided from the author’s own observations and experiences.

The discussion in this chapter revolves around two key issues (a) the rationale for the implementation of a CDC in Lenasia; and (b) the implementation strategy.

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 Lenasia is a dormitory suburb 25 kilometres south west of Johannesburg created for persons classified as ‘Indians’ in terms of the Group Areas Act No 41 of 1950. Thousands of Indians belonging primarily to the Hindu and Islamic faiths were forcibly removed from Johannesburg and its surrounding suburbs including Vrededorp, Kliptown, Sophiatown, Newclare, Jeppe, Doornfontein, Fordsburg, and Turffontein and resettled by the apartheid era Department of Community Development [DCD] in Lenasia.

The township grew rapidly from about five square kilometers in 1970 to about twenty five square kilometers in 1996. (Patel 1996: 13) Much of the development, apart from housing, infrastructural, and bulk services, took place through private and local community initiative. Development is largely uncoordinated and without a strategic plan, with little or no input from stakeholders. For example, the central business district [CBD] of Lenasia is located at the far north eastern flank of the township rather than being central to the whole community.

Lenasia is strategically located within close proximity to (a) major Group area townships namely Soweto, Ennerdale, and Eldorado Park, and (b) other sprawling townships namely Orange Farm, Weilers Farm, Zuurbekom and Poortjie. The combined populations of all these areas could be in the region of 2 million.

The present population of Lenasia is estimated at between 150000 and 250000 including residents of the formal as well as informal settlements within Lenasia and greater Lenasia.

(Salojee 1999: 1) The size of the population suggests that Lenasia has sufficient critical mass to be a town or a city in its 34

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own right. The population of Lenasia can be compared to fully fledged municipalities but with smaller populations and growing industries such as Port Shepstone (70000) in KwaZulu Natal and Bronkhorstspruit (50000) in Gauteng. (BBB 1998: 548; 541) The population of Lenasia can also be compared to the island state of Seychelles (75000). (www.seychelles.net) Census statistics suggest that the income level of the majority of Lenasia’s population fall into low and medium income earner categories. According to the 1991 census, 38,55% of Lenasia’s population was income earning and 61,45% was dependent or non-income earning. Of the income earners approximately 55% earned between R9999 and R29999 per annum; approximately 20% earned less than R9999 and approximately 25% earned more than R30000 per annum.

(Patel 1996: 19) Business development is concentrated mainly within the small and cramped CBD and within small industrial areas in Lenasia.

The CBD comprises mainly of hawkers and micro retail enterprises focusing primarily on food, clothing, and general household requirements. A small industrial base comprising of micro industries including snack and garment manufacturers, food processors, and panelbeaters has also emerged.

Ownership of these businesses is exclusively family, individual, or small partnerships. No listed company or conglomerate has as yet set up any distribution or manufacturing facility in the area.

Lenasia’s economy is based on a dormitory labour force ranging from labourer to professional. Most economically active males and females work in neighbouring towns and cities outside Lenasia. Many have to travel north between 30 and 75 km to their work places by means of their own transport, lift clubs, and inadequate public transport. The 35

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majority of women are economically unemployed either due to cultural factors or the lack of employment opportunities within the area. With many of Johannesburg's businesses migrating to the north, commuters have to travel even further, as the gazetted Urban Development Strategy notes: Concentrations of population often outnumber work opportunities. In greater Johannesburg, industrial and service jobs migrate northwards, ever further away from the large lowincome townships and informal settlements in the south. (Hall 1997: 399) The agricultural sector is largely undeveloped making Lenasia’s primary food source outside the township.

Commercial, and industrial property owners are also primarily family and individually owned. Very few properties are owned by entities other than family or individuals. Examples are: Lenasia Square and the SBDC park (corporate owned); Highpoint (private syndicate owned); and LMA Heights (religious organisation owned).

The major financial service institutions including banks and insurance companies that have been long established in Lenasia’s CBD have often been accused of taking from Lenasia but not giving back commensurate with resources that are withdrawn from Lenasia. Institutions have been accused of ploughing resources into the northern areas such as Sandton, Randburg, and Midrand rather than the south such as Lenasia, Soweto, Ennerdale, and Orange Farm.

Although there are sufficient public schools in the area schooling seems to be deteriorating rather than improving. This is evidenced by the emergence of several religious community schools in the area and the northbound exodus of learners who commute to former model ‘C’ and white private schools for 36

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their primary and secondary schooling. There is also an influx of learners from Soweto into Lenasia as schooling is perceived to be better in Lenasia than in Soweto. There are no tertiary institutions in the area. The only institution providing technical skills is the MH Joosub Technical School. Students have to travel out of Lenasia for tertiary and technical education.

There are many social service organisations trying to serve the community with inadequate resources tackling the numerous social problems in the area. Housing has been mainly provided by the erstwhile DCD with a small percentage of owner built homes. However, there remains a large shortage of housing units in the area. Gaps in the development of Lenasia are community recreation and sports facilities catering especially for youth and women.

On the economic empowerment front, there is no known and established broadly based community economic development organisation. The South Western Chamber of Commerce (SOWECC ) and the Lenasia Development Forum (LDF) are recently established organisations cherishing ideals of local economic development. These organisations have yet to make any significant impact on community empowerment.

Being a community that has historical, religious, and cultural ties with India, Pakistan, the Middle East, Malaysia, Indonesia and several African countries, the community has been slow in strengthening economic and cultural ties with those nations.

This is so mainly due to the past isolation of South Africa from the “international community�. For example, India has one of the largest computer software industries in Bangalore.

The Lenasia community has the potential to build partnerships with their counterparts in Bangalore to develop a software zone in Lenasia. Or the oil rich Middle Eastern and African countries may be invited to set up energy industries in Lenasia.

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Presently very little, if any, outside help for development is forthcoming. A study has, however, been commissioned by the Southern Metropolitan Local Council (SMLC) to investigate and make recommendations for an integrated development framework. No report has as yet been published. Apart from a recently announced development of a shopping and entertainment complex by a consortium of Malaysian and local institutional and private investors, there has been no large scale, co-ordinated initiative to tackle the developmental issues of Lenasia.

The quality of life of the community in Lenasia is generally poor. There are no public parks that can be regarded as safe, clean and green where parents, youth and children could enjoy a picnic or a braai either during the day or evening. SMLC owned recreation centres are ill equipped and organise few recreational courses and programmes for youth and adults while community owned halls are used for generating income for institutional survival rather than for social and recreational use. Pavements are generally unlawned and sandy even in the main streets. Trees planted sporadically by the local town council struggle for survival. Places of worship, which provide the spiritual dimension to quality of life, are not easily accessible especially in the poorer sections of the communities.

Because of its population size, entrepreneurial spirit, lowmiddle income level, existing socio-economic infrastructure, and its strategic location, Lenasia has the inherent potential to become the economic hub of the south. Twenty or fifty years down the line, Lenasia has the potential to become the “Little Singapore of Gauteng� if the community takes its future into its own hands and attends to its development.

From the foregoing, Lenasia is urgently in need of carefully 38

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planned integrated community development based on the communities needs, values and aspirations. The options that are open to the community in terms of future development may be narrowed down to two. One way is to maintain the status quo and continue with the pace of development as in the past. The second option, and more importantly is to make an intervention. That intervention is for the community to take charge of their own development in a meaningful way through the establishment of a dedicated Community Development Corporation to improve the quality of life of its residents and broadly towards empowering the community.  The model that I intend utilising for the implementation of a CDC in Lenasia is the Problem-Solving model in combination with the Linkage model [PSL], rather than other models referred to in chapter 4. Other implementation models are not suitable because of the idiosyncratic needs and conditions prevailing in Lenasia. The implementation of a CDC is unlike a prepackaged computer programme that can be disseminated by way of top-down or mass dissemination means. The conditions prevailing in Lenasia may be different to the conditions prevailing in Orange Farm or in Mayfair, Johannesburg. A strategy that will be most suited to particular conditions will therefore be needed.

In the PSL strategy, the implementation process is a joint process between a community champion or leader and the community (client) on the one hand, and an outside change agent (consultant) on the other hand. The consultant plays the role of catalyst, resource linker, solution provider, and helps to facilitate the process. The consultant may be a development agency or a professional working in the field of community development.

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The sequenced process begins with felt needs sensed and articulated by the client. This need is translated into a problem statement which is then followed by a diagnosis of the problem. A process of search and retrieval of information and ideas ensues. Such information and ideas are then used to formulate a solution or select the course of action. At this stage the client may adapt or evaluate the suitability of the solution in terms of the original need. Once the solution is accepted, the final stage is the application of the solution. (Appendix 1) During the entire implementation process the focus is on client needs and client empowerment. This process enables the client to take whatever action is necessary in pursuit of solving the problem either independently or with assistance from the consultant. Client involvement in the process is paramount.

The consultant plays a collaborative role throughout the process assisting and providing guidance. (Havelock 1973: 155) It is argued that the implementation of a CDC in Lenasia begins with a specific ‘felt need’ by a community champion within a community system.

This process requires clear 'diagnosis' and articulation into a 'problem statement'. It will then be argued that having defined the problem, 'search and retrieval' of ideas and information should be pursued to determine an appropriate 'solution', including an appropriate support system, to the problem followed by the 'application' of the solution. (Havelock, 1973: 7 & 155) Steps in and factors affecting the implementation process are construed as ‘critical' factors’. (Dalin 1978: 89) These factors together constitute a ‘combination’ of critical factors. Each critical factor in turn provides the ‘leverage’ for developing, in this instance, a Community Development Corporation. (Senge 40

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1990: 3-6) Accordingly a PSL strategy that includes the combination of critical factors is argued for here. (Havelock 1973: 155) I will now proceed to explain key concepts in the PSL implementation strategy.

'Diagnosis' refers to the process of understanding the felt 'needs' denoting the pain, dissatisfaction, concern, disturbance or crisis of the community in the context of the prevailing ‘system', that is the prevailing socio-politico-economic system in which the community finds itself. The diagnosis process includes investigating essential details of symptoms, history and possible causes, and essentially defines the problem in words in a problem statement. (Havelock 1973: 63 & 155) 'Solution' refers to the determination of the factors, including sound investments and ethical business practices, that are needed and which would enable or contribute to satisfying the felt need and solving the problem of the client. 'Search and retrieval' refers to researching solution relevant ideas, information, and resources, from both inside and outside the community using a variety of techniques including keyinformant interviews, and gleaning of relevant documents.

(Havelock 1973: 78, 83-85 & 155) Further, search and retrieval would contribute to understanding the situation more fully and, more importantly, in determining what would be needed in formulating a solution to the problem. This stage also implies studying implications of various options and generating a range of solution ideas or brainstorming to determine a blueprint or a plan of action. (Havelock 1973: 98-99) The final stage of 'application' refers to taking a definitive course of action based on the ideas and information gathered in the previous stage to actually implement the solution in addressing the problem. (Havelock 1973: 7, 99 & 155) 41

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'Critical' factors refer to the notion of being essential to the success of innovative efforts And 'combination' of critical factors refers to a convergence of critical factors that operate interactively in concert, rather than independently to enable a project to succeed. 'Leverage' refers to those actions and changes in organisations that can lead to significant, enduring improvements. (Dalin 1978: 89; Senge 1990: 6-12, 120) Finally, a 'learning organisation' refers to a corporation as an organisation where every participant, particularly staff, continuously learn and grow. This implies that the corporation is driven by a sense of initiative and creative growth of each participant, hence growing the whole organisation. (Senge 1990: 3 & 14; Dalin 1993: 2) Thus the strategy for the implementation of CDC in a Lenasia involves a combination of Havelock's Linkage and PS strategies, integrated with notions of critical factors [PSL].

The PSL strategy here is viewed as a combination of critical factors, which as a composite whole ensures successful implementation.

This leads to the discussion of the implementation strategy in the implementation of a CDC in Lenasia. I will proceed within the framework of the Problem-Solving-Linkage implementation strategy across the four major problem-solving stages posited by Havelock by arguing for the (a) diagnosis of the problem (b) search and retrieval of ideas and information (c) solution for founding a CDC in Lenasia and (d) the application or course of action needed for the founding the CDC. These are discussed in the ensuing chapters. ___________________________________________________

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 



   





Diagnosis of the felt need for a CDC and articulation of the problem is a critical starting point in the implementation process because it contributes to an understanding of the underlying causes and origin of the problem. The rationale for a community empowerment programme stems from this understanding.

The felt need for such a programme arises from intense pain and observation that inter alia: (a) economic development and therefore wealth and job creation is taking place at a rapid pace north of Johannesburg particularly in Sandton, Randburg, and Midrand with the predominantly white private sector and foreign companies setting up offices, factories, and distribution centres in those areas. (b) Government is not seen to be doing much in terms of socio-economic development in the impoverished south. This is particularly the case in dormitory townships such as Soweto, Lenasia, Ennerdale, and Orange Farm which has a combined population estimated at 2 million 43

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and where poverty and the unemployment rate is the highest, and, social services the poorest. (Patel 1996: 36) (c) Financial institutions, multinational companies and corporate South Africa flood township markets with goods and services essentially produced elsewhere. There appears to be no meaningful contribution by the aforementioned companies to the integrated development of the townships. This process leads to community wealth flowing out from the township referred to as ‘capital flight’, and perceived to being ploughed into the north. (d) The more educated and skilled youth, professionals, and wealthy businessmen tend to be emigrating northwards settling in former white suburbs, sometimes forced by necessity, causing a brain drain in township communities. (e) The quality of life in terms of a cleaner, greener, and safer environment; participation and enjoyment of arts and culture; access to quality parks and recreational facilities; and facilities for various sports codes, need radical improvement.

These disturbing factors and indicators suggest a much deeper problem: the responsibility for community development.

Unless local communities do not initiate systems and structures for community empowerment themselves, it is unlikely that the state or the corporate sector will initiate any major development initiative at the local community level given that there are perhaps other priority areas that need attention.

Communities need to get organised and mobilise their resources and creative energies to achieve community empowerment. This could help not only to reverse disturbing trends but also to contribute meaningfully to their own upliftment.

Self-upliftment is in line with the thrust and support by government, civics, private sector and NGO’s for ‘endogenous’ local economic development (LED) as an alternative to top-down state initiated development. From a 44

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development perspective, endogenous development refers to development from within a local community based on the mobilisation of a localities resources. As a concept and practical application, according to Patel, this concept is well established internationally and is a late entrant in SA since the early 90’s. (Patel 1996: 1-4) There is therefore a pressing need for empowerment initiatives by the community for the community to facilitate integrated community development. One such initiative is the Community Development Corporation that has been implemented and tried-and-tested in several thousand communities internationally. From the international and local experience the CDC is an ideal structure to have within a locality as a way towards empowering the community, contributing to the RDP/nation-building, and in addressing the felt needs of the community.

While it is untenable to suggest that the CDC would be a panacea for the present socio-economic problems in the South African context, it can be reasonably expected that the CDC, like similar programmes elsewhere, can not only contribute to resolving the present crisis in community development in disadvantaged communities, but also be instrumental in the integrated development and empowerment of the community as emphasised by advocates of LED. There is a risk of CDC failure due to a variety of problems including inadequate capitalisation, poor management, and lack of community support. This is evidenced locally and abroad. The task at hand is to establish a CDC that is likely to succeed.

The problem here focuses on how to successfully implement a CDC in a community where the CDC will be a central vehicle for change and transformation. Following from here, the crux of the problem with reference to Lenasia is: how can 45

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the CDC be implemented in Lenasia?

Having established the felt need and articulated the problem leads to the search and retrieval stage of the implementation strategy. ___________________________________________________

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         Engagement in a process of search and retrieval of ideas and information as part of the PSL strategy is important because both ideas and information are needed to address the problem as articulated in the statement ‘How can a CDC be implemented in Lenasia?’

A diverse range of issues that affect the implementation process will need to be addressed. It is essential that the project be lead and managed on the basis of informed decisions made upfront in anticipation of the issues involved rather than on the basis of crisis management. Prudency requires that issues that can be addressed in the first instance should not be ignored as later confrontation may plunge the whole project into a crisis. It may be too late then to salvage the corporation.

However, this is not to say that every single issue can be anticipated upfront. New issues are bound to arise in the future needing further search and retrieval of ideas and information. An endeavour will need to be made to discern essential requirements before proceeding.

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For the purpose of founding and operating a CDC in Lenasia ideas and information around the how, what, where, and when would need to be searched and retrieved: The following issues need consideration: (a) The legal requirements with regard to the founding of CDC’s, including their capital structure, composition, management, and accountability. (b) Available state and corporate support, participation and involvement. (c) Community support, participation, and involvement. (d) Funding and capital requirements. (e) Methods of raising capital and legal requirements. (f) Community investment projects, priorities, and feasibility. (g) Management, control, and reporting. (h) Staff qualifications, recruitment, selection and training. (i) Business policies and ethical values. (j) Channelling of development efforts and funding in community and social services. (k) Important community roleplayers and stakeholders, and (l) Identification of appropriate business projects.

Having indicated the major issues involved, the matter of how and where the search and retrieval needs to be done also needs clarification.

Havelock suggests a whole range of general purpose resource acquisition strategies. To search and retrieve the variety of issues involved in founding a CDC in Lenasia, ideas and information need to be gleaned from diverse sources including relevant state policy documents, key persons inside and outside of the community, persons involved in implementing CDC’s, 'in-house experts', case studies, site visits, and outside consultants. (Havelock 1973: 94-95) Personal experience in 48

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working as a professional accountant and auditor, and participating actively in community development projects, also has to be brought to bear on ideas and information retrieval.

Brainstorming may be used as a technique to generate ideas within the client system. Where appropriate, volunteer task teams and professional persons will need to be appointed to do further research.

Having collected data from diverse sources, these must then be analysed to provide the solution needed in solving the problem of founding a CDC in Lenasia. This leads to the next critical stage of solution in the PSL strategy. ___________________________________________________

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    An analysis of the data from the search and retrieval of ideas and information suggests that eleven critical factors are needed for the solution to the problem of founding a CDC in Lenasia.

These factors provide the leverage and together are the combination of critical factors that are needed for successful implementation. These factors are as follows (a) leadership and vision (b) stakeholder support mobilisation, participation and involvement (c) community ownership (d) supportive state legislation and policies (e) funding (f) investments (g) board of directors, executive personnel and staff (h) partnerships (i) technical support (j) business ethics and values, and (k) paradigm shift. Each of the foregoing critical factors are argued for below followed by a discussion on what is needed for the implementation of the CDC in Lenasia.  The first factor needed to found a CDC in Lenasia is leadership and vision. Though these concepts are complex, in 50

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this instance leadership refers to the pro-active commitment and intense drive of the community champion not only in initiating the project but also in being consistent, willing to sacrifice, share and serve. Vision refers to what the leader sees happening broadly in society and in institutions, especially to its own community to the extent that a particular project such as founding a CDC becomes the leaders 'grand passion'. (Kurt Hahn in Lester B Pearson 1995: 5; Peters: 1989; Covey: 1992; Altalib: 1991; Senge: 1990) Although the leader provides the vision, s/he is able to inspire others to share that vision and to become part of the process of realising that vision. Evidence suggests that a project involving the founding of a CDC can fail if it does not have leadership and vision.

In the case of Jaame, a pioneer in Islamic financial services, it was the Muslim Youth Movement of SA (MYM) which initiated the project through a team led by one of its executive members, the late Abdul Sattaar Gani (1940-1996). He provided the leadership and articulated the vision for that investment company. In 1976 a community financial services company was founded with the vision of establishing an Islamic Bank. Gani offered financial as well as “spiritual” returns or dividends for members. Despite the obstacles and frustrations the project faced initially from the community, Gani and MYM was driven by their vision to develop a strong financial base for the emerging Muslim community. The company’s ideas spurred many other similar independent institutions in SA notably AnNahl, AlBaraka Bank, and the now defunct Islamic Bank.

MYM also provided a similar platform for the leadership and vision of Dr Shaukat Ali Thokan for founding the South African National Zakah Fund (SANZAF), a non-profit NGO. SANZAF was established in 1974 to collect in an organised way an Islamic-based wealth tax from the Muslim community.

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SANZAF provides the needy and destitute with relief including food, clothing, debt payments, rent, and study bursaries. From meagre collections of under R100 000 in 1974, its 1999 budget stands at over R8million. Thokans vision was to establish a national organisation that would be structured to organise one of the five pillars of Islam, that is the Zakah.

(Mahida 1992: 113; http://sanzaf.org.za) A similar pattern can be found in the case of Sikhulule Chicken Enterprise. Here the leadership and vision was driven by an external facilitator. The VistaCCD identified and led the process with the vision of creating self-employed women in the impoverished Northern Province town of Noupoort. (Dzingwe 1998: 9) In Vidals (1992) study of 130 CDC’s abroad, he identified stable leadership as one of five key success factors.

Hahn's vision was to 'produce responsible and active citizens' who would be of service to their communities and be 'fortified against a diseased civilisation' through an education of involving action, experience and service. He provided the leadership to establish Outward Bound Schools world-wide.

(Schulze 1972: 5) ‘Good leadership’, ‘strong and dedicated local leadership’ was also cited as a factor in the success of the Oukasie Development Trust and the Stutterheim Development Forum (GPG 1998: 69; 75) The leadership and vision for founding a CDC in Lenasia has to be provided by a community champion or a group of community champions with the help of the consultant. There are several alternatives of identifying leadership within Lenasia. (a) Existing organisations operating in Lenasia can be approached for recommendations; (b) the community can be asked through newspaper advertisements to nominate persons to provide the leadership for the organisation; (c) by public exposure of the project through face-to-face presentations to interested groups and media reports by the local newspapers 52

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and radio, interested persons can come forward on a voluntary basis and (d) community champion/s is/are identified by the consultant after a process of discussion with key members within the community or from the consultants personal experience and contacts.

It is suggested here that the tentative vision is for Lenasia to become a first class city. This entails Lenasia becoming the economic hub of the south, with growth and development in all sectors of the local economy. All development undertaken will have to be within a broader integrated development framework, where there will be employment opportunities at all levels of the labour spectrum, abounding business opportunities, and a holistically strong community enjoying a fair quality of life. The mission of the CDC would then be to actualise that vision.

Leadership and vision is therefore needed as part of the solution to the founding of a CDC in Lenasia.        Support mobilisation refers to winning the acceptance and gaining concrete patronage and sympathy of relevant stakeholders. Stakeholders here include the broader community and those persons and institutions who will be most needed, have an interest in, are most likely to identify with, share a common vision, support and serve the project at hand, morally and/or materially. The second factor in the founding of a CDC in Lenasia is for the community champion to mobilise the support of relevant stakeholders because without their support and involvement, especially in a democratic environment, it is unlikely that the project will succeed. Further, inadequate initial support from stakeholders may be an indicator of non53

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support later, which in turn may well lead to the closure of the corporation and the failure of the project.

Evidence of support mobilisation of various stakeholders in diverse ways may be discerned in several cases. AS Gani and members of his team addressed many meetings, under the watchful eye of a hostile state as well as community members skeptical of the idea. These meetings were used effectively to explain the innovative concept and to elicit support from various stakeholders within the community including religious leaders, businessmen, womens groups, youth groups, and activists. Various fora were used including Friday mosque congregations, conventions, seminars, private, and public gatherings. These for a were effectively used to obtain stakeholder support not only in the initial stages but continuously throughout its existence thus giving Jaame Ltd. steady growth in terms of shareholder membership as well as in the services that it provided. Twelve years after its founding, membership of Jaame Ltd. numbered approximately 8000 with a capital base of approximately R5million. (Mahida 1992: 110; Kolia 1999: 1) In the case of Oukasie, regular weekly meetings were held.

These meetings served to mobilise increasing support for the various projects undertaken by the organisation and provided a forum for resolving conflicts within the community. Because of key stakeholder support within the community and successes achieved, the organisation was able to attract other stakeholder support, namely of The Kagiso Trust, The South African Council of Churches and the Regional Services Council. (GPG 1998: 72-75) The support mobilisation strategy in the case for the founding of a CDC in Lenasia, is that the community champion would need to seek the support of key individuals and leaders within 54

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the broader community of Lenasia through personal contact, house meetings, seminars and presentations of the idea of the project thus establishing home support, similar to Gani and Thokan. Through this process a larger support group needs to be formed. This support group will need to know and understand the project and its strategic plans. Prepackaged marketing material in the form of pamphlets or brochures may be prepared and distributed to interested persons for reference as well as for learning purposes. The support group together with leaders, will in turn champion the idea further to ‘raise the level of consciousness’ of their respective communities about their socio-economic realities, consult with their communities and obtain their feelings towards the project.

Further presentations by the consultant will need to be made if necessary. (La Belle 1987: 201) Once positive feedback is received by a stipulated time, the next step would be to establish a Lenasia Community Development Forum (LCDF) that is representative of the community as a precursor to the Lenasia CDC. It is also suggested here that the defunct Lenasia Development Forum not be revived because of its political affiliations. CDC’s that maintain their independence from political parties are likely to draw more public support. The LCDF should include representation from (i) faith communities including the Jamiatul Ulama-Lenasia Branch, The Hindu Co-ordinating Council, Christian Churches (ii) social welfare organisations including Johannesburg Institute for Social Services (Jiss), Nishtara Lodge, and Central Islamic Trust (CIT), (iii) youth groupings including Call of Islam, ANC Youth League, Muslim Youth Movement, Al Fajr, and the Hindu Youth Movement (iv) trade groupings including the local chamber of commerce namely the Southwest Chamber of Commerce (SOWECC) and the Lenasia Traders Association and (v) local resident associations including the Lenasia Residents 55

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Association. The LCDF would then take charge and establish a team of committed persons to take responsibility for various aspects of the work involved including strategic planning, public relations, legal, finance, investments, and human resources. Decisions emanating from here would be the basis for further strategies.

For mobilisation of support at a wider grassroots community level, and other stakeholders, a multi-pronged strategy would be needed. This should include well written articles published in the local print media, public interviews on radio and community television, visits to stakeholders, audio-visual presentations, brochures and pamphlets, community reportback meetings, and, if possible, the construction of a dedicated web site.

Strategically selected stakeholder support is needed and should, therefore, be mobilised for the founding of a CDC in Lenasia.  Community ownership here refers not only to the spiritual ownership where people feel that a project belongs to them, but also to the legal ownership in the sense that individuals and groups have legal title to the shares as members according to their financial investment into the capital of the CDC. The legal title confers rights and duties on members. More importantly it enables members of a community to exercise real power in decision making, steering, and charting the future of the organisation in line with democratic principles.

The third critical factor in founding a CDC in Lenasia is ensuring community ownership.

Community ownership was evident in the case of Jaame where 56

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each shareholder being a member and who invested into the company was entitled to vote and to be elected on the Board of Directors. This position also entitled members to determine the policies and practices of the company. Further, because the services were rendered to members primarily, the community had a sense of belonging and ownership at the same time. The community self-esteem was also raised in the sense that they were contributing to the development of their own company fulfilling a religious obligation. One factor that can be attributed to Jaame’s phenomenal growth is its unique ownership formula. (Kolia 1999: 1) Coupled with the share ownership, members were required to donate 20% of their capital to the MYM for the purpose of funding MYM and other religious activities. The latter provided the “spiritual” dividend in the case of Jaame. Ownership will also ensure the commercial viability of the project as it can be expected for members to channel business transactions through the CDC. Community ownership in the case of Kholvad Madressa was engendered through the active participation of rank and file members in decision making and in financially contributing to development projects including Kholvad Waterworks and the Kholvad Electricity Supply Corporation. These projects brought relief and benefit to members’ families in addition to a sense of achievement. Ownership was also engendered by having regular report back meetings and the promotion of education through a bursary programme for members’ children.

(MAIK: 1994) Community ownership in the case of the CDC in Lenasia needs to be based on the participation-benefit principle as modelled in the Jaame and Kholvad Madressa cases. Strategies have to be developed to involve the community of Lenasia in the many facets of the project which engender ownership.

Members of the community need to be given the opportunity 57

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to have a real stake in the CDC through a variety of strategies including share ownership; attending meetings and making inputs; deriving special benefits in terms of discounts and the goods and services that the CDC might offer; preferential but fair treatment in terms of services on offer; and the funding of community and social services that make a difference to the community. Depending on the nature and structure of the CDC, it may issue shares to the public at an affordable level to obtain maximum numbers to gain ownership. In the Lenasia community, it should be made possible for every adult and child to own at least one share. A variety of levels of ownership could also be established for those individuals and groups wanting to invest more than the minimum.

An integral part of the founding of the CDC in Lenasia is that it is a creation of the community, by the community, and for the community.   While the thrust of the establishment of CDC’s is community empowerment where members of a community take charge and initiate and implement programmes by themselves, they also need the support of the state in the form of legislation and policies that promote community empowerment. Facilitative and supportive legislation and policy includes (a) establishing funding mechanisms for community enterprises (b) establishing mechanisms to train personnel and transfer of skills (c) encouraging and/or enforcing the private sector to ploughback funds, skills and knowledge into communities where they operate.

In the American experience facilitative and supportive state legislation and policy has been cited as a central factor in 58

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successful implementation of CDC’s. Funding and support mechanisms have been established through (a) Federal government statutes: these include the Community Reinvestment Act 1977 where banks are forced to reinvest in a community where they operate; the Community Development Block Grant which provides financial assistance (incorporating equity capital) targeted at new training, job creation and ownership opportunities in businesses, industrial parks, environment, public service programmes and social service programmes within or near a community; and Local Low Income Housing Tax Credits where housing development companies receive tax credits as an incentive for their development efforts (b) Local government: where community empowerment is supported through friendly municipal bylaws, partnership arrangements, and direct funding. (GPG 1998: 14-15) In South Africa many of the restrictive policies such as the Group Areas Act, the Land Act and the Job Reservations Act have been repealed. Instead, a host of facilitative and supportive legislation and policy has been put into place and special institutions have been created to facilitate and support community empowerment particularly in the area of SME’s.

Government initiated Khula Enterprise Finance Ltd. (Khula) with grants totalling R300million as at 31 March 1998 and Ntsika Enterprise Promotion Agency (Ntsika). Khula provides loan and equity capital in addition to guarantees and professional support to SME’s. Ntsika promotes SME development and provides a variety of services including technical and advisory services. (Khula: 1998) The Land Bank has also introduced a variety of funding mechanisms to assist the SME sector. Notable is its ‘Step-Up’ micro loan finance programme starting from as little as R250,00. (Land Bank 1999: 2) The Industrial Development Corporation of South 59

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Africa (IDC), an apartheid era state owned corporation, has also through its transformation processes now emerged with several supportive schemes including the (a) Consortium Finance Scheme; (b) Low Interest Rate Empowerment Scheme; and the (c) Entrepreneurial Finance Scheme. (IDC 1998a; IDC 1998b; IDC 1998c) New legislation includes The Small Business Act of 1997 which makes provision for individual or co-operative ownership and management and the Non-Profit Organisations Act No 1 of 1997 which promotes and regulates non-profit community organisations. The Gauteng provincial government has also produced a draft white paper on Urban Regeneration that targets previously disadvantaged areas. With regard to skill development, the Skills Development Act of 1997 was enacted to provide for the development of skills in the work place. To fund the skills development processes, the Levies Act of 1999 was recently passed into law.

The problem to be addressed here is how the Lenasia CDC can access the variety of support programmes offered by government. The solution to this problem requires an assessment of the exact needs of the CDC and each need may have to be addressed differently. It may not be necessary to access funding if sufficient capital is secured through members of the community. On the other hand, where insufficient capital is mobilised within the community, mechanisms are in place to access government funding through IDC or Retail Financial Intermediaries (RFI) which act on behalf of Khula or a Local Business Service Centre which acts on behalf of Ntsika.

Various requirements or criteria are laid down for assistance programmes especially for funding. These include black ownership, female ownership, job creation, economic merit, viable and sustainable projects, expertise, amount of owner capital, amount of borrowed capital, securities available.

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Registration of the CDC and the drawing up of an investment memorandum/ prospectus needs to be done in compliance with the Companies Act. There are no specific laws in SA relating to support for Community Development Corporations as in the USA, and policy development is still in the formative stages in SA. However, within the existing supportive legal framework and parastatal support it is possible to found a CDC. But direct comprehensive, supportive and facilitative state legislation and policies, as in the case of the USA, are crucial in the CDC implementation process particularly for integrated community development in SA.  Funding here refers to both the quantum and the sources of funds and includes share capital, shareholders loans, debentures, bonds, state grants, and donations in order to establish and operate the Lenasia CDC. Funding is an important factor because in view of current competing demands for limited state funds by state departments including welfare, education, and housing, it is unlikely that the state would be able to provide for the funding of the CDC in Lenasia. The state may be able to provide support services and limited funding through Khula, Ntsika, IDC, Independent Development Trust [IDT], and the Development Bank of SA [DBSA] but direct grants are unlikely to come by easily. Another source of funding may be the corporate sector. Here companies including Telkom, Billiton, Spoornet, and Amplats are known to be funding certain economic empowerment projects in various parts of the country. (Saturday Star, 2/1/1999) But funding by them would also need to fit in terms of the respective company’s priority 61

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criteria.

Evidence of funding as a critical factor can be seen in many CDC’s both locally and abroad. The Stutterheim Development Forum was funded by the DBSA. The Buffalo Flats Community Development Trusts [BFCDT] funding came from the Netherlands Organisation for International Development Co-operation and USAID. BFCDT also received bridging finance for its site and service project from Johnson and Johnson Housing Trust. The USA CDC’s funding came from various sources including Federal grants, local government and banks. Insufficient funding could lead to the collapse or closure of the CDC as in the case of Community Bank where corporate support was lacking. (Coovadia 1998: 1) Sufficient funding by means of shareholder purchase of shares in the company as investment enabled the Nurul Islam Plaza project to be successfully completed. In the case of MAIK it was a combination of individual and family donations in cash and kind: shop assistants giving one full months salary; collections from the community; bank mortgage bonds; and income from investments that funded their development projects both locally and abroad. (MAIK: 1994) In the case of Jaame, funding came from shareholders. The capital of the company was structured in an open-ended way, which allowed investors to buy shares on an ongoing basis instead of being a closed fund where funds are raised from investors for a specific project or investment. Shares were not traded in Jaame and investments were made according to the shareholder capital funds and shareholder loan funds it had on hand without any borrowing from financial institutions unless required for bridging purposes.

The quantum and source of funding required for a Lenasia CDC would depend on the structure and activities of the CDC. 62

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For the purposes of determining the funding of the CDC in Lenasia it is assumed that (a) the CDC in Lenasia will be a registered as a Section 21 Company in terms of the Companies Act 1973, and (b) the CDC will itself create further entities for different types of capital mobilisation and investments. Hence, the CDC could mobilise capital according to specific investment projects as in the case of the Nurul Islam Plaza or an open-ended fund could be established for investment purposes, as in the case of Jaame. It is suggested here that both strategies be used. This strategy may be reviewed from time to time. A community bank operation or finance company might provide an avenue for open ended raising capital because of the need to fund continuous growth as in the case of Jaame while a specific property investment or an investment into a franchise business may be a closed fund.

Funding for the LCDC Ltd. as section 21 public company [LCDC S21] can come from a variety of sources. These sources include members subscriptions, “kickstart” grants from donors within the community or from the corporate sector, local development agencies, parastatal agencies, international donors and development agencies, and founders. The S21 can also secure “soft” loans if need be. Where the LCDC S21 has more specific projects, for example an investment holding company, it may have a public issue of shares for ongoing investment activities. Several public issues may be made as further investments are identified and as more funds are required. Alternatively, the LCDC S21 may have a property investment or other project which requires a definite sum of money, in that case a separate public company may be floated with a closed end fund. LCDC S21 may itself be a founder shareholder in such entities or the latter may even become subsidiaries of LCDC S21.

Other options of raising capital for funding purposes could be 63

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bankers acceptances, mortgage bonds, shareholders loans, debentures, and preference shares. As far as is possible, borrowings against payment of interest from third parties should be avoided and the use of ordinary share capital should be increased. Interest payment could sap profits which would otherwise be payable to shareholders of the respective entity.

The payment or receipt of interest is also condemned in certain faith traditions. Where necessary bank and IDC funding, IDT grants and Khula guarantees could also be used for funding purposes.

Funding requirements will depend primarily on the strategic plan of the LCDC S21. The plan should include the type of investments that it wants to pursue. This leads to the next critical factor of investments.  Investments refer to the specific assets which are purchased either directly through one of the LCDC S21 subsidiary companies or indirectly through other empowerment groupings with the specific aim of deriving an income or profit. Assets may represent equities in subsidiaries, in listed and/or unlisted companies; fixed assets including real estate, factory buildings, farm land, machinery and equipment; and current assets including cash, loans, and inventory.

Investments are critical because they give the company reason to exist. Investments not only provide profits to shareholders but also contribute to further development and empowerment.

For example, an investment into a mini-factory complex will inter alia bring employment, skills, products that will be beneficial, a sense of self-esteem to a community, and returns to shareholders.

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Purposeful investments need to be made, rather than investment for the sake of it. Investments need to be made with clearly defined criteria and strategies if they are to bring the desired outcome of empowerment. Evidence suggests that CDC investments must include the following criteria: ventures must be practical, manageable, low-risk, promote selfsufficiency, must have sustainable growth; and be community oriented. The community must further identify with the investment. (Vidal 1992) Jaame invested shareholders funds mainly in financing assets including motor vehicles, machinery and equipment, inventory, fixed property, and in businesses for its clientele on an interestfree but cost-plus-mark-up basis. This policy was pursued in response to high finance charges or interest charged by the traditional financial institutions. It was also a way of responding to community needs and aspirations. In Jaame’s case shareholder funds were continuously streaming in and were not specifically linked to investment requirements. The greater the amount of cash resources, the greater the amount available for investment. However, some of the investments made were of a high-risk nature and were not made with a clear strategy or definite criteria resulting in several defaulters.

Perhaps separate investment companies with different risk levels to accommodate investors with varying risk profiles should have been implemented.

Jaame pooled all the income generated from its various investments and made an annual distribution to shareholders.

Approximately twenty percent of the income so distributed was paid to MYM for religious, social, and community service purposes.

Both the Rustenburg Mosque Plaza and the Nurul Islam Plaza companies raised sufficient finance through a combination of 65

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share capital and shareholders loans to invest directly into office and retail property developments for the dual purpose of generating income for their respective operations, that is maintaining their religious institutions, as well as for providing a return on members investments. NationsBank CDC investments includes development or redevelopment of affordable housing units, commercial and industrial property, retail centres, community based facilities (for example, health clinics and day care centres) and a variety of lending products including construction loans, mini-permanent/interim loans, and ‘scattered site’ lines of credit. NationsBank also targets investments in companies that focus on neighbourhood development and that have the potential to create jobs. A specialised unit was created to capitalise companies that strengthen communities. (NationsBank(a) 1998: 1-12) The investments envisaged for a CDC in Lenasia would include equity in varying degrees in (a) property including mini-factories, multi-purpose commercial buildings, shopping centres, and residential complexes; (b) businesses including security, franchise operations, financial and business services, manufacturing, heathcare, telecommunication, textile, information technology, chemical, ecological and cultural tourism, and distribution. Some of the investments may be in partnership or joint venture with existing established businesses and the corporate sector, while others may be sought with historically and culturally linked partners. Some of its investments may be channelled in consortia with other black empowerment companies to acquire stakes in technology, communications, healthcare, energy and other strategic sectors of the economy. A small portion of investments may also be made offshore, subject to legal formalities, if it is going to be beneficial for the community while another portion may be invested in a small business loans company as a ‘retail financial intermediary’ (Khula 1998: 6) 66

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The investment criteria for a Lenasia CDC would include practicality, manageability, special funds for differing risk levels, promotion of self-sufficiency, must have sustainable growth, be community oriented; and the community must identify with the investment in terms of their needs, values, and aspirations. In addition profitability and cash generation are important criteria, because returns to shareholders will be an important factor in the structuring of the CDC. Avoidance of investments in which directors have a direct or indirect interest should be standard policy. This is to avoid any form of doubt and suspicion of anything that may seem improper and which may in turn lead to unwanted damage in the confidence and trust of the community.

In terms of the risks involved in specific types of investments, the CDC in Lenasia may have a strategy of establishing several subsidiary companies with different risk levels. This is to grant risk averse investors the highest capital protection with lower returns on investments. On the other hand, investors who are comfortable with higher levels of risk perhaps with possibilities of higher returns may invest in higher than normal risk ventures. These may include a venture capital subsidiary set up specifically for micro lending and small business where the risks are usually higher than say in a property investment.

The next critical factor I turn to is the board of directors, executive personnel, and staff.   The Board refers to the appointed board of directors of the company in terms of the Companies Act or Board of Trustees of a trust. Management refers to the executive personnel appointed by the board to execute board decisions in the day to 67

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day business. Staff is the personnel needed for operational functions. It is critical that the board and management not only comprise of professional, talented, and respected persons with relevant expertise but also that they conduct the affairs of the company with diligence underpinned with a high sense of business morality, ethics and values. Staff too are critical in that they are both the contact persons with the public and in charge of the day to day operations of the entity.

In the case of Islamic Bank the liquidator attributed three main causes of its failure. All three were related to the quality of the board, management and staff: (a) The company’s records reflect a high percentage of non-performing assets; (b) issued share capital appears to be unpaid and consequently the Company was under capitalised for purposes of banking operations and (c) inadequate credit control and general financial management. In addition the liquidator reported that it appeared that the management and directors had contravened provisions of the Companies Act and the Banks Act. Certain directors could possibly be held personally liable for the debts of the company. (Wilkins 1998: 3) The first factor indicates a lack of proper evaluation of investments by management or a lack of competent personnel to perform the function of evaluation of investing depositors’ money. The second factor suggests an ethical misdemeanor as well as a contravention of law on the part of senior management. The third factor also points to incompetence on the part of both clerical as well as executive personnel.

In the case of USA CDC’s, the GPG analysis indicated that a key success factor, amongst others, was the ‘leadership stability’. The average total output of CDC’s that have enjoyed stable leadership is consistently higher than the output of other groups. It falls as the degree of leadership instability increases.

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(GPG 1998: 26) A similar finding was made in the Stutterheim case where a key success factor, amongst others, was cited as the ‘presence of strong, talented and respected leaders whom the entire community supports’. (GPG 1998: 70) In the Oukasie case, ‘choice of trustees and the use of technical experts was to be a critical factor in the success of the Trust in that the Trustees from the NGO sector were well connected and had good process skills’ and ‘success can also be attributed to strong and dedicated leadership within the Trust, as well as dedicated staff members’. (GPG 1998: 72; 75) The fostering of trust between ‘prime movers’ and shareholders was cited as the answer to the success of Champion Challenge, a small Soweto grouping of ex salespeople turned traders.

(Randall 1999: 27) Although the group lacked any social, cultural or religious bonds, they ‘had to build the trust’ in order to succeed. (Champion Challenge 1993 in Randall 1999: 27) In the case of a CDC in Lenasia the board needs to comprise of directors with business acumen as well as persons who are respected and trustworthy members of the community. Further characteristics are persons who are able to act independently and objectively in their decision making without fear or favour of any group. Board members should also have technical skills and talent particularly in financial management.

One way to ensure acceptance of the board by the community is to call for nominations from members of the public similar to the nomination process in certain state appointments. The board should comprise a mix of persons representing various communities within Lenasia rather than being drawn from any particular community. An independent selection panel could also be established to select the board from the various nominations according to predetermined criteria. The appointment of an independent panel will further provide 69

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credence to the selection process.

The management and staff too need to be highly trained and competent. They will need to commit and dedicate themselves to a charter that enshrines the values of the company including the vision and “grand passion” of its leadership and of the community. One of the aims of the CDC in Lenasia needs to be the creation of a learning organisation where every participant will undergo a continuous process of personal learning, growth and development. Even the selection of staff will need to be done on the basis of prespecified criteria so that the competence level and technical abilities of personnel are commensurate with the particular tasks that will need to be done.

The next critical factor for successful implementation: Support system.  Support system refers to the link between the CDC and an outside organisation, such as a consultancy or agency, which provides specific technical support to the corporation. The support includes assistance with setting up the infrastructure, training of staff, transferring of skills, sharing of new knowledge and techniques to enable staff to become more competent in the implementation of a particular project. In terms of the PSL implementation strategy, the outside consultant helps to provide relevant solutions and link the CDC to more remote resources and technical support if need be.

A support system is important because it enables the corporation to carry on its core business knowing that it can rely on support if needed for other functions. These may include developing labour relations strategies, administrative 70

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and accounting systems, and financial management. Since blacks were generally excluded from a variety of jobs and professions in the past, the empowerment process includes a process of training, skill transfer, and technical support.

Without exception, the Oukasie, Buffalo Flats, and Stutterheim projects had access to strong support in the form NGO’s, consultants, overseas volunteers, and financial institutions either on a full-time or consultancy basis. When the New Republic Bank [NRB] was launched in the early 70’s primarily by community champions within the Indian community of SA, technical support was provided by the Standard Bank of South Africa. The NRB, as a mature bank today, was recently placed under curatorship not because of a lack of technical support, but rather because of adverse publicity created in the proposed sale of the bank to an empowerment company represented by Mzi Khumalo. The adverse publicity led to depositors withdrawing funds on a large scale causing liquidity problems.

One of the failings perhaps of both Jaame and the Islamic Bank was that both did not have strong technical support from more experienced financial institutions, although there seems to have been some knowledge transfer from international experts in so far as their product development was concerned for example mudaraba, murabaha, and musharaka. AlBaraka Bank (South Africa) on the other hand was linked to an international banking group that continues to provide the Bank with technical support in terms of systems, products, and best practice.

The support system of a CDC in Lenasia needs to comprise of a key consultant who in turn has access to further and further resources that could be made available to the corporation in terms of the linkage strategy. At each stage of the operation, the board, management and the relevant consultant will need to confer on the adequacy of the organisational, business, and 71

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technical systems of the company. Where necessary partnerships will need to be created with the aim of transferring knowledge and skills. In line with the notion of empowerment, an underlying theme will be to reduce reliance on outsiders all the time but without sacrificing standards, know-how, and quality of service.

The next critical factor that is discussed is the issue of partnerships.  Partnerships here refer to structuring business and development projects jointly between corporate South Africa and/or historically linked companies abroad on the one hand, and local community corporations on the other hand for mutual benefit where both parties have an equity stake in the project. The corporate partner benefits from gaining entry into a market that was hitherto closed, hostile, or restrictive, and the community gains equity and thereby, power to determine policies, for example employment and location, access to expertise, and new knowledge.

Partnerships with the corporate sector are important because it is the corporate sector that has vast amounts of financial and human resources and skills that can be shared in the process of operating a business. Partnerships are also likely to spur further growth and development of business in the area because of the scale of business and the expertise that comes with the participation of an established company. Examples of equity partnerships can be seen in the larger empowerment scenario where for instance Thebe Industrial Holdings purchased equity in Hoskens (now known as Thebe Hoskens) an insurance broking company. Hoskens are thus able to tap into Thebe’s constituency and supporters whereas it allows Thebe to get a 72

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foothold into the short term insurance industry. Another example is that of Brimstone which acquired a stake in Sea Harvest thus giving the mainly Cape based empowerment company a direct stake in the fishing industry, which is very close to the Cape community. The franchise option, at a much smaller scale compared to large empowerment company deals, is yet another example of how partnerships work between the franchisee and the franchisor. The franchisor as business partner develops business ideas, sets and ensures that standards are maintained, provides the necessary training and support, and the franchisee is empowered to take charge of his/her business.

In the case of a CDC in Lenasia, partnerships will need to be formed with the Southern Metropolitan Local Council (SMLC) for land development. This was evidenced in the case of the recently developed Health and Racquet Club where council land was leased to a corporate for bringing recreation to the community. The council was unable, on its own, to provide such a facility to the community. Partnerships will need to be formed between the CDC and, for example (a) banks to develop community financial institutions including community banks, (b) property developers to develop the housing needs of the community, and (c) insurance companies to develop a community insurance company. Partnerships may also be formed with companies in India, Pakistan, Africa, the Middle East and South East Asia to take advantage of historical, religious and cultural ties to set up joint ventures in Lenasia as is the case with other multinational companies including Coca Cola, Compaq, and Kelloggs where business partnerships are developed with South African entrepreneurs.

This leads to the next critical factor: business ethics and values.

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 Business ethics and values refer to the underlying beliefs, standards, ideas, criteria, principles, and policies which are derived primarily from scripture, the constitution, and recognised sound business practice and which (i) guide human thought, action, and behaviour, (ii) develop and maintain attitudes, and (iii) make value judgements. (Cajee 1996: 23) Business ethics and values are the ‘moral foundations’ of business. (Covey 1992: 90) Business ethics and values are important to a CDC in Lenasia because they provide the organisation with a basis on which to conduct its business operations and how it relates to its stakeholders. Issues including honesty, accountability, transparency, attitudes and service to clients, integrity, keeping promises, not cheating, fairness, sound labour practices, and communication with stakeholders are contributory factors to the success of the organisation. Further, since we are living in a new democracy that respects the beliefs, cultures and religions of all citizens, any business is obliged to be sensitive to those particular values.

Evidence of business ethics and values are found in several corporations and professions usually communicated through mission statements, public broadcasts, advertising and business practice. Dion, the discount chain for example emphasises its policy of keeping promises in its slogan ‘a promise we make is a promise we keep’. In the auditing profession, an auditor will not accept an appointment from a potential client unless his/her colleague consents. An auditor is also bound by confidentiality rules to ensure that information about his/her client is not disseminated to unauthorised persons. Divulging of confidential information could result in loss of clients and perhaps litigation. It is considered a sin and unethical practice 74

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to lie to a customer in order to sell him/her your goods or services in most if not all religions. Bribery and corruption are not only considered sinful but also illegal in terms of SA law.

Wadee (1999 :1) asserts that the founders of MAIK were steeped in the traditions of Islam and more particularly in core fundamental values of ‘honesty, integrity, and the duty to fellow beings’. These values undergirded the organisation activities throughout its 85-year history and contributed to its success and the work that it was able to achieve to this day.

Wadee stressed that the core values were in fact the ‘heart of the institution’. There may have been errors of judgement but never has there been any form of corruption, theft, or dishonesty from any of its board members, management, or staff in the conduct of the institutions business.

The CDC should upfront publicly declare its ethics and values after a process of clarification and formulation. In its formative stages, one of the tasks of the LCDF would be to obtain inputs from its targeted community and other stakeholders of the ethics and values they would identify with in the operation of the corporation so that all parties will know what to expect in their dealings with a CDC in Lenasia. More importantly is that all persons within the organisation including directors, management and staff adhere to the adopted ethics and values and to be seen to be doing so without having double standards.

Failure to adhere or a perception that the LCDC is failing to maintain a high code of ethics may result in the collapse of the corporation.

This leads to the final critical factor of the need for a paradigm shift.    75

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 A paradigm refers to a patterned or traditional way of thinking about certain phenomena or problems and a paradigm shift refers to a courageous break with the past to distinctively new ways of thinking. (Covey 1992: 67) In a sense a paradigm shift challenges the comfort zones that people are set in and may engender a fear of change in them. The paradigm shift is integral to the role that the leadership of a community empowerment company will need to play.

A paradigm shift is important to South Africans because we are living in a new era of post-apartheid democracy and globalisation. We can no longer think of confrontation, protest politics, and destruction but need to transform our thinking towards growth, reconstruction, and development. We can no longer think in terms of community power to achieve only social welfare and political ends, but have to transform towards economic empowerment. We can no longer take a lethargic view on youth, women, the disabled and the environment, but we have to be proactive in ensuring that our total ecology is healthy and strong so that we may survive the next millenium and leave for posterity what is rightfully theirs.

Evidence of a paradigm shift may be discerned in several aspects of Jaame’s operation. One was the shift from interest based finance to non-interest based finance. Another was inherent in the way the company’s capital was structured - a move away from purely financial gain to a combination of financial and spiritual returns - dividends for this world and for the next. Yet another was its strong base in Islamic norms and practices, a shift away from secular approaches. Jaame was in a sense “home grown” and not dependent on its thinking from abroad. Jaame was pioneering proactively a field that may have been dormant in the broader international Muslim 76

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community for several centuries. A paradigm shift may also be discerned in the Nurul Islam Plaza project where a commercial office and shopping complex was no longer the private property of an individual or a single family, but was opened to community participation. This was clearly a shift in the thinking of the promoters as well as in the members.

Lenasia has not, thus far in its history, seen an economic empowerment company nor any investment project that embraces all religious and cultural groups and that can be truly be called a Lenasia owned company. The first paradigm shift that would be needed in the case of founding a CDC in Lenasia is that all the communities of Lenasia will need to work cooperatively and collectively rather than unto themselves.

Secondly, ownership of projects will also need to be passed to the community rather than to individuals and families.

Thinking here will need to be changed from individualism to communitarianism where projects are “communitised� rather than privatised at the individual/family level. The LCDC will need to pursue a course of communitisation.

Thirdly, the community will need to change its thinking from dependence to self-sufficiency and self-reliance in broader development issues within the community and not only in their own idiosyncratic religious, cultural, and social welfare affairs.

Environmental issues, heritage, youth affairs, sport and recreation, security, economic and the broader development and growth of Lenasia would also need to be tackled rather than focusing on water and lights, rates, and bread and butter issues.

Fourthly, thinking will need to change about Lenasia’s position from a dormitory suburb to becoming a first world city.

Lenasia could develop strong industrial, financial, commercial, 77

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agricultural, and educational and cultural sectors where people may work, play, pray, learn, and enjoy a better quality of life.

Unless past patterns of thinking are changed, it is likely that Lenasia will remain a third world dormitory suburb.

Fifthly, thinking will need to change from “survival” to “sustainable” growth and development where the community not only survives the day-to-day needs of its organisations and institutions but also are enabled to sustain themselves through, inter alia, income-generating investments. Whereas many groups and organisations survive on donations and goodwill of the community, they need to think of how projects can be sustained in the long term from investment income rather than donations.

The transformation of thinking will need to come through “vision transmission” and consciousness raising activities from the community champions, leaders and “livewires”. A variety of strategies may be used for this essentially educational purpose. Strategies may include using (a) the print and electronic media including community based radio stations like Eastwave, Radio Islam, and the Voice and community based newspapers including The Indicator, Southern Globe, Lenasia Times, AlQalam and ArRasheed; publishing pamphlets, flyers, and brochures; (b) face to face discussions with groups of youth, parents, women in community halls, in homes and street meetings; and (c) engaging imams, pundits and priests to encourage this paradigm shift in mosques, churches, temples, and other public gatherings. Educational programmes designed specifically for schools will need to be introduced where both teachers and learners could engage in the issue of paradigm shift as it relates to community empowerment.    78

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 The eleven factors discussed above are critical in the founding and operation of a CDC in Lenasia, not individually but in combination that will enable the corporation to succeed. These critical factors enable the founders of the CDC in Lenasia to ensure that all possible alternatives in finding appropriate solutions have been explored and thoroughly scrutinised so that a cohesive strategy is developed for the final stage of the PSL strategy.

The next problem to be addressed is the actual application of the solutions and the ideas and information retrieved. This leads to the next chapter that deals with the steps to be taken for the actualisation of the CDC in Lenasia. ___________________________________________________

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      At this juncture, the underlying concerns in the broader community of Lenasia have been identified within the context of a post-apartheid democratic South Africa. Community empowerment has been earmarked as a way forward to addressing some of those concerns. The establishment of a Community Development Corporation has been proposed as a way forward to community empowerment. The problem statement articulated here is how to implement a CDC in Lenasia.

A process of search and retrieval for ideas and information ensues. Various ideas and information emerge from that exercise. In particular eleven critical factors are identified for the successful implementation of a CDC in Lenasia.

The application stage comprises the definite course of action in the founding of a CDC in Lenasia within the PSL strategy. The specific steps and actions that need to be taken to actualize the CDC now have to be taken. The application stage ensures the founding, operation, and continuation and expansion of the corporation within the specified community. Without the 80

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application of the solution, implementation is incomplete and can be regarded merely as a blueprint as in architects plans.

This section of the report draws from insights gained from the literature review, case studies as well as from personal experience. As it focuses more on the practical steps to be taken towards actualisation rather than on application theory, the section takes on the character of a forward plan of action which involves four interactive phases, namely (a) initiation, (b) organisation, (c) establishment, and (d) continuation and expansion. Each of the phases comprises a number of steps and is discussed below.  The initiation phase involves the planning and preparatory tasks for founding the CDC in Lenasia. Specific tasks that will need to be done as part of the initiation process are (a) identifying community champions (b) initial discussions and (c) the mobilisation of wider community support.      The first step in the initiation process is to identify community champions within the targeted community. This can be a single person or a group of persons who show concern for the community and who are likely not only to support the idea of a CDC but also to be actively engaged in the implementation process. A particularly important function of the community champion is to provide leadership for the project so as to drive the process.

The identification of a community champion will need to be done initially by the outside consultant through his/her knowledge of the community and through contacts within the 81

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community. S/he may also be assisted by knowledgeable persons within the community, and could glean through community newspapers to identify community champions.

In the case of Lenasia, several community champions can be identified especially those serving existing social welfare and community service organisations. Names that immediately come to mind are Messrs R Naidoo and N Moolla (fictitious names) who recently received awards separately from two different organisations in recognition of their service to the community.

Now that possible community champions have been identified, the next step is to hold discussions with them about the idea and need for a CDC in their township.  The second step is to arrange a series of face-to-face meetings between the consultant and community champions either individually or in small groups for a discussion on a range of issues pertinent to the problems of the community and possible solutions. The purpose of initial discussions is to motivate and gain acceptance, sympathy, and commonality about the empowerment of the community in Lenasia. A strategy that is likely to yield acceptance, for example emphasising the benefits of founding a CDC, will need to be carefully thought out and then used for initial discussions.

One of the community champions may facilitate a house meeting inviting others to an informal “get-together” or the consultant may invite the community champions individually to his/her home for the discussion. Another alternative is for the consultant to offer a presentation to a potential community champion who may then facilitate the presentation to a broader 82

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group of community champions.

The focus of the initial discussions is on soliciting concerns and problems about the development of Lenasia and sharing ideas of possible solutions. The idea of founding a Community Development Corporation in Lenasia as a way towards community empowerment should be presented. The specific terms will need to be explained during the course of the discussion and the historical background to the CDC movement locally and abroad should be discussed.

In particular the option of tried-and-tested CDC as a viable community based vehicle to address felt needs will need to be discussed and their support obtained therefor. A presentation using audio-visual aids of the CDC as a vehicle for integrated development and its potential to contribute to alleviating pains should be made so that at this early stage local community leader support can be obtained. And having established that a CDC is the definitive vehicle, the next issue that would need to be settled is the articulation of the problem: How to implement CDC in Lenasia, given that other options may not be feasible.

Having a small group of key people accept the idea provides assurance to some extent of the acceptability of the idea to a broader audience. In a sense the initial discussions act as a screening process to iron out problem areas or to remove anything that might not be acceptable within the broader community. Once there is a sense of acceptance and commonality among community champions, the next step is to start mobilising wider support from all sectors of the community.   The third step in the initiation phase is to mobilise wider 83

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support from the target community. In particular, various stakeholders, both individuals and organisations, need to know, understand, and support the idea. This is to enable the stakeholders in turn to obtain the support of their respective constituencies.

The community in Lenasia is not a monolithic one. It comprises of various faith communities which in turn have several layers of sub groupings. Many other interest groups exist. These include the “backyard� Lenasia Traders Association, the Hawkers Association, womens’ groups, youth groups, political parties, Lenasia Greening Committee, and SOWECC. A careful analysis will need to be made of the various key individuals and organisations that play important and influential roles in community life in Lenasia. Information may be gleaned from community champions who may know of such persons or organisations from their own networks of friends and associates. Lists of names may be obtained from a database of organisations and individuals kept by the local ANC office, or co-ordinating organisations such as the HCC, SOWECC, or the JU. Several meetings will need to be organised to market the idea to stakeholders for their acceptance. Presentations and discussions of the idea of a CDC and its benefits for Lenasia will need to be made to individual organisations, groups of organisations, and influential individuals. The agenda for such discussions needs to include (a) the impact of the colonial and apartheid era on black communities particularly on their lack of development and their disempowerment; (b) the current postapartheid era and the implications for community empowerment; (c) the problems facing Lenasia and its community; and (d) possible solutions to the problems.

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At this stage a small investigative random opinion survey of stakeholders will need to be done to sound out sympathy and support for the project within the broader community. The questions that will need to be asked focuses on the following broad issues: (a) the present state of Lenasia’s economy and community (b) problems facing the community especially in terms of its socio-economic development; and (c) the future of Lenasia.

Small group discussions in targeted communities in Lenasia including religious and cultural groups, business and trade associations, sport organisations, and resident organisations on the issue of establishing a CDC in Lenasia should be organised to broaden the awareness of and mobilise initial support for the project and to listen to objections and problems.

Local print-media advertised meetings could also be held for preliminary discussions as part of a process of involving interested persons from the outset. An explanatory brochure highlighting the problem will need to be prepared setting out the vision and aims of the CDC. This document will need to be circulated to targeted members of the community inviting critical comment. The purpose for this initial process is to deliberate and articulate the vision of the project and to establish that the felt-need for a CDC in Lenasia is not only one advocated by the outside consultant, and community champions, but also that of the broader community.

The strategic objective of the presentations and discussions is to enlist the support of leaders from the wider community. If this initial testing of the waters indicates that the project has succeeded in mobilising initial support with positive feedback and does in fact have potential grassroots support, it would mark the end of the initiation phase and the beginning of the 85

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next phase in the application process.  Up until now the application process has been led informally by the consultant as catalyst and community champions as leaders. But having achieved (a) successful initiation of the project; (b) a positive indication from the several discussions and informal meetings; and (c) the support from the leaders and key stakeholders for the project, the focus of the consultant and community champions must now be directed at the next phase of organisation. This phase moves away from informal support mobilisation to formal community based structures.

This phase specifically involves (a) setting up of appropriate and relevant structures and (b) the development of master and specific action plans geared towards actualisation.  The next step is to establish formal organisational structures that will be engaged in the finer details of the application process. An organisational structure, namely a Lenasia Community Development Forum (LCDF), should first be convened for the sole purpose of formally taking forward the application process for the founding of a CDC in Lenasia.

The LCDF should comprise of a general assembly [GA] and an executive committee [EC]. The GA should comprise of members of the public, key individuals, and delegates representing organisations and interest groups. It should be open to any interested person. The GA should elect a chairperson, secretary, and a treasurer from among themselves.

The EC should be composed of about seven members elected by the GA. The EC should appoint its own office bearers and have powers to establish sub-committees as needed. The sub86

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committees in turn may comprise of single or multiple member committees drawn from either the executive committee or coopted from the general assembly or general public. The subcommittees will report to the executive committee which in turn will report to the general assembly.

The primary objective of the LCDF will be to take the process of the application of a CDC in Lenasia forward. In particular, the executive committee will be tasked with developing a strategic plan to take the application process further and deeper within the community. Because of the importance of the task of the EC, its members will need to be selected for their particular skills, talents, commitment, integrity, and representivity. The question arises as to how the steering committee is selected and by whom. Various strategies may be used here. Each organisation may nominate a person from their respective organisation. Volunteers may be called for through the media or through organisations. Announcements could be made at the various presentations and discussions for persons to volunteer their time in a committee. Specific individuals may be targeted for their specialist skills.

To ensure wide representation and inclusivity, key individuals, members of the public, and representatives of organisations, should be formally invited to a meeting to officially form the LCDF. Adequate notice should be given to persons who have shown interest in the idea of a CDC from previous meetings and discussions. Further, organisations should be formally requested to send delegates to the meeting with a mandate to serve on the LCDF with a view to forming a CDC. Members of the public and other interested parties should be invited through a newspaper advertisement in the local newspaper.

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Main features of the agenda for the meeting should include: a) Resolution on constituting the LCDF. b) Election of office bearers of the general assembly. c) Election of an executive committee accountable to the general assembly. d) Mandating the executive committee to develop a master plan and specific action plans for the founding of a CDC. e) Reporting back to the general assembly of the LCDF for ratification of plans.

The various committees will need to be set up with clear lines of authority and delegation of functional responsibilities. The leadership of the GA as well as the EC will be drawn from among the stakeholders so that the multitude of community interests is represented and simultaneously a sense of community ownership prevails.

The outside consultants role will be to facilitate the formation of the LCDF and its committees. He/she may also attend EC meetings to guide rather than takeover the process in terms of the PSL strategy.  The first task of the EC would be to develop a strategic plan at a retreat or “bosberaad” for focused attention. The strategic plan would consider (a) the actual strengths and weaknesses of the community, and the opportunities and threats presenting themselves to the community (SWOT analysis); (b) the actual problems and needs of the community. The strategic plan would also (c) formulate and articulate the vision of the community and (d) develop an appropriate integrated development plan.

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At this stage sub-committees responsible for specific tasks would need to develop more specific action plans. These committees should include: support mobilisation; public relations; finance and raising capital; legal and tax aspects; investments; business ethics and values; technical support systems; partnerships; staff recruitment and selection; and special commissions (youth, environment, heritage, arts & culture etc) to connect to the integrated development programme to take care of the various aspects of the founding of a CDC in Lenasia.

A major initial task of each of the sub-committees will be to further search and retrieve solution-relevant information that will help in formulating specific policies, strategies, and actionplans for aspects of the project that would culminate into a coherent, integrated combination of the whole CDC project where no detail is omitted.

A secretariat should be set up for this purpose to assist with coordinating and compiling data which needs to be collected from disparate sources, including government and parastatal organisations and specialist consultants such as architects, quantity surveyors, accountants, lawyers, educationists, investment analysts, and community empowerment practitioners. A cost-effective way to obtain much of the data is to have such consultants serving on the sub-committees of the LCDF. Several specific interlinked issues related to the founding of a CDC in Lenasia would need to be brainstormed, deliberated and resolved by the various sub-committees committees to develop a master plan of action including: (a) Mission, vision, and values of the corporation which in turn would impact on CDC internal policy, rules and 89

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regulations. The vision and mission in the case of the CDC may be articulated as follows: To undertake and facilitate the integrated development of Lenasia and its community to their fullest potential in partnership with significant stakeholders and roleplayers to become a healthy, prosperous and winning city and community within the context of the RDP, Gear, and the African Renaissance in the next millenium and beyond. (b) a non-profit organisation or a company for profit, or both.

This decision will impact on the funding of the corporation. A for-profit company is more likely to attract investment funds than a non-profit organisation whereas the latter is more likely to receive grants and endowment funds than the former. Tax implications of the structure will also need to be considered carefully. (c) Target communities and their involvement as this is likely to impact on raising shareholder funds. Should the investment be open to every citizen of Lenasia or should it be restricted to the business community. (d) Investment criteria and preferred investments. These would need to be consistent with the broader aims of local integrated development. (e) Governance structures of the CDC and rules determining the board of directors and management to ensure that talented and professional persons are appointed and that issues of corporate governance are adequately addressed. (f) Budgets and business plans. A projection of the funding requirements will be needed together with detailed plans of how the business is going to be managed, by whom, and 90

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specific marketing strategies that will be employed to further the business of the CDC. (g) Staff recruitment, selection, appointment to ensure that the calibre of staff needed are the ones appointed, and staff training to ensure that they understand the CDC values and are competent persons. (h) Capital structuring and funding including the determination of the level of shareholder contribution towards the integrated development framework. (i) Legal formalities including the drafting of special clauses for the memorandum and articles of association to protect and promote varying interests of participating individuals and communities, for example voting rights of shareholders, appointment of directors, and “socially sensitive or permissible investments”. (j) Registration of the company and attending to formalities. (k) Raising of capital, and (l) The relationship between the CDC and other business and community organisations.

Final proposals of definitive action plans will need to be deliberated thoroughly and presented to a further general assembly meeting of the LCDF for discussion and ratification.

Once the LCDF has ratified the proposals the stage is set for the next phase of establishment.    91

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 The establishment phase refers to actioning all the plans and strategies of the various committees. In the case for the establishment of the CDC in Lenasia some actioning will need to take precedence over others, some will need to be done parallel with others while certain actioning will need to follow others as is done in a variety of project management activities.

The various steps indicated in this section are based on assumptions of strategies and action plans that have already been ratified by the GA.  Prior to any establishment activity, some of which may involve acquiring legal rights and obligations to third parties, the necessary corporate, taxation and legal requirements will need to be put into place. The overall strategy for the operation of the CDC in Lenasia is to conduct its activities mainly through two public companies, namely a single non-profit company and a for-profit company where both companies will be linked through a special capital structure.

In this regard two separate public companies must be formed: one a non-profit public company limited by guarantee in terms of Section 21 of Companies Act 1973, as amended. Hence the registration of Lenasia Community Development Corporation Limited (LCDC (S21)). The S21 company will serve as a conduit for grant-in-aid funds, donations, as well as profits derived from equity holdings in operating companies such as the second company. It will be the recipient of largely donor funds that will either be re-invested or utilised in terms of donor specifications. The S21 company will also serve to channel funds derived from income or earmarked donations 92

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into community and social service aspects of the strategic plan.

Another public company, namely LCDC Investment Holdings Ltd. [LCDC Invesco], must be registered in terms of the companies act. The latter will receive investment funds from shareholders who will receive a return on their investments.

(Appendix 2)   The capital of LCDC S21 will comprise of R1 shares and will be open ended to accommodate as many members as possible.

Each member will have one vote irrespective of the number of shares he/she may have in the company. The R1 share will be linked to the member’s purchase of shares in LCDC Invesco.

When a share is purchased in LCDC Invesco, the member would also purchase a share in LCDC S21.  The share capital of LCDC Invesco will comprise of two classes of ordinary shares namely ‘A’ shares (authorised capital: 10000000 A ordinary shares of 1c each) and ‘B’ shares (authorised capital: 2500000 B ordinary shares of 1c each).

Both classes of shares will in turn be linked to debentures. ‘A’ shares will belong to the respective community member/investor whereas ‘B’ shares will belong solely to LCDC S21. The ‘B’ share and its linked debenture will be donated to the LCDC S21 by the ‘A’ investor but the funds will remain in LCDC Invesco and may not be sold or pledged.

Profits will then be divided on a 75:25 ratio to A and B shareholders/debentureholders.

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Each member would initially pay R102. This amount is made up as follows: Allocation Member

Membership of LCDC S21 75 A class shares of 1 cent each 25 B class shares of 1 cent each 75 debentures of R1 each 25 debentures of R1 each

TOTAL

LCDC S21

Total

1,00 ,75 -

,25

1,00 ,75 ,25

75,00 -

25,00

75,00 25,00

76,75

25,25

102,00

The above structure is designed to provide 75% of the profit distributions from LCDC Invesco to members and 25% directly to LCDC S21.

It is anticipated that initially 20000 units will be sold to community members giving a capital of R2million in LCDC Invesco. The capital fund will be open-ended and members will be able to join on a continuous basis. Perhaps a valuation will be done on an annual basis so that new shares are issued at valuation rather than at par. It is envisaged that every citizen of Lenasia, major and minor will become a member over time.

Each member may purchase as many units as he/she wishes.   A panel of independent adjudicators will need to be appointed.

The panels task will be to select the office bearers of the two companies in terms of prespecified criteria including expertise, integrity, trustworthiness, commitment, talent, and sensitivity towards ethnic, religious, and gender representation. The office 94

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bearers for each company will include a board of directors, both executive and non-executive, a managing director, chairperson, secretary, and auditor. As the management of CDC affairs is critical to its success, the nominated directors and other office bearers will need to undergo a screening process as is done in several public institutions. Persons and firms who are then recommended by the panel and approved by shareholders of LCDC S21 and LCDC Invesco at its inaugural meeting, will be duly appointed. The appointees could remain the same for both companies with slight variations if need be. It will be important to structure board of directors in such a way that each year one director would not be reappointed and in his/her stead a new appointment is made to ensure continuity and stability of the companies.   Investments by the LCDC Invesco will be made in terms of strict criteria. The investment should provide a reasonable, market related return. CDC funds should be invested prudently in low risk investments. No loans may be granted to any director of the company. The CDC should have a controlling stake in the investee or be able to derive benefits for its members or constituency, for example in the form of employment.

Ventures that are relevant and beneficial to residents of Lenasia may be considered for investment purposes. For example, the establishment of a property portfolio where investments are made in mini-factories and small retail complexes. The first project may be a small factory industrial park or the creation of an “empowerment zone”. Another example is the establishment of a Lenasia Equity Fund where investment funds are sought from residents of Lenasia as well as outside to invest in companies that the LCDC Invesco may own or have a 95

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controlling interest. Such companies may be relocated to Lenasia so as to add to the economic development of the area and its residents. New jobs may be created in this way.

A second tier of capital may be raised from CDC members, the general public, and strategic partners for specific investment ventures in or outside of Lenasia. This second tier of capital may be invested directly into for-profit companies with a proviso that between 10% and 25% of the capital so raised be donated to the LCDC S21 in the form of share ownership so that dividends declared on that portion will accrue to the LCDC S21, similar to the LCDC Invesco structure. In this structure the LCDC S21 will control the investment jointly with shareholders, but will have a sizeable influence to determine the policies, practices, and the appointment of key personnel of such a company through its voting rights. (Appendix 2) Several other investments may be considered including in the manufacturing, security, financial services, real estate, technology, and healthcare sectors. (Appendix 3)  Further formalities would need to be completed including opening of bank accounts, income tax registration, obtaining tax exemptions where necessary, establishing offices, arranging p o box, telephone, fax and e-mail, and designing and printing business forms. Special care should be taken in establishing a sound system of internal control in conjunction with the LCDC auditors and consultants. For example, bank signatories should comprise of at least the managing director and one other director.

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  The personnel that LCDC will need will change as the corporation grows. However initially, the LCDC would need at least secretarial and administrative staff in addition to an investment manager. Initial tasks will entail capital mobilisation from the general public and ensuring that the company is managed with the highest level of efficiency and integrity.

Personnel may be either recruited through a personnel placement company or the sub-committee on personnel may recruit suitable personnel according to accepted criteria, subject to the approval of the Board of Directors. Once selected and placed, personnel should undergo a period of training in the ethos of the company, its policies, procedures, values, and operations.    Raising capital will be an ongoing activity as the focus of the CDC as a group is capital mobilisation and investment. As the process of securing investment options is commenced, the raising of capital becomes imperative. Raising of capital should be put into top gear once the legal formalities of the company are complete.

Capital for the LCDC is required for the following purposes: (a) Preliminary expenses including the initial set up costs from the time of initiation to the registration of both companies.

It is estimated that this cost could be about R50000, 00. (b) Operating expenses for the first three months. It is estimated that this cost would be about R20000, 00. (c) Investment activities. As indicated above, the initial capital 97

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to be raised is arbitrary and could be in excess of R2 million. (Appendix 5) Because the establishment of the LCDC and its continuity is critically dependent on funding, the capital raising effort will need to be prioritised at the outset given the time-consuming and often lengthy process involved in raising the initial capital.

The investment memorandum / prospectus will need to be prepared accordingly for the raising of capital and distributed through stakeholder organisations through to respective communities. This should be combined with press and media coverage as well as advocacy from community and religious leaders. Until such time that sufficient commitments and/or guarantees are received from shareholders and potential lenders and/or donors to cover capital requirements, the investments may not be actually made. The initial capital funding arrangements need to be in place within specific time constraints.  Within a period of three months, all aforementioned aspects in relation to the establishment of the LCDC should be completed and can then proceed into the next phase of the implementation process: Continuation and expansion.  The continuation and expansion phase refers to the ongoing growing and development of the corporation in terms of capital mobilisation, investment activity, personnel, and community services - quantitatively and qualitatively.   98

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 The primary source of capital mobilisation will remain the membership of the company. As membership forms the bedrock of the LCDC, it is imperative that the membership base continuously grows in breadth and in depth. Growth in breadth means that the quantity of the membership base must be grown in terms of new members. If in the first phase the target membership was 20000, this number should be grown to 250000 or more over the next five to ten years. Growth in depth means that existing members must be nurtured so that new money continuously flows in from that source. The initial R102, 00 can become a monthly, quarterly, bi-annual, or annual purchase of additional shares in the LCDC by existing members. For sustained continuation and growth of the company, members expectations will include a soundly managed company, growth of their investments in terms of value, a sound track record of profitability, creation of employment, innovative community beneficial investments, zero corruption, continuous strength in leadership, and tangible social returns or benefits.

While membership growth will be an area of concentrated effort, other areas of capital mobilisation should not be ignored. With the corporate sector becoming more conscious of its responsibilities towards communities, they too are beginning to make earmarked donations to community foundations such as the LCDC S21. Growth of the LCDC can be given impetus by tapping into this source for the benefit of the community. Here too the LCDC management will have to demonstrate that they are competent to manage and invest such funds in a way that will satisfy corporate grantmakers.   99

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 As funds pour into the coffers of the LCDC, prudent decisions have to be made about existing investments and new investments. The investment activity will be an important area of the business of the LCDC, as investments will become vehicles for further and continuous capital mobilisation.

Existing investments will need to be nurtured for growth and evaluated on a continuous basis so that they remain relevant to the community and profitable simultaneously. For this to happen management must be strong and visionary. The available expertise must be utilised to its maximum and where necessary new personnel must be brought on board to add value to existing investments. Where necessary the strategy of joint ventures and partnerships must be utilised to further grow investments and underlying business activity.

For continuation and growth management should also be on the alert for new acquisitions and investments. New investments could include buying controlling stakes in targeted companies which could be relocated to Lenasia; establishing empowerment zones, where site and serviced land is made available for emerging entrepreneurs on newly acquired land; investing in a Community Bank to further strengthen community ownership of resources; and acquiring or establishing a short term insurance company in partnership with an existing insurer to tap into the vast housing, business, vehicle, and household insurance market within the geographic area of concentration of the LCDC. Proper feasibility studies and due diligence investigations should be done prior to investments being made. Stringent criteria should be set and adhered to so that only those investments are made that will fit the requirements of the LCDC and its membership base.  100

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 People are a company’s best and most valuable asset. For continuation and growth the LCDC will need to review its quality and quantity of staff on a continuous basis. There should be policies in place for adequate staff benefits, compliance with new labour laws, and going the extra mile. If the LCDC wants to be that learning organisation then policies and action plans will need to be put in place to ensure that staff are kept up to date with the latest technology in the work place, efficiency is reviewed and improved on a continuous basis and a culture of continuous growth and improvement in staff quality and performance become embedded in the organisation.

Staff incentives and rewards should also be reviewed periodically to ensure that they remain committed and motivated to serve the organisation.

This process of continuous growth and expansion also involves the continuous growing, maintaining, and developing of the LCDC’s policies as a learning organisation and includes the encouragement of all key participants including directors, management, staff, and community to learn, grow, and share the vision and mission of the corporation. For this purpose appropriate measures including training programmes, seminars, newsletters, media releases, and interviews will need to be arranged with support organisations. Staff should be encouraged to undertake self study and company supported study and training programmes and should be adequately rewarded for that learning. There are literally thousands of study and training programmes available today at universities, technikons, and private colleges and include basic issues such as customer relations and telephone courtesies to more advanced issues such as leadership development.

Further, the LCDC should create an environment of excellence 101

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in its businesses where personnel can thrive and give of their best to the LCDC, its members, customers, suppliers and associates. The value of excellence must permeate every aspect of the LCDC. Examples of such aspects include clean and fresh cloakrooms; neatly painted buildings; clean floors; modern finishes; best equipment, technology and systems; and friendly and efficient personnel.  One of the core programmes of the LCDC is its community and social service programme. The company is sold to the community on the basis of both financial and social returns. It therefore becomes incumbent on LCDC S21 to not only ensure that community relevant projects are supported but also to be innovative and create new areas of service. The continued support and growth of the LCDC will also be dependent on the type and intensity of community and social service projects that the LCDC S21 supports, creates, and manages.

The LCDC S21 must make a continuous assessment of community needs. The core function of the LCDC S21 will be to provide and support community and social service. It would therefore be essential to employ a full time director who would have his/her ear to the ground and take up any opportunity to either provide a service directly or to facilitate the provision of that service through existing or new organisations or committees.

Some of the areas of urgent need include youth services especially in sport, recreation, and informal learning; a heritage commission to investigate aspects of the history of Lenasia and making recommendations for the naming of important sites, streets, and buildings to reflect the role played by individuals in the development of the town; a security commission to ensure 102

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co-operation between police and community and to ensure that the community is protected from criminal activity; a language, art, and culture commission to promote and develop the rich heritage that the community and its faith communities risk of extinction because of past apartheid policies; and a small business advisory and support service unit could be provided in partnership with Ntsika to help develop the small business and cottage industry sector in Lenasia. (Appendix 4)  The application stage of the PSL implementation strategy is the process of actualisation of action plans that have been brainstormed and adopted by community leaders and stakeholders. It is during this stage that the community is mobilised, conscientised, and motivated to participate in their own development. During this stage the CDC is operationalised in pursuance of its vision, mission and goals.

For the continiuity and expansion of the LCDC, capital mobilisation, investment activity, personnel development, and community and social services – key functions of the LCDC will need to be further enriched with more and more creative ideas. Key stakeholders will need to be kept informed of LCDC’s affairs, developments, and finances, and a close relationship will need to be nurtured with the shareholders, personnel, communities, and the community service clients through newsletters, meetings, newspaper and radio communication. Corporation policies and ethos will need to be continuously reviewed and developed to synchronise with the growth of the LCDC. Links with the community, business and institutions will also need to be built with the view to implementing joint ventures and partnerships. ___________________________________________________ 103

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 

 

The study gave insights into the meanings of the terms community, development, and community empowerment. It elucidated the notion of a Community Development Corporation as practised abroad and in South Africa and briefly examined various implementation strategies.

The study argued for the implementation of CDC’s in SA within the context of both (a) a post-colonial/apartheid South Africa that is riddled with vast disparities in various sectors of society particularly between its black and white populations due to past unjust policies and (b) nation-building strategies adopted by the new democratic government. Central to the argument is that communities on the ground need to initiate programmes for their empowerment given that the state has inadequate resources on its own to address the vast developmental backlogs inherited from previous eras. By communities organising themselves, mobilising and managing their collective resources in a way that can increase their wealth, contributing to their well-being and quality of life, they will have made great strides in achieving the goals of community empowerment.

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The findings of this study suggest that CDC’s can be implemented by communities. CDC’s have been implemented in the poorest of the poor communities abroad and in SA. But communities need guidance on the concept and support in the implementation process. Communities will require much motivation and convincing to lend support to the idea. Hence a process of conscientisation or a process of social learning and awareness has to be a critical part of the implementation process.

The research findings indicate that a CDC can be implemented using a structured Problem-Solving-Linkage implementation strategy that includes a combination of critical factors.

Evidence suggests that a PSL strategy is essentially driven from the bottom-up with strong links to facilitator/change agent who in turn has links with more remote resources that can be helpful in empowering communities. The strategy focuses on real felt needs of the community which is dissatisfied with the present status quo.

Central to this PSL implementation strategy are the various critical stages beginning with the diagnosis of user felt needs and articulation of the problem, followed by the search and retrieval of ideas and information, finding a solution, and finally proceeding with the application of the solution. The application stage brings the project of founding a CDC to fruition through a definitive course of action and the project is then geared for continuation and expansion. Each community will invariably have a different set of circumstances that will need to be considered when determining strategies for implementation. For example, Langa in the Western Cape is likely to be different from Eldorado Park in Gauteng in terms of quality of life, per-capita income, and physical and human 105

106

resources.

The conclusion that can be drawn from the foregoing is that CDC’s, side by side with private, corporate, and state interests, have a major role to play in the lives of communities in South Africa. CDC’s have the potential to tap into community capital and human resources and invest for community empowerment, thus contributing to the mammoth task of the RDP, GEAR, and the African Renaissance. __________________________________________________

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



   At stake here is the future development of communities in South Africa. Ziauddin Sardar asserts that, inter alia, there are basically two alternatives that should be considered in respect of the future namely (a) an ‘aimless future’ or (b) a ‘planned future’. (1988: 3) An aimless future allows the status quo to prevail whereas a planned future is action oriented and goal directed. The CDC’s allow communities to develop both strategic plans for their idiosyncratic needs and action plans to achieve their goals in the future.

Being a strategy for post-colonial/apartheid community empowerment in South Africa, it is recommended that every community, especially those previously disadvantaged in SA, pursue the goal of establishing a CDC within their communities. Every community, whether based on geographic area, religion, culture, language, or shared interest, should endeavour to form a CDC to empower their respective communities. No matter how small the beginning, a forward 107

108

looking view should be taken so that every community can start owning and controlling part if not all of their collective resources. Examples abound where small beginnings have grown into empires.

The CDC as discussed in the foregoing chapters has several possibilities. Some alternatives that may be considered in the implementation of CDC’s are: (a) CDC’s from different geographic communities may combine their resources to operate joint ventures; (b) CDC’s that serve communities based on common culture, language, or religion may form associations and partnerships to strengthen their particular communities and organisations; and (c) multi-community CDC’s may be established to serve the needs of those communities.

While the idea of implementing CDC’s across the nation sounds a daunting task, it is possible to pursue this goal and succeed as is the case in the USA and elsewhere. However, for the idea to be given impetus to grow and spread like wildfire, it also needs the support of government in terms of more specific legislation and government funded agencies to help communities establish CDC’s, notwithstanding that CDC’s are about becoming self-reliant.

To develop the idea further, government will need to be lobbied to provide a special legislative framework for the purpose of promoting the formation and regulating the activities of CDC’s. This would help to institutionalise the concept within communities across the country and protect their interests through appropriate governance and reporting structures or perhaps with restrictions, for example, on investment activities. The widespread implementation of CDC’s will in itself create a new area of development and job creation.

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New funding mechanisms may be legislated and income tax concessions made for CDC’s. The state may provide community grants (start-up, kick-start, or seed capital grants) for the establishment of CDC’s and the idea of a community development levy could also be introduced whereby a small amount (for example R1) is levied to members of a community on a monthly basis through local government channels. For example assessment rates accounts could be debited with the community development levy and be used specifically to channel into local CDC’s for the development of that community. A similar approach is used in Singapore where a community tax is levied on members of a specific community through the tax collection system to pursue the development of their communities.

Government may also set up and fund a Community Development Agency (CDA) similar to agencies such as Khula, Ntsika, and the TNDT. The specific function of the CDA will be to assist communities to set up their CDC’s and provide the necessary support and training. The CDA would also monitor the activities of the CDC’s to ensure that community and members’ interests are protected at all times.

CDC service centres such as those established by Ntsika may also be established as agencies of the CDA to provide support to CDC’s. This may be done by broadening the activities of Ntsika’s local business service centre to include a community development service centre.

Government may well also need to be persuaded to enforce financial institutions and companies to contribute towards community development by way of grants or other mechanisms to CDC’s. A Community Reinvestment Act should be promulgated to facilitate such reinvestment so that community money can be rechanneled to develop the communities in 109

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which those financial institutions and companies operate. Now in its 20th year, the Community Reinvestment Act is responsible for over 213 billion US Dollars (about 1,3 trillion Rand) in reinvestment in lower-income communities across the USA. (Woodstock 1998: 1) Financial institutions should be compelled to provide information such as the amount being held in credit balances from specific communities and the amounts reinvested as, for example housing loans, business loans, and community services.

Government can also assist in releasing state owned land to CDC’s especially in former group areas.

Facilitative legislation may also be enacted so that provincial authorities and local government may transfer land held by them to communities at nominal values instead of selling them at exorbitant prices to the already landed.

CDC’s have a significant role to play in the new South Africa in getting communities to work for their own as well as the countries betterment. ___________________________________________________

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WEB SITES: http:// www.nonprofit.net/woodstock/ http:// www.sanzaf.org.za http:// www.seychelles.net/siba/lochis.html#history http:// www.urban.org/pubs/comdev90/summary.htm http:// www.usa.gov __________________________________________ 119

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120



Community Ownership

Individual members

75%

100% Board of Directors

Board of Directors

LCDC Invesco

25%

LCDC Invesco Investment Projects

LCDC S21

LCDC S21 Community Service Projects

Notes to Appendix 1: 1. The community, through individual members, owns and retains effective control of both LCDC Invesco and LCDC S21 by virtue of purchase of membership/investment units of R102,00.

2. LCDC Invesco makes investments in several projects (see appendix 2) and distributes its profits, as dividends, in the ratio 75% to individual members and 25% to the LCDC S21.

3. LCDC S21 never distributes any profits to individual members.

LCDC S21 utilises its profit share and other income or grants that it may receive for expenditure/grants in community service projects (see appendix 3).

4. Both LCDC Invesco and LCDC S21 are governed by its own Board of Directors.

121



LCDC Invesco Ltd. Shareholding in the underlying companies may comprise of a combination of community members, LCDC Invesco, corporate sector partners, and the general public.

Lenasia Property Fund

Lenasia Equity Fund

LCDC Insurance Co

(Development and investment in viable commercial properties – business parks, mini factories, shopping and residential complexes

(Investment in viable Lenasia based / relocated companies)

(Provision of short term insurance services for business, household, homeowners, and other)

LCDC Asset Management & Trust Co

LCDC Venture Capital Fund

Asian-African Empowerment Fund(Mobilisation of

LCDC Service Co

LCDC Community Bank (Joint venture with an existing

Lenasia Housing Devco

(Development of housing complexes for rental/sale)

Newco

Newco

(Provision of asset management services)

(Joint ventures in the provision of security, cleaning, garden maintenance, & transport services)

Small Business Invesco

(Investment and promotion of small business, agro and home industries)

(Mobilisation of risk capital and investment in viable ventures in/out of Lenasia)

bank/financial institution)

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capital for investment in viable ventures, JSE listed or unlisted)



Community Ownership

Individual members

75%

100% Board of Directors

Board of Directors

LCDC Invesco

25%

LCDC Invesco Investment Projects

LCDC S21

LCDC S21 Community Service Projects

Notes to Appendix 1: 1. The community, through individual members, owns and retains effective control of both LCDC Invesco and LCDC S21 by virtue of purchase of membership/investment units of R102,00.

2. LCDC Invesco makes investments in several projects (see appendix 2) and distributes its profits, as dividends, in the ratio 75% to individual members and 25% to the LCDC S21.

3. LCDC S21 never distributes any profits to individual members.

LCDC S21 utilises its profit share and other income or grants that it may receive for expenditure/grants in community service projects (see appendix 3).

4. Both LCDC Invesco and LCDC S21 are governed by its own Board of Directors.

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

LCDC S21 Ltd The underlying possible community service projects are either directly managed by LCDC S21 or in partnership with relevant stakeholders. Funding comes from a combination of sources including profit share from LCDC Invesco, investments, and grants-in-aid.

Youth Commission

Recreation Commission

(Facilitating and supporting community youth groups in meaningful activities)

(Facilitate development of appropriate community recreational facilities)

Education Commission

Business Advice Centre

Social Welfare Commission

Faith Community Commission (Facilitate understanding and joint

(Investigate educational needs and facilitate development of appropriate strategies)

(Facilitate the development of adequate care facilities)

Arts, Culture, Language & Heritage Commission

(Provision of advisory services and resources for SME’s)

Environment Commission

(Facilitation and promotion of cleaner, greener environment and eco-tourism projects)

Sports Commission

(Facilitate the formation of appropriate structures for the development of various sports codes within the community)

Security Commission

action where necessary)

(Develop strategies for maintaining security for the community)

New ComService

New ComService

(Develop arts, culture, and language within the community. Recognition of heritage) 123

LCDC INVESCO LTD FORECAST INCOME STATEMENTS FOR THE YEARS ENDING 30 JUNE

1

2

3

4

5

INCOME Income from investments

300000

600000

900000

1200000

1500000

EXPENSES Overhead

100000

150000

200000

250000

300000

NET INCOME for the year

200000

450000

700000

950000

1200000

DISTRIBUTION Members LCDC S21

200000 150000 50000

450000 337500 112500

700000 525000 175000

950000 712500 237500

1200000 900000 300000

0

0

0

0

0

10.00 7.50 17.50 17.5

11.25 8.06 19.31 36.81

11.67 8.67 20.33 57.15

11.88 9.32 21.19 78.34

12.00 10.02 22.02 100.35

RETAINED INCOME Cash return on investment Capital growth Total return on investment Cumulative return on investment Assumptions:

1. All income is distributed. The company may decide to retain income in the future.

2. Investments have a capital growth content.

3. The return on investment is calculated for the total amount invested and includes the capital of individual members as well as the LCDC S21.

125

LCDC S21 LTD FORECAST BALANCE SHEETS ON LAST DAY OF YEARS' ASSETS Non-current assets Investments Current assets Cash and cash equivalent Total assets EQUITY AND LIABILITIES Capital Share Capital Retained Income Debentures Total equity and liabilities

1

2

3

4

5

500000

1000000

1500000

2000000

2500000

32500

80625

131875

183125

234375

532500

1080625

1631875

2183125

2734375

20000 12500

40000 40625

60000 71875

80000 103125

100000 134375

500000

1000000

1500000

2000000

2500000

532500

1080625

1631875

2183125

2734375

Assumptions: 1. 20000 share and investment units are subscribed for each year.

2. All debenture proceeds are invested.

3. All investments are held in LCDC Invesco.

4. The retained income is not reinvested.

LCDC S21 LTD FORECAST INCOME STATEMENTS FOR THE YEARS ENDING 30 JUNE

1

2

3

4

5

Income Debenture income

50000

112500

175000

237500

300000

Expenses Overhead Grants-in-aid: LCDC projects

37500 5000 32500

84375 11250 73125

131250 17500 113750

178125 23750 154375

225000 30000 195000

NET INCOME for the year RETAINED INCOME at beginning of year RETAINED INCOME at end of year

12500

28125 12500 40625

43750 28125 71875

59375 43750 103125

75000 59375 134375

12500

Assumptions: 1. 75% of the income is utilised for grants-in-aid and administration. 25% of the income is retained for reinvestment.

2. All income is from the donated portion of investments.



 Transitional National Development Trust [TNDT] P O Box 31959, Braamfontein. 2017 Tel: (011) 403 6650 Fax: (011) 403 2515 South African National NGO Coalition [SANGOCO] Tel: (011) 403 7746 Fax: (0110 403 8703 Land Bank P O Box 375, Pretoria. 0001 Tel: (012) 312 3999 Khula Enterprise Finance Ltd. P O Box 4197, Rivonia. 2128 Tel: (011) 807 8464 Fax: (011) 807-8471 Toll Free: 0800 11 88 15 Ntsika Enterprise Promotion Agency 9th Floor, Prodinsa Building, 501 Pretorius Street, Arcadia, Pretoria. 0001 Tel: (012) 483 2000 Fax; (012) 483 2072 Development Bank of Southern Africa P O Box 1234, Halfway House, 1685 Tel: (011) 313 3911 Fax: (011) 313 3086 Industrial Development Corporation of South Africa P O Box 784055, Sandton. 2146 Tel: (011) 269 3000 Fax: (011) 883 4541 Business Partners P O Box 7780, Johannesburg. 2000 Tel: (011) 470 3111 Fax: (011) 642-2791

126

ZEINOUL ABEDIEN CAJEE obtained his BBusSc from the University of Durban-Westville in 1974, HonsBCompt from the University of South Africa in 1978 and passed his Public Accountants and Auditors Board examinations in 1979. From 1992 he pursued studies in education at the University of the Witwatersrand, Johannesburg from where he obtained both his BEd and MEd degrees specialising in curriculum and programme design, development, and implementation. He established the chartered accountancy and consultancy firm CajeeRazak in 1981 and currently holds the post of Senior Lecturer in the Faculty of Management at the Soweto campus of Vista University. He has served and continues to serve youth and community organisations.

TOWARDS COMMUNITY EMPOWERMENT is a study of how communities in a post-colonial/apartheid South Africa can take charge of their destinies by mobilising collective resources and investing in community beneficial projects as a way towards their own empowerment. This they do through the implementation of community owned and organised structures such as the internationally tried and tested Community Development Corporation. The book argues that the state alone cannot address the imbalances of the past but needs communities at grassroots level, in partnership with the state and other stakeholders, to participate in the process. The book takes the reader through the implementation of a CDC in a single community in South Africa.