I

Faculty of Business & Economic Sciences

Managing tomorrow

Student Name: A.W Saki

Student Number: 212432982

Module Code: EDS 504

Lecturer Name: Dr Adam Mwamayi

Topic: The impact of Income generating projects on poverty

alleviation: A case of Ibuyambo Sorghum Secondary

Cooperative Ltd at Emalahleni Local Municipality

Date submitted: 4 April 2014

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II

DEPARTMENT OF ACADEMIC ADMINISTRATION

EXAMINATION SECTION – NORTH CAMPUS

PO Box 77000

Nelson Mandela Metropolitan University

Port Elizabeth 6013

Tel. +27 (0) 41 504 3206 / 504 3392

Fax +27 (0) 41 504 9206 / 504 3064

DECLARATION BY STUDENT

NAME: Ayanda Watson Saki

STUDENT NUMBER: 212432982

QUALIFICATION: M.A. (by coursework) Development Studies / 14500

TITLE: The impact of Income generating projects on poverty alleviation: A case of

Ibuyambo Sorghum Secondary Cooperative Ltd at Emalahleni Local Municipality

DECLARATION:

In accordance with Rule G4.6.3, I hereby declare that the above-mentioned

treatise/dissertation/thesis is my own work and that it has not previously been

submitted for assessment to another University or for another qualification.

SIGNATURE: SAKI AYANDA WATSON.

DATE: 4 April 2014

III

DEDICATION I dedicate this work to both my parents, Nomathemba Nolimit and Wellington Saki who unfortunately passed away in 2009 and 2013 respectively; my wife Vuyokazi Magthalinah Ndlebe; my two daughters Mbasakazi and Ahlangene; and my two sons Khakalesizwe and Ahlomile.

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ACKNOWLEDGEMENTS

First and for most, I thank God Almighty for providing me with guidance and strength

throughout this daunting but interesting task of undertaking and completing this

research study.

Secondly, I am highly grateful and feel indebted to my supervisor Dr A. Mwamayi for

his wonderful, splendid, awesome work and diligence in supervising and guiding me

throughout the research project. His support and encouragement kept me going and

made this study a possibility.

Thirdly, I thank my respondents and key informants on this study, for their guidance

without them this would never have been possible.

Fourthly, I thank my Editor Mrs Kim Roberts for her sterling performance in editing this

work.

Lastly but not least, I give my special appreciation and thanks to my wife Vuyokazi

Magthalinah Ndlebe; my two daughters Mbasakazi and Ahlangene; and my two sons

Khakalesizwe and Ahlomile for their never ending support and motivation to me.

V

ABSTRACT

The study was about the impact of income generating projects on poverty alleviation

and was conducted on Ibuyambo Secondary Cooperative Ltd at Emalahleni Local

Municipality within Chris Hani District Municipality in the Eastern Cape. Ibuyambo

Secondary Cooperative Ltd consisted of seven primary cooperatives from which data

was collected from 18 respondents through questionnaires. To complement that,

interviews were conducted with six key informants from government departments and

other development stakeholders in the same area. The study was conducted in August

2013.

The study covered a literature review on poverty as one variable, with focus on its

definition; theoretical perspectives of poverty; poverty in development thought; global

statistics on poverty; historical background of poverty in South Africa; structural

adjustment programmes as a major cause of poverty; and causes of poverty in sub-

Saharan Africa. A literature review of income generation as another variable was also

undertaken, with emphasis on definitions; the experience of income generation

projects/activities (IGPs/IGAs); key factors for the successful implementation and

management of projects; income generation projects and sustainable livelihoods;

income generation and poverty alleviation programmes in South Africa; as well as a

case study of projects under IRDP in India.

The results of the study indicated that Ibuyambo Secondary Cooperative Ltd was

generating income. However due to poor governance, mismanagement of funds and

theft it was running at a loss and was struggling to finance its working capital and other

member benefits. As such it was not making a meaningful impact on alleviating poverty

on its members. The study also gave recommendations on the findings.

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LIST OF ACRONYMS AGM : Annual General Meeting ANC : African National Congress ASGISA : Accelerated and Shared Growth Initiative of South Africa BOD : Board of Directors CBPWP : Community Based Public Works Programme CHDCDC : Chris Hani District Cooperatives Development Centre CHDM : Chris Hani District Municipality CMIP : Consolidated Municipal Infrastructure Programme CPRC : Chronic Poverty Research Centre DEDEA : Department of Economic Development, Environmental Affairs and

Tourism DFID : Department for International Development DRDAR : Department of Rural Development and Agrarian Reform ELCF : Emalahleni Local Cooperatives Forum ELM : Emalahleni Local Municipality EMAFU : Emalahleni Farmers Union EU : European Union EXCO : Executive Committee FPO : Fruit Products Order GEAR : Growth Employment and Redistribution GDP : Gross Domestic Product GM : General Manager Ibuyambo : Ibuyambo Secondary Cooperative Ltd ICA : International Cooperatives Alliance IES : Income and Expenditure Surveys IFAD : International Fund for Agricultural Development IGAs : Income Generating Activities IGPs : Income Generating Projects ILO : International Labour Organisation IMF : International Monetary Fund IP : Income Poverty ISRDP : Integrated Sustainable Rural Development Programme LED : Local Economic Development LRED : Local and Regional Economic Development MDGR : Millenium Development Goal Report MDG1 : Millenium Development Goal One MDGs : Millenium Development Goals MIG : Municipal Infrastructure Grant M&E : Monitoring and Evaluation NGO : Non- Governmental Organisation OECD : Organisation for Economic Co-operation and Development PAPs : Poverty Alleviation Projects PMI : Project Management Institute PLA : Participatory Learning and Action PPP : Purchasing Power Parity PSC : Project Steering Committee RDP : Reconstruction and Development Programme SGRY : Sampoorna Gramin Rozgar Yojana

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SGSY : Swarnjayanti Gram Swarozgar Yojana SLA : Sustainable Livelihoods Approach SMMEs : Small, Medium and Micro Enterprises SSA : sub-Saharan Africa StatsSA : Statistics South Africa UK : United Kingdom USD : United States Dollar VAT : Value added Tax WCED : World Commission on Environment and Development

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TABLE OF CONTENTS

DECLARATION ii

DEDICATION iii

ACKNOWLEDGEMENTS iv

ABSTRACT v

LIST OF ACRONYMS vi

CHAPTER 1: INTRODUCTION

1.1. Rational and Background to the study 01

1.2. Problem Statement 04

1.3. Aims and Objectives of the Study 05

1.4. Motivation of the Study 06

1.5. Scope and Delimitation of the Study 06

1.6 Definition of Key Words 07

1.6.1 Poverty 07

1.6.2 Income Generating Projects 08

1.6.3 Sustainable Development 08

1.6.4 Local Economic Development 08

1.7. Chapter Outline 08

1.8 Chapter Summary 08

CHAPTER 2: LITERATURE REVIEW ON POVERTY

2.1. Poverty Definition 10

2.2. Theoretical Perspectives on Poverty 10

2.2.1. Individual Deficiency as a cause and effect of poverty 10

2.2.2. Culture of Poverty as a Cause and Effect of Poverty 12

2.2.3. Economic, Political and Social Factors as Causes and Effects of Poverty 12

2.2.4. Geographical Disparities as Cause and Effect of Poverty 13

2.2.5. Poverty Caused by Cumulative and Cyclical Interdependencies 13

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2.3. Poverty in Development Thought 14

2.3.1. The Neo-liberal Perspective of Poverty 14

2.3.2. The Post Washington Consensus Perspective of Poverty 15

2.3.3. The Structuralist Perspective of Poverty 15

2.3.4. The Neo-Marxist Perspective of Poverty. 16

2.4. Global Statistics on Poverty. 16

2.5. Historical Background of Poverty in South Africa 17

2.6. Structural Adjustment Programme: A Major Cause of Poverty 18

2.7. Causes of Poverty in sub-Saharan Africa 19

2.8. Income Generation Projects/Activities (IGP/IGA) 21

2.8.1. Definitions 21

2.8.2. The Experience of Income Generation Projects/Activities (IGPs/IGAs) 22

2.8.3. Key Factors for the Successful Implementation and Management

of Projects 23

2.9. Income Generation Projects and Sustainable Livelihoods 26

2.9.1 Definition of Sustainable Livelihoods 26

2.10. Income Generation and Job Creation Policy, Programme and Strategy 27

2.10.1. The Reconstruction and Development Programme (RDP) 27

2.10.2. Growth, Employment and Redistribution (GEAR) 27

2.10.3. AsigiSA 28

2.10.4. Small, Medium and Micro Enterprises (SMME) 28

2.10.5. The Community Based Public Works Programme 28

2.10.6. The Expanded Public Works Programme 29

2.10.7. Cooperatives 30

2.10.8. Local Economic Development (LED) 31

2.11. Poverty Alleviation Programmes in Rural India 31

2.11.1 Integrated Rural Development Programme Background (IRDP) 31

2.11.2 A Case Study of Projects under IRDP Self-Help Groups under

Swarnjayanti Gram Swarozgar Yojana (SGSY) in Tamil Nadu 32

2.12 Chapter Summary. 33

CHAPTER 3: RESEARCH DESIGN AND METHODOLOGY

3.1. Introduction 34

3.2. Research Design, Methodologies and Approaches 34

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3.3. Sample and Sampling Procedure 35

3.3.1. Targeted Population and Sample Size 36

3.3.2. Sampling Related Issues 36

3.4. Data Collection Tools 37

3.4.1. Group Administration of Questionnaires 38

3.4.2. Semi-Structured Interviews 38

3.4.3. Document Review 39

3.5. What The Study Sought To Measure 40

3.6. Data Analysis 40

3.7. Ethical Considerations of the Study 41

3.8. Chapter Summary 42

CHAPTER 4: FINDINGS OF THE STUDY

4.1. Introduction 43

4.2. Background of Ibuyambo Secondary Cooperative Ltd 43

4.3. Respondent Profile 44

4.3.1. Age of the Respondents 45

4.3.2. Gender of the Respondents 45

4.3.3. Level of Education of the Respondents 46

4.3.4. Employment Status of the Respondents 47

4.3.5. Number of Dependents 48

4.4. Other Findings of the Study and Interviews 48

4.5. Chapter Summary 59

CHAPTER 5: CONCLUSION AND RECOMMENDATIONS

5.1. Introduction 60

5.2. Key findings of the study 60

5.3. Recommendations 65

5.3. Limitations of the study 68

5.4. Conclusion 69

LIST OF REFERENCES 70

XI

ANNEXURE A 79

ANNEXURE B 89

1

CHAPTER ONE: INTRODUCTION

1.1 Rationale and Background to the Study

South Africa today is still faced with the same challenges of poverty, unemployment

and inequality as in the past, as well as general underdevelopment in the hinterland

(Friedman and Bhengu, 2008:10). They note that the history of this poverty dates back

to the apartheid period when the policies of the day promoted widespread dependence

on cash income. Many people were left without land due to the enforcement of the

land policies of the time and many families depended on remittance transfers from

their breadwinners as a result of migrant labour. The country experienced rampant

and endemic poverty, with huge inequalities in the distribution of wealth characterising

the South African society (Friedman and Bhengu, 2008:10).

Seekings (2007:11-13) argues that all measures of income in South Africa show a

widening gap between the rich and the poor. The South African government’s

“Millennium Development Goals Mid-Term Country Report” of September 2007

reveals that “inequality between races has declined, while inequality within race

groups has grown” between 1993 and 2006 (South Africa, 2007: 15).This, as a

consequence, according to Friedman and Bengu (2008:10), created a dual economy

where the first economy allowed space for meaningful participation by the wealthy

white minority and the second economy featured the disadvantaged black majority; as

the country entered the democratic dispensation, the number of unemployed people

was 4.8 million, with women being worse off both in terms of poverty and

unemployment; and to a great extent this situation has not changed .

According to the government’s MDGR (2010:4), the South African government has

declared war on poverty and has made the Millennium Development Goal One

(MDG1) a priority in its development agenda. It aims to fight poverty by speeding up

growth and transforming the economy in order to create jobs and sustainable

livelihoods. It should be noted however that the adoption of Millennium Development

goals by South Africa does not necessarily suggest that South Africa has won the

battle against poverty, nor does it suggest that it is a panacea for the world. Lopes

(2002:135) argues that the MDGs entail specific targets and timetables for reducing

2

poverty by 50% by 2015. He notes that progress in terms of reducing poverty has been

slow and the prospects of attaining these goals are bleak.

Additionally, the Public Service Commission (2007:10) indicated that there was a

paradigm shift of focus from poverty relief initiatives (the so-called ‘hand outs’) that

promoted dependency and were decreasing the public funds to those that were termed

‘investment’ programmes. This in my view indicates that there was a concerted effort

by government to shift the focus from service delivery issues, especially satisfaction

of basic needs as well as social grants, to implementing investment and income

generating programmes that would boost and sustain the economy and hence

sustainable community livelihoods.

Furthermore, the Public Service Commission (2007:6-10) stated that the concept of

implementing income generating projects and developing SMMEs for poverty

alleviation finds expression in government programmes such as Local Economic

Development, Extended Public Works Programme, Integrated Sustainable Rural

Development Programme (ISRDP), Municipal Infrastructure Grant (MIG),

Consolidated Municipal Infrastructure Programme (CMIP), Community Based Public

Works Programme etc. The idea was that these projects would promote sustainability,

a culture of enterprise and entrepreneurship, youth and women empowerment, skills

development, self-reliance and independence among communities. However Manyeli

(2003) in his study on income generating projects in Port Elizabeth writes that

according to the project beneficiaries, so-called income generating projects were not

actually generating income and this was causing dissatisfaction.

According to Benjamin (2005), mass poverty is a reality in South Africa and has not

declined in the last ten years despite the government’s poverty alleviation

interventions. It is sad that despite all this effort by government it appears that the

impact of these income generating projects on poverty alleviation has been generally

questionable and often has not generated income and profit as originally planned. Kaw

(2006) notes that the huge and serious challenges experienced by income generating

projects in the Limpopo Province include lack of skills; lack of competence of members

in terms of project implementation; misuse of project funds; poor record keeping; lack

3

of water; and the fact that many projects operate beyond the business plan

parameters.

Within government programmes, the concept of ‘sustainable development’ and

‘community participation’ in development is promoted for the effective implementation

of projects by the communities themselves in order to satisfy their needs. Sustainable

development requires that communities undertake development by striking a balance

between the environment and development so as not to compromise future

generations (WCED, 1987:83).

The World Bank defines poverty as the “inability [of an individual or household] to

attain a minimal standard of living”, and that the standard of living is measured in terms

of consumption or income levels (Yassi et al., 2001:43). Woolard and Leibbrandt

(2001) further note that the World Bank Development Report defines poverty as

income poverty (IP) and this in their view is narrow as it ignores other aspects of

human life. They further assert that the narrow perspective of poverty assumes that

economic growth will be a solution through the ‘trickle down’ distribution of wealth from

the rich to the poor; this unfortunately has not improved conditions in sub-Saharan

Africa over the nearly five decades since its adoption in the 1960s.

The study tried to explore the impact of Ibuyambo Sorghum Secondary Coop Ltd in

alleviating poverty among its members. Ibuyambo Sorghum Secondary Coop Ltd is

an income generating project that is located within Emalahleni local municipality.

The study looked at the profile of project members and checked whether the project

generated income and profit as planned in order to create and sustain employment;

whether the project had funding; whether it addressed their needs and skills; whether

knowledge was gained; the level of commitment; implementation and operational

challenges; and success factors for the project.

1.2 Problem Statement

4

According to Strydom and Tlhojane (2008:34), poverty is rife to the extent that 57% of

the South African population is living below the poverty line, despite government

initiatives to alleviate poverty. They further note that the poorest have become poorer,

the poverty gap between poor and rich has worsened, and the poverty gap had grown

faster than the economy. This means that there has been no meaningful benefit for

the poor from economic growth. South Africa, as part of its responsibility to achieve its

MDG1, has committed to halve poverty and hunger by 2015. In 2006 it had the

following statistics (Government of South Africa, MDGR, 2010:24-25):

“Proportion of population below $1 (PPP) per day was 5.0%

Poverty gap ratio at $1 (PPP) per day was 1.1

Gini coefficient (including salaries, wages and social grants) was 0.73

Employment to population ratio was 42.5 by 2009”

The above statistics show that poverty in South Africa is still a big problem and this

state of affairs calls for a war on poverty. Poverty alleviation remains a priority

programme of government and many sector departments have participated in this

programme by engaging in income generating projects as poverty reduction

strategies. In this case the Department of Economic Development, Environmental

Affairs and Tourism in the Eastern Cape has funded income generating projects in

Emalahleni local municipality for poverty alleviation and employment creation within

the context of Local and Regional Economic Development. According to the LRED

Funding Criteria and Guidelines 2013/2014, projects proposed for support from the

LRED Fund should address one or more of the following objectives:

Sustainable job creation to reduce poverty levels, especially among historically

disadvantaged communities and individuals.

Generation of additional sources of income for the poor.

An improved quality of life in communities brought about by improvements in

local economic and social infrastructure.

Economic and social inclusion, an entrepreneurial culture, increased levels of

confidence, self-belief and initiative, and capabilities for sustaining own

enterprises among individuals and groups from marginalised communities.

5

Considering the LRED Fund objectives, it becomes clear that the department’s main

focus is to reduce poverty by undertaking projects to create sustainable jobs and

generate sources of income for the poor, in the process ensuring socio-economic

inclusion and improving quality of life in marginalised communities. Despite these

interventions by government, poverty remains a problem and it is also not clear

whether these income generating projects achieve their set objectives as well as those

of government. Hence the researcher undertook a case study on Ibuyambo Sorghum

Secondary Coop Ltd and evaluated its impact on alleviating poverty among the project

beneficiaries.

1.3 Aims and Objectives of the Study

The aim of the study is to explore the impact of income generating projects on poverty

alleviation using Ibuyambo Sorghum Secondary Coop Ltd as a case study.

Objectives:

To assess project performance with regard to project implementation and

operationalisation.

To evaluate its impact on poverty alleviation with regard to job creation, knowledge

and skills development and empowerment of designated groups.

To explore the successes and challenges experienced by Ibuyambo Sorghum

Secondary Coop Ltd.

To understand the role played by Department of Economic Development,

Environmental Affairs and Tourism and other funders with regard to project

management, monitoring and evaluation.

6

1.4 Motivation of the Study

The South African government, through its sector departments, funds income

generation projects as a strategy to alleviate poverty among communities. It is

anticipated that sustainable jobs will be created; people will be empowered through

acquisition of skills and transfer of knowledge to project beneficiaries; projects will

generate income and profits and sustain themselves when government grants are

ceased; beneficiaries’ needs will be satisfied; designated groups such as women and

youth will be prioritised for participation; and that these projects will contribute to

creating sustainable livelihoods. It is therefore critically important that the researcher

evaluates whether the project under study has a positive impact on alleviating poverty

among project beneficiaries and whether their standard of living has improved.

If it is found that the project impacts positively on poverty alleviation, the researcher

will document the lessons learnt and this could serve to advise government on the

best practice models that need to be implemented across government departments

to improve project implementation. On the other hand if no positive impact is

established, a record of the challenges encountered would help project funders and

government to prepare response packages to address these challenges and ensure

sound project implementation and operationalisation to achieve project objectives in

the future. This in a nut shell is what motivates the study.

1.5 Scope and Delimitation of the Study

The study was conducted at Emalahleni local municipality which is one of the eight

municipalities of Chris Hani District municipality in the Eastern Cape. The area is

generally underdeveloped and many people are trapped in poverty. Chris Hani District,

along with Joe Gqabi (formerly known as Ukhahlamba), Alfred Ndzo District, and OR

Tambo District, have been identified as Presidential District nodes under the ISRDP

programme with a view to influencing government investment decisions in favour of

these nodes to address the underdevelopment and spatial development inequalities

in the Eastern Cape. According to Statistics South Africa (census, 2011) the population

of Emalahleni local municipality in 2011 was 119 460. A breakdown showed that 55%

were between the ages of 15 and 64; the dependency ratio per 100 in this bracket was

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81%; the population growth from 2001 to 2011 was -0.20%; and the unemployment

rate for people ageing between 15 and 64 was 46.3%. Youth unemployment between

the ages of 15 and 34 stood at 55.3%, those without schooling amounted to 18.8%

and those with matric and higher education amounted to 11.0% and 3.8% respectively.

There were 31 681 households, of which 53.5% were female headed, 11.8% had

flushing toilets, 2.9% had water inside their dwellings and 78.5% had electricity for

lighting .

The study was conducted among seven primary cooperatives that form Ibuyambo

Sorghum Secondary Coop. The cooperatives were as follows: Magxibha Agricultural

Coop, Ndonga Ncedolwethu Agricultural Coop, Vukani Upper Ndonga Primary Coop,

Maqhashu Sorghum-belt Primary Coop, Lower Mgwalana Primary Coop, Guba Hoek

Primary Coop and Khuluphambene Primary Coop. The above-mentioned coops were

undertaking crop production entailing the production of sorghum, wheat and beans.

The seven primary coops combined had 804 members. The study sought to evaluate

the impact of Ibuyambo Sorghum Secondary Coop on alleviating poverty among its

primary coops as well as the 804 individual members from the primary coops. The

foreseeable limitations of the study were the time factor and the timeous availability of

respondents and key informants. Since the researcher was government employed,

these had to be properly managed and the researcher had to strike a balance between

work and the research project in order to meet the submission deadlines.

1.6 Definition of Key Words

1.6.1 Poverty

Altman (2003) states that a comprehensive definition of poverty refers not only to

material deprivation but to other non-material aspects such as the lack of access to

social security, skills development, participation, relaxation, education, a sense of

belonging and decision-making power.

1.6.2 Income Generating Projects

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According to Matakanye (2001), income generating projects refer to projects or

initiatives that are aimed at alleviating poverty through generating income on a

sustainable basis.

1.6.3 Sustainable Development

‘Sustainable development’ is “development that meets the needs of the present

without compromising the ability of future generations to meet their own needs”

(WCED 1987:83).

1.6.4 Local Economic Development

‘Local economic development’ refers to the process in which local governments or

community-based (neighbourhood) organisations engage to stimulate or maintain

business activity and/or employment. “The principal goal of local economic

development is to stimulate local employment opportunities in sectors that improve the

community, using existing human, natural, and institutional resources” (Blakely 1994:

26).

1.7 Chapter Outline

The study is divided into five chapters. Following this introduction, which comprises

Chapter One, a summary of key issues discussed in each of the remaining four

chapters is presented. These are as follows:

Chapter Two: This chapter discusses poverty related issues (origin, causes, policies

and theory) and income generating situations. More specifically, it reviews and

critically contextualises poverty issues and strategies as reflected through

international experience and current local practice in South Africa.

Chapter Three: This chapter gives a detailed description of the research design and

methodology used.

Chapter Four: This chapter presents the findings of the research.

Chapter Five: This chapter gives a summary of the issues that emerged from the study.

1.8 Chapter Summary

9

The research problem has been identified in this chapter together with the research

aims and objectives. This chapter gave an overview of the background to the study as

well as definitions of key concepts. The next chapter investigates issues related to

poverty and income generation. It looks at international experiences of poverty

alleviation and makes a comparison with similar approaches in South Africa.

10

CHAPTER TWO: LITERATURE REVIEW ON POVERTY

2.1 Poverty Definition

Poverty is not easy to define. As a result there are many definitions of poverty and

since World War II, it has been predominantly defined on the basis of money, where

income and consumption levels have been used as the measures of poverty (Grusky

and Kanbur 2006:11). According to Lipton and Ravallion (1993:1) the poor have been

defined on the basis of those who fall below a given income/consumption level or

‘poverty line’. However, in contrast to this narrow economic definition there have in

recent years been other approaches that define poverty in a more multi-dimensional

way (Subramanian, 1997:35). According to the Organisation for Economic Co-

operation and Development (OECD) (2006), a multidimensional poverty is defined as

interrelated forms of deprivation in the economic, political, human, social, cultural and

protective spheres.

According to Mikkelsen (2005:224), poverty varies from one place to another over time

and in depth and to use income generating projects to alleviate poverty, a grounded

poverty analysis is essential. He argues that implementation of income generating

projects should be sensitive to a particular context and based on the understanding of

the characteristics of poverty which are:

Poverty is complex. It comprises a wide range of aspects and situations that

together constitute the livelihood of poor people – men, women and children.

Poverty is context specific: the features of poverty are derived from the

particular environmental, socio-cultural, economic and political characteristics

of the situation in a given area.

Poverty is relative: deprivation is defined by those concerned in relation to their

notions of what is judged to be decent life in terms of economic resources,

security, adequate health and education, opportunities to participate in social

life and fulfil important cultural functions etc.

Poverty is dynamic: the manifestation of deprivation will change over time.

Individuals and groups may move in and out of poverty depending on the

11

local situation as well as on external forces such as natural or human disasters,

economic crises and armed conflict.

This definition points to the multidimensional nature of poverty, which goes beyond the

narrow income poverty approach to encompass people empowerment, education and

healthcare aspects. To further advance this point, Silver and Miller (2003) note that

the social aspects of poverty are important and formalised in the ‘Social Exclusion’

approach, which allows for a broader analysis of poverty. Poverty, as Shaw (1996:28)

observes, “is a very complex social problem with many variants and different roots, all

of which have validity depending on the situation”.

2.2 Theoretical Perspectives on Poverty

According to Bradshaw (2006:5-6), there is an acknowledgement of the different

theories of poverty in the recent literature. However the literature classifies them in

multiple ways and almost all authors draw a distinction between theories that base the

cause of poverty on individual deficiencies and theories that put the cause on broader

social relations. For example, Rank (2004:50) argues that it is economic, political and

social system structural failings that are the causes of poverty and that “the focus on

individual attributes as the cause of poverty is misplaced and misdirected.” Another

scholar, Schiller (1989:2-3) theoretically explains it as “flawed characters, restricted

opportunity, and Big Brother.”

2.2.1 Individual Deficiency as a Cause and Effect of Poverty

This theory of poverty, as the name suggests, focuses on individuals as being

responsible for their poverty situation. Politically conservative theoreticians argue that

individuals in poverty are to blame for creating their own problems and that with harder

work and better choices, the poor could have avoided poverty (Bradshaw, 2006:6).

Rainwater (1970:16) critically looks at this theory of poverty as a “moralising

perspective” and observes that the poor are “afflicted with the mark of Cain. They are

meant to suffer, indeed must suffer, because of their moral failings. They live in a

deserved hell on earth.” Gwartney and McCaleb (1985:7) argue that the years of war

on poverty have caused escalation in the levels of poverty among working age adults

12

despite huge increases in welfare expenditures, and they conclude that “the

application of simple economic theory” is the challenge that lies in the war against

poverty programmes. Furthermore they argue that welfare programmes have

introduced a perverse incentive structure, that is, they discourage self-improvement

and protect individuals from the negative repercussions of their own bad choices.

2.2.2 Culture of Poverty as a Cause and Effect of Poverty

Lewis (1969:190-192) argues that the culture of poverty emerged when populations

that were socially and economically marginalised from a capitalist society developed

patterns of behaviour in dealing with their low class status and he further argues that

this behaviour manifested itself in low aspirations, political apathy, helplessness,

disorganisation, provincialism and the disparagement of so-called middle-class

values. In addition, Lewis, quoted in Lister (2004:106), notes that ‘cultures’ of poverty

entail “a subculture with its own structure and rationale, as a way of life which is passed

down from generation to generation along family lines.” In explaining the dangers of

cultural beliefs among the poor with regard to receiving welfare payments, the Centre

for Social Justice (2006) notes that welfare payments, rather than reducing poverty

and the effects of deprivation on children’s outcomes, have been viewed as causing

generations of families to become culturally disconnected from society, damaging their

independence, ambition and motivation and trapping them in poverty.

2.2.3 Economic, Political and Social Factors as Causes and Effects of Poverty

Much of the literature on poverty now indicates that the economic system is structured

in such a way that poor people suffer and are left behind, irrespective of how

competent they may be, and that the problem lies in the fact that minimum wages do

not allow single families to be economically self-sufficient (Jencks 1996:72). Exclusion

from political, social and economic institutions is part of a vicious cycle that causes

low capability levels. This in turn limits the ability of people to escape poverty (World

Bank, 2005: 40- 43). Most often, exclusion results from various forms of active

discrimination aimed against certain people (e.g. those who share ethnicity, religion or

culture). It may be enhanced by discrimination on the basis of personal characteristics

such as gender, age or impairment.

13

However inclusion can also sometimes be a challenge due to the fact that it can drive

and maintain poverty. For example many of the poorest people participate in economic

activity but often on unfavourable terms and conditions (CPRC, 2004:37). The

structuralist argues that poverty is not caused by indolence, lassitude, immorality or

character deficiencies. Rather, it is unequal social relations that make the poor

vulnerable to economic exploitation, socially subordination and political

marginalisation (Hulme 2013:9). According to Lister (2004:178), powerful groups even

“have the power to construct ‘the poor’ as other through words, images and deeds”.

2.2.4 Geographical Disparities as Cause and Effect of Poverty

Shaw (1996:29) makes the observation that “space is not a backdrop for capitalism,

but rather is restructured by it and contributes to the system’s survival. The geography

of poverty is a spatial expression of the capitalist system.” In terms of an increasing

body of literature there is a view that advantaged areas grow more than disadvantaged

areas, even during times of general economic growth, and that there will be some

‘trickle-down’ but not an equalising as classical economists would want us to believe

(Rural Sociological Society, 1990: 114-119).

2.2.5 Poverty Caused by Cumulative and Cyclical Interdependencies

Bradshaw (2006:9) explains this by saying that at the community level a lack of

employment opportunities causes outmigration, shutdown of retail stores and

declining local tax revenues. This leads to deterioration of schools and a lack of trained

workers. With no local skills new companies are not attracted to the area, leading to

an even greater lack of employment. Furthermore, he observes that this cycle repeats

itself at the individual level. Lack of employment leads to lack of consumption and

spending owing to insufficient incomes and inadequate savings, which means that

individuals cannot invest in training or in businesses or start their own businesses.

This leads to a lack of expansion, erosion of markets and disinvestment, all of which

contribute to more limited community opportunities.

2.3 Poverty in Development Thought

14

Development activist, Harriss (2013) points out that there are a variety of contesting

development theories with different conceptualisation and perspectives on poverty

and features of poverty in development theory. Such theories relate to those of

structuralists, marxists and neo-marxists, neo-liberals and the post-Washington

Consensus. It follows that development decisions with regard to policy formulation and

strategy development are likely to be influenced by these different schools of thought.

For example if poverty is believed to be lack of access to social development

programmes or opportunities, then policies are likely to be aimed at addressing access

to social development programmes.

2.3.1 The Neo-liberal Perspective of Poverty

From a neo-classical perspective, inequality is not a problem for the poor. It is

necessary, unavoidable and beneficial, and motivates poor individuals to work hard to

improve their poverty situation (Bracking, 2004:887-888). The neo-liberal perspective

views growth as an absolute positive, creating wealth which trickles down so that

everyone can enjoy and benefit from improved well-being (World Bank, 2002). Hulme

(2013:5) argues that neo-liberals place poverty in a subsidiary position, embracing

economic growth through market forces as the analytical and policy priority. He further

argues that neo-liberals believe that poverty would automatically decrease as

economic growth increases, and inequality is not a problem. Rather it is desirable as

it promotes competition and contributes to economic efficiency and higher growth

rates.

However, Thorbecke and Charumilind (2002:1481-1482) argue that income inequality

could stimulate unproductive rent-seeking activities; could cause social instability;

could result in a propensity for the median voter to go for a redistribution policy; and

that a more economically empowered middle class will reduce fertility and spur growth.

From a structuralist perspective, Dagdeviren et al (2002: 389) argue that for a majority

of countries, redistribution is a better solution for reducing poverty than growth.

2.3.2 The Post-Washington Consensus Perspective of Poverty

15

The post-Washington Consensus liberals, both centre-right and centre-left, are in

agreement that poverty reduction is the central tenet of development theory and

action. However, where the centre-right promotes poverty reduction by ‘pro-poor

growth’ (growth with poverty reduction), the centre-left adopts rights-based and human

development concepts to provide for a more redistributive framework for poverty and

inequality reduction (Hulme, 2013:5).

2.3.3. The Structuralist Perspective of Poverty

The incentives of inequality that the neo-classical economists see in remuneration are

a cause of social exclusion, demotivation and adverse incorporation (Bracking,

2004:889). Gore (2003: 2) views the notion of poverty as a global structural

relationship and sees a “complex of trade and finance relationships” reinforcing

generalised poverty within many of the poorest countries. He further observes that

poverty is associated with economic stagnation and that the current form of

globalisation is tightening the international poverty trap. According to

Balasubramanyam (1999:3) the least developed or poorer countries seem to be

structurally excluded from the flows of foreign direct investment that could catalyse

industrialisation as they accounted for less than 1% of total flows, or $0.4 billion, from

1987 to 1996.

Pietersie (2002:1026-1036) argues that at a global level, poverty reduction agenda

incoherently co-exist with neo-liberal policies that widen structural inequality, and that

policy preoccupation with ‘culturally flat’ definitions of poverty obscures the

significance of inequality to structural outcomes for the poor. According to Aliber

(2001:8-9), in South Africa historical structures have left over 60% of Africans poor,

40% of Coloureds, 5% of Indians and 1% of Whites. Formal sector job losses between

1996 and 2000 amounted to 800 000, despite a four-year high in the overall growth

rate. This in my view suggests that growth alone does not necessarily translate to

poverty reduction and hence redistribution policies are imperative as a form of

intervention by the state to address structural inequalities as well as to reduce poverty.

2.3.4 The Neo-Marxist Perspective of Poverty

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Neo-Marxists and dependency theorists focus primarily on reducing inequality and

view inequality not only as income inequality, but also as exploitative social relations.

Development in their view requires radical social transformation into classless

societies that are independent of the capitalist system. Poverty is an effect of

inequitable social relations and potentially an analytical distraction from the

underpinning causes of global inequality (Hulme, 2013:5).

2.4 Global Statistics on Poverty.

Shah (2013:1) observes that:

“Almost half the world — over three billion people — live on less than $2.50 a

day.

The GDP (Gross Domestic Product) of the 41 Heavily Indebted Poor Countries

(567 million people) is less than the wealth of the world’s seven richest people

combined.

Nearly a billion people entered the 21st century unable to read a book or sign

their names.

Less than one per cent of what the world spent every year on weapons was

needed to put every child into school by the year 2000 and yet it didn’t happen.

One billion children live in poverty (one in two children in the world), 640 million

live without adequate shelter, 400 million have no access to safe water, 270

million have no access to health services, 10.6 million died in 2003 before they

reached the age of five (or roughly 29 000 children per day).”

In terms of the eight Millennium Development Goals (MDGs), one of the world’s main

priorities is to eradicate poverty and hunger, and the target is to rescue 50% of the

people living on less than $1.25 a day from poverty by 2015. This goal has been

achieved three years before that target date in some of the most populous countries:

Brazil (where the percentage of the population living on less than 2005 PPP $1.25 a

day went from 17.2% to 6.1%), China (from 60.2% to 13.1%) and India (from 49.4%

to 32.7%) (Human Development Report, 2013:26).

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Between 1990 and 2008, China alone lifted a remarkable 510 million people out of

poverty (Human Development Report, 2013:26). It is estimated that in the 104

countries covered by the MPI about 1.56 billion people or more than 30% of their

population live in multidimensional poverty. This goes beyond the estimated 1.14

billion people in those countries who live on less than $1.25 a day, although it is below

the proportion who live on less than $2 a day. This also holds true for many of the

rapidly growing countries of the South (Human Development Report, 2013:27).

2.5 Historical Background of Poverty in South Africa

Poverty in South Africa started when the Dutch East India Company occupied the

Cape of Good Hope in 1652. This led to the forceful removal of South African

indigenous people from their original settlement area. The Dutch occupation resulted

in the takeover of productive assets from the Khoi people, especially arable grazing

land, and this turned them into servants and slaves of the colonialists on their farms.

Setai (1998:1) notes, “This take-over strategy set the tone of the relationship between

Black and White in South Africa for hundreds of years, a tone of confrontation”.

In 1913 the majority African population was dispossessed of their land by the

colonialists through the Natives Land Act of 1913. As if that was not enough, under

the Native Trust and Land Act, 1936, black people were further deprived of their right

to purchase land in the reserves and were compelled to make use of the land

administered by tribal authorities appointed by the government (Department of Land

Affairs, 1997).

In 1948 South Africa was subjected to apartheid policies. As a result extreme

inequalities in access to education and assets on the basis of racial lines have caused

an excessively unequal distribution of income within the country. This has resulted in

the majority of the Black population living in poverty to the point that South Africa

currently has a Gini coefficient of about 0.6 (Bhorat et al., 2001:22).

Motloung and Mears (2002:532) argue that the South Africa’s Gini coefficient is one

of the highest in the world, and almost 50% of the population lives below the poverty

line. South Africa was subjected to sanctions in the 1980s which resulted in an

18

economy that was closed to global markets. In the early 1990s, the apartheid

government adopted liberalisation policies with a view to becoming more outward-

oriented and integrating with the global economy (Bhorat and Poswell, 2003:3).

This policy direction was reinforced in 1994, when the post-apartheid government

came into power, signed the Marrakech Agreement and formally became a member

of the World Trade Organisation. In 1996 the growth, employment and redistribution

(GEAR) strategy was implemented in an attempt to reduce poverty through growth,

employment creation and redistribution. (Bhorat et al., 2002:1). GEAR has not been

successful on its own terms. In the late 1990s the GDP went up very slowly, even

though it has increased at a higher rate since 2000, reaching 4.5% in 2004 (StatsSA,

2005a).

Employment fell during the 1990s and early 2000s and went up slightly only in 2005.

Income and Expenditure Surveys (IES) carried out by the Government Statistical

Services (StatsSA) reveals that the Gini coefficient went up between 1995 and 2000,

from 0.65 to 0.69. Income inequality between racial groups has declined, but interracial

inequality has increased. According to the IES, the Gini coefficient for Africans has

increased from 0.56 in 1995 to 0.61 in 2000 (Seekings and Nattrass, 2005).

2.6 Structural Adjustment Program: A Major Cause of Poverty

George (1990:143,187,235) states that “debt is an efficient tool. It ensures access to

other peoples’ raw materials and infrastructure on the cheapest possible terms.

Dozens of countries must compete for shrinking export markets and can export only a

limited range of products because of northern protectionism and their lack of cash to

invest in diversification. Market saturation ensues, reducing exporters’ income to a

bare minimum while the north enjoys huge savings. The IMF cannot seem to

understand that investing in “… a healthy, well-fed, literate population … is the most

intelligent economic choice a country can make”.

According to Shah (2013:1), the fact that many developing nations are in debt and

poverty is attributable to the policies of international institutions such as the

International Monetary Fund (IMF) and the World Bank. Their programs have caused

19

increased dependency on the rich northern nations and poverty in many nations in the

south. Shah further writes that the Structural Adjustment Programmes as an integral

element of neo-liberal policies were introduced and implemented by the ‘Washington

Consensus’ institutions to ensure debt repayment and economic restructuring. This

has required poor countries to cut spending on items such as health, education and

development, while debt repayment and other economic policies have been prioritised.

Machida (2011:119) notes, “Economic globalisation driven by neo-liberalism has

dramatically affected citizens’ livelihood around the world, establishing a system of

global capitalism”. He further notes that “neo-liberal globalisation reinforces the

structure of inequality in the global economy” (Machida, 2011:120).

2.7 Causes of Poverty in Sub-Saharan Africa (SSA)

Harvest failure

According to Sinha and Lipton (1999), harvest failure is a key risk for rural households

in SSA. For example between 2001 and 2003 southern Africa experienced a food

crisis, while heavy rains in 2001 caused a maize crop failure (Wiggins, 2005:3). The

harvest failure, together with factors such as institutional weaknesses, political factors,

donor policies and economic inequalities, caused the food crisis which led to severe

problems for the poor. In fact, it is estimated that in late 2002 the lives and livelihoods

of as many as 16 million people in Lesotho, Malawi, Mozambique, Swaziland, Zambia

and Zimbabwe were threatened (Maunder and Wiggins, 2007: 4).

Market failure and market volatility

Market fragmentation means that markets are poorly integrated over both time and

space. This affects physical markets and decreases producers’ and traders’ access to

information on price changes, thus limiting their ability to change their patterns of

production and trade to avoid economic shocks. The existence of infrastructure and

integrated markets is an advantage, as can be seen in Tanzania, where households

20

within 100 metres of a road that has a regular bus service earn on average one third

more per capita than the rural average (IFAD 2001: 164).

Conflict

There is a positive correlation between high levels of conflict and multi-dimensional

poverty. For example between 1997 and 2006 nearly 40% of states with low human

development globally experienced armed conflict, compared with less than 2% of

those with high development and a third of those with medium human development

(Ploughshares, 2007). Conflict in Africa has generated millions of refugees (over 3

million in 2006). This is costly for host countries as they put pressure on domestic

resources, jobs and services (Goodhand, 2001: 13-14).

Low Capabilities

According to CPRC (2004:40) it is likely that people trapped in persistent poverty are

likely to experience multiple ‘capability deprivations’ concurrently. This means they are

illiterate or have poor levels of literacy, have inadequate nutrition, poor human rights

and insufficient income and livelihood opportunities. These drive and maintain their

poverty and ensure it transmits from one generation to another.

Inequality, exclusion and adverse incorporation

Inequalities in income and other economic indicators are often persistent and deeply

rooted. They are a result of political forces that ensure wealth accumulation and

protection and of market imperfections that exclude low income earners from capital

accumulation. Accordingly in any society there is a generally positive relationship

between high levels of income inequality and low school enrolment, low life

expectancy, high fertility, corruption, insecure property rights and macroeconomic

instability. This shows the multidimensional impact of income inequality (Inter-

Regional Inequality Facility, 2006: 2).

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Political, social and economic exclusion is a vicious cycle that leads to low capability

levels, which in turn decreases the ability of the people to free themselves from poverty

and ‘horizontal inequalities’. These inequalities between groups defined according to

ethnicity, gender, region, religion, and so on, make up a significant proportion of overall

inequality (World Bank, 2005: 40- 43). Exclusion may be caused by various forms of

active discrimination, directed against certain people on the basis of ethnicity, religion,

or culture, gender, age or impairment (CPRC, 2004: 37). Inclusion can also be

problematic at times, in that sometimes it causes poverty. This happens as many of

the poorest people are included in economic activity, but on unfavourable terms

(CPRC, 2004: 37).

Limited livelihood opportunities

In 2006 80% of Africans did not earn enough to lift themselves and their families above

the US$2 a day poverty line and one-half lived in extreme poverty (less than $US1 a

day) (ILO, 2007: 3).This happens, especially in rural areas, due to lack of employment

opportunities. In Nigeria there is a strong positive correlation between living in a rural

area and being poor (Hillhorst and Ogwumike, 2003:15).

2.8 Income Generation Projects/Activities (IGP/IGA)

2.8.1 Definitions

According to Matakanye (2001), income generating projects refer to projects or

initiatives that are aimed at alleviating poverty through generating income on a

sustainable basis. According to Patel, (2005:242) poverty alleviation could be

achieved through income generating projects which are micro-development

interventions targeted at individuals, households and communities. There is a positive

correlation between poverty alleviation and income generation projects.

22

Asante and Ayee (2004:4) define poverty reduction as “designing, implementing and

targeting appropriate methods to ensure that scarce resources are allocated to

activities that are likely to yield the greatest impact on the poor and decrease their

levels of deprivation and vulnerability.” DEDEAT LRED funding guidelines (2013/14:5)

state that support from the fund should address these objectives: “… sustainable job

creation to reduce poverty levels, especially among historically discriminated and

disadvantaged communities and individuals … generation of additional sources of

income for the poor.” The guidelines further state that “entrepreneurial partnerships

qualifying for prioritisation have to demonstrate a pro-poor character and composition,

instead of being simply contrived for the purpose of accessing the DEDEAT LRED

Fund.” Income generating activities, therefore, are aimed at alleviating poverty on a

sustainable basis. LRED is the programme for local and regional economic

development in the Eastern Cape Department of Economic Affairs and Tourism and

this fund shows how serious the South African government is about income generation

programmes for the poor for poverty alleviation.

2.8.2 The Experience of Income Generation Projects/Activities (IGPs/IGAs)

Albee (1994:3) argues that the trickle-down or top-bottom approach has had no

success for the rural poor in developing countries. Welfare-oriented approaches were

common in the 1970s, however by the end of the decade the focus shifted to larger

programmes developing more considerable income generating activities (IGAs). He

further observes that women who received funding for their IGAs were failing to raise

their income levels by the mid-1980s and by the end of the decade many agencies

became disillusioned with IGAs as an approach to empower rural women to generate

new sources of income for poverty alleviation. However by 1990 there was a paradigm

shift where small-scale businesses being run by women showed evidence that their

operations were successful, and giving rural women access to credit was seen as

instrumental in yielding socio-economic benefits or returns (Albee 1994:4).

Blackden et al (1997:47) argue that there is bias against women, which prevents them

from gaining access to credit in Uganda, for example. These include institutional

barriers that prevent a woman from opening a personal bank account without her

husband’s signature, or using land as collateral in accessing credit Therefore, women

23

in Uganda are seen as a high risk by microfinance institutions. However the same

cannot be said about South African women to whom microfinance is available in the

form of small loans with low or no interest for starting up or expanding IGAs.

According to Copestake (2002:753), the reason for the popularity of microcredit is that

it is viewed as a market-friendly method for poverty reduction. However in a survey of

a programme in Zambia it was found that only a minority of the credit clients had

success in their businesses with no problems with their debt repayments, while 50%

of the clients “struggled to service their debts and exited within a year of joining,

probably financially worse off as a result of taking loans” (Copestake, 2002:753).

2.8.3 Key Factors for the Successful Implementation and Management of

Projects

Project Needs Assessment

McKillup (1998:261) argues that a needs analysis is a decision-making tool in

programme planning and development in various fields Therefore, a needs analysis

to appreciate and understand the nature, scope and context of problems encountered

by income generating project members is logically important.

Clear Goals and Objectives

The Project Management Institute (PMI) defines projects as “a means of achieving

organisational goals and objectives, often in the context of a strategic plan” (PMI

2008:15).

The PMI further notes that projects and project management take place in a broader

environment than that of the project, and an understanding of this reality enables work

to be undertaken in line with the goals of the enterprise and to be managed according

to the established practices of the business.

According to Payne (2010:11), to give purpose and effect to the vision and mission of

the enterprise, it is important to always set out the key goals and objectives that need

24

to be achieved. He further notes that specific tasks or actions then need to be

developed against these key goals and objectives and that these tasks or actions

should be measurable and achievable, with timeframes allocated.

Clearly Established Project Scope

The PMI (2008) defines project scope as “the work that needs to be accomplished to

deliver a product, service or result with the specified features and functions” (PMI

2008:103).

Nah et al (2003:17) indicate that establishing the programme scope is critical to the

successful implementation of a project and that project definition must be on the basis

of its milestones or clear delivery dates. Realistic milestones and end dates should be

set, and project timeliness should be adhered to and issues and conflicts escalated

and managed (Nah et al. 2003:18).

Community Involvement or Participation

Mouton (1996:16-38) notes that the manner in which development is perceived

indicates the approach and methodology that should be used and that participatory

methods such as participatory, learning and action methods (PLA), allow for the

participation of people in their own development. Rahman (1991:148-149) observes

that the acknowledgement and understanding by development practitioners that poor

people should be allowed to improve their environments progressively by their own

means is a driving force in the PLA ideology. The ideology therefore acknowledges

that the community members have valuable knowledge at their disposal and

encourages self-development.

Creation of a Project Steering Committee

25

According to Grabski and Leech (2007:37), a steering committee provides project

oversight, assists senior management to directly monitor the project team and controls

cost escalation. He further notes that the steering committee monitors the project team

decisions, has the ratification and approval rights on all significant decisions and could

hold the project manager and project team accountable for the completion of clear

deliverables at specific times and review whether this has occurred.

Skills Development and Training

Robbins (1993:230) talks of a model that illustrates the relationship between the

performance of an individual, his abilities and his motivation. He concedes that

individual performance can be assisted or handicapped by opportunities.

Opportunities entail personal and material resources such as training and

development and abilities include knowledge and skills, such as product development,

production, quality control and various marketing skills. Robbins (1993:205) defines

motivation as “... the willingness to exert high levels of effort toward goals, conditioned

by the effort's ability to satisfy some individual need.” It therefore becomes important

that skills development and training should be undertaken to build the capacity of the

income generating project members to ensure success and sustainability of the

project.

Competent Project Management

Doom et al (2009:394) assert that project team empowerment and provision of

decision making power to project teams is critically important and improves project

implementation. Francoise et al (2009:386) observe that the project manager should

have adequate authority and be part of the project as soon as possible, as must the

organisation’s management. They further observe that management should be directly

involved in providing team support and delegating authority and responsibility.

Monitoring and Evaluation and Project Progress Communication

26

According to Holland and Light (2000:19), communication formally promotes and

presents the project's progress through the project management team to the rest of

the organisation and other relevant stakeholders.

2.9 Income Generation Projects and Sustainable Livelihoods

2.9.1 Definition of Sustainable Livelihoods

Chambers and Conway (1992:7) have the following definition of sustainable

livelihoods:

“A livelihood comprises the capabilities, assets (stores, resources, claims and

access) and activities required for a means of living; a livelihood is sustainable

which can cope with and recover from stress and shocks, maintain or enhance

its capabilities and assets, and provide sustainable livelihood opportunities for

the next generation; and which contributes net benefits to other livelihoods at

the local and global levels and in the short and long-term.”

According to Jones (2002:3), “A livelihood is sustainable when it can cope with and

recover from stresses and shocks and maintain or enhance its capabilities and assets

both now and in the future, while not undermining the natural resource base.” The

concept of the Sustainable Livelihood Approach (SLA) to development projects dates

back to the late 1990s in the UK. The Department for International Development had

made a call in 1997 in its white paper for international development to “…refocus our

international development efforts on the elimination of poverty and encouragement of

economic growth which benefits the poor. We will do this through support for

international sustainable development targets and policies that create sustainable

livelihoods for poor people, promote human development and conserve the

environment” (DFID, 1997: 6).

2.10 Income Generation and Job Creation Policy Framework

2.10.1 The Reconstruction and Development Programme (RDP)

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‘Reconstruction and development’, was an expression of the new government’s

recognition in 1994 of the need to correct the extreme social and spatial inequalities

created by years of apartheid policies. The policy document states, “. . . every aspect

of South African life is deeply marked by minority domination and privilege” (African

National Congress (ANC), 1994: 119). A key element of the RDP was the generation

of new employment opportunities, a strategy that could have a significant impact on

livelihoods and poverty alleviation.

The RDP (ANC, 1994) stated that “no political democracy can survive and flourish if

the mass of our people remain in poverty, without land, without tangible prospects for

better life. Attacking poverty and deprivation must therefore be the first priority of our

democratic goal.” Mokate (2000:52) argues that post 1994, rebuilding and

strengthening of the South African economy became one of the key foundations of the

new government's Reconstruction and Development Programme (RDP).

2.10.2 Growth, Employment and Redistribution (GEAR)

The programme targeted an economic growth rate of 6% per annum by the year 2000,

which, the government argued, would boost exports by over 8% per annum and

generate up to 400 000 jobs per annum. It was envisaged that in the period from 1996

to 2000 about 1.35 million jobs would be created (ANC, 1997). Mubangizi (2008:174)

argues that a range of antipoverty measures implemented by the government have

proved ineffective and this includes neo-liberal policies to foster economic growth,

such as GEAR and ASGISA, public works programmes, social security, and poverty

alleviation projects (PAPs) which were to a certain extent mildly effective but poorly

administered.

2.10.3 AsigiSA

28

The Accelerated and Shared Growth Initiative (AsgiSA) was a strategy policy that was

launched by Government in February 2006 with a view to doubling the national

economic growth rate for South Africa from 3% to 6% by 2010. What triggered its

development and implementation was the Government’s view that commitments to

halve unemployment and poverty by 2014 were not likely to be achieved. After

research and consultative discussions with stakeholders, government identified

‘binding constraints on growth’ that needed to be addressed so as to realise its target

of halving unemployment and poverty by 2014. This could be done if growth was at

4.9% by 2009 and 6% between 2010 and 2014.The constraints necessitated

interventions in the following areas: (i) Infrastructure development, (ii) Education and

skills development, (iii) Sector investment strategies, (iv) Second-economy

interventions, and (v) Improving the capacity of the state to provide economic services

(AsgiSA Annual Report, 2007: 2).

2.10.4 Small, Medium and Micro Enterprises (SMME)

The Small Business Act provides that a small businesses can be classified as micro,

very small, small or medium enterprises (SMMEs) on the basis of a complex set of

thresholds per industry and that SMMEs are not restricted to formally registered

enterprises (such as close corporations, private companies and co-operative

enterprises) but include informal and non-VAT registered enterprises, such as

survivalist street trading enterprises, backyard manufacturing and services and

occasional home-based evening jobs. SMME development has been prioritised as one

of the key drivers of government's economic development, poverty alleviation and job

creation strategy (The Department of Trade and Industry Annual Review of Small

Business in South Africa, 2008:23-24).

2.10.5 The Community Based Public Works Programme

The CBPWP was an integral part of the National Public Works but was launched as a

presidential lead project and since it was linked to the RDP a grant amount of R250

million was transferred from the RDP to finance this programme from 1994 to 1996 (

Friedman and Bhengu, 2008:115). In her speech on the launch of CBPWP on 25 June

2000, the Minister of Public Works, Stella Sigcau stated that the CBPWP was

29

conceived as a national response to the challenge of poverty in South Africa; apartheid

had left behind a legacy that impacted badly on Black people, especially those in the

rural areas, who experienced the acute pains of poverty, as manifested by a lack of

physical infrastructure to take care of basic needs. A shortage of employment

opportunities and a lack of education and training inhibited the capacity of the

communities to seek and find better jobs (Department of Public Works, 2000:2). The

objectives of the CBPWP, in summary, are to:

“Build productive community assets which will begin almost immediately to

impact positively on the quality of life.

Create job opportunities and enable primarily women, youth and the disabled

to become providers.

Develop human resources through skilling and training and ensuring the

sustainability of these projects” (Department of Public Works launch of CBPWP

in Mpumalanga, 2000).

2.10.6 The Expanded Public Works Programme

The EPWP was pronounced by former president Mbeki in his state of the nation

address in February 2003 and launched by the cabinet in November of that year. Its

job creation target was 1 million jobs over 5 years, and high levels of training for

participants was also the focus of the programme.

The Phase 1 Expanded Public Works Programme focused on four sectors:

Infrastructure sector, which aims at increasing the labour intensity of

government funded infrastructure projects.

Environment and culture sector, which aims at creating work opportunities in

public environmental and cultural heritage programmes.

Social sector, which aims at creating work opportunities in public social

programmes, particularly home based care and early childhood development.

30

Economic sector, which utilises general government expenditure on goods and

services to provide small enterprise learnerships and incubation programmes

through the Department of Environmental Affairs EPWP Natural Environment

and Culture Plan (2009-2014).

2.10.7 Cooperatives

According to Act no 14 of 2005 on Cooperatives, a ‘cooperative’ means an

autonomous association of persons united voluntarily to meet their common economic

and social needs and aspirations through a jointly owned and democratically controlled

enterprise organised and operated on cooperative principles. Cooperatives have been

identified in South Africa as the vehicle through which the HDI and designated groups

are to be supported by the mainstream economy. This is another government

intervention aimed at addressing poverty and unemployment.

According to Philip (2003:1), the Presidential Growth and Development Summit, held

in July 2003, adopted special measures to support cooperatives as part of a range of

strategies for job creation in the South African economy. He argues that the mandate

for cooperatives in government has been shifted from the Department of Agriculture

to the Department of Trade and Industry. Today close to a billion people are affiliated

with cooperatives all over the world from 227 member organisations in the 91 countries

that make up the International Cooperative Alliance (ICA). It is said that many

countries that have had success in economic development have a vibrant and dynamic

cooperative sector, which contributes immensely to the growth of those economies.

A case in point is Kenya, where cooperatives contribute 45% of the gross domestic

product (GDP) and 31% of the total national savings and deposits (Eastern Cape

Department of Economic Development and Environmental Affairs and Eastern Cape

Socio-Economic Consultative Council Baseline Study, 2009:4).

2.10.8 Local Economic Development (LED)

31

“Local Economic Development (LED) is the process by which public, business and

nongovernmental sector partners work collectively to create better conditions for

economic growth and employment generation. The aim is to improve the quality of life

for all” (World Bank Urban Development Unit 2003: 4). It is important to note that as a

programme in South Africa, the LED programme (which is LRED by expansion)

requires income generating projects for sustainability and these require funding. This

concept has changed the mindset of local communities from undertaking initiatives for

subsistence only to implementation of projects or initiatives for commercialisation

purposes.

2.11 Poverty Alleviation Programmes in Rural India

2.11.1 Integrated Rural Development Programme Background (IRDP)

260 million people in India at the beginning of the new millennium did not have the

income to access a consumption basket which was a determinant of the poverty line.

Of these, 75% were in the rural areas. India is home to 22% of the world’s poor and it

has anti-poverty programmes in its ninety plan. These include the Integrated Rural

Development Programme (IRDP), Swarnajayanti Gram Swarozgar Yojana, wage

employment programmes, Jawahar Rozgar Yojana/Jawahar Gram Samridhi Yojana

employment assurance schemes, the Food for Work programme, Sampoorna Gramin

Rozgar Yojana (SGRY), rural housing programmes, social security programmes and

land reforms.

The Integrated Rural Development Programme (IRDP), was introduced in 1978-79

and universalised in 1980 to provide assistance to rural poor by way of subsidies and

bank credit for productive employment opportunities. The IRDP and allied

programmes were merged into a single programme known as Swarnajayanti Gram

Swarozgar Yojana (SGSY) at the beginning of April 1999 and was conceived as a

holistic programme of micro-enterprise development in rural areas focusing on

organising the rural poor into self-help groups, capacity-building, planning of activity

clusters, infrastructure support, technology, credit and marketing linkages. The

success of this anti-poverty strategy is evident in the decline in poverty levels in the

32

rural areas from 37.2% in 1993-94 to 27.09% in 1999-2000 (Planning Commission,

Five Year Plan, 2002-2007:293-294, Government of India).

2.11.2 Case Studies of Projects under IRDP

Project 1: In Mathur village in the Dharmapuri district of Tamil Nadu, 100 women from

eight self-help groups received training in fruit processing by a non-government

organisation (NGO). They got assistance under SGSY to run a fruit processing unit

registered under the name of Sathyamurthi Mahalir Mandram in May 2000 and were

provided Rs.8 lakh under the SGSY infrastructure fund for purchasing pouching, shrink

pack and other machines. The unit produces fruit squash, jam, ready-to serve

beverages and pickles made from mango, pineapple, grape, lemon and onion. It has

been granted a Fruit Products Order (FPO) licence. Its products are sold to local retail

shops, and at district and state-level exhibitions. Their marketing is done by two NGOs,

Sarvodaya Sangam Vellore and Sarvodaya Sangam, Thirupatthur. The group

members maintain accounts themselves.

Members of the group engaged in processing activities are given employment on a

rotation basis and the monthly income of a member is not less than Rs. 1000. As a

result of the high volume of sales, the group has been able to construct a new building

for housing the unit at a cost of Rs. 10 lakh. In addition to raising the economic status

of the group members, the project members are more aware and are actively involved

in government schemes, camps and campaigns. They attend gram sabha meetings

and have made representation for the provision of basic facilities in their village and

overall development of the area (Source: Ministry of Rural Development, Government

of India, Planning Commission, Tenth Five Year Plan, 2002-2007:293-294,

Government of India).

Project 2: In the Vilpatti village of Dindigul district, 45 women below the poverty line,

from three self-help groups assisted by an NGO and aided under SGSY, received

training in dry flower arrangement from an art gallery. In November 2000, the three

groups established a confederation called BIRIJA and are now engaged in the

collecting, processing and selling of dry flowers. BIRIJA has a marketing tie-up with

an art gallery to conduct exhibitions and sell their finished products.

33

The group generated monthly sales of Rs. 70 000 within six months of the

commencement of their venture. The members receive an average net income of

Rs.1500 per month. Their living conditions and confidence have improved and

members actively participate in social work, for example in the movement against illicit

arrack and in gram sabha meetings (Source: Ministry of Rural Development,

Government of India, Planning Commission, Tenth Five Year Plan, 2002-2007:293-

294, Government of India).

2.12 Chapter Summary

This chapter covered various issues in relation to poverty. They included poverty

definition, theoretical perspectives on poverty and thinking on poverty development

(where a range of contesting development theories with different conceptualisation

and perspectives on poverty were explored and related to those of structuralists,

marxists, neo-marxists, neo-liberals and the post-Washington Consensus). It also

described global statistics on poverty, the historical background to poverty in South

Africa, structural adjustment programmes as a major cause of poverty and the causes

of poverty in sub-Saharan Africa.

The chapter also looked at the definition of income generating projects or activities,

together with experiences of IGPs or IGAs in developing countries. Also under

discussion were the key factors for the successful implementation and management

of projects, and the definition and origin of sustainable livelihood approaches in

development interventions. Income generation, job creation policy and programme

and strategy frameworks for poverty alleviation in South Africa were also discussed

and brief case studies on international poverty alleviation programmes in India were

covered. The following chapter presents a discussion on the research design and

methodology.

34

CHAPTER THREE: RESEARCH DESIGN AND METHODOLOGY

3.1 Introduction

This chapter presents a discussion on the research design and methodology the

researcher used in conducting the research on the impact of Ibuyambo Secondary

Cooperative Ltd as an income generating project for poverty alleviation. Other

important aspects to be presented and discussed in this chapter are the following:

sample and sampling procedure, data collection tools, what the study sought to

measure, data analysis and ethical considerations of the study.

3.2 Research Design, Methodologies and Approaches

Henning et al (2004:36) state that “methodology refers to the coherent group of

methods that complement one another and that have the ‘goodness of fit’ to deliver

data and findings that will reflect the research question and suit the research purpose.”

Barbie and Mouton (2001:75) argue that “research methodology focuses on the

process and the kinds of tools and procedures used.” Hussey and Hussey (1997:54)

argue that a research design is the “overall approach to the research process, from

the theoretical underpinning to the collection and analysis of data.”

Mouton (2000) observes that “research designs are tailored to address different kinds

of questions. When we attempt to classify different types of studies and different

design types, it is not surprising that we do so according to the type of questions they

are able to answer.”

Owing to the nature of the research study and the type of data needed, the overall

research approach comprised a literature review and a qualitative methodology. These

mixed methods corroborated each other and enhanced the reliability, authority and

dependability of the research findings. According to Kitchen and Tate (2000), the

combination of various methods results in a more precise and holistic inquiry,

particularly when there are complexities as in the case of human behaviour. Therefore

35

data was gathered using both qualitative and quantitative methods. According to

Neuman (2003), positivism views social science as an organised method for

combining deductive logic with precise empirical observations of individual behavior,

with a view to discovering and confirming a set of probabilistic causal laws that can be

used to predict general patterns of human activity. Creswell (1994) defines quantitative

research as a type of research that “explains phenomena by collecting numerical data

that are analysed using mathematically based methods (in particular statistics).”

According to Mouton in Fouche and De Vos (2002:137), a research design can be

defined as a blueprint of how the researcher intends to conduct the research. An

interpretivist approach to the nature of reality with regard to the project to be evaluated

was used. The researcher relied on personal contacts within the group that was

studied and the approach was inductive. According to Ulin, Robinson and Tolley

(2004), a qualitative research methodology most often relies on personal interaction

between the group being studied and the researcher. A deeper insight into the context

of the study is often realised when the researcher has established sound partnerships

with the group being studied and this brings richness and depth to the study. They

further argue that qualitative methodologies are inductive in nature in that they are

discovery and process oriented, have high validity, and are less concerned with

generalising but more focused on deeper understanding of the research problem in its

proper context.

In terms of qualitative research, the interpretivist, constructivist perspective views the

world as constructed, interpreted and experienced by people in their interactions with

each other and with broader social systems (Maxwell, 2006). Farzanfar (2005) further

notes that in terms of this paradigm, the nature of inquiry is interpretive and the

purpose of the inquiry is the understanding of a particular phenomenon as opposed to

generalising to a population. There is a range of qualitative methods and these entail

participant observation, case studies, focus groups and unstructured interviews.

However for the purposes of this research study, a mix of qualitative and quantitative

data collection methods was used. They included administration of questionnaires to

Ibuyambo members, semi-structured interviews with key informants and a review of

the documents.

36

3.3 Sample and Sampling Procedure

3.3.1 Targeted Population and Sample Size

The target population for the study consisted of 7 primary cooperatives that form

Ibuyambo Sorghum Secondary Coop. The cooperatives were as follows: Magxibha

Agricultural Coop, Ndonga Ncedolwethu Agricultural Coop, Vukani Upper Ndonga

Primary Coop, Maqhashu Sorghum-belt Primary Coop, Lower Mgwalana Primary

Coop, Guba Hoek Primary Coop and Khuluphambene Primary Coop. The above-

mentioned coops were undertaking crop production which entailed the production of

sorghum, wheat and beans. The seven primary coops combined had 804 members.

The researcher conducted interviews with key informants (officials of government and

other stakeholders) and administered questionnaires to Ibuyambo members. There

was a specially designed interview guide for government officials and a separate

questionnaire for Ibuyambo members. Data collection entailed issuing questionnaires

to 11 of the 12 members of the board (as one member could not be found and one

member from each of the seven primary coop. Interview guides to one member from

each of the Department of Economic Development, Environmental Affairs and Tourism

(DEDEAT); the Department of Rural Development and Agrarian Reform (DRDAR);

Emalahleni Local Municipality (ELM), Emalahleni Local Cooperatives Forum (ELCF),

Chris Hani District Municipality (CHDM), and Chris Hani District Cooperatives

Development Centre (CHDCDC), which assists cooperatives in the Chris Hani District

which includes the Emalahleni area. This came to a total of 18 respondents who

completed the questionnaire, while six key informants were interviewed. From this all

the necessary data about Ibuyambo was gathered, especially around implementation,

operationalisation, benefit, challenges, successes and the role played by the

Department of Economic Development, Environmental Affairs and Tourism (DEDEAT)

and other funders in monitoring and evaluation of the coop.

37

3.3.2 Sampling Related Issues

Maree et al (2011:79) write that sampling means the process by which a portion of a

population is selected for research study and they further argue that qualitative

research generally adopts a non-probability and purposive sampling approach as

opposed to probability or random sampling approaches. Creswell (2003:220)

observes that “… in qualitative data collection, purposeful sampling is used so that

individuals are selected because they have experienced the central phenomenon.” On

the basis of this, non-probability sampling methods were used – the purposive/

judgmental technique and the convenience sampling technique.

Since the researcher during the course of his work duties interacts with some

Ibuyambo members as well as employees of both Ibuyambo and other sector

department development practitioners, the convenience sampling technique was used

as the individuals were easily and conveniently available (Meree et al.(2011:177). The

advantage of the purposive/ judgmental sampling technique was that the researcher,

since he works for the funder of Ibuyambo Secondary Cooperative Ltd, already had

knowledge of the population and its elements under study (Babbie and Mouton,

2004:166).

According to De Vos et al (2005:328), there are no rules on the sample size as the

size is determined on the basis of what the researcher wants to know, the objectives

the research wants to achieve, what will bring credibility and what will be useful.

According to Maree et al (2011:176-177), the following is a list of situations in which

non-probability sampling may be used: when there is not much time available to

conduct the research study, when there is not much money available, and when the

population is difficult to find.

3.4 Data Collection Tools

O’Leary (2004:150) asserts that “collecting credible data is a tough task and it is worth

remembering that one method of data collection is not inherently better than another.”

Therefore, what is important with regard to the selection of a data collection method

depends on the research goals that the researcher wants to achieve and not

38

necessarily how one views the collection method. Therefore for the purposes of the

study the data collected was both qualitative and quantitative in nature. The data

collection methods consisted of a review of Ibuyambo Secondary Coop documentation

(business plans, PSC minutes, etc.); documentation from funders (i.e. funding

models); semi-structured interviews with a total of six key informants; and the

administration of questionnaires to 18 respondents from Ibuyambo.

3.4.1 Group Administration of Questionnaires

Maree et al (2011:157) note that the data collection tool most often used by

researchers is group administration of questionnaires, where the researcher visits a

group of respondents and asks them to complete questionnaires. They outline the

advantages of this method as follows:

“Many respondents can complete the questionnaire in a short space of time

Test administrators can check questionnaires for accuracy

This method is relatively cheap and easy to carry out

Respondents can be reached across long distances

The response rate is optimal

The interviewer can immediately assist with issues in the questionnaire which

are not clear to the respondents” (Maree et al., 2011:157).

Both open and ended questions were employed when designing the questionnaires in

order to solicit as much input and information from the respondents as possible.

Questionnaires were administered to 18 respondents as further respondents could not

be found or gave excuses, despite further appointments that were made to meet them.

The researcher visited three groups of respondents in three weeks.

3.4.2 Semi-Structured Interviews

Corbetta (2003:270) views semi-structured interviews as follows:

39

“The order in which the various topics are dealt with and the wording of the questions

are left to the interviewer’s discretion. Within each topic, the interviewer is free to

conduct the conversation as he thinks fit, to ask the questions he deems appropriate

in the words he considers best, to give explanation and ask for clarification if the

answer is not clear, to prompt the respondent to elucidate further if necessary, and to

establish his own style of conversation.” Maree et al (2011:87) observe that the semi-

structured interview is used to corroborate emerging data from other data sources,

does not take a long time period, requires a participant to answer a set of

predetermined questions and allows for probing and clarification of answers.

Hoyle, Harris and Judd (2002:144) point to the advantage of interviews and argue that

questions have “ … dual goals of motivating the respondent to give full and precise

replies while avoiding biases stemming from social desirability, conformity or other

constructs of disinterest.” There are many reasons for using interviews for collecting

data and as a research instrument. Leedy and Ormrod (2001) argue that the benefit

of conducting face-to-face interviews is that it affords the researcher an opportunity to

establish a relationship with the respondent and this often facilitates the production of

high response rate.

According to Gray (2004:214), use of interviews for data collection has the following

advantages:

• They result in highly personalised data

• There are opportunities for probing

• They allow a good return rate

• The interviewer can assist when respondents are not fluent in the native

language of the country, or where they have difficulties with written language.

For these reasons semi-structured interviews have been chosen by the researcher for

data collection.

3.4.3 Document Review

40

According to Maree et al. (2011:82), using documents as a data gathering technique

requires a focus on all the types of written communication that may provide information

on the phenomenon under investigation. They further state that written sources many

entail published and unpublished documents, company reports, faxes, newspaper

articles, or any document that is relevant to the investigation. In accessing documents

such as PSC meeting minutes, business plans and reports, the researcher relied on

the fact that he worked for the funder and easily accessed this documentation.

3.5 What the Study Sought to Measure

The study sought to evaluate the impact of Ibuyambo Secondary Coop Ltd on poverty

alleviation with regard to job creation, knowledge and skills development and

empowerment of designated groups. It also focused on the assessment of project

performance with regard to project implementation and operationalisation, exploring

the successes and challenges experienced by Ibuyambo Sorghum Secondary Coop

Ltd, as well as assessing the role played by Department of Economic Development,

Environmental Affairs and Tourism and other Ibuyambo funders with regard to project

management, monitoring and evaluation. Effectively, the study had to answer the

following research questions:

What was the project performance with regard to implementation and

operationalisation of Ibuyambo?

Was there an impact on poverty alleviation for Ibuyambo members with regard to job

creation, knowledge and skills development and empowerment of designated groups?

What role did DEDEAT and other funders play in monitoring and evaluating Ibuyambo

and what were the successes and challenges?

3.6. Data Analysis

41

According to Mayan (2001:21), data analysis involves: “… the process of observing

patterns in the data, asking questions of those patterns, constructing conjectures,

deliberately collecting data from specifically selected individuals on targeted topics,

confirming or refuting those conjectures, then continuing analysis, asking additional

questions, seeking more data, furthering the analysis by sorting, questioning, thinking,

constructing and testing conjectures, and so forth.” Thus the researcher used tables

and graphs to analyse the data.

Flick (1998:192-196) argues that, depending on the methodology of research and the

corresponding aim of the analysis procedures, a researcher may use the conventional,

straightforward ‘qualitative coding and categorising’ approach. With regard to

qualitative data analysis, a general inductive, qualitative data analysis approach

consisting of identifying, encoding and categorising patterns and themes found from

the responses of the 18 respondents and six key informants was applied in order to

analyse data collected through the questionnaires and interview guides. Results were

paired to develop major themes or categories that described the variables under

investigation. Data pairing facilitates the simple and efficient communication of the

findings.

3.7 Ethical Considerations of the Study

Babbie (2011:478) writes that whoever is involved in social science research needs to

know the general agreements shared by researchers about what is right and not right

in the conduct of scientific inquiry. Strydom (2002:63) observes “anyone involved in

research needs to be aware of the general agreements about what is proper and

improper in scientific research.” In light of the above, it was therefore essential that the

researcher paid respect to the ethical principles underlying the study. Therefore the

researcher requested the consent of the participants in conducting the research and

a full explanation was provided to them about the aims and nature of the research, it’s

likely duration, and how the results would be disseminated.

Saunders et al (1997; 409) observe “research should be based, as far as possible and

practicable, on the freely given informed consent of those under study.” Henning

(2004:73) argues that respondents need to give informed consent to participate, must

42

be fully informed about the research and need to know that their privacy and sensitivity

will be protected and what will be the use of their information after recording. Barbie

(2011:480) explains further the concept of ‘informed consent’ and writes “this norm

means that subjects must base their voluntary participation in research projects on a

full understanding of the possible risks involved.”

3.8 Chapter Summary

This chapter presented a discussion on the research design and methodology and

explained why both quantitative and qualitative research design approaches were

adopted for the research. Sample and sampling procedure, data collection tools,

administration of questionnaires, semi-structured interviews, document review and

data analysis were discussed. The chapter also covered the ethical considerations for

the research study. The following chapter presents the findings of the research study.

43

CHAPTER FOUR: FINDINGS OF THE STUDY

4.1 Introduction

This chapter presents a discussion of the research findings. It starts off with a

background to Ibuyambo Secondary Cooperative Ltd, followed by a discussion on the

profile of the respondents, after which the research findings are presented, based on

the themes developed for the study and those that emerged during the data collection.

4.2 Background to Ibuyambo Secondary Cooperative Ltd

Ibuyambo Secondary Cooperative Ltd started operating late in the year 2010 and had

7 primary cooperatives. Member primary cooperatives appointed 12 directors who

oversaw Ibuyambo affairs during monthly meetings. An Executive Committee

comprising five members appointed from within the 12 member board of directors

oversaw daily operations. According to Ibuyambo respondents, Ibuyambo was

initiated by Chris Hani District municipality and in conjuction with Emalahleni local

municipality and Emalahleni Farmers Union (EMAFU) their primary cooperatives were

mobilised and organised as a vehicle to collectively access funding from government

and other development funding institutions. Primary coops were asked to join together

and form a secondary cooperative to access an EU-funded economic development

support programme fund called Thina Sinako which had issued a request for proposal

for funding at the time.

On buying the concept of Ibuyambo, the primary cooperatives saw the opportunity for

a platform that would ensure access to markets for their local produce, access to

financial resources, support for primary agricultural production, agro-processing and

value addition, commercialisation and job creation – especially local youth

employment and primary member capacity building. The main activities of Ibuyambo

were sorghum and grain milling operations with the focus on developing the input

suppliers to the value chain to a level of sustainable production of sorghum, maize and

bean crops which could provide mill inputs for agricultural value addition.

4.3 Respondent Profile

44

This section describes the characteristics of the respondents from whom data was

collected and also covers the demographic profile of Ibuyambo Beneficiary

Cooperative members. The researcher issued questionnaires to Ibuyambo members

and conducted interviews to officials of government and other stakeholders. Data was

collected through questionnaires from 11 of the 12 members of the board as well as

from one member from each of the seven primary coops. Interviews were also

conducted with one key informant from each of the Department of Economic

Development, Environmental Affairs and Tourism; the Department of Rural

Development and Agrarian Reform; Chris Hani District municipality; Emalahleni local

municipality; Emalahleni Cooperatives Forum; and Chris Hani Cooperatives

Development Centre, which is a centre that assists cooperatives in the area of Chris

Hani District, including the Emalahleni area. This came to a total of 18 respondents

and six key informants from which all the necessary data about the secondary coop

was gathered. This covered implementation, operationalisation, benefit, challenges,

successes, the role played by the project and an understanding of the contribution by

the Department of Economic Development, Environmental Affairs and Tourism

(DEDEAT) and other Ibuyambo funders in monitoring and evaluation of the Coop.

Regarding the nature, character and calibre of the key informants (government and

other stakeholders), all had been involved in local economic development and

cooperative development in their respective institutions. They were all also currently

involved with Ibuyambo Secondary Cooperative and had first-hand experience and

information on the implementation of the project.

The tables and figures below provide an illustration of the socio-economic realities that

the Ibuyambo members were experiencing.

45

4.1 Age of the Respondents

Figure 1

Figure 1 shows that of the 18 respondents from Ibuyambo, six were aged between 40

and 49 years, representing 33% of the sample, and 12 were aged between 50 - 59

years, representing 67%. This means that there were no young members of the

project. This is a bad reflection considering that South African government

programmes and legislation based on affirmative action promote the mainstreaming

of designated groups in the economy as these groups were previously disadvantaged

in terms of job opportunities in the past (Employment Equity Act.1998:19). This

observation is also contrary to the objective of youth employment in Ibuyambo.

4.2 Gender of the Respondents

0%

67%

33%

0%0%

0%

Age of the Respondents

Above 60 years

50 - 59 years

40 - 49 years

30 - 39 years

20 - 29 years

Below 20 years

67%

33%

Gender of the Respondents

Male

Female

46

Figure 2 above shows that of the 18 respondents, 12 were male which represented

67%, while 6 were female which represented 33%. There were no disabled people.

Again there was no equity in terms of participation as the number of women was half

that of the men. Women and disabled people as a designated group still lack

opportunities. Since 11 of the respondents in this study were serving in the BOD and

the other seven were also permanent members from their primary cooperatives,

representation of women in directorship and management positions was minimal.

4.3 Level of Education of the Respondents

Figure 3

Figure 3 shows that of the 18 respondents from Ibuyambo, 12 had less than a grade

10 level of education which represented 67%, while two had a level of education

between grades 10 and 12 which represented 11%. The results also revealed that two

respondents had matric, representing 11%, while another two respondents had a

degree or diploma qualification, representing 11%. The researcher’s observation here

is that the levels of literacy were not bad at all.

67%

11%

11%

11%

Level of Education

Less than grade 10

Grade 10 - 12

Matric

Degree/Diploma

47

4.4 Employment Status of the Respondents

Figure 4

Looking at the levels of employment for the Ibuyambo respondents other than

employment in the project, Figure 4 shows that only one respondent out of 18 was

employed by a company, which represented 6%, and the rest were without

employment, representing 94%. Some respondents said that they had no employment

and their children also had no employment because they did not go far enough at

school and they did not have money for university fees. Clearly those children cannot

be held responsible for their failure, as discussed in Chapter 2 under theories of

poverty. Rank (2004:50) argues that it is the economic, political and social system

structural failings that are the causes of poverty and that “the focus on individual

attributes as the cause of poverty is misplaced and misdirected”. Lack of employment

for the 17 respondents clearly meant that their participation in Ibuyambo was seen by

them as a job opportunity and poverty alleviation initiative for their families.

4.5 Number of Dependents

6%

94%

Employment Status

Employed

Unemployed

48

Figure 5

Figure 5 shows that of the 18 respondents only one had no dependents while the rest

had dependents ranging from one to ten. The demographic profiles of the Ibuyambo

members demonstrates the high levels of poverty in which the communities of

Emalahleni Local Municipalities are trapped. Looking at the number of dependents

shows that poverty is transmitted to younger generations and is cyclical. Lewis quoted

in Lister (2004:106) notes that ‘cultures’ of poverty entail “a subculture with its own

structure and rationale, as a way of life which is passed down from generation to

generation along family lines”.

4.4 Other Findings of the Interviews

Community Involvement or Participation

Community involvement or participation of the project members was critical at every

stage of the project management, whether it was initiation, planning, development,

implementation, operationalisation, monitoring, evaluation or reporting. Respondents

were asked what it was that they wanted to achieve at Ibuyambo and whether it was

achieved.

6%

6%

16%

16%

16%

22%

6%

6%

6%Number of dependents

10 dependents

9 dependents

7 dependents

6 dependents

5 dependents

4 dependents

3 dependents

1 dependents

0 dependent

49

In their responses, the majority of respondents said that Ibuyambo was initiated by

Chris Hani District municipality and primary cooperatives were told that this was done

for them in order to access funding from Thina Sinako. Much as respondents were

able to state the objectives to be achieved on the establishment of Ibuyambo, some

were still confused about their role and what needed to be achieved. This tended to

limit their inner drive and participation in the Ibuyambo programmes as some were

said to be not attending meetings. Rahman (1991:148-149) observes that the

acknowledgement and understanding by development practitioners that poor people

should be allowed to improve their environments progressively by their own means is

a driving force in the PLA ideology. Unfortunately development practitioners acted

inconsistently with the Participation, Learning and Action (PLA) ideology.

There was no indication from the key informants about project initiation. However on

verifying the responses received from the respondents, three (i.e Emalahleni Local

Cooperatives Forum, DRDAR & Emalahleni LM) of the six key informants confirmed

what was said by the respondents and added that Chris Hani District initiated

Ibuyambo and mobilised farmers through collaboration with Emalahleni Local

Municipality. Project initiation in this regard was been ‘top-down’ as opposed to the

‘bottom-up’ approach.

Establishment and Implementation Phase

From what was gathered from the respondents and seen through site visits to the coop

establishment, Ibuyambo erected a milling plant in 2010 with buildings, electricity and

water availability financed through funding secured from the Thina Sinako programme.

While the coop also bought other assets such as four tractors, three delivery bakkies,

one truck and one forklift, procurement and management was ill advised and and not

according to the business plan. However when asked if the Ibuyambo project was

implemented according to its business plan, two of the six key informants said it was

done according to plan.

The majority of respondents claimed that all four tractors were purchased from

Queenstown as second-hands and have since broken down. This was done by the

50

general manager together with the district municipality without the consent of the BOD

and against the advice of the Department of Rural Development and Agrarian Reform

(DRDAR). Confirming this, one key informant, the manager from DRDAR, like many

of the respondents, said “the broken tractors are severely affecting the primary

production as the primary cooperatives are now struggling to plough their fields”. The

coop also had a shop where its finished products were sold.

According to the respondents, outstanding deliverables for the implementation phase

were the stock feed machine, three silos and three offices. Also outstanding was the

establishment of a dairy enterprise as they had planned to diversify into other income

generation activities to ensure income security and sustainability for their members.

Project Operationalisation

All respondents expressed the view that the coop was operational on a lower scale as

opposed to a bigger scale and that operationalisation of the coop was not entirely

according to the business plan and its time frames as there were deviations from the

plan. Also the general manager tended to act beyond the parameters of the plan. All

key informants also shared the same view as the respondents that Ibuyambo was

operational on a lower scale and not to its full capacity.

The majority of respondents said that a shortage of personnel was hampering smooth

operations of the coop and this was due to lack of funding for population of the

organogram. The general manager was said to be doing everything by himself and

taking decisions without the approval of the BOD. Four of the six key informants

confirmed what the respondents said and pointed to the lack of capacity and business

acumen of the BOD as the reason for the fact that the general manager was doing

everything. Some of the decisions taken by the general manager were passed by the

BOD, though this group might not have been consciously aware that it had done so.

The general manager was appointed as a project manager. However, according to

respondents he elevated himself to the post of general manager for a monthly salary

of R 25 000. He hired a miller from Nigeria who he also fired, and replaced him with

his son. This was negatively affecting operations as the coop was finding it difficult to

51

meet the market demand for its products. The general manager was also said to be in

charge of recruitment, fleet management, financial management, production

management, marketing management and administration.

Respondents also said that operationalisation of the mill was not going according to

the original plan because there was more focus on sorghum milling and less on maize

milling. This was because all the primary cooperatives as suppliers of grain inputs to

Ibuyambo were located in the sorghum belt area at Emalahleni where sorghum was

doing well, even when there is not much rain. It is painful to note that project

implementation in this regard did not respect the project scope. Nah et al (2003:17)

indicate that establishing the programme scope is critical to successful project

implementation and that project definition must be on the basis of milestones or clear

delivery dates. Respondents also claimed that the general manager bought a milling

machine with a huge capacity for maize milling and less capacity for sorghum from

Modern Milling and they were not happy about that.

The results were that maize inputs were sourced from Elliot and the Free State as the

quality of the maize in Emalahleni was not good enough for milling. Sorghum primary

production was also not doing well because the second-hand tractors were broken.

This was not good for poverty alleviation. All key informants cited primary production

as a challenge for operations and sustainability.

Income and Profit Generation and Sustainability

Respondents and key informants were asked whether Ibuyambo was generating

income, realising profits and operating on a sustainable basis. Of the 18 respondents

targeted, the majority said that they believed Ibuyambo, despite huge operating costs,

was generating income and realising profits. However owing to mismanagement of

funds and stock theft it was now running at a loss and was struggling to finance its

working capital and other member benefits. The respondents however did not have

records to substantiate their claims. All they said was that they were relying on the

reports they got from some members of the BOD. All six key informants indicated that

Ibuyambo was generating and realising profits. One key informant from Chris Hani

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District Cooperatives Development Centre (CHDCDC) observed “the coop realises

profits after tax but is not able to pay patronage to members”.

Minutes sourced from the DEDEAT LRED advisor on financial statements reported by

the general manager at PSC level revealed only projections on the income statement

and not the actual income statement that would explain the financial performance of

Ibuyambo in a particular financial year. Out of 18 respondents, only four said they did

not know whether there were income and profits generated so they they did not know

if the project was sustainable. Interestingly, all four were based at primary

cooperatives and did not participate at the board of directors level at Ibuyambo. This

also pointed to a lack of reporting by some BOD representatives to their respective

primary cooperatives.

Dependence Syndrome

The majority of respondents admitted that they depended too much on government

support such that they believed that it was their right and natural that government must

support them. All key informants cited too much reliance by Ibuyambo members on

government grant funding as a challenge facing Ibuyambo. Much as the primary

cooperatives were expecting support from Ibuyambo in the form of tractors, feeds and

fertiliser, they were also blaming DRDAR for not providing them with tractors.

Reliance on government grant funds by members of the primary cooperatives

negatively impacted on them such that they were failing to produce enough grain

inputs for the mill. Some of them revealed that there was a standing agreement

between them and Chris Hani District Municipality where primary cooperatives were

required to pay R1800 to access more funding for primary production in the form of

subsidies. However the majority do not want to pay the money. It was found that the

coop was not sustainable and had asked the Chris Hani District Municipality to

mobilise other funders to finance the working capital, a lack of which was causing

serious operational challenges.

Poor Governance

53

The respondents were asked whether there was a board of directors (BOD) or project

steering committee (PSC) for provision of strategic direction and implementation of the

Ibuyambo project and whether they were represented and receiving reports about

decisions. All respondents said there was board of directors and project steering

committee and that they were represented in those structures. All key informants said

that BOD and PSC structures were in place, however one of them from CHCDF said

they were not represented in those structures. However the observation by the

majority of respondents and all key informants was that the BOD was lacking capacity.

The majority of the 12 members from the primary coops had low levels of education

and their performance in terms of running Ibuyambo was dismal.

The respondents also felt that the general manager was contributing to the problem in

that he was not doing enough to capacitate the BOD through training, mentoring and

skills transfer programmes. There was poor governance by the BOD and poor

management by the Exco as a result of lack of capacity and capabilities of the BOD.

In the discussion on causes of poverty in Chapter 2 it was stated that according to

CPRC (2004:40) it is likely that people trapped in persistent poverty are likely to

experience multiple ‘capability deprivations’ concurrently. The result has been that the

general manager implemented decisions based on his own will and did not recognise

and report to the BOD instead of the public sector coordinated PSC. This has caused

mistrust and infighting between the general manager and the board.

The infighting has exposed Ibuyambo to mismanagement and theft. The public sector

coordinated PSC led by Chris Hani District has since intervened and governance of

Ibuyambo is in their hands for three years with effect from the beginning of August

2013. The current BOD has been asked to accept this resolution, which was taken by

politicians of the district and was implemented by the PSC. Respondents said BOD

directors accepted the decision to replace them with the PSC because it was taken in

good spirit. The goal was to assist Ibuyambo with capacity building of the BOD to

position them for the running of Ibuyambo in the future, mobilise funds for the working

capital challenge and to conduct an audit of Ibuyambo. However a minority (one

respondent and one key informant) claimed that primary cooperatives did not like the

time period of three years, preferring six months.

54

Access to Financial and Non-financial Support

It emerged that there was massive support and investment from the public sector for

the establishment of Ibuyambo and that there was enough market demand for

Ibuyambo products. From what was gathered from the respondents and key

informants, Ibuyambo secured funding from the EU funded Thina Sinako programme

and the Department of Economic Development, Environmental Affairs and Tourism

(DEDEAT) for procurement of the milling plant and other infrastructure and from Chris

Hani District Municipality for primary production. In kind support came from the

Department of Rural Development and Agrarian Reform (DRDAR) for land, fencing

and extension services and from Emalahleni Local Municipality (ELM) for technical

services and stakeholder mobilisation.

Access to Markets

With regard to access to markets, respondents believed that the coop had established

a strong customer base across the Eastern Cape and into the Free State, with reliable

customers being Umtiza (East London), BKB Ltd and a few in the Free State. The

response from the respondents and key informants in this regard was evidenced by

information contained in the funding proposal submitted to the Department of

Economic Development, Environmental Affairs and Tourism (DEDEAT) by Ibuyambo

for access of LRED funding. The proposal states that “…. the existing mill with its

strong customer base can achieve sales of approximately R2.5 million per month with

a monthly gross margin after grain costs of approximately R700 000 to cover

expenses and plough back into the local economy” (Ibuyambo -DEDEAT LRED Fund

business plan, 2012/13:6).

Member Benefits, Capacity Building and Empowerment

The key finding on benefits accruing to Ibuyambo members and job creation was that

benefits are not a ‘free for all’. The majority of respondents indicated that they did not

enjoy any personal benefits from Ibuyambo and that the only benefit was that they

were selling their grain inputs as primary cooperatives to Ibuyambo. From these sales

55

they would receive proceeds as primary coops and then share those among

themselves. This was not enough to support their dependents, who like them were

trapped in poverty and without jobs. They also revealed that they had heard that those

serving in the BOD and the GM were feeding their small animal stock from the by-

products of the milling, and that BOD members also received training, although they

could not specify in what areas BOD members were trained.

One respondent from primary cooperative X said, “We did not receive any benefits as

individual members of Ibuyambo and even as member primary cooperatives. Instead

Ibuyambo still owes us R37 000 as proceeds from sales we made through them”.

However, at the primary cooperative level benefits were initially received such as

seeds and fertilisers and the provision of tractors to assist with ploughing. This support

was no longer existent due to broken tractors and the fact that at the individual level

BOD members received empowerment in the form of training on governance and

financial management and technical training on agricultural production. This was

organised by Ibuyambo on their behalf. However these training sessions were not

sufficient and did not improve their strengths and capabilities as “we BOD are still

lacking capacity and capabilities”. Respondents said that more training opportunities

were needed for Ibuyambo members to unlock their potential and capabilities.

Robbins (1993:230) talks of a model that illustrates the relationship between the

performance of an individual, his abilities and his motivation, and he concedes that

individual performance can be assisted or handicapped by opportunities.

Opportunities entail personal and material resources such as training and

development.

No Job Creation Benefit for Majority of Members

Although Ibuyambo created a few jobs that did not automatically translated to job

creation for the majority of Ibuyambo members and their dependents at primary

cooperative level. Based on information from the respondents and key informants and

confirmation from the GM reports and PSC minutes sourced from DEDEAT, job

creation breakdown was as follows:

56

One general manager earning R25 000 pm

One miller earning R20 000 pm

One project coordinator earning R12 000 pm

Five Exco members earning a stipend of R3000 pm

Four security officers each earning R1600 pm

One admin clerk earning R2500 pm

One factory shop salesperson earning R3000 pm

One inventory employee earning R2500 pm

Nine casual employees on milling earning R1600 pm

From the responses it emerged that the communities in the area of Ibuyambo were

the ones benefitting from the jobs created instead of the unemployed youth. One

respondent from one primary cooperative said, “Our children are not employed here,

they are told to produce qualifications, what qualification do you need for a security

job?”

Project Success and Achievements

The majority of respondents mentioned the establishment of Ibuyambo milling plant

and the value addition to the local produce as a success. The organisation of

Emalahleni farmers into Ibuyambo, the mobilisation of government grant funds,

availability of Ibuyambo as a market for local produce from primary cooperatives and

job creation were other successes for Ibuyambo. However, except for the Ibuyambo

being a market, respondents believed that very little positive impact, if any, had been

made on the livelihoods of Ibuyambo members, both at individual and primary

cooperative levels. All key informants indicated that much as there were jobs created,

they believed that not much success had been achieved in this regard as Ibuyambo

was not fully operational.

Challenges and Interventions

Respondents and key informants were asked to say what they considered to be the

challenges facing Ibuyambo and the interventions required. The key challenges most

commonly mentioned were lack of capacity by BOD and Exco, poor governance, the

57

general manager being the sole decision maker, mistrust between BOD and GM, low

levels of education among the members, non-availability of the Ibuyambo constitution,

non-availability of youth in Ibuyambo, non-attendance of meetings by members, lack

of primary production, shortage of water, no permanent miller, stock theft and lack of

capacity building.

Constitution of Ibuyambo Non-existent

The majority of respondents said that there is no constitution for Ibuyambo as they

had never seen it.The Guba Hoek primary cooperative that withdrew its membership

from Ibuyambo revealed that they requested the constitution of Ibuyambo several

times from the BOD and the Exco to no avail and that it was a struggle to convene

annual general meetings (AGMs). When the researcher probed respondents about

benefits accrued to them as members, very few member respondents had a clue about

patronage or anything about their shareholding or stake of Ibuyambo.

Another discovery by the researcher on perusing the Ibuyambo business plan (2011:5)

was that Ibuyambo was operating as a secondary but still had not registered as a

secondary cooperative. This lends credibility to the claim by the respondents that

there was no constitution for Ibuyambo. All key informants confirmed that Ibuyambo

was operating as a secondary even though it was not registered as such.

Lack of Commitment by Members

There was lack of commitment at the level of a secondary cooperative by BOD to

attend meetings and at the level of a primary cooperative by members to focus on the

primary production of grain inputs. They were not doing enough to overcome the

challenges affecting production. This was the opinion of a majority of respondents as

well as key informants.

Monitoring and Evaluation

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Respondents were asked whether DEDEAT and other Ibuyambo funders were visiting

Ibuyambo, how often they were visiting, whether they had a project manager

responsible for Ibuyambo, and what the requirements were for accessing DEDEAT

funding. Certain respondents were not aware whether DEDEAT and other funders

were monitoring and evaluating Ibuyambo. It was notable that much as the eighteen

respondents (including BOD) come from primary cooperatives, the entire seven

members (non-BOD members) from the primary cooperatives were part of the eleven

that were not aware. One non-BOD members said, “I do not know, I once heard

extension officers saying DEDEAT has also funded.” According to Holland and Light

(2000:19), communication formally promotes and presents a project's progress

achieved by the project management team to the rest of the organisation and other

relevant stakeholders.

The observation is that communication and reporting aspects were lacking among

Ibuyambo members. There were monthly visits by DEDEAT and other funders, reports

were requested, fund transfers were made in tranches and performance progress

reports were submitted before transfer. The finding is that there was a requirement for

monitoring and evaluation (M&E) by funders and that there was also a project steering

committee to monitor the progress of implementation and the performance of the

operations, as well as to evaluate their impact. However the performance and

efficiency of the M&E systems were questionable given the challenges of Ibuyambo.

All key informants were aware of the fact that there were M&E systems in place.

However improvement was needed to address the Ibuyambo challenges.

Lack of Institutional Systems, Policies and Procedures

The glaring failure in terms of project implementation and operationalisation was

caused by a lack of institutional systems, policies and procedures. This lack of systems

exposed the institution to operational failures that caused Ibuyambo to run at a loss

and fail to make a meaningful and positive impact on its members. It was unable to

pay patronage to its members and unable to finance its working capital and was

therefore not sustainable. Non-availability of systems led to the general manager doing

everything by himself, whether the right way or the wrong way.

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4.5 Chapter Summary

This chapter presented the research findings from the data collected from 18

respondents from Ibuyambo cooperatives and 6 key informants from government

stakeholders. The views of the respondents during the data collection process were

used to develop the themes and to determine emerging themes in order to come up

with findings. An outline of the themes has been presented and these were also related

to literature review aspects in Chapter 2. A summary of key findings will be presented

in the next chapter, on the basis of which recommendations and conclusions will be

made.

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CHAPTER FIVE: CONCLUSION AND RECOMMENDATIONS

5.1 Introduction

This study is about the impact of income generating projects on poverty alleviation

with the case in point being Ibuyambo Sorghum Secondary Coop Ltd.

Objectives:

To assess project performance with regard to project implementation and

operationalisation.

To evaluate its impact on poverty alleviation with regard to job creation, knowledge

and skills development and empowerment of designated groups.

To explore the successes and challenges experienced by Ibuyambo Sorghum

Secondary Coop Ltd.

To understand the role played by the Department of Economic Development,

Environmental Affairs and Tourism and other funders with regard to project

management, monitoring and evaluation.

This chapter presents the key findings of the study and the major themes that emerge

from the research on the impact of Ibuyambo Secondary Cooperative Ltd on poverty

alleviation. It makes recommendations to guide the initiation, implementation,

management, monitoring and evaluation of income generating projects aimed at

creating a positive impact on the livelihoods of the local people. Limitations of the study

and conclusions are also presented.

5.2 Key Findings of the Study

Top-down approach to project initiation

The majority of respondents believed that primary cooperatives and farmers under

Emalahleni Farmers Union were mobilised and organised by Chris Hani District

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municipality to form Ibuyambo to enable them to access grant funding from Thina

Sinako programme, while project concept and initiation were imposed on Ibuyambo

members. The non-existence of a constitution, combined with the fact that there were

no clear ownership arrangements in place, were further observations.

Lack of Power And Participation in Decision Making

There were many decisions that led to serious operational challenges at Ibuyambo

and members as represented by the BOD did not have power and often were not given

an opportunity to participate in the decision-making processes. Instead the general

manager and government officials from Chris Hani District municipality, in particular,

were the decision makers. It appeared that procurement by the general manager of

some production assets was the will of these officials and the voice of the BOD was

not listened to. The general manager was undermining the BOD, instead reporting to

the public sector coordinated PSC.

Poor Governance

It also emerged that despite the presence of the PSC and BOD at Ibuyambo, there

was poor governance by the BOD and poor management by the Exco as a result of a

lack of capacity and capabilities. The fact that the general manager was doing

everything by himself without the approval of the BOD proved how weak and incapable

the institutional arrangements were at Ibuyambo. Also the co-existence of BOD and

the PSC at both the implementation and operational stages exposed Ibuyambo to

potential conflicts and hence poor governance. The infighting exposed Ibuyambo to

mismanagement and theft. Due to poor governance, the public sector coordinated

PSC led by Chris Hani District Municipality has since intervened and governance of

Ibuyambo is in their hands for three years with effect from the beginning of August

2013.

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Lack of Sustainability and Mismanagement of Assets

The majority of respondents said that Ibuyambo, despite huge operating costs, was

generating income and realising profits. However owing to mismanagement of funds

and other production assets, as well as stock theft, it was now running at a loss and

was struggling to finance its working capital and other member benefits. The

respondents however did not have records to substantiate their claims. All they said

was that they were relying on reports they got from some members of the BOD.

However a document review on the minutes of the PSC meeting held on 25 August

2013 revealed that there was indeed stock taken by a DRDAR official amounting to

R90 000, and by other directors to the tune of R13 890, without payment . The report

to PSC also revealed that other assets like the Mahindra, Colt delivery vans, trucks,

tractors and implements were in a state of disrepair. Given the fact that Ibuyambo

enjoyed a huge market for its products with a huge potential turnover, as discussed in

Chapter 4, sustainability should not have been a problem. Due to lack of proper

management and misuse of production assets, it was a challenge. Another glaring

problem was that the financials of Ibuyambo did not show the actual income statement

with the actual performance of operations. Instead it showed projections and grant

amounts received from funders.

Dependence syndrome

At the time of data collection it became clear that primary production was non-existent

from all primary cooperatives attached to Ibuyambo. Respondents indicated that the

reason for this failure was that they were not getting fertiliser, seeds and tractors from

Ibuyambo and that DRDAR was also failing to provide them with tractors. There was

no sense of self-reliance among the Ibuyambo members and according to the same

report to PSC on 25 August 2013, Ibuyambo requested the PSC to mobilise an amount

of R1.5 million to resuscitate primary production and ensure continuous milling

operations. It transpired that Chris Hani District municipality agreed to mobilise the

amount as part of a condition which ensured that Ibuyambo governance resided with

the public sector coordinated PSC. This did not augur well for their future as an

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independent institution as it did not encourage them to work hard for their self–

sustenance and independence.

Inadequacy and Inequality in Member Benefits, Empowerment and Job

Creation

The key finding on benefits accruing to Ibuyambo members and job creation is that

benefits were not a free for all. According to the majority of respondents, very little was

achieved in terms of benefits, job creation and empowerment and that training, was

only made available to BOD. Only communities in the nearby Ibuyambo plant

benefited in terms of jobs created, to the exclusion and neglect of communities and

other Ibuyambo members on the periphery of the Ibuyambo plant. Short courses to

capacitate BOD did not have a positive impact on Ibuyambo given the low levels of

literacy of Ibuyambo members and this led to poor governance and resulted in the

Ibuyambo board being replaced by a public sector coordinated PSC.

Lack of Awareness for Cooperative Principles and Cooperatives Act by

Ibuyambo Members and Some Government Officials

Amongst others, the cooperative principles of autonomy and independence, voluntary

participation and democratic member control by cooperative members on the

formation and running of a cooperative were violated by the PSC, and Chris Hani

District municipality in particular. This was done by imposing the formation of

Ibuyambo on primary cooperatives and also by the replacement of Ibuyambo BOD by

the PSC, as resolved by Chris Hani District municipality and Emalahleni Municipality

councillors. The non-existence of the Ibuyambo constitution also pointed to a lack of

awareness of the National Cooperatives Act no.14 of 2005 that governs the

establishment of cooperatives establishment, their registration, etc. (National

Cooperatives Act no.14, 2005:14-18).

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Lack of Monitoring and Evaluation on Performance of Operations

What emerged from the data gathered from the respondents was that a majority of

respondents felt that monitoring and evaluation (M&E) measures by DEDEAT and

other funders were in place. However, a few respondents especially non-BOD

members, were not aware of whether there were monitoring and evaluation measures

in place. What also emerged was that the M&E focus was mainly on the progress

made on the deliverables from the grant funding, to the exclusion of M&E on the

performance of operations. Also M&E was often done in silos by various individual

funders and was not integrated. A key informant from DEDEAT indicated that even

though the general manager had tabled financial projections in the PSC meeting

referred to above, there was no reflection of the actual performance of operations by

way of an income statement. This never came under discussion and neither there was

any plan to monitor it in future as a collective exercise.

High Poverty Levels

From the demographic profiles of the respondents it was clear that the majority of them

were trapped in high levels of poverty and that their communities were characterised

by underdevelopment. Looking at the employment status of the respondents, the

researcher found that 94% were unemployed and in terms of levels of education, 67%

had less than a grade 10 level. The fact that there was only one respondent with no

dependents showed how big the unemployment levels and levels of poverty were.

Lack of Institutional Systems, Policies and Procedures

The glaring failure in terms of project implementation and operationalisation was

caused by a lack of institutional systems, policies and procedures. This exposed the

institution to operational failures that caused Ibuyambo to run at a loss. Non-availability

of systems led to the general manager doing everything by himself, whether the right

way or the wrong way. This also exposed the institution to corruption, mismanagement

of funds and theft, as there was no isolation of responsibilities and segregation of

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duties.

5.3 Recommendations

In this section of the chapter, the researcher makes recommendations on the basis of

the research findings with a view to contributing towards addressing the challenges

that hinder the impact of income generating projects on poverty alleviation.

Promotion of the Bottom-up Approach in Project Initiation

To ensure a high level of commitment and a sense of direction by all members of a

project, it is critically important to allow them space to do a needs analysis, project

conceptualisation and initiation by themselves. Officials should only be part of such

processes to guide project members and not to dictate to them what projects they

should undertake to improve their livelihoods. Poor levels of commitment at Ibuyambo

were a manifestation of the effects of imposing a project on community members.

Promotion of Involvement and Participation of Project Members

From the study of Ibuyambo, it was clear that while there was a lack of a sense of

ownership and non-involvement by some project members, those that were formally

and highly educated, the government officials and politicians, had a tendency to

undermine and take advantage of the less educated and sometimes illiterate project

members. The non-existence of a constitution meant that there were no clear

arrangements on shares or patronage, governance issues and other fundamental

aspects pertaining to Ibuyambo as a cooperative. The undermining of Ibuyambo BOD

by the GM and government officials led to serious operational challenges that almost

landed Ibuyambo in a state of complete paralysis. Ibuyambo members had wanted a

milling plant that would have more capacity for sorghum and less for maize and not

vice versa, because they knew the resource endowments in their locality, yet the

officials and general manager decided otherwise. There was a dire need for funders

to ensure that project members were actively involved in their development at all times

so as to bring about a positive impact on their livelihoods.

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Clarification of Strategic Project Objectives, Roles and Responsibilities

is Vital

Clarification of strategic project objectives, roles and responsibilities to both the project

members, government officials and politicians involved at Ibuyambo was needed. The

co-existence of BOD and PSC at both implementation and operation stages exposed

the institution to unnecessary tensions and conflicts that caused serious operational

challenges and this created an overlap in terms of functions and responsibilities. A

training course or workshop on governance is recommended for all those involved at

Ibuyambo.

Recruitment of Qualified Personnel to Fill Vacancies at Ibuyambo, Ensure

Segregation of Duties and Conduct an Audit

Many of the failures, such as sustainability and mismanagement of assets and

operational challenges that made it impossible for the local people to escape the

poverty trap, were a result of a lack of isolation of responsibilities, segregation of duties

and lack of capacity in terms of staff. The general manager had been doing all the

business management functions by himself, and he also conducted audits himself.

This is a dangerous phenomenon for any organisation. Therefore segregation of duties

or functions is needed and can be done only if all positions are filled with qualified

personnel as a matter of urgency to ensure the smooth running of business operations

to generate income, realise profits and achieve sustainability and thus have a positive

impact on poverty alleviation.

Mind-set Shift from a Dependency Culture to Self-reliance

A culture or behaviour change by Ibuyambo members from reliance on government

grants to self-reliance is needed and government must help in this regard to change

the mind-set and review and restructure its support interventions for all grant

applicants to promote self-belief, a culture of entrepreneurship and sustainability.

Funding models by government should be 40% loan and 60% grant, where a grant will

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only be transferred to successful applicants after a year of loan repayments. This

would encourage a high level of commitment from applicants. Communities must be

taught to understand that it is natural that they should be in charge of their

development.

Promotion of Capabilities Through Equal Opportunity in Capacity

Building, and Employment for Project Members

From the study it became apparent that a lot of operational failures at Ibuyambo could

be attributed to a lack of capacity by Ibuyambo members due to their low levels of

education. This points to a need by all stakeholders involved to mobilise resources for

a massive investment in skills base improvement, better education, effective

mentorship and training programs for all Ibuyambo members and not just BOD as in

this case. In the Ibuyambo experience, members were trained in one or two day short

courses and for such members with low levels of education, these intervention

measures did very little if anything, to improve their skills so that their income-earning

opportunities could be improved.

Promotion and Awareness-raising of Cooperatives Act and Cooperatives

Principles

There is a complete lack of awareness of the Cooperatives Act no.14 of 2005 and the

International Cooperative Alliance cooperative principles guiding cooperatives. The

act has provisions that cover compliance to cooperative principles, registration of co-

operatives, and constitution of co-operatives and unlawful use of the word co-operative

(Co-operative Act no.14, 2005:14-18). It is recommended that the Enterprise

Development Unit that also does cooperative development within DEDEAT should be

asked to undertake workshops on the act as well as cooperative principles for all those

involved at Ibuyambo. There is also an urgent need for registration of Ibuyambo as a

secondary cooperative since its operations as a secondary at this juncture remain

unlawful. The legal status of BOD is also unlawful yet all its primary cooperatives are

registered. Therefore the registration of Ibuyambo is paramount.

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Development and Implementation of an Integrated and Comprehensive

Monitoring and Evaluation Tool

The funders and Ibuyambo members need to develop and implement as a collective,

an integrated and comprehensive monitoring and evaluation tool to ensure that the

public investment in Ibuyambo and the spinoffs from that investment in the form of

profits from sustainable operations give value for the money invested. Funders also

need to stop planning, implementing and monitoring in silos and stop focusing only on

their funding but must also be concerned about all the funding and performance of the

operations of Ibuyambo. Integration could also discourage ‘double- dipping’ by

Ibuyambo and other projects in the future. It can happen that two or more funders fund

the same activity or activities in a project, yet the money could have been used more

effectively elsewhere.

Development and Implementation of Systems, Policies and Procedures

It is imperative that Ibuyambo, in collaboration with funders, the PSC in particular,

develops and implements institutional systems, policies and procedures to guide and

direct operations at Ibuyambo as they are non-existent at the moment. At Ibuyambo

the general manager carries out all the functions. For example he manages the fleet

without approved transport management policies by the BOD. This must be stopped

because it exposes the institution to corruption and mismanagement of assets and

funds.

5.4 Limitations of the Study

The study was limited by time and financial resource constraints. The researcher had

planned to have 18 respondents filling in the questionnaire and 6 interviews with key

informants. Too much time was consumed by respondents who were not available for

appointments and would only avail themselves later. This disturbed and delayed the

schedule of the researcher. It must be said however, that despite the restrictions there

was a high response rate for the study.

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5.5 Conclusion

The research study was about the impact of income generating projects on poverty

alleviation and Ibuyambo secondary cooperative Ltd was a focus of the researcher’s

investigation. The study concludes that while Ibuyambo had every chance of being an

income generating project, it failed to realise profits and was not sustainable to the

point that it had very little impact in terms of alleviating poverty among its members.

Due to serious strategic and operational challenges, Ibuyambo has failed to achieve

the objectives of its members; it has contributed very little in terms of benefits to its

members in terms of training and employment; it has not empowered any designated

groups as there was no youth or disabled people and there were high levels of poverty

among its members with 94% unemployed. However it must be said that with proper

governance and management, it has every potential of achieving its objectives and

changing the livelihoods of its members for the better. Further investigation is needed

to help understand these governmental projects and how they can empower and

alleviate poverty among poor communities.

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83

ANNEXURE A

QUESTIONNAIRE FOR IBUYAMBO SECONDARY COOP MEMBERS

Research Study: The Impact of Income Generating Projects on Poverty

Alleviation: A Case of Ibuyambo Secondary Cooperative Ltd at Emalahleni Local

Municipality.

Dear Respondent

My name is Ayanda Watson Saki, a Master’s student at Nelson Mandela Metropolitan

University (NMMU) in the Development Studies Department. I am conducting a

research study evaluating the impact of Ibuyambo Secondary Cooperative Ltd on

poverty alleviation for the partial fulfilment of my Master’s degree. I therefore request

and plead with you to provide me with information by answering the questions listed

on the questionnaire below.

Be informed that participation in this study is voluntary, not harmful and that any

information received will be kept confidential and will never in any way be used against

the respondent. The study is merely for academic purposes and could also be a useful

tool for possible interventions in the Coop in future. Your cooperation in this regard is

highly appreciated.

Yours Faithfully

……………………………………………………………

Ayanda Watson Saki

Student

…………………………………………………………….

Doctor A. Mwamayi

Supervisor

84

SECTION A: DEMOGRAPHIC INFORMATION

N0. QUESTION ANSWER

1. How old are you? Below 20 20-29 30-39

40-49 50-59

Above 59

2. What is your gender? Male Female

3. Are you disabled? Yes No

4. What is your highest level of

education attained?

No Education Less than Grade 10

Grade 10-12 Matric

University degree/Diploma and other

5. What is your marital status?

5. Are you employed other than in

the project?

6. Do you have dependants? If yes,

how many?

SECTION B: COOP/PROJECT PERFORMANCE WITH REGARD TO

IMPLEMENTATION AND OPERATIONALISATION

1.

Question In your understanding, what did you want to have in place in

establishing the Ibayambo?

Answer

85

2.

Question Have you achieved all what you wanted to have in place in

establishing Ibuyambo, if not what has not been achieved?

Answer

3.

Question Is Ibuyambo operational and running according to stipulated

time-frames on the business plan? Please explain.

Answer

86

4.

Question In your opinion, Is Ibuyambo generating income, profits and

sustainable? Please explain.

Answer

5

Question Does Ibuyambo have a Project Steering Committee or Board of

Directors? If yes, are you represented and receiving reports about

its decisions? Please Explain

Answer

6.

Question Which stakeholders have funded Ibuyambo? Is there any other

support other than financial support? If yes, what is that and from

which stakeholders?

Answer

87

SECTION C: EVALUATION OF IMPACT ON POVERTY ALLEVIATION FOR

IBUYAMBO MEMBERS

1.

Question Why did you and your primary coop join Ibuyambo?

Answer

2.

Question Have you received any benefits from Ibuyambo? If yes, what are

those?

Answer

3.

Question Is Ibuyambo helping you to support yourself and your

dependants? If yes explain how?

Answer

88

4.

Questions Have there been any specific capacity building initiatives for the

members? If yes, have you participated? , what are those

initiatives (i.e. training, mentorship, etc.)? And in what areas were

you trained?

Answer

SECTION D: EXPLORING THE CHALLENGES AND SUCCESSES EXPERIENCED

BY IBUYAMBO SECONDARY COOPERATIVE LTD

1.

Question In your opinion, what are the challenges faced by Ibuyambo

Answer

89

2.

Question What have been the means or interventions to address the

challenges?

Answer

3.

Question What have been the successes achieved by Ibuyambo

Answer

SECTION E: ASSESSING THE ROLE PLAYED BY DEDEAT AND OTHER

FUNDERS IN THE MONITORING AND EVALUATION OF IBUYAMBO

SECONDARY COOP LTD.

1.

Question Does DEDEAT and other funders visit Ibuyambo Secondary

Coop? If yes, how often?

90

Answer

2.

Question Does DEDEAT and other funders have a Project Manager attached

to Ibuyambo Secondary Coop Ltd? If yes, what is his role in the

Coop?

Answer

3.

Question Does DEDEAT and other funders request monthly performance

reports? If yes explain

Answer

4.

Question How does DEDEAT and other funders make

payments/disbursements to Ibuyambo Secondary Project? Any

specific requirements? Explain.

Answer

THANK YOU FOR YOUR PARTICIPATIION

91

ANNEXURE B

INTERVIEW GUIDE FOR GOVERNMENT OFFICIALS AND COOP

STAKEHOLDERS

Research Study: The Impact of Income Generating Projects on Poverty

Alleviation: A Case of Ibuyambo Secondary Cooperative Ltd at Emalahleni Local

Municipality.

Dear Informant

My name is Ayanda Watson Saki, a Master’s student at Nelson Mandela Metropolitan

University (NMMU) in the Development Studies Department. I am conducting a

research study evaluating the impact of Ibuyambo Secondary Cooperative Ltd on

poverty alleviation for the partial fulfilment of my Master’s degree. I therefore request

and plead with you to provide me with information by answering the questions listed

on the interview guide here below.

Be informed that participation in this study is voluntary, not harmful and that any

information received will be kept confidential and will never in any way be used against

the respondent. The study is merely for academic purposes and could also be a useful

tool for possible interventions in the Coop in future. Your cooperation in this regard is

highly appreciated.

Yours Faithfully

……………………………………………………………

Ayanda Watson Saki

Student

…………………………………………………………….

Doctor A. Mwamayi

Supervisor

92

SECTION A: IBUYAMBO SECONDARY COOP LTD PERFORMANCE WITH

REGARD TO ITS IMPLEMENTATION AND OPERATIONALIZATION

1.

Question In your opinion, has ibuyambo Secondary Coop Ltd been

implemented according to its business plan? Please explain.

Answer

2.

Question Is Ibuyambo Secondary Coop Ltd operational and achieving what

it wanted to achieve? Please explain.

Answer

3.

Question In your opinion, Is Ibuyambo generating income, profits and

sustainable? Please explain.

Answer

93

4.

Question Does Ibuyambo have a Project Steering Committee or Board of

Directors? If yes, Is your Institution represented and what is its

role? Please Explain.

Answer

5

Question From your knowledge which stakeholders have funded

Ibuyambo? Is there any other support other than financial

support? If yes, what is that and from which stakeholders?

Answer

94

SECTION B: EVALUATION OF IMPACT ON POVERTY ALLEVIATION FOR

IBUYAMBO MEMBERS

1.

Question In your opinion, what do you consider to be the benefits received

by Ibuyambo Members from their Coop?

Answer

2.

Question Has ibuyambo created any jobs? Please explain.

Answer

3.

Question From your knowledge, have there been any specific capacity

building initiatives for the members? If yes, what are those

initiatives (i.e. training, mentorship, etc.)? And in what areas were

they trained?

Answer

95

SECTION D: EXPLORING THE CHALLENGES AND SUCCESSES EXPERIENCED

BY IBUYAMBO SECONDARY COOPERATIVE LTD

1.

Question In your opinion, what are the challenges faced by Ibuyambo?

Answer

2.

Question What have been the means or interventions to address the

challenges?

Answer

96

3.

Question What have been the successes achieved by Ibuyambo?

Answer

SECTION E: ASSESSING THE ROLE PLAYED BY DEDEAT IN THE MONITORING

AND EVALUATION OF IBUYAMBO SECONDARY COOP LTD.

1.

Question In your opinion, is DEDEAT and other Funders of Ibuyambo

monitoring and evaluating Ibuyambo? If yes, Please explain fully.

Answer

97

2.

Question In your opinion, what could be done to improve monitoring and

evaluation of Ibuyambo?

Answer

THANK YOU FOR YOUR PARTICIPATION