Economic Growth & Entrepreneurship

A New Point of Departure on the Bond Boycotts

By Craig Charney | Business Day | December 14, 1995

JOHANNESBURG — Alarm bells are ringing again over the persistence of “boycotts” in the townships. There news reports that to residents out of three are not paying for services in some areas, and more than half the bonds issued by the Housing Trust’s Khayalethu Loans are not being serviced.

Operation Masakhane, the campaign to stimulate payment, has been declared a flop in some quarters, and once more there is a talk of an intractable “culture of entitlement” among SA’s blacks.

Recent research suggests, however, that the real reasons why non-payment continues have not been properly understood, much less addressed. To focus on convincing people that they ought to pay is to fight a battle has largely been won.

However, specific circumstances—poor services, high unemployment, and free riding—make it illogical for many people to pay, even if they accept the principle. Solving these problems needs deliberate, lengthy policies by government and parastatals, not just ad campaigns.

The stakes involved are huge. The financial viability of the new local authorities, and the RDP itself, will be menaced by continued non-payment. So it is especially important that the legislators working on the issue get their premises right.

The point of departure should be a recognition that the boycott era is over. Paying for services and houses is now generally seen as legitimate. Indeed, the factors which initially motivated boycotts are now considered obsolete.

The new consensus was voiced by a woman living in a shack on the East Rand who participated in a focus group study I directed for the Centre for Policy Studies, Voices of a New Democracy.

She said: “We had a reason for non-payment, as we wanted to have our own government. Now we have our government, so must pay for services and rent. In this way the government will be able to have money and start building houses”.

Her views were echoed in a countrywide opinion survey for the International Republican Institute, where only 21% of blacks said defaulters’ service charges should be paid by government.

In short, the “continuing boycott”, like the “culture of entitlement” supposed to underlie it, is largely a myth. No organisation still actively propagates boycotts at the grass roots. Moreover, far from rejecting the capitalist ethic, studies show that SA blacks do not expect anything for nothing.

So why does non-payment persist? The fact is that non-payment is a rational choice, giving the circumstances now facing many SA blacks.

Understandable reasons for non-payment emerged in focus group discussions with township residents conducted for Rand Water earlier this year:

• Poor service: “The services are poor. For instance, if somebody’s sewerage pipes are blocked, then water runs straight to your house. Are you happy to pay if you experience such problems?”
• Unemployment and poverty: “They do want to pay for services, but they cannot afford to pay.”
• Free riding: “It doesn’t make sense for me to be the only one who pays, if other people are not paying.”

To tip the scale, these conditions must be changed so as to increase the benefits and diminish the burdens of paying. There are a variety of policy options in each area which government, utilities, and the private sector need to consider:

• Upgrading services in line with payment. To give consumers a sense of receiving value for money, it is helpful to have initial improvements in conditions before a partial charge or flat rate is established. Proceeds can go to more upgrading before higher tariffs are charged;
• Flexibility on payment arrangements. For individuals in temporary difficulty, rescheduled payments can be negotiated. For those who cannot pay an economic tariff, partial subsidy is needed, either on a blanket basis (as in the water affairs department’s proposed “lifeline” tariff) or by individual means testing. Another option, favourably received in the Rand Water study, is payment in kind through work. Many cash-strapped families have jobless members with time to dig ditches or lay bricks; and
• Linking individual incentives or costs to payment. Gauteng’s tying of transfer of township houses to a pledge to pay services is an example of an incentive to individuals for payment (although it would probably work better if title was only transferred after a year or two of payments). Costs can be imposed on non-payment by cutting off service or evicting defaulters. Such tough options enjoyed considerable popular support in all three studies cited.

The utility which has gone furthest in implementing these sorts of changes is Eskom, which enjoys an enviable 70% payment rate among Soweto residents as a result. Even they have some way to go, however, with R230m in current arrears reported in November.

Nonetheless, a policy to restore townships’ housing and service payments must begin by recognizing that non-payment is no longer the result of collective action, so it cannot be addressed solely by collective solutions. It will also require policies to encourage individual responsibility and to change individual calculations on the costs and benefits of paying.

Charney is a sociologist who worked in SA for nine years.