While much has been written about the advent of the black middle class (however difficult it may be to define) since 1994, not much attention has been paid to how South Africa's vulnerable middle class or working class may have the opportunity to flourish and build wealth in the new dispensation. Innovations in banking, financing, and housing will have to be pursued by private sector actors if South Africa is to become a more inclusive economy and society.
According to the Cooperative Banks Act of 2007, a cooperative bank means a cooperative whose members have similar occupations or are employed by a common employer, or work in the same business district; or have common membership in an association or organisation, including a business, religious, social, cooperative, labour or educational group; or live in the same area.
Opportunities exist in places like faith organisations, which have a common bond of faith but also can span inner cities, suburbs, and townships as "multi-site churches". This means not only that there is an established trust between leadership from different backgrounds and areas, but by extension between congregations that wildly differ on income, race, and class parameters.
There is an ideal opportunity to build a model of cooperative banking in those structures that emphasise class and racial solidarity along with faith identification, that can leverage wealth from more suburban and affluent congregations to create a base where low-interest credit for micro and small township entrepreneurs can be obtained, which would be a boon for the township economy especially in light of the country's lockdown which has disproportionately affected the employment status of low-income workers in industries like the restaurant industry; workers who mostly live in the townships and the inner city areas of our major cities.
Low-interest home loans could also be made available as a tool for lower-income households to be able to build generational wealth through home-ownership. The repayment model for these home loans would need to compare favourably to rental rates and still be affordable for low-income households.
By their very nature, cooperatives around the world serve many roles. They are economic actors by creating opportunities for income generation; they are people-centred enterprises with social goals that contribute to social equity and justice; and they are democratic institutions controlled by their members, playing a leadership role in society and local communities.
In other words, using a trusted social arrangement and organisation such as a faith-based organisation to facilitate partnerships and true racial and class solidarity through banking and financing will help build happier and healthier communities and cities without the need for government intervention. A church I attended for some time in Cape Town already had successful job training and job placement programmes, amongst many others. This was a core part of their DNA, which they described as "our gifts to the city", building a case for members investing in each other through a mechanism such as a co-operative banking.
Imagine a working-class family living in one of Cape Town's townships attends the very multi-site church I attended and hears about the new cooperative bank through a short 15-minute educational video.
They hear that the church has raised an initial R20 million investment (which is entirely possible considering how much money churches raise for equipment and infrastructure), which will have committed financial professionals among the congregation overseeing it.
The family has two streams of income – the mother is a domestic worker and the father is a gardener – and they have two school-going-age children, and an adult child trying to start a business. The family has an income of R6,000 and lives in a corrugated iron structure – a shack.
They hear that the bank, in partnership with a local and innovative housing organisation called UBU, which builds housing using a combination of sandbags and EcoBeams made up of a composite of steel lattice and 38mm timber battens, which form the frame for the structures (220mm wide). Latterly concrete ring beams and columns enhance the structure to enable a second storey.
The family is given an initial 10-year low-interest R100,000 loan that would allow them to build a double storey house with three bedrooms and a bathroom with a proper cement floor and a well-designed wooden fireplace. The house has a corrugated iron exterior and aesthetic to keep initial costs down.The bank and UBU partner with the City of Cape Town to take advantage of the National Upgrading Support Programme through the mechanism of the Upgrading of Informal Settlements Programme which provides the basic infrastructure for services like water and sanitation.
If the family can pay off the first loan, they can receive another in the next 10 years that will allow them to strip the corrugated iron exterior and create a more personalised and plastered home. When they retire, this home can be a source of generational wealth.
The bank also offers them very cheap financing and savings options to save for their eventual retirement to inxiwa – land granted by a local traditional leader where many working-class South Africans go to retire in their rural home – which will gift them a hydroponic system to grow their own food, some animals to raise, and water tanks and solar power to help with sanitation and energy.
The bank also offers a "stokvel" in which 50% is paid out in December, in time for the holidays. The other 50% is pooled and invested on behalf of the banking members.
While the scenario isn't refined per se, it does give some idea of the possibilities in raising the living standards of working-class South Africans if innovations in banking and financing are pursued and built on a model of solidarity across what have been traditionally stark dividing lines in our country. We have to learn to be imaginative and courageous in pursuing solutions outside government fiat.
This article was first published on African Liberty on 15 March 2021.