Does the Transkei hold a key to solving welfare dependency in the UK?


Trying to articulate a new form of capitalism is tricky. Social investor, entrepreneur and regular Pioneers Post contributor James Perry may have found the answer in South Africa's remote Eastern Cape.


You know you’re in a good place when you’re having a ‘rocket shower’. It is a rickety contraption which looks a bit like a rocket with a small aperture at the base, into which you put some scrunched up loo roll, douse it with paraffin and then set it alight. To the satisfying noise of hot air rollicking up the tube of the rocket one can enjoy a hot shower where there is no hot water. When the paraffin has burned, the fire goes out and the water runs cold once again.
Bulungula and its rocket showers is a joint venture between a committed social entrepreneur and a remote Xhosa village in the Eastern Cape, South Africa. The region used to be known as the Transkei, and, abandoned by the apartheid regime, was virtually an independent Xhosa nation. This made it a no-go area for most whites, and has left it with a starting point for development more akin to the rest of Africa, rather than the one-off context of much of modern South Africa. The place is run by local staff and management, supported by their resident social entrepreneur JV partner – who takes a low profile. The locals drink in the bar and local children come to play the drums after school. There are no locks on any of the doors, and a genuine sense of visitors – who come mostly to enjoy the spectacular beach and isolation – mingling as equals with the locals. Bulungula operates a social enterprise incubator, established to support the development of local projects. The incubator, for example, has set up and funds well-resourced pre-schools for each of the four villages that are part of the joint venture, replete with Western expert volunteers such as Kate, an experienced psychologist from London on three month unpaid release from her NHS job. 
By contrast, just down the coast, Coffee Bay is a small and much more conventional backpacker village. Many of the enterprises follow a more conventional model, with white owners employing black staff. ‘You must speak to the boss if you want to pay’. It is a place where backpackers go to party. Locals, many of whom are stoned, sit outside the backpackers in groups, pushing trinkets, excursions, magic mushrooms and dagga. The atmosphere is intimidating and adversarial. Petty crime is an issue.
The Bulungula model is complex and hard to operate. It took two years, once the social entrepreneur and the local community had agreed to embark on their joint venture, to get the requisite approvals from the government. It didn’t fit the boxes on the forms, it was too ‘different’. The more conventional Coffee Bay also brings tourist dollars, provides employment and stimulates the local economy. Conventional models are much easier to implement – it is the way things have always been done, it is understood.
So much of the collateral benefit of the Bulungula model is impossible to quantify. How does one measure the difference between an empowered local community who feel a sense of ownership of what is going on in their village compared to a disempowered local community who feel exploited by what is going on in their village? Or the myriad ways in which the capacity of local people is being built in Bulungula, versus the myriad ways that the capacity of local people is being suppressed in Coffee Bay? Both models are sustainable, and both are delivering for their respective owners.
One can look at crime statistics and literacy levels and so on, and these can be useful indicators. But this runs deeper and much of it cannot be measured because it is about human dignity.
What is striking is that in contrast to the dignity and involvement of the former, the latter has created something depressingly familiar - what we in the UK would recognise as a ‘welfare culture’. At Bulungula, the community is open, friendly and self-regulating. When an inebriated young local man starts to smoke in the bar (against the rules), it is the locals who quickly shoo him out and tell him off. They would do the same with any visitor, they are empowered to do so - it is their place.
In Coffee Bay, much of the community is closed, flat-eyed and threatening. There is no opportunity for the locals to break the rules by smoking in the bar because they are not welcome there. So inevitably many see the visitors as walking wallets. The only role available for them to take is to seek ways to access those wallets. Of course, some of those are legitimate, some not, some annoying and some downright dangerous to everyone. If you have so little to lose …  
In the absence of a welfare system, there is no direct financial cost to this. But if you do have a welfare system, as we are currently finding out in the UK, it is cripplingly expensive.
In London, right now, there are a small and growing number of people who are battling against the enormous inertia of the way ownership and investment ‘have always been done’, and trying to articulate a different kind of capitalism with different boxes to tick. Bulungula clearly shows the critical importance of ownership, and of a long-term committed social entrepreneur with access to a special kind of capital – patient, inclusive capital which can buy into the broader vision and operate patiently to see blended value created, rather than chasing quicker and easier returns through the conventional model.
Whilst Bulungula is illustrative of why it is so difficult to do this, it also serves as an inspiration as to why it is worth grappling with the challenges of establishing a functioning social investment marketplace. 
Give everyone in a community the dignity of a true stake in it, and much of the power that feeds the social problems arising from a dis-aligned, dependency culture might be removed. Might social businesses offer a key to solving those intractable social problems that seem to be the unattainable holy grail for so many successive governments?