Inequality and economic marginalisation: How the structure of the economy impacts on opportunities on the margins

Despite terms of reference that took the concept of the second economy for granted, this strategy process attempted to engage in an open way with the then-raging debate around the use of the term, from a perspective that assumed the policy purpose was to focus on the challenges of poverty and economic marginalisation, and to understand these better in order to change them. [...] 2 ECONOMIC MARGINALISATION: ROOTED IN STRUCTURAL INEQUALITY The central argument in the Strategic Framework is that structural inequality in South Africa has its origins in the following key legacies of apartheid: the structure of the economy: the centralised, monopoly structure of the core economy, the highly skewed distribution of assets such as land and capital, and the impacts of migrant lab. [...] In vertically-integrated value-chains – in which the company at the top of the chain owns the companies further down – there is a tendency for profit to be concentrated at the top of the chain, with the activities of its subsidiaries performed at very low margins or even at cost to contribute to profit maximisation at the centre. [...] The emphasis is on the carrot, not the stick.33 Addressing the distribution of power and value in value-chains also requires a different approach to transformation, looking more seriously at issues of access – including access to ownership – at all levels of the chain and the scope to re-negotiate the spread of benefits along the chain as a whole. [...] In most agro-processing value chains relatively little value is located on the land itself any more; the opportunity therefore needs to be taken to think beyond land alone in the resolution of these claims, in ways that secure the jobs across the length of this chain and, in the process, to find ways to transform the distribution of ownership and of returns across the full length of such chains al.