Subsidising Life in South Africa

Written by SJ Cooper-Knock for the Off-Grid Cities Project

–

Some words loosen themselves from the lines of government legislation or fall from the files of financial auditors and work their way into the world. ‘Cross-subsidisation’ is one such term. South Africans read it in newspaper print and they hear about it in the commentary of political pundits. Histories of cross-subsidisation in the country, however, are far less familiar.

Since 1994, the notion of ‘cross-subsidisation’ has been at the  centre of municipal politics. It refers to a process by which the municipal rates paid by wealthier households are used to support service provision to poorer households. The majority of these households are home to black South Africans. More broadly, the term is used to refer to financing models in a range of different sectors, from real estate to education. When it is associated with post-apartheid democracy, ‘cross-subsidisation’ is a benevolent term. It evokes ideas of collective support, obligation, assistance, and justice. As such, it weaves itself into broader debates about the role that ‘taxpayers’ play in society. 

The story of South Africa’s cross-subsidisation, however, does not begin in the democratic era. Subsidisation happened across the lines of racially-segregated areas in apartheid South Africa. As Rebekah Lee reminds us, when black South Africans did receive electricity during apartheid, the tariffs that they paid subsidised white consumption. White municipalities added a minimum of 10% to the price of the electricity that they sold to Black Local Authorities (BLAs), which governed black townships. The cost of capital investments was also folded into the prices charged to BLAs. In other words, electricity was cross-subsidised in apartheid South Africa: black consumers were paying more for their electricity, so that white consumers could pay less. 

Contemporary narratives systematically overlook apartheid histories of cross-subsidisation. And yet, in some senses, apartheid as a whole can be seen as an exercise in the subsidising of white life. Apartheid was a fundamentally relational endeavour: oppression and dispossession occurred to enable privilege and accrual. The land, labour and lives of black South Africans were leveraged to secure the comfort and prosperity of their white counterparts.

It matters where our stories begin. If talk of subsidised consumption is only associated with democratic South Africa, the danger is that it is associated with altruism rather than redress. Cross-subsidisation in post-apartheid South Africa is not just a matter of doing what is right. It is paying what is due.