Food Vouchers
-First introduced in Britain in the 1950’s
-Created as a response to the need to develop a social programme to ensure food security
-Currently used in over 31 countries around the world
-Over 11 million users daily in Brazil
-Rapidly spreading acceptance as a poverty alleviation tool in developing world

The Constitution
The 1996 constitution provides that:
"Every person has the right to have access to sufficient food. The state must take reasonable and other measures within its available resources to achieve the progressive realisation of this right"

Informal Social Security Network
-14 million South Africans are vulnerable to food insecurity
-75% of all households in South Africa have incomes of less than R2 500 per month
-households of 3 and more experience a food expenditure gap. Large household of 5 and more experience the widest gap
-Households with five members or more will spend on average R850 per month on food whereas they need to spend R1430 per month in order to meet minimum nutritional standards
-Large households of 5 and more are supported by a single job. Consequently, low-wage earners are the best medium to address poor household food needs

The Current initiative
-The proposal is that government create an enabling environment which encourages employers to grant an additional income in a currency only exchangeable for food.
-The primary target group is workers earning less that R2 500 per month

Benefits of the Initiative
-Better nutrition results in:
-Fewer workplace accidents
-Improved productivity
-Reduced absenteeism
-Better concentration at schools
-Overall improvement in family health
-The HIV epidemic increases the need for access to a well-balanced diet

Brazilian Experience
-Brazilian Workers Feeding Scheme in operation for nearly 25 years
-One of the most successful Public/Private Partnerships in that country
-Longest surviving government social programme in the country

South African Proposal
-Focus exclusively on Food Voucher
-Objective to ensure guaranteed level of expenditure on family food bill, with low income workers as the primary target group
-Implement via smart card to minimise abuse

-The consortium will roll out a network of smart card readers in supermarkets and shops around the country
-In remote areas where there is no fixed telecommunication infrastructure, the cell phone network will be used to enable even the remotest spaza shops to become part of the network

The network platform
At present smart card initiatives are fragmented and geographically localised
-Once rolled out, the network will provide the most comprehensive coverage of rural and township areas to enable low cost financial transactions of any kind
-This Network would be available countrywide to government, to facilitate the likes of pension payouts, disability grants, UIF entitlements and the basic income grant

-Should government create an enabling environment for the food voucher concept by introducing tax incentives, private sector companies would have to compete to establish their presence both in respect of networks and clients
-However, any company wishing to administer the program would require government accreditation
-In Brazil there are some seven companies engaged in issuing food vouchers

Potential Abuses
-The Brazilian experience shows that abuses can occur, typically among dishonest retailers who discount vouchers for cash
-Companies issuing vouchers are kept under pressure to stamp out abuses in order to maintain their governmental accreditation.
-Merchants who discount vouchers are immediately barred from accepting vouchers and are criminally prosecuted

Abuse and Smart Cards
-Precisely to prevent abuse voucher companies like Accor are migrating Brazilian users of vouchers to Magnetic Cards
-Only accredited merchants can accept these cards and cash discounting would rapidly show up on the merchant’s computer monitored trading patterns

The consortium
-The Food Voucher concept is being promoted in South Africa by the following groups:
· Womens Development Banking Investment Holdings (Pty) Ltd
· Disability Employment Concerns Trust
· Accor SA
· These three groups have agreed to form a company jointly to implement the concept if government decides to introduce suitable incentives

WDB Investment Holdings
-Part of the Women’s Development Banking Group
-Committed to economic empowerment of rural and urban women
-WDB Micro-Finance provides small loans and basic business skills to women in rural areas
-WDBIH invests in high growth businesses and supports women in business both financially and through skills transfer and placements within investments

DEC Trust
-DEC Trust was established by seven major national NGO’s representing the 12% of the population with disabilities
-Its purpose is to make sound medium to long term investments to establish sustainable income streams to its NGO beneficiaries so that they in turn may operate programs resulting in the economic and social empowerment of people with disabilities in South Africa

Accor SA
-One of France’s largest company’s and the world’s largest hotel operator
-Brands include Formule1 and Mercure (in South Africa) as well as Novotel and Sofitel
-Accor Corporate Services is the world’s largest issuer of Food and Restaurant Vouchers
-Its products are used daily by over 11 million people in 31 countries worldwide

What is required of Government?
-The introduction of legislation granting tax incentives to employers issuing Food vouchers
-Details will be worked out in consultation with government

Why use the tax system?
-Makes use of the private sector’s employer/employee infrastructure
-Offers real opportunity to draw the business sector into the scheme
-Using the relatively sophisticated remuneration tax environment a further level of control against abuse is added
-Since the incentive involves a host of low value items the opportunity for tax fraud or abuse is drastically reduced

Criteria for using the Tax system as an incentive
-Intended objective is a legitimate and necessary purpose of the State
-Objective can be achieved more effectively through tax incentives than through expenditure programs
-Loss of revenue is justifiable relative to benefits attained
-Scope for abuse must not be excessive

What about the unemployed?
-The unemployed can benefit from this Public Private partnership in three ways:
-1. The tax incentive to businesses can be extended beyond their own employees as part of their charitable contribution to society
-2.By assisting the low paid and their dependants through a public-private partnership, government frees up its own resources to assist the "deep level" unemployed.
-3. Government could use delivery platforms created by the private sector with in-built safeguards against abuse and corruption to benefit the unemployed

What about the pensioners?
Government can use the platform created to deliver benefits to the neediest:
-1. A pensioner could receive benefits specifically targeted to their needs – food, rent, electricity, etc…
-2.The smart card delivery would provide a secure method of receiving and paying for services
-3. By reducing its cash distributions in favour of payment in kind using a smart card network, government could save itself significant cost and deliver a better service.
-4.For the pensioner, secure card delivery means reduced risk of being preyed upon and a more efficient means of being paid

A double tax deduction
-As a preliminary proposal we suggest that the face value of food vouchers issued to low-paid workers be granted a progressive double deduction against corporate profits and an income-tax break for wages up to a limit of R5000.
-A food allowance of 2.5 Billions Rands (R220 per month granted to one million people) would cost the government approximately R 360 million annually in taxes forfeited.

The Next Step
-Officials of the Brazilian government indicated to a delegation from WDBIH and DECT in April last year that they would be prepared to assist in arranging a visit for a delegation from South Africa comprising government officials and other interested parties such as Trade Unionists to evaluate the Worker’s Feeding Programme firsthand

What is required
-A statement of firm interest from the relevant South African government officials that the project merits further study
-A process of engagement with the Finance Department to finalise details of a proposal for submission to Parliament and Cabinet