By Quentin Wray

Clement Attlee, the former British Labour prime minister, said that although democracy meant government by discussion, it was only effective if you could stop people from talking.

Attlee died 27 years before the Transkei was reincorporated into South Africa in 1994 after 18 years of so-called independence, but he could well have been talking about the former Bantustan.

Nine years on, the Transkei is still awash with talk about democracy and accountability.

But the lack of progress on security of tenure and land reform and an inability to enter into binding contracts with traditional leaders mean tourism and agriculture, the two fields where the region can in effect compete, remain dead in the water.

The industrial heart of the Transkei was ripped out after 1994, with the scrapping of decentralisation incentives.

But on its own the scrapping of incentives would not have led to such complete collapse. It was the breakdown of local government that finally drove most industrialists away.

There was conflict between the ANC and local civic organisations; power supplies became unreliable; refuse stopped being collected; and responsibility for servicing industry fell under brand new and staggeringly inept local governments rather than being the responsibility of fairly well-funded and reasonably efficient development corporations.

I was in the Transkei in November 1998, when Thabo Mbeki, then deputy president, opened the Gcuwa Training Centre (GTC).

Funded by SAB as part of its attempt to salve its conscience at having closed down one of the town's biggest employers, it offered a wide range of training courses and was touted as a practical solution to unemployment.

At the GTC's opening, it was filled with dozens of crafters, welders, confectioners and a host of other small businesses.

But Butterworth by then had already shed tens of thousands of jobs and the new life promised in 1994 had proved to be one of massive job losses and increased marginalisation for the Transkeian people.

The streets were strewn with garbage and the community's anger was palpable.

A sign of just how disaffected the area had become was the success of former Transkei leader Bantu Holomisa's new United Democratic Movement in the 1999 elections.

Now, five years later, the enormous hall is empty save for a handful of crafters and welders.

Les Bank, the head of the Institute for Social and Economic Research at Rhodes University's East London campus, says the scrapping of incentives and the breakdown of local government cost the Eastern Cape's former homelands between 50 000 and 60 000 jobs.

"Nobody knew how difficult it would be create jobs in the new South Africa," Bank says.

He says that, in retrospect, it might have been worth looking at the cost of keeping subsidies and reducing them over time.

Bank says the first priority after 1994 should have been maintaining jobs. Only then should other growth strategies, such as tourism, have been thought about.

"Who knows - if local mayors had been able to incentivise and target certain sectors with support from the national government, they might have been able to hold on to some of these jobs."

He says infrastructure investments in rural economies should have been safeguarded with the industrial focus scaled down to service agrarian economies.

Decentralisation identifying rural areas as growth nodes was first legislated in 1968. It stumbled along into the 1970s and only picked up pace in 1976, with the Soweto uprising, when it became a political imperative to create jobs in rural areas.

It seemed to work for a while. Places like Butterworth attracted dozens of factories and created more than 30 000 jobs.

"They had to do something so that the political model would work," Rhodes University head of economics Hugo Nel says of the decentralisation policy.

"It would always be difficult to justify ... if there was no economic activity there."

Butterworth was able to attract big brand names like SAB, Pep Stores, Tanda Milling and Bauer Engineering and became a showcase for separate development.

Even today, dodging the potholes in its industrial areas with GTC manager Tyson Kentane, you can get a picture of what the town was once like.

He points to a car park filled with scrapped cars and says it was once a chemicals factory  
. Skeletal remains of warehouses stand against the skyline, all their cladding stolen by locals to make shacks.

Born and bred in Butterworth and schooled at the famous Lovedale College in Alice, where he was a compatriot of Mbeki, Kentane worked at SAB when it still produced beer in the town.

He remembers the "good" old days when the town had everything. He also remembers the misery when things changed in the 1990s after the factories shut en masse and breadwinners could no longer provide for their families.

From the mid-1990s onwards, the miners laid off up north started returning. This meant even less money flowing into the area and more mouths to feed.

Making the situation worse was that spouses and children flocked to town as wages dried up. Squatter shacks mushroomed, crime surged and enormous pressure was put on Butterworth's limited capacity to deliver services.

"Life is tough for us," Kentane says. "The town is dirty, the roads are bad, the schools are overcrowded and the hospitals are dirty."

There are now only a handful of factories, and businesses such as retailers and taxi operators have also suffered.

Kentane says his training centre has helped, but even when people have skills it is too difficult for them to raise capital and make a go of their businesses.

It is considered a success if an entrepreneur can earn R500 to R600 a month - far less than the legislated minimum wage.

The GTC trained 229 people last year. Kentane says most of these people do not want to be entrepreneurs; they would far rather have jobs.

He has run the GTC since June 2001, when Rutec, its previous manager, pulled out.

He pays the bills from money received from the department of labour for courses the centre gives, and from rent for the few stalls that are still occupied.

Bank says research is needed to work out how to tap into the residual skills that still exist in the Transkei. There is an "amazing silence about these policies now, a glib dismissal of the costs, yet when you reflect on the backlogs in poverty relief and job creation, one needs to take a fresh look at these areas", he says.

Provincial MEC for economic affairs, environment and tourism Enoch Godongwana says the province's growth strategy does not include getting heavy industry back into the Transkei.

Rather, it is focused on consolidate the manufacturing base to slowly develop a world-class economy. Both the province's industrial zones are central to this.

It aims to raise rural incomes in line with the fact that more than 60 percent of people live in the rural areas.

This involves intensifying agriculture so that even if people are not employed, they can eke out an income of some sort.

Developing agriculture will also help develop small businesses, Godongwana says.

The strategy also is looking at new commercial afforestation in the Transkei, the only area that has the potential for this, and on tourism development.

The provincial growth and development programme emphasises poverty eradication, agrarian transformation and manufacturing and tourism development, and the need to focus resources on these problems.

It will run from 2004 to 2014 and is predicated on human resource and infrastructure development and public sector and institutional transformation, and covers things like a rural transportation strategy, the building of rural access roads, access to clinics and schools and transporting agricultural produce.

Small business opportunities revolve mainly around agroprocessing and tourism services, but these will remain unrealised until agriculture and tourism in the Transkei are sorted out.

Fred Hendricks, the head of industrial sociology at Rhodes University, is not optimistic about the area's short-term potential.

"There are too many things that need to happen for development to take off there," Hendricks says.

"But not everything is gloomy. One thing gives a sense how things are working: there are no major cases of malnutrition, even though people are desperately poor. They are surviving on pensions, but they are not starving."

This is the first instalment of a three-part series that will continue tomorrow and on Friday