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Poverty Gap Widens in SAfrica: Report

by Rajashri on September 29, 2009 at 8:18 PM
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 Poverty Gap Widens in SAfrica: Report

A new report released on Friday has said that South Africa has reduced poverty but remains the world's most unequal society. Analysts are warning the yawning gap between whites and blacks threatens social stability.

The Development Indicators report showed that the income of South Africa's poorest 10 percent rose by a third from 783 rand (105 US dollars, 71 euros) in 1993 to 1,041 rand a month in 2008.

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The richest 10 percent got richer by nearly 38 percent over the same period.

While the report acknowledges a "racial underpinning" of inequality, figures show that while black South Africans' salaries increased by 38 percent, the incomes of white South Africans jumped by 83.5 percent between 1995 and 2008.
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Haroon Bhorat, an economist with the University of Cape Town, said sustained growth up until about 2006 had partially reduced poverty, but at the same time the gap between the rich and the poor had widened.

"Income inequality in the long run is bad for growth. It is a threat to social stability," he told journalists at the report's launch.

While South Africa and Brazil were the world's most unequal societies in the early nineties -- based on the "Gini co-efficient" which measures inequality -- South Africa has now surpassed the south American nation.

While other countries may occasionally come in below South Africa in inequality indices, as a nation with regular and reliable data it was "now singularly the most consistently unequal society in the world."

South Africa is considered an advanced developing nation with an annual gross domestic product of 144 billion US dollars, growing rapidly since the end of white-minority apartheid rule in 1994.

In 1995, 31 percent of the population lived under the poverty line of 283 rand a month, which dropped to 22 percent in 2008.

"The change out of extreme poverty is occurring; there are still too many people there, but there is a shift out of that," Ronette Engela of the presidential policy unit told journalists.

"The improvement in people's lives could be attributed to economic growth and expanding employment as well as government's poverty alleviation initiatives... social assistance support and better housing," said the report.

Bhorat said South Africa had managed to finance its high poverty levels through "positive growth and high revenues through social security."

More than 13 million people now receive social grants in South Africa, nearly double the figure in 2004.

However, amid the country's first recession in 17 years, and high budget deficits, this was no longer sustainable.

Planning Minister Trevor Manuel said the report gave a "warts and all" account of the state of South Africa and would be used to gauge the outcomes of policy.

"The current recession of course casts a very long shadow over what we do."

The report showed the negative impacts of the economic crisis such as a loss of 267,000 jobs in the second quarter of 2009, which Bhorat said were mainly among partially educated young black men working in the informal sector.

The government is embarking on an ambitious public works programme to create job opportunities and has promised 500,000 by the end of the year.

The report noted concerns about increasing mortality due to HIV/AIDS. Health expert David Saunders of the University of the Western Cape said South Africa was one of only five countries where under-five mortality was increasing.

"Basically it's a gloomy picture," he said. "The performance of our health sector is extremely poor considering what we spend on it."

Source: AFP
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