SOUTH AFRICA: Inequality not so black and white

Photo: Bonile Bam/IRIN
Poverty levels remain

8 February 2010 (IRIN) – The growing gulf between the haves and have-nots in the black population has given South Africa the dubious distinction of becoming one of the world’s most unequal societies, according to a recent report by the Organisation for Economic Co-operation and Development (OECD), an inter-government body.

“From a policy point of view it is important to flag the fact that intra-African [black] inequality and poverty trends increasingly dominate aggregate inequality and poverty in South Africa,” noted the report, Trends in South African Income Distribution and Poverty since the Fall of Apartheid.

“While between-race [black, white, coloured or mixed-race, and Indian] inequality remains high and is falling only slowly, it is the increase in [black] intra-race inequality which is preventing the aggregate [inequality] measures from declining,” the authors commented.

The demise of apartheid in 1994 left a skewed racial economic hierarchy that placed whites firmly at the top, followed by Indians, coloureds, and then blacks. Since then the African National Congress (ANC) government has made Black Economic Empowerment (BEE) a policy centre-piece, but by the party’s own admission it has failed to improve the lot of the vast majority of black South Africans.

“We also have to admit that the ‘broad-based’ part of BEE has seemed elusive. In the main, the story of black economic empowerment in the last 15 years has been a story dominated by a few individuals benefiting a lot,” Deputy President Kgalema Motlanthe said on 4 February 2010 at the first meeting of the BEE Advisory Council.

The country’s ethnic composition has seen the black population expand from 70 percent to 80 percent between 1970 and 2001, compared to the shrinking proportion of whites – 17 percent to 9 percent – over the same period.

“Clearly such demographic change gives increasing importance to the intra-African distribution in driving the aggregate distribution,” the OECD report said.

Usual suspects

BEE has faced sustained criticism over the perception that it is benefitting a few, with the emergence of a disparaged class known as the “usual suspects”, like mining magnate Patrice Motsepe – whose wealth is estimated at about R14.2 billion (US$2 billion) – and ANC housing minister and struggle hero, Tokyo Sexwale, who is also a mining magnate.

Steven Hawes, manager of research and advocacy at Empowerdex, a company specializing in all aspects of BEE, told IRIN that the empowerment policy was not “a vehicle for oligarchs” although its initial stages might have appeared that way. “It’s premature to say BEE as a policy has not worked. It needs time to spread its wings.”

He said the introduction of Broad Based Black Economic Empowerment (BBBEE) in 2007 was designed to benefit greater numbers of previously disadvantaged people.

The OECD acknowledged that the post-apartheid government could be seen as pro-poor, as it had expanded access to housing, water, electricity and sanitation. In 1993, for example, 51.9 percent of South Africans had access to electricity for lighting, but by 2004 this had increased to 80.2 percent.

“It should be noted that while the between-race component of inequality has fallen, it remains remarkably high by international norms, and its decline has slowed since the mid 1990s,” the report said.

“Moreover, the bottom deciles of the income distribution and the poverty profile are still dominated by Africans [blacks], and racial income shares are far from proportionate with population shares.”

Although the country’s “levels of poverty and inequality continue to bear a persistent racial undertone”, poverty levels have been assuaged by social assistance grants rather than the labour market, despite the survey period – 1993 to 2008 – mirroring the longest period of growth the country has witnessed,” the report commented.

“Individuals with very low levels of education and with no workers in the household have the highest poverty incidence, but they have not become poorer over time … rather, those with no children have become poorer.”

Two-thirds of the income of the poorest 20 percent was derived from social assistance grants, mainly child grants, but “orphans are less likely to be receiving the Child Support Grant than children with both parents.”

Social grants

South Africa’s level of HIV/AIDS has undoubtedly contributed to its estimated four million orphans. “Most significantly, there appear to be many eligible children in need who are not receiving the grant. The most common reason for not applying when eligible for the grant is found to be a lack of correct documentation,” the researchers noted.

More than decade of uninterrupted growth ended with the global slowdown in 2008, but it had allowed for the rapid expansion of grants, and speculation that there might be some form of unemployment benefit.

“It is questionable whether a permanent income support for the unemployed would lead to the desired outcomes. Many of the unemployed are young school leavers, and while they clearly need some sort of social safety net or temporary social insurance, the longer-term goal of policy should be directed at helping this group enter the labour market and remain in work in the long term,” the report recommended.

Greater access to education has also not proved a boon to poverty alleviation. “The fact that better-educated young people remain poor suggests that the labour market has not been playing a successful role in alleviating poverty, and that the education system is not delivering the skills needed in the labour market,” the OECD said.

“Thus, it is concluded that it is not the labour market but rather social assistance grants which have driven the relative improvement in poverty levels over time.”