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South Africa: Poverty Debate
AfricaFocus Bulletin
Nov 29, 2004 (041129)
(Reposted from sources cited below)
Editor's Note
"At the moment, many, too many, of our people live in gruelling,
demeaning, dehumanising poverty. We are sitting on a powder keg.
... We should discuss as a nation whether a basic income grant is
not really a viable way forward. We should not be browbeaten by
pontificating decrees from on high. We cannot, glibly, on full
stomachs, speak about handouts to those who often go to bed hungry.
It is cynical in the extreme to speak about handouts when people
can become very rich at the stroke of a pen." - Archbishop Desmond
Tutu
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Archbishop Tutu's comment, in the annual Nelson Mandela lecture on
November 23, reignited an ongoing debate in which most of the
critics combine critical views of government policy with electoral
loyalty to the majority African National Congress. Along with AIDS
and Zimbabwe, poverty is one of three issues on which the
government faces criticism from all quarters, including much of its
own base. The sensitivity of the issue was shown when President
Mbeki reacted sharply and dismissively to Archbishop Tutu's appeal
in the same lecture not to "pull rank and demand an uncritical,
sycophantic, obsequious conformity." [The full text of Tutu's
lecture is available at
http://www.safm.co.za/webfeatures/featureList.jsp?featureID=12
President Mbeki's comment is available on the ANC website at
http://www.anc.org.za/ancdocs/anctoday/2004/at47.htm]
This AfricaFocus Bulletin contains several recent documents
relevant to the debate on poverty in South Africa, and in
particular to the Basic Income Grant proposal to which Archbishop
Tutu refers. This proposal for a non-means-tested grant would build
on the acknowledged impact of equalizing old-age grants in
providing some widely-distributed counterbalance to the inherited
inequalities of apartheid.
For a wealth of resources on the wider debate on poverty,
inequality, and the impact of government policies, see in
particular the website of the Southern African Regional Policy
Network (SARPN; http://www.sarpn.org.za), particularly the page on
the 10-year review (http://sarpn.org.za/documents/d0000589/index.php).
An overall survey of the poverty debate, "The Politics of Poverty,"
by David Everatt, is available at
http://www.sarpn.org.za/documents/d0000613/index.php.
Other references are given in the documents below.
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Editor's Choice
Recommended Books on Poverty in South Africa (last updated January 2008)
Skhela Buhlungu et al.,
State of the Nation: South Africa 2007, 2007.
(check prices at
Powell's Books or
Amazon)
Adam Habib and Brij Maharaj,
Giving and Solidarity: Resource Flows for Poverty Alleviation in South Africa, June 2008.
(check prices at
Powell's Books or
Amazon)
Ashwin Desai,
We are the Poors: Community Struggles in Post-Apartheid South Africa, 2002.
(check prices at
Powell's Books or
Amazon)
Sampie Terreblanche,
History of Inequality in South Africa 1652-2002, 2003.
(check prices at
Powell's Books or
Amazon)
Francie Lund,
Changing Social Policy: The Child Support Grant in South Africa, June 2008.
(check prices at
Powell's Books or
Amazon)
Jeremy Seekings and Nicoli Nattrass,
Class, Race, and Inequality in South Africa, 2005.
(check prices at
Powell's Books or
Amazon)
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South Africa: Debate rages over proposed basic income grant
UN Integrated Regional Information Networks (IRIN)
http://www.irinnews.org
[This report does not necessarily reflect the views of the United
Nations]
Millions of South Africans still live in poverty
JOHANNESBURG, 23 Nov 2004 (IRIN) - Debate on the sustainability and
suitability of a basic income grant (BIG) for all South Africans is
raging, with government facing off against its traditional allies,
labour unions, church and civil society groups.
The debate around BIG has been heating up as it became clear that
economic growth alone could not address poverty in the country.
"It's not going to happen in [the next] 10 years," Charles Meth of
the School of Development Studies at the University of
KwaZulu-Natal told IRIN on Tuesday.
A report titled 'Social Security Policy Reform in Post-Apartheid
South Africa - A focus on the Basic Income Grant', published by the
university's Centre for Civil Society, observed that the country
was saddled with "huge socioeconomic inequality". [The report is
available on the website of the Centre for Civil Society -
http://www.ukzn.ac.za/ccs]
Reflecting the country's apartheid past, poverty was concentrated
among blacks, particularly Africans. Sixty-one percent of Africans
and 38 percent of mixed-race 'coloureds' were poor, compared with
five percent of Indians and one percent of whites, according to the
report.
Although the government has made poverty eradication its top
priority, Meth noted that "they cannot solve the poverty problem -
economic growth cannot happen fast enough. I would say about 4
million out of the 8 million unemployed are desperate, and they
cannot be reached through strategies aimed at stimulating job
growth".
The government has instituted a number of social grants - for
pensioners, child support and disability, among others - that are
all subject to a means test, given by the department of social
development, before a beneficiary qualifies.
"However, 11.8 million of the poorest 23.8 million South Africans
lived in households that received no social assistance in the same
year [2002]... that the [government-appointed] Taylor Committee
recommended the introduction of a basic income grant (BIG), i.e. a
grant of R100 [US $16.70] per person per month for every South
African citizen, regardless of age or income level," the report
noted.
While the government remains undecided on the matter, there has
been increasing pressure by civil society, church and labour
groups, which have united under the umbrella of the BIG Coalition.
The report pointed out that "in contrast to conventional social
assistance subject to means tests, the BIG is paid to everyone
irrespective of income". However, this "does not mean the
introduction of a BIG would make the rich become richer, because
the BIG must be funded somehow, and the rich would contribute more
(relative to their numbers, not necessarily their incomes) to its
funding than the relatively poor".
This could happen in a number of ways, including a progressive
income tax "or even a regressive indirect tax", the report noted.
On Friday last week Finance Minister Trevor Manuel told members of
the National Council of Provinces that the implementation of a BIG
would "bankrupt the country".
News agency I-Net Bridge reported that Manuel was responding to
questions in the National Council of Provinces - the upper chamber
of parliament - when he said the BIG would have to go to every
individual "as a right", and would cost the fiscus R83 billion ($14
billion).
The government has also come under pressure from the official
opposition, the Democratic Alliance, to institute a means-tested
BIG, rather than the non-means-tested initiative currently
advocated.
Manual, who has been praised for tight fiscal discipline, added
that he had major problems with the idea of BIG, as the state would
"probably have to raise VAT [value added tax] by at least another
14 percent to fund the R83 billion".
However, in a letter on Tuesday to the influential national daily
newspaper, Business Day, BIG Coalition treasurer Rev Edwin Arrison
said it was unclear on which costings the minister had based his
statement.
"The coalition released research findings on the financing of a
BIG, done by four highly respected economists. They strongly
concurred that a BIG for everyone in SA is affordable and
sustainable, and would cost the government between R24 billion [$4
billion] and R40 billion [$6.6 billion], depending on how some of
the costs were recouped through the tax system," Arrison said.
He also questioned why government had set up the Taylor Committee
to investigate a comprehensive social security system for South
Africa, which recommended a BIG for everyone, "if its guidance is
not taken seriously".
The BIG Coalition would continue lobbying for a non-means-tested
grant, as "it is our view that a people's contract should start
with a BIG," Arrison concluded.
The coalition believes that the BIG would provide "everyone with a
minimum level of income, enabling the nation's poorest households
to better meet their basic needs".
Meth noted that there were various ways of costing a BIG, and
estimates varied widely. "What we are talking about is
redistribution from those who have to those who have not," he said.
"The only way to do that is through the tax system ... this is
essentially a political problem, rather than an ideological one."
Also on Tuesday, Archbishop Emeritus Desmond Tutu questioned the
impact of black economic empowerment (BEE) on poverty, saying it
seemed to benefit a small "recycled" elite, and argued that it was
perhaps time to consider a BIG as "a viable way forward", SAPA
reported.
Tutu was speaking at the Nelson Mandela Foundation in Houghton,
Johannesburg, when he said too many people were living in
"gruelling, demeaning, dehumanising poverty", and warned that South
Africans "are sitting on a powder keg - we really must work like
mad to eradicate poverty."
Just days after Manuel's statements, Tutu urged people not to be
"browbeaten by pontificating decrees from on high" and added that
"we cannot glibly on full stomachs speak about handouts to those
who often go to bed hungry". In reference to recent BEE deals
involving ruling party and former government officials, Tutu said
it was "cynical in the extreme to speak about handouts [to the
poor] when people can become very rich at the stroke of a pen".
Proponents of a BIG argue that welfare states cater for various
risks related to ageing, unemployment and health, but assume full
employment of the populace - that is, social assistance is intended
only in exceptional circumstances.
The report, however, noted that "due to globalisation and
post-industrialisation, full employment is becoming more difficult
- chronic unemployment and underemployment have increased".
The government has focused its poverty alleviation efforts on
extending the child support grant to a greater number of recipients
and an expanded public works programme, but South Africa's
"unemployment rate is so high that public works programmes would
not be able to create enough jobs, however 'massive' they [public
works programmes] would be", said the report.
Anna McCord, an analyst with the Centre for Social Science Research
at the University of Cape Town, told IRIN that the government's
expanded public works programme and the proposed BIG were
"absolutely not policy alternatives".
"The expanded public works programme aims to create 200,000 jobs a
year, but they are temporary jobs. Unemployment levels are between
5 million and 8 million, so the impact of the public works
programme will be far more limited than the impact of a BIG -
they're incomparable in terms of their scale," McCord said.
She added that the proposed BIG would be universal and, as such, it
would have "large-scale [impact] and be a significant step in
addressing poverty".
"The pubic works programme is excellent ... as, when government
spends money on infrastructure, a greater proportion will be spent
on labour, but 200,000 temporary jobs is in no way comparable to
the impact [on poverty] of a basic income grant," McCord concluded.
South Africans for a Basic Income Grant
3 July 2001
[Statement available at http://www.sacc-ct.org.za/BIGindex.html]
Poverty and inequality pose the greatest threat to the success of
South Africa's young democracy. A bold initiative is urgently
needed to confront this challenge.
We, the undersigned organisations, call for the introduction of a
universal Basic Income Grant as a key intervention to combat
poverty and to improve the lives of the majority of South Africans.
At least 22 million people in South Africa--well over half the
population--live in poverty. On average, they survive on R144 per
person per month. A Basic Income Grant would provide rapid and
sustained relief to all South Africans by:
- providing everyone with a minimum level of income,
- enabling the nation's poorest households to better meet their
basic needs,
- stimulating equitable economic development,
- promoting family and community stability, and
- affirming and supporting the inherent dignity of all.
The Basic Income Grant should be founded on the following
fundamental principles:
- Universal Coverage: It should be available to everyone, from
cradle to grave,and should not be subject to a means test.
- Relationship to existing grants: It should expand the social
security net. No individual should receive less in social and
assistance grants than before the introduction of the Basic Income
Grant.
- Amount: The grant should be no less than R100 per person per
month on introduction and should be inflation indexed.
- Delivery Mechanisms: Payments should be facilitated through
Public Institutions. Using community Post Banks would have the
additional benefit of enhancing community access to much-needed
banking services.
- Financing: A substantial portion of the cost of the grant should
be recovered progressively through the tax system. This would
demonstrate solidarity by all South Africans in efforts to
eliminate poverty. The remaining cost should be borne by the
fiscus. A range of new measures should be introduced to increase
revenue so that the additional cost can be accommodated without
squeezing out other social expenditure.
In recent weeks, the following organisations have come together to
endorse this basic platform and to commit ourselves to working with
government to make the Basic Income Grant a reality. We call on all
South Africans to join us in this campaign and invite them to add
their endorsement to this platform.
Alliance for Children's Entitlement to Social Security (ACESS)
Black Sash
Child Health Policy Institute
Congress of South African Trade Unions
Development Resources Centre
Ecumenical Service for Socio-Economic Transformation
Gender Advocacy Programme
Community Law Centre, University of the Western Cape
South African Council of Churches
South African National NGO Coalition
Southern African Catholic Bishops' Conference
Treatment Action Campaign
Fact Sheet: Poverty in South Africa
Human Sciences Resource Council
http://www.hsrc.ac.za
Excerpts only
Full document (including tables and map) available at
http://www.sarpn.org.za/documents/d0000990/index.php
26 July 2004
Introduction
New estimates of poverty show that the proportion of people living
in poverty in South Africa has not changed significantly between
1996 and 2001. However, those households living in poverty have
sunk deeper into poverty and the gap between rich and poor has
widened. The Human Sciences Research Council (HSRC) in
collaboration with Mr Andrew Whiteford, a South African economist,
has generated these estimates.
Approximately 57% of individuals in South Africa were living below
the poverty income line in 2001, unchanged from 1996. Limpopo and
the Eastern Cape had the highest proportion of poor with 77% and
72% of their populations living below the poverty income line,
respectively. The Western Cape had the lowest proportion in poverty
(32%), followed by Gauteng (42%). See Table 1.
The HSRC has estimated poverty rates for each municipality. The
majority of municipalities with the lowest poverty rates are found
in the Western Cape. These include Stellenbosch (23%) and Saldanha
Bay (25%). The major city with the lowest poverty rate is Cape Town
(30%). Pretoria and Johannesburg have somewhat higher rates of 35%
and 38%, respectively, while Durban has a rate of 44%. The poorest
municipality is Ntabankulu in the Eastern Cape, where 85% of its
residents live below the poverty line. The figure below shows that
seven of the 10 poorest municipalities are located in the Eastern
Cape while two are located in Limpopo and one in the Free State.
While the poverty rate measures the proportion of a region's
population living below the poverty line it does not give any
indication of how far below the poverty line poor households are.
For this the HSRC has used a measure called the poverty gap that
measures the required annual income transfer to all poor households
to bring them out of poverty. The HSRC study has shown that the
poverty gap has grown from R56-billion in 1996 to R81-billion in
2001 indicating that poor households have sunk deeper into poverty
over this period.
Table 1. Poverty indicators by province
[see full PDF version of paper]
With its large, poor population KwaZulu-Natal has the biggest
poverty gap (R18 billion). The Eastern Cape and Gauteng follow
KwaZulu-Natal. The Gauteng's poverty gap has grown faster between
1996 and 2001 than all other provinces. This is probably a result
of its population growth rapidly exceeding economic growth. Among
municipalities, Durban has the largest poverty gap, followed by
Johannesburg and East Rand.
The poverty gap has grown faster than the economy indicating that
poor households have not shared in the benefits of economic growth.
In 1996 the total poverty gap was equivalent to 6.7% of gross
domestic product (GDP); by 2001 it had risen to 8.3%.
The fact that poorer households have not shared in the proceeds of
economic growth is reflected in the rise in inequality between rich
and poor. To measure inequality the HSRC have used the Gini
coefficient, which can vary from 0 in the case of a highly even
distribution of income, to 1 in the case of a highly unequal
distribution. South Africa's Gini coefficient rose from 0.69 in
1996 to 0.77 in 2001. While historically South Africa has had one
of the most unequal distributions of income in the world this rise
is likely to place it at the top of the world rankings.
In the past inequality in South Africa was largely defined along
race lines. It has become increasingly defined by inequality within
population groups as the gap between rich and poor within each
group has increased substantially The Gini coefficient for the
African population has risen from 0.62 in 1991 to 0.72 in 2001.
This level of inequality is comparable with the most unequal
societies in the world. The white population has a Gini coefficient
of 0.60 that is extremely high for a group whose education and
occupational profile matches that of societies in highly
industrialised countries.
Table 2. Gini coefficient by population group
[see full PDF version of paper.]
Methodology
Aggregate Poverty Gap
The poverty gap measures the difference between each poor
household's income and the poverty line. Thus, it measures the
depth of poverty of each poor household. The aggregate poverty gap
is calculated by summing the poverty gaps of each poor household.
Therefore, it is equivalent to the total amount by which the
incomes of poor households need to be raised each year to bring all
households up to the poverty line and, hence, out of poverty.
The poverty line varies according to household size, the larger the
household the larger the income required to keep its members out of
poverty. The poverty lines used were based on the Bureau of Market
Research's Minimum Living Level.
Table 3. Poverty income by household size (R per month)
[See full PDF version of paper. The 2001 poverty line for a
household of 5 was 1,541 South African rand a month - less than
US$200 using 2001 exchange rates.]
In order to calculate the aggregate poverty gap a cross tabulation
of household income by household size, municipality and race was
drawn from the 2001 census. This data, viewed together with the
poverty income data shown in Table 1, enables the number of
households living in poverty and the poverty gap of each poor
household to be determined. The poverty gap of each poor household
was summed to arrive at the aggregate poverty gap for each
municipality.
Gini Coefficient
The Gini coefficient is a summary statistic of income inequality
that varies from 0 (in the case of perfect equality where all
households earn equal income) to 1 (in the case where one household
earns all the income and other households earn nothing).
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