Two major studies on poverty in South Africa have caused understandable alarums this last year. One is a World Bank study on inequality issued last month, the other a 10-yearly Statistics SA “Poverty Report” that came out in August 2017. Yet for all their bad news, they risk obscuring the progress that SA is making in various ways affecting ordinary folk.
The World Bank study (which included inputs from various other institutions and Stats SA) ranked SA the most unequal country the world. It uses a measurement called the Gini Coefficient to track inequality of incomes, which gives a mark between 0 (everybody has the same income) to 1 (one person has everything) and which the Bank is able to apply to only about a third of the world’s countries. On that measure, SA is the most unequal of those countries, although this has lessened since 2005.
According to the Stats SA report, the number of poor South Africans increased between 2006 and 2015, which prompted dire warnings to be issued in or by, among others, Business Times, The Sunday Independent, Business Day, the Financial Mail, the Official Opposition, and Maritzburg’s Agency for Community Social Action.
This sort of reaction is important in informing the overall national conversation, but missed some notable positive things that these reports expose. These are the positive longer-term trends, so important when watching how society is progressing.
Because to appreciate progress, to fixate on an “immediate score” is less important than to keep an eye on the direction of play. Where are we headed long-term? It’s hardly ever just good or just bad, human complexity being what it is.
So with inequality, for instance. Much of our inequality of incomes has been between Black Africans themselves, where it increased particularly markedly from 1996 to 2005. That’s perversely a good thing as it’s mainly caused by an uptick in income for many of these South Africans. In other words, a sign of progress, where a liberated Black middle class detached itself from the lowest economic rungs and rose in relative wealth, quickly.
Even so, we can’t pretend that vast inequalities in society can be tolerated forever, given that they give rise to resentment and thus to ideas that all privately-held land and other property are the proceeds of theft. That’s bad for social cohesion.
Reacting to the Stats SA poverty study, most commentators seemed to work only off that report’s presser, which emphasised that there were more poor people than before. But they missed a central finding - that the proportion of people in poverty has declined, dramatically. In just a decade, the proportion of people in upper-limit poverty improved from one-in-two to one-in-three. Have we ever before known such a quick betterment in SA?
It’s one-of-a-piece with economist Mike Schussler’s dissection of the 2015 General Household Survey, where he found that SA’s home-ownership of over 60 percent is one of the best in emerging markets. Fully 78 percent of us live in formal houses, the number of which jumped a third from 2002 to 2015, with most built privately.
Schussler notes that no country with a median age of just 25 years has wealth on this scale, with half the housing stock being homes consisting of six rooms or more, and a declining average household size. Almost one-in-three South Africans own a second home, compared to Europe’s four percent.
Then there are private pension assets, with SA now having the world’s sixth highest pension-assets-to-GDP-ratio, unique for so young a people. Many other things also point to improvement in our material circumstances, from a doubling of motor vehicle ownership in 20 years to the almost elimination of the lowest Living Standards Measures - a recently abolished way for marketers to segment the population by things owned, rather than by income.
Then there’s the changing racial profile of higher income groups, with significant improvement in average Black earnings as compared to whites. And much more besides.
Even so, we can’t blithely imagine that constant improvement in people’s lot is an inevitable destiny, nor that it will happen fast enough.
In this, a true measure of progress is found in the ratio of population growth versus GDP growth. Simply, if the latter outstrips the former, then we’re getting richer on the whole and thus per capita. Sometimes we’ve done alright in this.
With urbanisation and increasing wealth across most strata, we’ve experienced a decreasing population growth rate in recent decades. The UNDP expects us to hit a ceiling number of people around mid-century and then, like much of the rest of the world, for SA’s population to start declining. That works off families continuing to decrease in size, but could, of course, be up-ended by any largescale immigration.
We managed to reverse a 20-year negative trend and enjoyed GDP growing faster than the population for most of the post-1994 years. That is until the second presidential term of Jacob Zuma when we went into reverse, and we’re still going backwards.
That is a very serious trend indeed, and SA will need to prioritise policies that encourage economic growth rates consistently stronger than population growth rates. Ultimately, our chances of positive nation-building depend on this, like nothing else.
Paul Pereira is editor at CSI specialist communications hub, WHAM! Media. This was published by the Free Market Foundation.