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The Challenge of Enduring and Deepening Poverty in the New South Africa

By Edmond J. Keller, University of California- Los Angeles

Remarks delivered at a Conference Towards the New South Africa, May 2005, California African American Museum, Los Angeles.

As can be gleaned from only a casual look at the fine photographic art of Peter Magubane, apartheid had a devastating effect on the social fabric of South African society. Yet, like the mythical phoenix, that country has over the past fifteen years emerged from the ashes and is well on the way to rendering apartheid a sad but distant memory. Much has been accomplished over the past decade and a half to create a new and more democratic political system. In many respects, racial and ethnic relations have greatly improved over that period. At the same time, however, there are serious challenges that still face South Africa, and most of these challenges can be related to the chronic poverty which afflicts the country. For instance, the problem of widespread poverty is the major reason for the high crime rates throughout the country. Also, South Africa's high rates of unemployment directly affect the levels of poverty.

To be sure, you can walk down tree-lined streets or drive through well-appointed suburbs that belie the notion that South Africa is mired in poverty; but, not far removed from these pleasant environs, the signs of chronic poverty are unmistakably there, and all South Africans know it. While South Africa has living standards that are on average significantly above those in countries where chronic poverty is assumed to be most severe, its particular legacy of polarization and racially embedded poverty naturally raises questions about the ability of the poor to use social mechanisms of access to capital in order to throw off the yoke of poverty. It is quite obvious that the poor need the government to intervene and to come up with schemes that help pull them out of this condition.

Along with HIV/AIDS and Zimbabwe, poverty is one of three issues on which the government of President Thabo Mbeki faces a great deal of criticism, including from the African National Congresses' own base. In a speech last year, Bishop Desmond Tutu asserted:

At the moment, many, too many of our people live in grueling, demeaning, dehumanizing poverty. We are sitting on a powder keg…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 become very rich at the stroke of a pen.

What Tutu was referring to in the last sentence was what many South Africans see as the corruption and cronyism associated with the Black Economic Empowerment Program. Tutu asked, "What is black empowerment when it seems to benefit not the vast majority but a small elite that tends to be recycled."

In response Mbeki claims that the objective of his government is to make BEE operate like affirmative action programs in other countries that are designed to address historic injustices related to economic opportunity. It is expected that in the process blacks are going to move into high levels of business enterprises that during the days of apartheid had been reserved for whites. Some whites see this as nothing more than reverse discrimination. So, you can see, Mbeki's government is vulnerable to attack from all sides: whites, many of whom never trusted the ANC in the first place, as well as from his grassroots base.

Just after South Africa inaugurated its first non-racial democracy, the government attempted to tackle the issues of poverty and inequality with numerous programs, the most important of which was the Growth, Employment and Redistribution (GEAR) strategy that was intended to boost the development of a rising black capitalist class. It was assumed that as this class emerged and prospered benefits would trickle down to the rest of the population that had suffered from historic discrimination and inequalities. A part of this strategy was the Black Economic Empowerment (BEE) Program that was expected to be the engine that drove the creation of a non-class based economy. The black elite as a social sector was encouraged to create a space for what was referred to as "popular capitalism" that was intended to flourish through the growth of small and medium sized businesses. In the process black business people were expected to be brought into the economy and in the end there was supposed to be created a balance between black and white business ownership. Although GEAR as a whole is widely acknowledged to have been a failure, the government currently sees BEE as the center of its economic growth strategy. Mbeki claims that he is morally obligated to "deracialize" business, redistribute income and wealth and fight poverty in black communities. His critics from the base of the ANC argue that this strategy is leading to the selective mobility of certain individuals who do not have a commitment to pulling up the poor along with themselves.

In order to understand the true dimensions of poverty in South Africa we have to consider the social and historical legacy of this multi-racial society. South Africa is a country of about 45 million people; and, it has eleven national languages. The population is 75 % black, 14 % white, 9% mixed race or coloreds, and 3 % Indian.

Among the African linguistic groups Zulus are 21% of the population, Xhosas are 17% and Sotho are 15%. Other smaller, but nonetheless significant groups are the Tswana, Venda, Ndebele, and the Swazi to name a few. Non-whites during the days of apartheid were largely confined to their so-called ethnic homelands or in adjacent industrial areas. Consequently, the largest population of Zulus, for example, is found in Kwa-Zulu Natal Province, the Xhosa in the Eastern Cape, Indians in Kwa-Zulu Natal, and Coloreds in the Western Cape. Of course, today there are no restrictions on population movement and the larger cities tend to be ethnically and racially heterogeneous. Now, this population distribution is reflected in the distribution of poverty in the country.

Recent estimates of poverty show that the proportion of people living in poverty has not changed much since the mid 1990s. At the same time, however there is evidence that those living in poverty have sunk deeper into poverty and the gap between rich and poor has widened. Moreover, whereas in the apartheid era, there was a definite racial cast to the distribution of wealth and poverty, today, there is a growing stratification within African ethnic groups along class lines, with the noveau rich on the top and the abjectly poor on the bottom.

In 2001 it was estimated that 57% of South Africa's population lived below the poverty line. Sixty-one percent of Africans and 38% of coloreds were poor, compared to five percent of Indians and one percent of whites. Limpopo and the Eastern Cape had the highest proportion with 77% and 72% of their populations living below the poverty line. The Western Cape, where the largest percentage of White English speakers is concentrated had the lowest proportion of people below the poverty line. Significantly the largest concentration of people in urban areas who were below the poverty line was at 85% in Ntabankulu in Eastern Cape and the lowest was in the city of Stellenbosch in the Western Cape.

It is quite clear that Mbeki needs to address the poverty issue and its related issues of crime, unemployment, education and housing, if his government and the ANC is going to maintain support from their base, which includes labor, humanitarian and civil society groups, religious groups and so forth. The question is: What is the government doing? The government has made poverty eradication its top priority. But it is clear that the problem cannot be solved with economic growth alone. There are an estimated 8 million people unemployed and 4 million of these are desperate. The government has instituted a number of social grants programs aimed at retired persons, children and disable persons; however, almost 12 million of the poorest 24 million people in 2002 lived in households that got no social assistance.

Several years ago, the government appointed a committee, the Taylor Committee to look into ways to address this problem. The committee recommended the introduction of a basic income grant or BIG, as it is commonly referred to. If implemented, this grant would provide every South African, regardless of age or income level, with R100 per month, or $16.70. This would be significant for the poorest of the poor, as at least 22 million people---about half the total population—live on only R144 per person per month. So far, the government has not accepted the Taylor Committees recommendation, and in fact, the Minister of Finance, Trevor Manuel, has gone on record as saying if the government were to accept the Committees recommendations in total, this would bankrupt the country.

As you might imagine this has led to a raging debated with the government facing off against its traditional allies, labor unions, church and civil society groups. The reason the so-called BIG Coalition favors the Taylor plan is that it would significantly redistribute wealth, as the cost of running the program would be passed on to those who are able to pay more in taxes. They also point out that this is not a handout because there is no means test associated with the program.

The ANC government is at a crossroads. It needs to maintain the support from its base, and I can see no way of doing that if it continues to resist the idea of expanding its social grants programs with BIG, or some version of it. Through such a program it has the capacity to influence the number of abjectly poor in a direct way. Yet, there have been no concrete plans put in place by the government to determine the number of poor and the severity of their poverty. If there had been, the potential value of an expanded social grants program as is represented in BIG would become clear. The problem of poverty is of such overwhelming importance; every effort should be made by the government to tackle it effectively.

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