Poverty and Inequality in South Africa: A History

Abstract

Contemporary South Africa exhibits widespread and persistent poverty and an extraordinarily high level of inequality. Historically, poverty and inequality were forged by forms of racial subordination and discrimination shaped successively by slavery, by colonial settlement and conquest, and by a mining-based industrial revolution in the last quarter of the 19th century. The explosive growth of capitalism and urbanization in a colonial context shaped a set of institutions and social relations—the “native reserves,” migrant labor, pass laws, job reservation, urban segregation, and the like—which reached their most stringent form under apartheid legislation, from 1948 on. The political, social, and economic system of apartheid entrenched white wealth and privilege and intensified the poverty of black South Africans, particularly in rural areas. By the 1970s, the apartheid project began to flounder and the National Party government launched a series of concessions intended to stimulate the economy and to win the support of black South Africans. A historic transition during the late apartheid years saw a shift from labor shortages to a labor surplus, generating structural unemployment on a massive scale. This was a problem that the African National Congress (ANC), in power since 1994, has been unable to solve and which has been a major factor in the levels of poverty and inequality during the democratic era. The ANC has made some advances in combating poverty, especially through the rapid expansion of welfare in the form of pensions and social grants. This has reduced ultra-poverty or destitution. In addition, the provision of housing, water, sanitation, and electricity to black townships has seen significant growth in assets and services to the poor. Yet since 1994, inequality has increased. South Africa has become a more unequal society and not a more equal one. Two factors have caused inequality to deepen: increasingly concentrated income and wealth, and a sharp rise of inequality within the African population. The ANC continues to commit itself to “pro-poor” policies; yet its ability to reduce poverty, and especially to achieve greater equality, appears to be substantially compromised by its failure to reverse or reform the structure, characteristics, and growth path of the economy.