Blurring the rainbowSouth Africa’s inequality is no longer about race

Democracy has brought wealth, but only to a few

IN KLIPTOWN, an old neighbourhood of Soweto, a group of perhaps 30 men stand in a huddle shouting at cars. One drags a large plastic barrier into the road, while a couple of others pour fuel into old tyres to make burning barricades. It is the sort of protest that disrupts life in or around Johannesburg every few days. What the men want is simple, explains Bongani Godfrey Ndaba, a 37-year-old with a thick mat of hair: a better standard of living.
Most live across a railway line from the road they are blocking, in a warren of crumbling old brick “matchbox” houses and newer tin shacks. Mr Ndaba points out the rubbish that litters the entrance to the neighbourhood, and the mucky water that pours down the muddy streets. “The rich get richer; the poor get nothing,” he says. “There are just empty promises.” As he speaks, the boom of tear-gas grenades comes from the road, indicating that the police have arrived.

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Witness such a scene, a few minutes’ drive away from where the Soweto uprising of 1976 started, and it would be easy to believe that not much has changed in South Africa since the end of apartheid. Among 154 countries surveyed by the World Bank, the country has the highest (meaning worst) Gini coefficient, a measure of inequality. That is probably not quite right: it is hard to believe that Angola, a kleptocratic petro-state, is really more egalitarian. But it cannot be far off. Nor, at 0.63, has the figure changed much over the years. Most black South Africans are still poor, and most income still flows to a small elite. Yet despite appearances, things are not the same as in 1994. The biggest difference is that now a rather large part of the economic elite is black.
In absolute terms, the poorest have not in fact done too badly. As the economy grew from 1994 to around 2009, GDP per person increased considerably, as did employment. As a result, living standards jumped. From 2001 to 2015, the share of the population living in LSM 1-3 (the three bottom tiers of a ten-point scale of living standards) shrank from almost 40% to 10%. Since 1996 the number of people living in proper houses has more than doubled; the numbers with access to lavatories and electricity have grown by even more.
Racial disparities in living standards have also narrowed. In 2004 whites, who are 8% of the population, made up 86% of those in the top bracket of living standards. By 2015 that share had fallen to 49%. Blacks made up 30%. That is partly because more blacks have been able to move into government jobs, which often pay well. But business and education have opened up, too. One survey of firms found that whereas in 1996 blacks made up just 8% of company executives, by 2015 they made up 41%. Before the end of apartheid, South African universities produced 44 white engineering graduates for every black one; by 2014, there were two blacks for every white.
Even so, overall inequality has not fallen. Imraan Valodia of the University of the Witwatersrand says one reason is that economic growth has generally benefited the best-educated. “Those with skills–the upper middle classes–did very well.” As big South African firms re-entered the global economy after the end of apartheid, and global firms moved to South Africa, room at the top became available for the black middle class. But it did not create as much opportunity for less-educated people or in areas far from big cities, which were kept going with redistributive spending. Between 2001 and 2015, the number of social grants given to the poor increased from 4m to almost 17m. Some 10.6m people receive such grants—more than the number who have formal jobs.
The fortunes of both rich and poor can improve together only when the economy is growing quickly, says Frans Cronje of the Institute of Race Relations, a think-tank. Sadly, growth has stagnated since the beginning of the economic crisis in 2009, and seems unlikely to pick up soon. Jacob Zuma, the president, has taken to speaking about the need for land redistribution. Malusi Gigaba, his new finance minister, is a loud proponent of “radical economic transformation” to make the country more equal, much to the consternation of investors. Yet many South Africans suspect that the real agenda is to direct more resources not to the poor but to the political elite. That policy has only one egalitarian conclusion: a country in which the whole country is poorer.

This article appeared in the Middle East and Africa section of the print edition under the headline "Blurring the rainbow"

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