Identifying Opportunities to Reduce Income Disparities in South Africa Today and In the Future

Despite the end of apartheid in the early 1990s, South Africa remains racially and economically segregated. The country is beset by persistent social inequality, poverty, unemployment, a heavy burden of disease and the inequitable quality of healthcare service provision. -- Katusha de Villiers (2021)

In 2019, the World Bank recognized South Africa as the most unequal country in the world, meaning that South Africas economy does not equally benefit all of its citizens. Khanyi Mlaba (2020)

Chapter One: Introduction

The epigraphs above underscore the current plight of South Africa nearly 3 decades after apartheid was formally abolished and a democratically elected government assumed power. Like many sub-Saharan nations, South Africa has experienced its share of challenges over the past 2 centuries in overcoming the lingering effects of colonialism and then a draconian apartheid regime that severely polarized the South African people in ways that have left a challenging legacy to overcome. This legacy began in 1948 when apartheid was formally adopted by the South African government as a path towards the separate development of the nations races but which placed the black majority and other non-white groups at a disadvantage to the white minority (South Africa people, 2021).

Besides international boycotts, protests by national leaders such as Nelson Mandela who spent decades opposing apartheid, with many of them spending time in prison as a result, finally compelled the white-led South African government to negotiate a peaceful transition to a democratic government with equal representation for all citizens in 1994 (South Africa people, 2021). Since that time, South Africa has faced a number of social and economic development challenges, most especially with respect to the lingering vestiges of apartheid-era inequities in income, employment opportunities, housing, education, and healthcare services. An unstable political regime marred by corruption has further exacerbated the problems facing South Africa at present (South Africa economy, 2021).

Notwithstanding these challenges, though, and unlike a number of its sub-Saharan neighbors, South Africa also possesses multiple types of valuable natural resources as well as mature supply chain networks and financial, legal, communications, energy, and transport sectors. In addition, South Africa is a financial hub for the region, boasting the largest stock exchange on the continent which is also ranked among the top 20 stock exchanges globally. Notwithstanding these numerous advantages and because its economy is inextricably connected to the international marketplace, the South African economy has suffered some serious downturns in recent years that have created an unemployment crisis that threatens the stability of the nation. Furthermore, the nation is also struggling to meet the needs of its population during the ongoing global Covid-19 pandemic where South Africa has already recorded more than 1.5 million cases to date (South Africa Covid-19, 2021). These trends directly relate to the problem of interest to this study which are described further below.

Statement of the Problem

Despite an abundance of natural resources, a modern infrastructure, and increasingly aggressive efforts by the national government and support from multiple nongovernmental organizations since apartheid ended in 1994, more than half (about 55% or 30.3 million people) of the South Africa population still lives in poverty today and another 13.8 million South Africans do not have enough to eat each day (Poverty & equity brief 2021). Moreover, current economic development indicators show that the per capita annualized consumption growth rate of the bottom 40 percent of the South African population actually suffered a 1.34% decline during the 4-year period from 2010 through 2014 (the latest statistic available from The World Bank).

In addition, although attendance at educational institutions is nearly universal…

Identifying Opportunities to Reduce Income Disparities in South Africa Today and In the Future

Despite the end of apartheid in the early 1990s, South Africa remains racially and economically segregated. The country is beset by persistent social inequality, poverty, unemployment, a heavy burden of disease and the inequitable quality of healthcare service provision. -- Katusha de Villiers (2021)

In 2019, the World Bank recognized South Africa as the most unequal country in the world, meaning that South Africas economy does not equally benefit all of its citizens. Khanyi Mlaba (2020)

Chapter One: Introduction

The epigraphs above underscore the current plight of South Africa nearly 3 decades after apartheid was formally abolished and a democratically elected government assumed power. Like many sub-Saharan nations, South Africa has experienced its share of challenges over the past 2 centuries in overcoming the lingering effects of colonialism and then a draconian apartheid regime that severely polarized the South African people in ways that have left a challenging legacy to overcome. This legacy began in 148 when apartheid was formally adopted by the South African government as a path towards the separate development of the nations races but which placed the black majority and other non-white groups at a disadvantage to the white minority (South Africa people, 2021).

Besides international boycotts, protests by national leaders such as Nelson Mandela who spent decades opposing apartheid, with many of them spending time in prison as a result, finally compelled the white-led South African government to negotiate a peaceful transition to a democratic government with equal representation for all citizens in 1994 (South Africa people, 2021). Since that time, South Africa has faced a number of social and economic development challenges, most especially with respect to the lingering vestiges of apartheid-era inequities in income, employment opportunities, housing, education, and healthcare services. An unstable political…

Identifying Opportunities to Reduce Income Disparities in South Africa Today and In the Future

Despite the end of apartheid in the early 1990s, South Africa remains racially and economically segregated. The country is beset by persistent social inequality, poverty, unemployment, a heavy burden of disease and the inequitable quality of healthcare service provision. -- Katusha de Villiers (2021)

In 2019, the World Bank recognized South Africa as the most unequal country in the world, meaning that South Africas economy does not equally benefit all of its citizens. Khanyi Mlaba (2020)

Chapter One: Introduction

The epigraphs above underscore the current plight of South Africa nearly 3 decades after apartheid was formally abolished and a democratically elected government assumed power. Like many sub-Saharan nations, South Africa has experienced its share of challenges over the past 2 centuries in overcoming the lingering effects of colonialism and then a draconian apartheid regime that severely polarized the South African people in ways that have left a challenging legacy to overcome. This legacy began in 1948 when apartheid was formally adopted by the South African government as a path towards the separate development of the nations races but which placed the black majority and other non-white groups at a disadvantage to the white minority (South Africa people, 2021).

Besides international boycotts, protests by national leaders such as Nelson Mandela who spent decades opposing apartheid, with many of them spending time in prison as a result, finally compelled the white-led South African government to negotiate a peaceful transition to a democratic government with equal representation for all citizens in 1994 (South Africa people, 2021). Since that time, South Africa has faced a number of social and economic development challenges, most especially with respect to the lingering vestiges of apartheid-era inequities in income, employment opportunities, housing, education, and healthcare services. An unstable political regime marred by corruption has further exacerbated the problems facing South Africa at present (South Africa economy, 2021).

Notwithstanding these challenges, though, and unlike a number of its sub-Saharan neighbors, South Africa also possesses multiple types of valuable natural resources as well as mature supply chain networks and financial, legal, communications, energy, and transport sectors. In addition, South Africa is a financial hub for the region, boasting the largest stock exchange on the continent which is also ranked among the top 20 stock exchanges globally. Notwithstanding these numerous advantages and because its economy is inextricably connected to the international marketplace, the South African economy has suffered some serious downturns in recent years that have created an unemployment crisis that threatens the stability of the nation. Furthermore, the nation is also struggling to meet the needs of its population during the ongoing global Covid-19 pandemic where South Africa has already recorded more than 1.5 million cases to date (South Africa Covid-19, 2021). These trends directly relate to the problem of interest to this study which are described further below.

Statement of the Problem

Despite an abundance of natural resources, a modern infrastructure, and increasingly aggressive efforts by the national government and support from multiple nongovernmental organizations since apartheid ended in 1994, more than half (about 55% or 30.3 million people) of the South Africa population still lives in poverty today and another 13.8 million South Africans do not have enough to eat each day (Poverty & equity brief 2021). Moreover, current economic development indicators show that the per capita annualized consumption growth rate of the bottom 40 percent of the South African population actually suffered a 1.34% decline during the 4-year period from 2010 through 2014 (the latest statistic available from The World Bank).

In addition, although attendance at educational institutions is nearly universal in South Africa, significant percentages of South African children (up to one-third in some provinces) still lack access to early childhood development programming (Measuring the progress of development in South Africa, 2021) and literacy rates are subpar. Moreover, the situation for the poorest people in South Africa is worsening and there are few new opportunities available on the short-term horizon that can help them achieve their full employment potential and realize the complete range of human right guarantees in the South African Freedom Charter, the United Nations Declaration of Human Rights, the South African Constitution and the commitments made by the South African government most recently in February 2021 to promote efforts to tackle issues such as poverty, exclusion, employment, gender equity and access to social well-being and justice for all (World Day of Justice, 2021, para. 2).

In sum, the ability of the nations leaders to take advantage of South Africas cornucopia of valuable natural resources has been limited in a number of ways that have directly affected the wellbeing of its citizens. While many of these constraints can be traced to the apartheid era, it is also clear that South Africa have failed to achieve the promise of the miracle that occurred in 1994 when apartheid was formally abolished and democratic elections were held for the first time in the countrys history. At present, some of South Africas more significant economic development challenges include the following:

South Africa's economic policy has focused on controlling inflation while empowering a broader economic base; however, the country faces structural constraints that also limit economic growth, such as skills shortages, declining global competitiveness, and frequent work stoppages due to strike action.

The government faces growing pressure from urban constituencies to improve the delivery of basic services to low-income areas, to increase job growth, and to provide university level-education at affordable prices.

Political infighting among South Africas ruling party and the volatility of the rand risks economic growth. International investors are concerned about the countrys long-term economic stability; in late 2016, most major international credit ratings agencies downgraded South Africas international debt to junk bond status (South Africa government, 2021, p. 5).

More troubling still, corruption has a long history in South Africa that dates to the 17th century and it remains rampant throughout the public and private sectors. Indeed, Daley (2021, p. 3) emphasizes that, Given this history, it is not surprising that corruption was a constant feature of the apartheid period. Black people were its chief victims, since they had no rights and so no way of protecting themselves against abuse. But they were not the only ones, as politicians and officials used government power for personal gain. Unfortunately, this same pattern has been repeated countless times since 1994, and corruption remains one of the most important challenges facing South Africa today (Daley, 2021). Taken together, South Africa has an uphill road ahead as it seeks to address the multifaceted, complex and well-entrenched problems facing the nation today, an issue that directly relates to the purpose of this study which is described below.

Purpose of the Study

Although racial segregation has not been unique to South Africa, the countrys strict apartheid laws endured far longer than most, a reality that has translated into widespread inequalities that persist to this day. In some cases, these inequalities are readily apparent but in others, post-apartheid life for many blacks in South Africa is still controlling in insidious ways by the legacy of these racial segregation laws. Indeed, as noted above, South Africa is widely regarded as being the most unequal country in the world at present, an eventuality that dismays many stakeholders today who were highly optimistic about the nations potential for the future. In this regard, Pooley (2018, pp. 640-641) emphasizes that, Inequality defines the post-apartheid condition. Years after South Africas first democratic elections in 1994, the nation has moved to radical levels of socioeconomic polarization. Poverty, unemployment and lack of opportunity are the consuming reality for millions of South Africans. Therefore, the purpose of this study was to identify the lingering vestiges of apartheid that ....... Africas marginalized citizenry and examining ways they can be eliminated.

Research Questions

The study was guided by the following research questions:

1. What are the primary constraints to reducing inequalities and promoting social justice, conceptualized as the equitable distribution of wealth, opportunities and privileges, in South Africa today?

2. What evidence-based initiatives have been used by the private sector in other emerging nations to improve social justice and income equality through initiatives such as job creation and skills training?

3. How can the existing human and natural resources in South Africa be leveraged to their best advantage for future economic development in ways that promote social justice and income equality?

4. How can public-private partnerships be used to their best effect in a South African context to achieve greater prosperity for all?

Importance of the study

Against the foregoing backdrop, it is clear that South African policymakers as well as the international community must develop innovative solution which are targeted at not only alleviating the suffering of these impoverish individuals but pave the road for future economic development to ensure that everyone in South Africa that wants a job that pays a living wage can get one. Likewise, additional provisions must be made for the well-being of the people of South Africa who are unable to pursue gainful employment for whatever reason. To this end, developing new employment opportunities through public and private sectors partnerships represent timely and valuable potential solutions to these challenging problems.

Chapter Two: Review of the Literature

Following the elimination of apartheid and the conduct of the first multi-racial elections in 1994, the African National Congress (ANC) headed a majority rule government that has sought to directly address the apartheid-era inequalities that continue to exist in all facets of South African society. One of the foundational documents that guided this process was the South African Freedom Charter, adopted by the ANC in 1955 to serve as a vision for a future South Africa that held equal opportunity for all. For example, according to Roberts (2020), The Freedom Charter remained a programmatic vision for the ANC for more than 30 years, and continues to have a broad influence on the policies of government, such as those aimed at addressing past injustices and promoting equity (p. 3).

The Freedom Charter makes it clear that there was no room left in South African society for the apartheid-era inequalities that have characterized life for the vast majority of South Africans for the past half century and more, but the aspirations codified in the Charter have not come to fruition and in some cases have even worsened over the years. The preamble to the South African Freedom Charter reads as follows:

We, the People of South Africa, declare for all our country and the world to know: that South Africa belongs to all who live in it, black and white, and that no government can justly claim authority unless it is based on the will of all the people; that our people have been robbed of their birthright to land, liberty and peace by a form of government founded on injustice and inequality; that our country will never be prosperous or free until all our people live in brotherhood, enjoying equal rights and opportunities; that only a emocratic state, based on the will of all the people, can secure to all their birthright without distinction of color, race, sex or belief; And therefore, we, the people of South Africa, black and white together - equals, countrymen and brothers - adopt this Freedom Charter. And we pledge ourselves to strive together, sparing neither strength nor courage, until the democratic changes here set out have been won.

The Freedom Charter also outlines 10 specific areas in which additional progress was needed to achieve this vision for South Africas future as set forth in Table __ below.

Table __

South Africas Freedom Charter commitments

Commitment

Description

The People Shall Govern!

Every man and woman shall have the right to vote for and to stand as a candidate for all bodies which make laws;

All people shall be entitled to take part in the administration of the country;

The rights of the people shall be the same, regardless of race, color or sex;

All bodies of minority rule, advisory boards, councils and authorities shall be replaced by democratic organs of self-government.

All National Groups Shall Have Equal Rights!

There shall be equal status in the bodies of state, in the courts and in the schools for all national groups and races;

All people shall have equal right to use their own languages, and to develop their own folk culture and customs;

All national groups shall be protected by law against insults to their race and national pride;

The preaching and practice of national, race or color discrimination and contempt shall be a punishable crime;

All apartheid laws and practices shall be set aside.

The People Shall Share in the Countrys Wealth!

The national wealth of our country, the heritage of all South Africans, shall be restored to the people;

The mineral wealth beneath the soil, the banks and monopoly industry shall be transferred to the ownership of the people as a whole;

All other industry and trade shall be controlled to assist the well-being of the people;

All people shall have equal rights to trade where they choose, to manufacture and to enter all trades, crafts and professions.

The Land Shall Be Shared Among Those Who Work It!

Restrictions of land ownership on a racial basis shall be ended, and all the land redivided amongst those who work it, to banish famine and land hunger;

The state shall help the peasants with implements, seed, tractors and dams to save the soil and assist the tillers;

Freedom of movement shall be guaranteed to all who work on the land;

All shall have the right to occupy land wherever they choose;

People shall not be robbed of their cattle, and forced labor and farm prisons shall be abolished.

All Shall Be Equal Before the Law!

No one shall be imprisoned, deported or restricted without a fair trial;

No one shall be condemned by the order of any Government official;

The courts shall be representative of all the people;

Imprisonment shall be only for serious crimes against the people, and shall aim at re-education, not vengeance;

The police force and army shall be open to all on an equal basis and shall be the helpers and protectors of the people;

All laws which discriminate on grounds of race, color or belief shall be repealed.

There Shall Be Work and Security!

All who work shall be free to form trade unions, to elect their officers and to make wage agreements with their employers;

The state shall recognize the right and duty of all to work, and to draw full unemployment benefits;

Men and women of all races shall receive equal pay for equal work;

There shall be a forty-hour working week, a national minimum wage, paid annual leave, and sick leave for all workers, and maternity leave on full pay for all working mothers;

Miners, domestic workers, farm workers and civil servants shall have the same rights as all others who work;

Child labor, compound labor, the tot system and contract labor shall be abolished.

The Doors of Learning and of Culture Shall Be Opened!

The government shall discover, develop and encourage national talent for the enhancement of our cultural life;

All the cultural treasures of mankind shall be open to all, by free exchange of books, ideas and contact with other lands;

The aim of education shall be to teach the youth to love their people and their culture, to honor human brotherhood, liberty and peace;

Education shall be free, compulsory, universal and equal for all children;

Higher education and technical training shall be opened to all by means of state allowances and scholarships awarded on the basis of merit;

Adult illiteracy shall be ended by a mass state education plan;

Teachers shall have all the rights of other citizens;

The color bar in cultural life, in sport and in education shall be abolished.

There Shall Be Houses, Secuity and Comfort!

All people shall have the right to live where they choose, to be decently housed, and to bring up their families in comfort and security;

Unused housing space to be made available to the people;

Rent and prices shall be lowered, food plentiful and no one shall go hungry;

A preventive health scheme shall be run by the state;

Free medical care and hospitalization shall be provided for all, with special care for mothers and young children;

Slums shall be demolished, and new suburbs built where all have transport, roads, lighting, playing fields, creches and social centers;

The aged, the orphans, the disabled and the sick shall be cared for by the state;

Rest, leisure and recreation shall be the right of all;

Fenced locations and ghettoes shall be abolished, and laws which break up families shall be repealed.

There Shall be Peace and Friendship!

South Africa shall be a fully independent state, which respects the rights and sovereignty of all nations;

South Africa shall strive to maintain world peace and the settlement of all international disputes by negotiation-not war;

Peace and friendship amongst all our people shall be secured by upholding the equal rights, opportunities and status of all;

The people of the protectorates-Basutoland, Bechuanaland and Swaziland-shall be free to decide for themselves their own future;

The right of all the peoples of Africa to independence and self-government shall be recognized and shall be the basis of close co-operation.

Let all who love their people and their country now say, as we say here:

'THESE FREEDOMS WE WILL FIGHT FOR, SIDE BY SIDE, THROUGHOUT OUR LIVES, UNTIL WE HAVE WON OUR LIBERTY.'

Adopted at the Congress of the People, Kliptown, South Africa, on 26 June 1955 (emphases in original document).

An examination of how well South Africa has achieved these reasonable civil rights goals is provided as a scorecard in the data analysis chapter that follow below, but it is clear that the chicken in every pot-type goals outline in the Freedom Charter have not been fully realized for a majority of the nations population. While many people in the world during the mid-20th century simply took the fundamental civil rights outlined in the South African Freedom Charter for granted, this proclamation was historic for South Africa and served to set the stage for the eradication of apartheid and its associated laws that marginalized a majority of the countrys population as well as the actions that would be required thereafter to achieve these ambitious objectives for all South African people. As the research that follows below will clearly demonstrate, though, the people and government of South Africa have multiple and serious challenges that are arrayed against them that have constrained their ability to achieve these laudable outcomes.

Today, South Africa is classified as a middle-income nation that enjoys abundant natural resources, a mature legal and financial network as well as a comparatively modern telecommunications and transportation infrastructure (South Africa economy 2021). In addition, South Africa has the 17th largest stock exchange in the world and a population of 57 million people with a strong work ethic and sense of nationhood. Although South Africa experienced sustained economic growth during the early years of the 21st century, the global economic downturn in 2009 had a devastating effect on the countrys macroeconomic stability from which it has still not fully recovered (South Africa economy 2021).

The per capita GDP for South Africa has resembled a roller coaster on the downside of a precipitous drop in recent years as depicted in Figure __ below.

Figure 1. Per capita GDP for South Africa: 1960 to date

Source: South Africa GDP Per Capita 1960-2021 (2021) at https://www.macrotrends. net/countries/ZAF/south-africa/gdp-per-capita

Further compounding the problems facing South Africa at present has been an energy crisis that began in 2007 which has resulted in rolling blackouts for many residents of major cities which have adversely affected virtually all facets of economic life in the country. In addition, despite significant progress otherwise, there are still severe problems lingering from the nations apartheid era that have created limited employment opportunities for many demographic groups (South Africa economy 2020). The net result of this perfect storm of existential threats arrayed against South Africa has been an increase in the level of income inequality which defy easy solutions (Kavya and Santhakumar 2020).

The combination of a lack of ongoing investments in infrastructure and growing unemployment rates has further exacerbated South Africas efforts to recover to its pre-recession levels, and the country has one of the worlds highest Covid-19 infection rates at present with 1.5 million confirmed cases and a new variant of the virus that threatens to further disrupt the countrys economic stability going forward (Johns Hopkins Coronavirus Resource Center 2021). Taken together, the foregoing trends and issues make it clear that the political leaders and people of South Africa have a number of challenges ahead, making the need to determine the best path forward at this point in time to reduce income inequalities an especially timely and valuable enterprise.

There are a number of different ways available that can be used to determine the antecedents of current income inequality levels in South Africa. For example, the country currently suffers from one of the highest income inequality levels in the world as measured by the commonly used Gini index (South Africas inequality, 2020). For example, according to one economist, The Gini index is a measure of the distribution of income across a population. It is often used as a gauge of economic inequality, measuring income distribution or, less commonly, wealth distribution among a population (Gini index, 2021).

The International Monetary Fund (IMF) applied the Gini index to South Africas current situation and deterined that income inequalities in the country have continued to remain at inordinately high levels. In fact, beginning in the 1990s when South Africa already suffered from a high inequality level due to the apartheid laws that prevented large segments of the population from securing improved employment opportunities, the Gini index for South Africa (63.0 at present) has continued to increase in severity. In this regard and as depicted in Figure 1 below, the IMF emphasizes that, South Africas Ginian index that measures inequalityhas increased further in the early 2000s and has remained high ever since. Meanwhile, its peers have been able to make inroads in reducing inequality (South Africas inequality, 2020, p. 2).

Figure __. Increasing inequality in South Africa: 1993-2017

Besides the dismal Gini index ratings for South Africa, the countrys income distribution levels also remain severely skewed in ways that reflect significant income inequalities. Although such skewed income distribution levels are not unique to South Africa, this measure does underscore the significant disparities between the countrys richest and poorest citizens. For instance, the top 20% of the South African population possesses more than two-thirds of the nations income (68%) versus a median rate of 47% for comparable emerging nations (South Africas inequality, 2020) as shown in Figure __ below.

In addition, the bottom 40% of the South African population holds 7% of the nations income versus 16% for similarly situated emerging economies) and comparable trends can be discerned from an application of other economic measures including the top 1%s share of South Africas income (South Africas inequality, 2020).

Figure __. Wealth concentration in South Africa

As noted above, economists and social science researchers can draw on a number of different measures to assess income inequalities in a given country, including any significant regional inequities. In the case of South Africa, there are significant disparities across multiple regions of the country. For instance, slightly more than two-thirds (67.4%) of the countrys population live in urbanized areas where per capita income levels are highest, meaning rural regions suffer from severe income inequalities by comparison (South Africa people, 2021). The IMF also cites these regional disparities as evidence of the income inequalities in South Africa. In this regard, the IMF refers to Figure __ below and notes that, Significant disparities remain across regions. Income per capita in Gautengthe main economic province that com