File photo: David Ritchie

JOHANNESBURG - South Africa’s weak economic growth, high unemployment, greater household dependency on credit and policy uncertainty condemned 30.4 million into poverty between 2011 and 2015. 

Figures released by Statistics South Africa (Stats SA) yesterday showed that more than 13 million South Africa fell into extreme poverty category living on less than R441 per month, up from 11m people in 2011

It said it used the upper-bound poverty line (UBPL) of R992 per person per month at 2015 prices to arrive at its estimates. However, the agency said the country’s ‘social wage’ has had a major impact on poverty, with the South African Multidimensional Poverty Index (SAMPI) projecting that it fell to 8 percent from 17.9 percent in 2001 and declined further to 7 percent by 2016. 

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Multidimensional poverty is made up of several factors that constitute poor people's experience of deprivation – such as poor health, lack of education and inadequate living standard. Statistician general Pali Lehohla said while the SAMPI data was encouraging, more still needed to be done to fight poverty. 

“Unfortunately, while households gained better access to services and facilities, their financial well-being suffered between 2011 and 2015 due to a combination of international and domestic factors such as stagnant economic growth, increasing unemployment, higher prices, poor consumer confidence, an unstable policy environment, and low commodity prices,” Lehohla said. Stats SA said the number of people living in abject poverty eased to nearly 13,8 million in 2015, down from a peak of 16.7 million recorded in 2009.

Investec chief economist Annabel Bishop said South Africa would only break poverty if business confidence improved and the economy grew. “South Africa needs substantially faster economic growth of 5-7 percent, but this acceleration requires the effective, efficient and timely institution of business friendly policies and plans (i.e. ones that sustainably raise business and consumer confidence, and so economic growth) in a cost effective manner,” Bishop said.  

The country’s employment has peaked to a 14 year high with little signs abating soon. The Rand Merchant Bank (RMB) and Bureau for Economic Research  Business Confidence index (BCI) for the second quarter also said business confidence had plunged  to levels last seen during the 2009 global financial crisis.  The government’s National Development Plan (NDP) target is to reduce poverty-induced hunger to 0 percent by 2030.  

Lehohla said the household debt-to-disposable income ratio increased from 54.1 percent in 2000 to 76.9 percent in 2015 peaking to 87.7 percent in 2008.  “The increase in 2008 was likely due to the fact that there was a global economic recession and households spent more than they could afford. 

During this time households resorted to debt as a means of survival,” Lehohla said. “A steady decline was observed from 2008 until 2015; although debt-to-disposable income was decreasing, the level of debt is still very high and problematic to the financial stability of households.”

- BUSINESS REPORT