On the back of the World Bank’s bleak report on South Africa’s inequality and poverty, President Cyril Ramaphosa has promised to galvanise his administration into action to change the fortunes of the country’s unemployed and poor.
The report by the World Bank showed that inequality in South Africa had deepened since the dawn of democracy in 1994. The report, which assessed poverty and inequality from 1994 to 2015, also revealed that one in four South Africans were considered middle class or upwards.
Ramaphosa, speaking on Friday in Esikhaleni, KwaZulu-Natal, where he had attended a Good Friday service, said the World Bank Report would invigorate his administration to work harder to create more employment and investment opportunities to decrease the levels of unemployment and poverty in the country.
“We’re always concerned about the increased levels of poverty amongst our people. The World Bank report does not come as a surprise because we did have a similar report last year which indicated that the poverty levels have gone up.
“Now that is a matter of great concern to us as government because our job is to make sure that we give South Africans a better life. We increase the levels of employment and we decrease the
levels of inequality and poverty in our country,” said Ramaphosa.
The report disclosed that 75% of South Africans had slipped into poverty at least once between 2008 and 2015. It also disclosed that 40% of South Africans lived below the poverty line in 2015, whereas 36.4% lived below the poverty line in 2011.
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Ramaphosa said the fight to end inequality and poverty needed a commitment from the government to redouble its efforts and pay more attention on what needs to be done in a much more efficient manner to increase the levels of focus on the economy and get more people into jobs.
“As you saw last week we launched the Youth Employment Service. We are going to be increasing the pace and the tempo of increasing investments in our country both in the public and private sector because it is through that we will be able to increase more people in employment,” said Ramaphosa.
Professor Mike Morris, from UCT’s School of Economics, said making headway in fighting inequality and poverty completely depended on whether or not Ramaphosa’s administration frees itself from corruption.
“It also depends on whether it increases the efficiency of its policy implementation process because we’ve got lots of good policies but our problem is that institutionally there’s a major gap between the institutions, corruption and stability to affect the policies,” Morris said.
He said the question the government should ask itself is how it can start reversing what occurred over the past decade of former president Jacob Zuma’s rule.
“From that perspective it’s still too early to say, but we’ve found things reasonably good with Ramaphosa and (Pravin) Gordhan,” Morris said.
George Glynos, director and chief economist at ETM Analysts, said Ramaphosa
had been a breath of fresh air so far and he understands business, labour and government well.
“Those are your three main protagonists in driving an economy one way or another. The findings of the report don’t surprise me at all, because we have many structural impediments in this country and I do not believe that this current government with its ideology and economic philosophies is equipped to tackle this problem properly,” Glynos said.
He said there was a lot of good intentions within certain areas of government but the ideological position was designed in a manner that allowed it to get in the way of the problem of inequality and poverty.
“We’ve had this government in power now for 24 years and in those years we’ve only seen the gap between rich and poor widen. That is a clear function of trying to force a particular outcome rather than working with the forces of the general capitalist economy to try and achieve the same objectives,” Glynos said.
He said the government contained many socialists who wanted to regulate the private sector to try to force a particular outcome on the private sector and who firmly believe that the government should be more interventionist in the private sector.
“As a result of that, they’ve presided over a huge expansion in the number of state-owned enterprises, many of which are running extremely inefficiently. They’ve presided over a government sector that has grown much faster than the economy has grown.”