More South Africans are better off than they were a decade ago because of a substantial increase in government grants, according to a poverty study by the bureau for economics at the University of Stellenbosch.
"The government grants have made a substantial difference, pulling a lot of people out of poverty and ensuring that those who were poor are now better off," said Servaas van der Berg, one of the authors of the study.
He told The Sunday Independent that there had been a sharp reduction in poverty, especially over the past two years, since the government had ploughed R22 billion a year into social grants to the poor.
"The expansion of the grant was so major that it's impossible for poverty not to have declined," he said.
Van der Berg added that the grants were a good part of government policy but not enough to eliminate poverty. "Jobs are key for growth," he said, adding that the study also looked at the expansion of the black middle class.
In a decade, he said, households earning more than R40 000 a year increased from 400 000 to 1,2-million.
"Affirmative action and BEE deals have contributed but not all of the 1,2-million households benefited from BEE deals. Black South Africans joined professions they were previously excluded from in senior positions," he said.
Van der Berg said welfare policy had become increasingly active in efforts to alleviate poverty through the provision of social grants.
The government has expanded the social grants system considerably, through introducing the child support grant for impoverished households containing children younger than 15 years of age. Another important development has been the deracialisation of the relatively large means-tested social old-age pension.
Research conducted locally and by the United Nations Development Programme (UNDP) found it was the most effective grant in terms of reducing the proportion of poor South Africans.
"However, it should be remembered that many poor people in this country do not qualify for social grants, underscoring the importance of private income-earning capacity for economic upliftment," Van der Berg said.
In a paper entitled "Trends in poverty and inequality since political transition", Van der Berg and his colleagues said they were struck by the speed at which poverty appears to have declined since 2002.
The report - put together by Van der Berg, Ronelle Burger, Rulof Burger, Megan Louw and Derek Yu - attributes the drop in poverty to several factors.
These include:
- The impact of the recent expansion of social grants on the poor, considering that real transfers from the government increased by some R22-billion in the past two years, an amount of more than R1 000 per poor person.
- Real remuneration rose by R53-billion between 2002 and 2004, representing an exceptionally large increase by South African standards of 11,7 percent over this period. This effect, if accurately measured in the national accounts, must have had a strongly positive influence on the incomes of many of the poor, either through higher wages or through increased employment.
- Income distribution, particularly in the black population, is relatively clustered around the poverty line. This means that small shifts in the distribution could have large impacts on poverty. The impact of grants on poverty is strongest if grants contribute predominantly to black incomes.
"But on the basis of the available evidence, there is no doubt that there has been a noticeable decline in poverty in the past few years. In summary, our analysis, using both combined data and raw survey data shows, that there has been a marked decline in poverty since 2000.
"These results are broadly consistent with the UNDP's report that the extent of poverty declined slightly over the period 1995-2002," the report said.
Van der Berg said the direction of the trend in poverty from 1993 to 2000 shown by the study is consistent with the findings of other authors who have found that poverty increased during the second half of the 1990s, although the magnitude of the increase was not consistent with the massive income decline.
"It is likely that we have slightly overestimated poverty here, given that we adopted conservative assumptions regarding the share of black income. Therefore, the true conclusion regarding the extent of poverty in South Africa may be even more optimistic."
Van der Berg said a decline in poverty meant that more black people were joining the ranks of the affluent and the middle class, citing the rise in the number of people earning more than R40 000 a year as one indicator.
During the study, the research team also looked at a lower income line in which people earned R25 000 a year. This increased from 1,1 million people in 1994 to 2,5-million a year ago.
Catherine Cross, a senior researcher at the Human Sciences Research Council involved in a study entitled "Poverty pockets in Gauteng: how migration impacts poverty", said the project raised serious questions around what shacks meant to the city, the impact of rural-to-urban migration on poverty, and tackling areas of extreme poverty in the province.
"Among the implications of the study is that delivery of housing and services alone may not be a sustainable answer to poverty," she said.
"For the government's housing strategy for addressing urban poverty to succeed, there may have to be jobs as well. And, there are indications that people may be forced out of their houses by unemployment and inadequate income, so that they wind up back in shacks."
About 98 percent of poverty pockets in the study were located in shack settlements, the usual destination of rural-to-urban in-migrants. In these pockets, an average of 72 percent of households had incomes of under R800 a month.
"People in the townships are not usually recent rural in-migrants. If there is severe poverty in places that have housing and services, then there may be significant implications for the national housing delivery policies that are the government's front-line strategy for bringing the poor into full urban citizenship."
A report produced by the World Bank, titled "Equity and Development", said equity would stimulate greater and more productive investment, which would lead to faster growth.
The report shows how wide gulfs of inequality in wealth and opportunity, both within and among nations, including South Africa, contribute to the persistence of extreme deprivation, often for a large proportion of the population.
This wastes human potential and, in many cases, can slow the pace of sustained economic growth. Pro-equity policies can bridge these gulfs, the report said. The objective is not equality of incomes, but rather to expand access of the poor to healthcare, education, jobs, capital and secure land rights.
Zwelinzima Vavi, the general secretary of Cosatu, said there had been an improvement in delivery of services. However, problems arose because of the failure of the economy to respond adequately to the needs of the poor.
"The report confirms that inequality has grown and South Africa has become worse.
"Unemployment and the quality of jobs created are also a key problem. There is a growing number of casual workers in the country, people who are getting poverty wages, and as a result are very insecure because of the nature of their tenure," he said.
Phumzile Mlambo-Ngcuka, the deputy president, responding to questions in parliament a week ago, said the government was committed to the creation of job opportunities and drastically reducing poverty.
"That is why we are working tirelessly to ensure that every government department has in place a programme that is meant for the achievement
of that goal."