Economic Inequality in South Africa

The South African economy is the largest and most innovative on the continent.  In the years leading up to the global recession of 2008, South Africa’s economy experienced consistent annual GDP growth.  South Africa has very lucrative mining, agriculture, and tourism industries which contribute to economic growth.  Over the past two decades the economy has experienced unprecedented growth, by far the largest in the nation’s history.

Many economic indicators show that South Africa’s economy is growing significantly.  Although this may be true in many respects, the nation faces severe economic inequality and disparity among racial groups.  South Africa is considered an upper-middle income country in terms of GDP and economic indicators.  In respect to social aspects such as life expectancy, disease rates, and unemployment, it is on the level of nations with very low income levels (Classification System).

The average household income for South Africa appears to be higher than other nations because of extreme inequality between blacks and whites.  As the chart below shows, over the past 30 years, whites, on average, have earned up to 12 times as much as blacks.  This accounts for the higher average income that is seen in many economic reports.

Per capita income:              1980          1985           1990             1995            2000              2005
Blacks R 3 134 R 4 479 R 5 107 R 5 423 R 6 008 R 6 704 R 7 283
Coloured R 8 184 R 8 630 R 8 822 R 9 855 R 11 404 R 12 722 R 14 126
Indians R 9 595 R 11 244 R 13 296 R 15 113 R 17 637 R 20 592 R 23 938
Whites R 39 217 R 44 242 R 46 670 R 48 370 R 51 951 R 53 840 R 62 360
Total R 9 936 R 11 626 R 12 125 R 12 385 R 12 903 R 13 436 R 14 716

Economic inequality is a problem that can be attributed to South Africa’s long history of apartheid.  The nation’s history of racial discrimination still lingers today and, unfortunately, is reflected in poverty levels between racial groups.  The figure below shows the poverty levels among different racial groups within the nation.  This is a startling illustration of the level of inequality in the economy.

                                         Census   1996  Census    2001 Community Survey 2007
Black 54.1% 53.8% 39.6%
Coloured 20.5% 21.0% 15.5%
Indian 5.4% 5.5% 5.8%
White 1.8% 1.1% 0.9%
Total 44.1% 44.6% 32.9%

A BBC podcast from earlier this month documented economic conditions within black townships around Johannesburg.  The report indicated that some townships still face unemployment rates hovering around 60%, severe poverty, and horrible living conditions.

This is a problem that the government must address.  Although income inequality may be present in many nations, it is particularly staggering in South Africa.  Whites, which represent less than 10 percent of the population, enjoy great success and live, for the most part, very comfortable lives.  Blacks which are the overwhelming majority still face poverty levels, comparable to some of the lowest income nations.  South Africa must address this dilemma in order for its economy to enjoy continued success in the future.



One Comment on “Economic Inequality in South Africa

  1. Ryan you address a serious issue here in SA. Apartheid is over yet it is economic Apartheid that is endemic. What it comes down to is education. Our leaders here are part of the lost generation who when the struggle was on they burned down the schools. Now this many years later those children now adults are in power. Without an education how are you going to run a country? The children now still have overcrowding and abhorrent school conditions. There are also very few qualified teachers. Because of the poverty many drop out to help at home or try and find a job to help the extended family. The pass fail rate is also scary. Few pass and go on to college. The rest are doomed to poverty. One would think that after the ’94 election things would have improved. This is not the case it has gotten worse! As things worsen you have a mass exodus of the rural communities to the cities. You will see this when you are in Cape Town. The Cape Flats is the colored community outside the city center. Shacks as far as you can see. it is riddled with gangs and violence/crime. One huge problem is the sheer quantity of drug addicted citizens. This is ground zero for “Tic” or methamphetamine the drug of choice. Very scary. Racism is rampant here. It is not only a white /black issue. It is amongst all the ethnic communities. I am not a racist far from it. I grew up in Chystals home town. One must remember that the white minority are the driving force of the economy. They provide the jobs. Yes it is unfair but a reality. Any Questions feel free to contact me. I experienced SA under Apartheid,during the fall of Apartheid the transition and now the aftermath.

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