NEDLAC FOCUS POVERTY

POVERTY AND INEQUALITY REPORT

In October 1995 Cabinet agreed that a Poverty and Inequality Report (PIR) should be prepared by South African researchers. The PIR was recently completed. It reviews the extent and nature of poverty and inequality in South Africa, assesses the current policy framework for the reduction of both, and provides guidelines on the formulation and implementation of such policy.

incd in the PIR is a review of human development in South Africa - covering issues such as education and training, health care, HIV/AIDS, welfare and crime. It also incs a review of macroeconomic policy, and an assessment of infrastructure delivery.

MAIN FINDINGS OF THE PIR

In per capita terms, South Africa is an upper-middle income country. However, most South African households experience outright poverty or vulnerability to being poor. In addition, the distribution of income and wealth in South Africa is among the most unequal in the world, and many households still have unsatisfactory access to clean water, energy, health care and education. To begin to talk about poverty, the PIR had to define "poor". The table illustrates the definitions it used.

Household poverty

Source: Julian May, Centre for Social and Development Studies, University of Natal, 1998

About 18 million people live in the poorest 40% of households and are thus classified as poor, and 10 million people live in the poorest 20% of households and are thus classified as ultra-poor.

The PIR found that most of the poor live in rural areas (45% of the population is rural). As can be seen from Table Two, the poverty share of rural areas (ie the percentage of poor individuals that live in rural areas) is 70%. The poverty rate in rural areas (ie the percentage of individuals classified as poor) is about 70%, compared with 30% in urban areas.

Rural/urban distribution of poverty

Source, Poverty and Inequality Report, 1998

Poverty is not confined to any one race group, but is concentrated among blacks, particularly Africans. The report found that that 61% of Africans and 38% of Coloureds are poor, compared with only 1% of whites and 5% of Indians. Three children in five live in poor households, and many children are exposed to public and domestic violence, malnutrition, and inconsistent parenting and schooling. Women are more likely to be poor than men: the poverty rate among female-headed households is 60%, compared with 31% for male headed households.

Government's initiatives to address poverty

Government policies and programmes are directed at the reduction of poverty and inequality. There has been an increase in the share of total government expenditure going to social services, from about 43% in 1985 to 57% in 1995/96. In the 1997-98 budget allocations, social services account for 60% of non-interest spending and 46,9% of total consolidated national and provincial expenditures. Of this allocation, education receives the largest share followed by health, social security and housing. The PIR also identified over 50 government programmes, pilot projects and grants that are relevant to the reduction of poverty and inequality. These programmes inc issues related to the welfare of children, water provision, municipal services, adult education; capacity building within the different spheres of government and job creation.

Government's comments on the PIR

Government, at the special session, was of the view that the PIR represents the most comprehensive documentation and analysis of poverty that has been undertaken in South Africa since the University of Cape Town-led Second Carnegie Inquiry into Poverty of 1984. It comprehensively covers the work of a range of government departments including Agriculture, Constitutional Development and Provincial Affairs, Education, Environment and Tourism, Finance, Health, Housing, Land Affairs, Welfare and Population Development, Water Affairs and Forestry, etc.

The PIR correctly highlights the lack of poverty and other socio-economic data as a legacy of the apartheid era, and indicates that much work still needs to be done to develop the appropriate poverty measurement tools.

There were however three main criticisms of the PIR. These were as follows:

• The PIR is supposed to be about poverty and inequality. However, it is strong on aspects of poverty, but less strong on inequality. Other than the reporting of the Gini Coefficient and the income quintiles using the 1993 SALDRU/World Bank data, there is a shortage of information on the pervasive types, sources and causes of inequality.
• Some of the data reflecting the achievements of government departments are dated.
• The PIR does not provide a strategic vision for the attainment of particular objectives.

THE SPEAK OUT ON POVERTY HEARINGS

From an NGO point of view, we have sufficient data on poverty, but such data is impersonal and faceless, and projects the poor merely as numbers. The SANGOCO hearings were therefore intended to personalise the poor, and to provide them with an opportunity to speak about their experience of poverty.

In total, ten public hearings were held in each of the nine provinces. Other participants in the hearings incd Cosatu, the Human Rights Commission, the Gender Commission, religious groups, and some sectors of business.

Some findings of the hearings

• Access to land:
• Health problems:
• Education:
• Workplace issues:
• Access to finance:
• t he land restitution process is slow and people were still without access to land.   Particularly in rural areas, people depended only on mobile clinics. There were no permanent health care facilities. This was further exacerbated by a lack of access to potable water. Pollution from factories was also identified as a cause of health problems being experienced by the poor. Children are being excluded from school for non-payment of fees. Some children have never attended school because their parents cannot afford the fees. There were reports of workplace injuries, some of which had resulted in deaths, where no compensation was paid. The poor could not access financial from finance institutions.

Recommendations arising from the hearings inc:

• A review of the GEAR strategy by government.
• The establishment of an anti-poverty budget, or poverty eradication fund through the participation of the private sector.
• The promotion of skills development initiatives targetted at the poor.
• The establishment of mechanisms through which the poor could more easily access credit.
• The scrapping of public debt.
• The establishment of information and advice centres, particularly in the rural areas.
• The establishment of partnerships to jointly eradicate poverty.

The Executive Council agreed that the secretariat would compile a summary document from the two presentations, which would inform the work that needs to be done in Nedlac.