South Africa is the world’s most unequal country according to the World Bank. A key driver is the unequal opportunities inherited from the apartheid, while inequality has actually increased since 1994.
South Africa is the world’s most unequal country according to the World Bank.
The World Bank published the report “Inequality in Southern Africa” on March 7 having analyzed the sources of inequality in the Southern African Customs Union (SACU) comprising Botswana, Eswatini, Lesotho, Namibia, and South Africa.
SACU is the world’s most unequal region. South Africa, the largest country of SACU, is also the most unequal of 164 countries in the World Bank’s database. Research was produced before the COVID-19 pandemic which likely worsened the situation.
South Africa in 2018 had a Gini coefficient of consumption (or income) per capita of 67, the highest in the world. All SACU countries are part of the 20% most unequal countries.
While there has been some progress in recent years, inequality has remained almost stagnant in the region, the World Bank noted. Between 2008 and 2018, South Africa’s Gini coefficient, an index measuring inequality, only improved from 68 to 67.
Yet, South Africa has one of the most dynamic economies in the region, despite facing extremely high unemployment rates recently.
But compared to countries with similar income levels, the poverty rate is twice as high in South Africa. Based on the international poverty line of $1.90 per person per day, in 2011 purchasing power parity (PPP) terms, the poverty rate in South Africa is nearly 20%.
‘The legacy of colonialism and apartheid continues to reinforce inequality of outcomes’
A factor of inequality in South Africa is the lack of middle incomers. Wages are either high or low. “Highly remunerated job opportunities are extremely difficult to access, and once people attain such positions, they are very unlikely to relinquish them.”
Furthermore, wealth inequality is even higher than income inequality, suggesting the issue is deeply rooted in South Africa. It was recently estimated that the top 10% of the population held 71% of the wealth, whereas the bottom 60% held only 7%. In contrast, figures for OECD members were 50% and 13% respectively. And 10% of the South African population owns 81% of financial assets.
Inequality can arise at different stages. The first source of inequality is the difference of opportunity before any income distribution, which arises from circumstances at birth or family background.
And in South Africa, the driver of unequal pre-income distribution is the legacy of apartheid almost 30 years after it was abolished. “The legacy of colonialism and apartheid, rooted in racial and spatial segregation, continues to reinforce inequality of outcomes,” the World Bank noted.
Inequality has actually increased since the end of the apartheid in 1994.
And the fact that inherited circumstances over which an individual has little or no control drive overall inequality – and their contribution has increased in recent years – is the main concern for the World Bank.
South Africa has also a historically high inequality of land ownership, along with Namibia. In Namibia, 70% of commercial agricultural land “still belongs to Namibians of European descent,” the World Bank said.
Gender-based inequality is also high in South Africa. Earning gap for females reaches 38%, higher than in Botswana, Eswatini, Namibia and Lesotho.