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04. April 2014

Four-million people lifted out of poverty in SA since 2006 – StatsSA

Statistics South Africa (StatsSA) statistician general Pali Lehohla revealed on Thursday that, based on an upper-bound poverty level (UBPL) of R620 a month, some four-million South Africans have been lifted out of poverty since 2006, leaving 45.5% of citizens, or 23-million South Africans, living below this threshold in 2011.

This data emerged from StatsSA’s Poverty Trends Report, which analysed trends in poverty and inequality between 2006 and 2011 based on money-metric data collected through the Income and Expenditure Survey (IES) 2005/06 and 2010/11, and the Living Conditions Survey (LCS) 2008/09.

The report applied three poverty line metrics; the UBPL, at R620, which signified individuals that could buy adequate food and nonfood items but had no lifestyle beyond this; the lower-bound poverty line (LBPL), at R443, which indicated individuals that could buy nonfood items, but who would be required to sacrifice food to obtain these; and the food poverty line (FPL), which was the level of consumption below which individuals were unable to buy sufficient food to provide them with an adequate diet with sufficient calories.

Fifty-four per cent of blacks were below the poverty line in 2011, compared with 27.6% of coloureds, 3.4% of Indians/Asians and only 0.8% of whites.

A growing "social safety net" in the form of social grants, real income growth, above-inflation wage increases, decelerating inflationary pressures on households, expansion of credit and the growth in formal housing were attributed to the contraction of those living in poverty.

However, Lehohla indicated that, while poverty in South Africa was declining, the “war on poverty” had not yet been won, citing that some 10.2-million, or 20.2% of the population, currently lived below the FPL.

In addition, 32.3% of the population, or roughly 16.3-million people, currently lived below the LBPL, a metric adopted by the National Planning Commission with regard to its poverty targets outlined in the National Development Plan (NDP).

“The NDP outlines the ambitious target of eliminating all poverty below the R443 metric by 2030. According to the poverty gap, roughly R31.7-billion a year will be needed to eliminate poverty at this level,” Lehohla noted.

A StatsSA statistician added at the launch of the report, in Pretoria, that the realisation of this objective would hinge on the country’s overall economic performance over the next 16 years, coupled with its ability to generate employment opportunities.

“We need a growing economy to achieve this,” she said, noting that unemployment was considered the key driver of enduring poverty in the country.

Tellingly, poverty levels had not consistently declined since 2006, but rather showed an uptick shortly after the 2008 global financial crisis before returning to a downward trajectory.

“An estimated one-million jobs were lost as a result of the crisis, following the sharp decline in demand for South Africa's exports and the drop in commodity prices. Roughly 90% of these job losses happened during the data collection period of the LCS 2008/09,” said Lehohla.

“Employment levels have recovered slowly since the crisis; by the end of the IES 2010/11, roughly 350 000 jobs had been reclaimed by the economy, mainly driven by public-sector employment growth,” he noted.

While there was still a net loss in jobs in the economy, the period saw significant above-inflation wage increases which, combined with the low interest-rate environment, supported household spending and dented poverty levels.

A contraction in the country’s poverty figures was further boosted by South Africa's social assistance system, which had expanded “tremendously” since 2000, growing from around three-million grants in 2006 to 15-million by 2011.

“Between the IES 2005/06 and IES 2010/11, the number of grant holders increased by over 46%, growing from 10.2-million in 2006 to 14.9-million in 2011, enabling South Africa’s social security system to play a huge role in the reduction of poverty levels since 2000,” Lehohla said.

He cautioned, however, that this also presented a future risk, as “social grants can’t be there forever”.

Another key factor driving a decrease in poverty levels was strong income growth in households, which recorded a 16.7% real increase in income between 2006 and 2011, showing increasing evidence that a “strong middle class” was emerging in South Africa.

While households saw their incomes growing, many households also become increasingly dependent on debt facilities to increase their spending power over the period.

According to the National Credit Regulator, credit granted nearly doubled from R53.6-billion in the third quarter of 2009 to R98.9-billion by the end of the third quarter of 2011.

“This expansion of credit since 2009 has mainly come in the form of unsecure lending. It is important to note that, while household spending was boosted by this credit extension – resulting in lower poverty levels – it does also pose a risk for many households should they default on their loans. Households which have graduated out of poverty by 2011 could easily slip back below the poverty line if their debt situation becomes unsustainable,” the report cautioned.

Decreased poverty levels were also impacted by the jump in household expenditure on housing, captured by the IES 2010/11, which was largely attributed to increases in formal housing as well as a combination of higher estimations of house values and higher rental yields.

While South Africa’s poverty position had improved over the period, Lehohla emphasised that inequality in society remained a “serious” problem.

“The Gini coefficient, which is a number between zero and one, where zero indicates total equality and one indicates total inequality, is calculated to be about 0.65 based on expenditure data and 0.69 based on income data, in 2011. These high levels of inequality are only slightly smaller than the Ginis recorded in 2006 and remain among the highest in the world,” he held.

Edited by: Tracy Hancock

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