30m caught in poverty trap
Weak economy, unemployment, debt weigh
SOUTH Africa’s weak economic growth, high unemployment, greater household dependency on credit and policy uncertainty condemned 30.4 million to poverty between 2011 and 2015.
Figures released by Statistics SA (Stats SA) yesterday showed more than 13 million South Africa fell into the extreme poverty category living on less than R441 a month, up from 1 million people in 2011.
It said it used the upperbound poverty line (UBPL) of R992 a person per month at 2015 prices to arrive at its estimates. But the agency said the country’s “social wage” had a major impact on poverty, with the SA Multidimensional Poverty Index (SAMPI) projecting it fell to 8 percent from 17.9 percent in 2001 and declined to 7 percent last year.
Multidimensional poverty is made up of several factors that constitute poor people’s experience of deprivation such as poor health, a lack of education and inadequate living standards.
Statistician-general Pali Lehohla said while the data was encouraging, more needed to be done to fight poverty. “Unfortunately, while households gained better access to services and facilities, their financial well-being suffered between 2011 and 2015 because of a combination of factors such as stagnant economic growth, increasing unemployment, higher prices, poor consumer confidence, an unstable policy environment, and low commodity prices,” Lehohla said.
Stats SA said the number of people living in abject poverty eased to nearly 13.8 million in 2015, down from a peak of 16.7 million in 2009.
Investec chief economist Annabel Bishop said the country would only win the poverty battle if business confidence improved and the economy grew. “South Africa needs substantially faster economic growth of 5-7 percent but this acceleration requires the effective, efficient and timely institution of business-friendly policies and plans (ones that sustainably raise business and consumer confidence, and so economic growth) in a costeffective manner,” Bishop said.
The country’s employment peaked to a 14-year high with little signs of abating. The Rand Merchant Bank and Bureau for Economic Research Business confidence index for the second quarter also said business confidence had plunged to levels last seen during the 2009 financial crisis.
The government’s National Development Plan target is to reduce poverty-induced hunger to zero by 2030.
Lehohla said the household debt-to-disposable income ratio increased from 54.1 percent in 2000 to 76.9 percent in 2015, peaking to 87.7 percent in 2008, likely due to the fact that there was a global economic recession and households spent more than they could afford.
“A steady decline was observed from 2008 until 2015. Although debt-to-disposable income was decreasing, the level of debt is still very high and problematic to the financial stability of households,” said Lehohla.