Poverty and inequality status and drivers in South Africa

Abstract

South Africa is the most advanced, diversified, and productive economy in Africa. It is the second biggest economy in Africa after Nigeria (measured by gross domestic product). Nevertheless, it remains the most industrialized, technologically advanced, and diversified economy in Africa. The country is classified as an uppermiddle-income economy, one of only eight African countries. Despite these positive attributes, South Africa is a dual economy with one of the highest and most obstinate inequality rates in the world, with a consumption expenditure Gini coefficient of 0.63 in 2023. This is a legacy of racial discrimination that characterised the colonial and apartheid eras. Today, high poverty and inequality are perpetuated by a legacy of exclusion and the nature of economic growth, which is not generating sufficient jobs. Inequality in wealth is even higher, and intergenerational mobility is low, meaning poverty and inequalities are passed down from generation to generation with little change over time.