Not Separate, Not Equal: Poverty and Inequality in Post-apartheid South Africa

I examine the changes in poverty and inequality in South Africa during the first 5 years following the end of the apartheid era. First, I construct new, comparable consumption aggregates for 1995 and 2000. Second, using the “cost-of basic-needs” approach, I derive lower-bound (R322, in South African rands) and upper-bound (R593) poverty lines (per capita per month in 2000 prices, adjusted for provincial cost of living differences) for South Africa. I find that real per capita household expenditures declined at the bottom end of the expenditure distribution during this period of low gross domestic product growth. The squared poverty gap significantly increased for most of qthe relevant range of poverty lines, while the headcount index remained unchanged. Inequality among the African population increased significantly. Even among subgroups of the population that experienced healthy consumption growth, such as coloureds or the Western Cape Province, the rate of poverty reduction was low because the distributional shifts were not pro-poor. I conclude that South Africa needs to grow in a way that also improves the distribution of incomes if it is to make significant progress against poverty in the short to medium run.