South Africa is the most unequal country in the world, having seen a widening gap between the haves and have-nots since the end of apartheid in 1994, according to the World Bank.
The bank’s report, titled Inequality in Southern Africa: An Assessment of the Southern African Customs Union (Sacu), released this week, shows that the union is the world’s most unequal region with a consumption inequality over 40 percent higher than the averages for both sub-Saharan Africa and other upper-middle-income countries, the report found.
South Africa is the largest country in Sacu – which also includes Botswana, Eswatini, Lesotho, and Namibia – and ranks first (or worst) among 164 countries worldwide on the World Bank’s global poverty database. Botswana, Eswatini and Namibia rate among the 15 most unequal countries, while Lesotho remains in the top 20, despite making improvements in recent years.
The report found that consumption inequality per capita in the Sacu region declined from 68.7 during the 2000s to 66.5 in 2016. Botswana and Lesotho recorded the most declines while inequality in Eswatini and South Africa remained relatively stagnant. Consumption inequality is measured by the Gini coefficient: a statistical distribution of welfare indicators commonly used to measure inequality, such as income or consumption.
The World Bank report notes South Africa is characterised by “high wealth inequality and economic polarisation (particularly across labour markets)”. Wealth inequality is higher than income inequality, with estimates showing that the top 10% of the population hold 71% of its wealth, whereas the bottom 60% hold only 7% percent. This compares with 50% percent and 13 percent respectively for member countries of the Organisation for Economic Co-operation and Development (OECD).
Further to this, wage inequality inflated by more than 10 percent between 1995 and 2015 when the Gini coefficient for wages rose from 58 to 69.
“We know from this report that inherited circumstances over which an individual has little or no control drive overall inequality, and that despite Sacu countries undertaking some of the most redistributive spendings in the world, particularly on education and health, inequality remains extremely high,” said World Bank director for Sacu Marie Francoise Marie-Nelly.
Inequality of opportunity
The report says at least one-fifth of overall inequality in Sacu is explained by inequality of opportunity. In all countries in the union except Namibia, the contribution of inequality of opportunity to overall inequality has increased over the last two decades.
Location contributes more to inequality of opportunity than other individual circumstances, with Sacu countries’ history of spatial segregation still evident in geography and rural-urban divides.
“In South Africa, the legacy of colonialism and apartheid, rooted in racial and spatial segregation, continues to reinforce inequality of outcomes,” the report found.
It attributes 47.7% of overall inequality in consumption per capita to inequality of opportunity “mostly because of race, which contributes around 38.9 percent to overall inequality”.
For Sacu as a whole, Marie-Nelly says: “Levelling the playing field at birth through more inclusive delivery of quality education, health, and basic services is critical to reducing inequality in the region.”
The report suggests “equalising” opportunities by improving access to health, education, and basic public services to poor and affluent people in rural and urban areas.
“Although Sacu has made progress in increasing access to basic public services, the remaining gaps entrench inequality of opportunity,” it states.