South Africa’s stark economic disparities: Why we are the most unequal country on earth

Inequality in South Africa is rife, with millions living in poverty and informal settlements like this one, while a small percentage enjoy the country’s wealth. File Picture: African News Agency (ANA)

Inequality in South Africa is rife, with millions living in poverty and informal settlements like this one, while a small percentage enjoy the country’s wealth. File Picture: African News Agency (ANA)

Published Aug 30, 2023

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South Africa, a nation of immense wealth and potential, continues to grapple with profound economic disparities and continues to carry with it the unwanted title of “the most unequal country in the world”.

A report by Content Analyst Accountant, Melisa Murialdo of Quotes Advisor has reaffirmed South Africa has the most unequal country in the world, with the World Bank's unsettling revelation that the top 10% of South Africans control a staggering 80.6% of the nation's financial assets paints a grim picture.

This is juxtaposed against a poverty rate of 20%, nearly twice the average of nations with comparable income levels.

The report, compiled by Murialdo is sourced from among others, the World Bank, Stats SA and the Department of Human Settlements.

According to the report, South Africa's historical legacy of colonialism and apartheid, characterised by racial and spatial segregation, has left an indelible mark on its socio-economic landscape.

Distribution of South Africa’s population.

The World Bank's study, 'Inequalities in Southern Africa', underscores that racial disparities account for 41% of income inequality and 30% of educational disparities.

The stark contrast between opulent cityscapes in Cape Town and Johannesburg and the sprawling townships on their peripheries is a testament to this divide.

The Gini index, a measure of income distribution, ranks South Africa as the world's most unequal country, with a score of 63%. South Africa’s income disparities have only deepened over time. The top one percent of earners pocket nearly 20% of the income, while the top 10% take a whopping 65%.

South Africa’s inequality and how we rank with the rest of the world.

This leaves a meagre 35% for the remaining 90% of South African earners.

Urban townships, home to 24% of the population, are emblematic of the country's socio-economic divide. Mamelodi, a product of apartheid policies, is a poignant example.

The housing crisis further exacerbates these challenges.

While data varies, it's estimated that anywhere from 35,700 to 200,000 people are homeless, with a significant portion hailing from the Gauteng province.

The Department of Human Settlements has earmarked over R167 million for the construction of 930 low-cost homes in the Eastern Cape's Matatiele district. However, the pace of construction lags behind the pressing demand.

South Africa’s unemployment rate.

Housing advocacy group, Ndifuna Ukwazi, highlights the mismatch between Cape Town's real estate market and the housing needs of its residents.

“While 76% of Cape Town’s population earn below R22,000 per month, only 34% of all formal homes cater to households in this income range,” they explained.

The city's social housing programme, while commendable, has been inconsistent in recent years. The National Association of Social Housing Organisations (NASHO) cites the current grant financing model as a significant impediment.

Inflation, another critical concern, saw the Consumer Price Index (CPI) drop to its lowest in two years at 4.7%. However, certain essential items like fish, milk, eggs, and sugar bucked this trend with higher inflation rates.

Food items that cost more in 2023.

South Africa’s unemployment rate, as per the Quarterly Labour Force Survey (QLFS), stands at a concerning 32.6%. Youth unemployment is even more alarming at 45.3%. While there have been employment gains in the formal sector, private households, and agriculture, the informal sector saw a decline.

South Africa's socio-economic landscape is a tale of two worlds, the report reveals. While the nation boasts immense wealth and potential, the majority of its citizens grapple with economic hardships, a testament to the deep-rooted inequalities that persist.

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