HALVING POVERTY IN SOUTH AFRICA: GROWTH AND DISTRIBUTIONAL ASPECT
Achieving the United Nations 2000 millennium development goals (MDGs) has been a preoccupation of many African countries. The most important MDG is arguably MDG1: halving poverty by 2015, from its level in 1990. Might economic growth alone achieve this goal? As the extant literature amply demonstrates, the role of inequality in reducing poverty cannot be underestimated, though the impact differs considerably across regions globally (Fosu, 2010c). Furthermore, South Africa is among the most unequal countries in Africa, suggesting that the poverty-decreasing effect of growth might be minimal (Fosu, 2009, 2010a, 2010b, 2010c, 2014). Nonetheless, using the $2.00 poverty line, Tregenna (this volume) finds that achieving MDG1 is feasible for South Africa, provided the country maintains moderate growth rates and a slight pro-poor improvement in income distribution.
As many African countries are off track in their quest to meet MDG1, the South African case study is instructive, despite the fact that the country’s much higher average income might facilitate its ability to meet MDG1 (Fosu 2014). Indeed, South Africa reduced the $1.25 headcount poverty rate from 24.3 per cent in 1993 to 13.8 per cent in 2008, despite the rise of its Gini coefficient from 59.3 per cent to 63.1 per cent over the same period (World Bank 2013b). Thus, the country has virtually achieved MDG1, notwithstanding South Africa’s relatively large and increasing levels of inequality. This evidence then seems to bolster the view that growth, relative to income distribution, should constitute the primary policy instrument for poverty reduction (Dollar and Kraay 2002), and even more so for African economies generally, notwithstanding country-specific fixed effects (Fosu 2009). For a higher poverty line, though, it appears from the Tregenna evidence that growth inclusiveness is crucial for further significant progress on poverty in South Africa.