Distributional Implications of Halving Poverty in South Africa

The South African government has set as a policy objective the halving of poverty by 2014, although the meaning of this goal has not yet been defined. This article frames government’s stated target of halving poverty by 2014 in terms of specific measures of the poverty gap and poverty headcount ratio, using newly released income and expenditure survey data. With the poverty line as defined here, approximately half the South African population falls below the poverty line. Despite this, the aggregate poverty gap is surprisingly only about 3% of GDP. Projections of poverty in 2014 under various growth scenarios indicate that growth alone will be insufficient to halve poverty by that time, and that any worsening of distribution will put the target of halving poverty by 2014 beyond reach. However, projecting the effects of a range of growth and distributional scenarios indicate that halving poverty appears feasible with moderate growth rates and fairly mild pro-poor distributional change. The results are indicative as to the scale of distributional changes necessary to halve poverty under various growth scenarios.