Important note: Information in this article was accurate in 2003. The state of the art may have changed since the publication date.

Reuters NewMedia - Tuesday January 14, 2003
Ed Stoddard

"We voted ANC...They said we're going to get the better life!" shouted Sophie Morweng, a 52-year-old domestic worker, as residents of the teeming township of Alexandra north of Johannesburg protested against the forced removal of families for non-payment of rent.

"This time I think I could even vote for a white man! He can help me," she said as tears welled in her eyes.

Her tirade was cut short by a well-aimed petrol bomb, which briefly engulfed the exterior of a police car in flames and sent the crowd scattering.

The rage of Morweng and many like her will not be extinguished so easily.

Almost nine years after the end of white rule, huge income disparities still persist in Nelson Mandela's "Rainbow Nation."

Disturbingly, recent research by Statistics South Africa suggests that these inequalities of income -- which still run largely but not exclusively along racial lines -- may actually be growing.

This bodes ill in a country where poverty and inequality are seen as major factors behind terrifying rates of violent crime.

Unemployment is another, estimated officially at 30 percent.

Analysts point to a host of reasons for this depressing state of affairs, including company restructuring, tight-fisted fiscal policies, and the impact of AIDS on poor households.

These trends have hit the poor hard, while the opening of the economy has given white-owned capital opportunities on the global stage that were previously denied it.

All is not bleak and analysts say the government deserves a lot of credit for its attempts to alleviate poverty by providing housing and water to the poor.

Since the end of white-minority rule, South Africa has hooked up about 10 million people -- around a quarter of the population -- to clean drinking water. About seven million more people need water piped to them and the government hopes to give everyone access to clean water by 2008.

But alleviating the harsher edges of poverty is not the same as redistributing wealth -- although it can be a step in that direction if people's health improves or if women, for example, don't have to waste hours each day fetching water.

The Stats SA study produces data showing that the poor, the vast majority of whom are black, ar getting poorer. And it indicates that the incomes of white families have actually risen.

POORER AND RICHER

"African-headed households were, on average, earning less in 2000 than in 1995," says the study on household income and expenditure patterns.

It says that in October 1995, the average annual household income for black or African-headed households was 23,000 rand.

When raised to 2000 market prices, that figure rose to 32,000 rand, considerably above the actual average household income of 26,000 rand. Blacks comprise about 75 percent of South Africa's 43 million people.

Indian families also got poorer though they remained well ahead of back families.

And the white-minority, which feared it would lose ground in the new South Africa, appears to have actually become richer under the new political order.

According to the study, the average annual income for white-headed households in 2000 was 158,000 rand against 137,000 rand in 1995, adjusted to 2000 prices.

So-called mixed race, or Coloured-headed households, were also better off, with average income at 51,000 rand in 2000 versus 43,000 rand in 1995 at adjusted prices.

The poor have suffered some additional blows since 2000.

Consumer inflation has been spiralling, partly because of the rand's 2001 plunge. Headline inflation hit 14.5 percent in the year to November, the same rate as in October, which was its highest since July 1992.

The poor, who spend much of their meagre incomes on feeding themselves and their families, bore the brunt of this trend, as food inflation rose by 18.4 percent in the year to November.

There have also been widening differences within racial groups, with the emergence of a small black middle class.

Within the white community, the poor have seen the removal of the state support they once enjoyed. Whites begging at traffic lights are now a common sight in major cities.

PAINFUL TRANSITION

Analysts point to a number of reasons to explain these trends, with South Africa's transition from global pariah to partner in the global economy topping the list.

"The main reason why income disparities have been getting worse is because we've had so-called jobless growth," said

Dennis Dykes, chief economist at the banking group Nedcor.

"Companies have been rationalising and cutting back and gearing up for global competition," he said.

South Africa's white-dominated economy was long shielded from international competition and, while the government of the day had an almost hysterical hostility to communism and socialism, the economy was heavily state-run and subsidised.

The transition to a more competitive model has cost the economy millions of jobs, according to the policy think tank Naledi.

"Officially, since 1995, the official number of unemployed people has doubled from 16 percent to 30 percent, or about two million to four million," said Naledi director Ravi Naidoo.

"But the figure excludes (those) who have given up looking so it is probably closer to 41 percent," he said.

And in an era of "jobless growth", economic expansion alone may not be enough to create jobs in a country with this much unemployment and which must absorb hundreds of thousands of school leavers into its workforce each year.

South Africa's growth rate is around three percent.

Some analysts argue that labour-intensive sectors such as tourism and construction need to expand, especially given the fact that much of South Africa's labour force is unskilled.

Another key factor behind persistent or growing inequality lies in the country's HIV/AIDS pandemic, which infects almost five million people, or one in nine in the country, and is taking a disproportionate toll on lower-income households.

The pandemic is killing off breadwinners and leaving an army of orphans in its wake, deepening poverty.

GOV'T POLICIES TARGETED

Critics -- who include the government's left-wing allies, the Congress of South African Trade Unions and the local Communist Party -- also say the ANC's prudent fiscal policies, tailored to woo investment, have failed to provide the necessary foundation for a redistributive welfare state.

The government argues that short-term pain, including its plans to trim a bloated civil service, maintain low debt levels and privatise key assets such as Telkom, will pay big dividends later -- an argument used by many economies in transition in Eastern Europe and the former Soviet Union.

Liberalisation certainly has the potential to create jobs and stoke growth in the longer term while stabilising the economy and exchange rate -- which it has done in some former communist countries.

But on the streets of Alexandra and other predominately black townships, this kind of talk seems academic and will do little to douse resentment.

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