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Letter of the President
16 November, 2007
In my last Letter, (Vol 7 No 44), I argued that we needed to oppose the pernicious tendency in our country of the falsification of reality to advance the particular agendas of forces that are opposed to our movement and the national democratic revolution. I argued that we faced a permanent task to chain the canards.
When I wrote the Letter I did not know that there was yet another canard in the making, which was let loose three days after the publication of the last edition of this journal. This time the source of the canard was the South African Institute of Race Relations (SAIRR), which made the startling claim that the masses of our people are now poorer than they were in 1996.
In last week’s Letter I said: “Or take other canards that emanate from people who are supposedly members of our democratic movement. These range from the absurd assertion that the masses of our people are poorer now than they were during the apartheid period...” In essence the SAIRR repeats this absurd assertion.
SAIRR on poverty
On Monday 12 November, the SAIRR published a report which claimed that “Using the globally accepted measure of poverty, of people living on less than one US dollar per day, poverty has increased in South Africa, both in absolute numbers and proportionally. The proportion of South Africans living on less than $1/day doubled between 1996 and 2005.”
It said that 4.2 million people were living on less than $1 (about R6.74) a day in 2005, up from 1.9 million in 1996. The SAIRR researcher Marius Roodt said, “It is going to take a long time to get rid of the poverty. The government’s social grants are helping, but to say poverty will be halved in seven years is a bit ambitious.”
Mid-term Review
On 21 June, 2007, the State Presidency published the “Development Indicators Mid-Term Review”. Among others, these Indicators also reflect on the issue of poverty.
On the issue of per capita income, the Review says, “Since 2002, strong overall income growth, including the expansion of social grants, resulted in the rise of the income of the poorest 10 and 20 per cent of the population. However, the rate of improvement of income for the poor has not matched that of the rich, and thus while income poverty is declining, inequality has not been reduced.”
The Review says that per capita real income for the poorest 10% in 1996 was R522. This had risen to R734 by 2006. The figures for the poorest 20% were R758 and R1,051.
The Review also includes a Poverty Headcount Index. In this regard it says, “This index measures the number of people living below a poverty line of R3,000 per capita per annum (in 2000 constant Rand). The strong decline in the headcount poverty rate (PO) after 2001 is mainly due to the expansion of social grants, and more jobs created in the economy.” The percentage of people living below this poverty line declined from 53.1% in 1996 to 43.2% in 2006.
The Review also includes a Poverty Gap Index (P1) and a Squared Poverty Gap Index (P2). In this regard, the Review says: “The P1 measures the depth of income poverty compared to a poverty line of R3,000 per capita per annum (in 2000 constant Rand). The declining P1 shows that incomes and/or expenditure of those in poverty improved, bringing the very poor closer to the poverty line.
“In addition, the declining P2 shows that the severity of poverty has been reduced, especially since 2002.” The P1 figures for 1996 and 2006 showing this decline are 0.26 and 0.20 respectively. The P2 figures are 0.16 and 0.12.
The Review also includes a Living Standards Measure (LSM). In this regard the document says, “Between 2000 and 2005, the LSM data shows a significant decrease of the number of people in the poorest categories (LSM 1-3), with a marked reduction of the number of people living in LSM 1. The number of people living in LSM 4-10 shows an increase and in part reflects the growth of the middle classes.”
The LSM 1 figures for 2001/02 and 2005/06 reflecting average monthly incomes are R742 and R999. The relevant LSM 2 figures are R883 and R1,214. The similar figures for LSM 3 are R1,092 and R1,521.
The Review also contains figures indicating the extent of Social-Assistance Support extended to deserving members of our population. In this regard, the Review says:
“At present, nearly 12 million people receive social grants, and 3.2 per cent of the GDP is spent on social grant assistance. The increase in the number of beneficiaries over the years has been as a result of increased government efforts to reach out to those people that are eligible to receive social assistance grants.
“The strong growth in grants in aid, care dependency grant and disability grant, is a reflection of government’s programme of social assistance and poverty reduction for persons with disabilities. The strong growth in the uptake of grants has stabilised over the past two years as the majority of eligible beneficiaries have been registered.” The total number of recipients in 1999 was 2,587,373. The number in 2006 had increased to 10,980,654.
With regard to the information supplied in the “Development Indicators Mid-Term Review”, I must underline that the Presidency relied on studies carried out by independent economists and institutions not connected to or commissioned by the Government. The figures for the grants were drawn from the government Social Security Pension System and the National Treasury. I mention these facts to emphasise the point that the Presidency did not falsify the figures about poverty, to hide our reality.
Push back the frontiers of poverty
Our movement and Government have taken a leading position in drawing attention to and focusing on the challenge of fighting poverty. This struggle served as the central element in the Manifesto we presented to the nation during the 2004 and 2006 elections precisely because we recognise the critical challenge we face to alleviate and eradicate poverty.
Government programmes have also focused on this important challenge. To indicate its seriousness in this regard, the Government is working to elaborate poverty indices as well as further refine its integrated offensive against poverty, reaching down to individual households, to improve the effectiveness of our work in this regard.
Our approach towards this vitally important matter is informed by what we said in the Reconstruction and Development Programme (RDP) shortly before the historic elections of 1994. The RDP said: “It is not merely the lack of income which determines poverty. An enormous proportion of very basic needs are presently unmet. In attacking poverty and deprivation, the RDP aims to set South Africa firmly on the road to eliminating hunger, providing land and housing to all our people, providing access to safe water and sanitation for all, ensuring the availability of affordable and sustainable energy sources, eliminating illiteracy, raising the quality of education and training for children and adults, protecting the environment, and improving our health services and making them accessible to all.”
For its part our official statistics agency, StatsSA says that poverty should be seen “in a broader perspective than merely the extent of low income or low expenditure in the country. It is seen here as the denial of opportunities and choices most basic to human development to lead a long, healthy, creative life and to enjoy a decent standard of living, freedom, dignity, self-esteem and respect from others.”
The SAIRR relies on a definition of poverty that is radically different from the one spelt out in the RDP and described by StatsSA. Necessarily, this produces a distortion of our reality which amounts to a falsification of this reality. Evidently the SAIRR depended for its figures on “Global Insight Southern Africa, Regional Economic Focus, 2006.” The SAIRR document says on the page on which it carries the figures that suggest that poverty has increased over the last ten years:
“People in poverty are defined as those living in households with incomes less than the poverty income. Poverty income varies according to household size – the larger the household, the larger the income required to keep its members out of poverty. Poverty income levels ranged from R871 per month for one individual, to R3,314 for a household of eight members or more in 2005.”
Fact and fiction
Last year the SAIRR trotted out the same canard that it broadcast to the country on 12 November. On that occasion Dr Vusi Gumede of the Policy Coordination and Advisory Services in the Presidency responded with an article that was published by the “Star” newspaper on 13 April 2006. We reproduce this article immediately below, in full, because it exposes even the canard told this year by the SAIRR. Dr Gumede wrote:
“The annual South Africa Survey by the South African Institute of Race Relations (SAIRR) contains much useful information on social dynamics within our society. But in some respects the authors get it wrong, and miss the extent to which we have as a country have come a long way. The latest survey just released is a case in point.
“In a statement released by the SAIRR to profile the publication, headlined ‘Poor left behind as black middle class grows’, the SAIRR explains that ‘levels of inequality measured by the gini coefficient, had increased for all race groups except whites since 1996.’
“Barely acknowledging this to be a consequence of many black people breaking through the glass ceiling of apartheid, the statement expresses concern that ‘such growth has been accompanied by an increase in poverty among the lowest income groups’.
“Besides the issue of relativity – where growth in inequality does not necessarily translate into the poor getting poorer – recent academic studies show that in fact there has been a marked reduction in poverty, especially since about 2000.
“In terms of methodology, the use of mainly money-metric measures to gauge poverty and inequality has been widely questioned by amongst others, renowned scholars such as Amartya Sen and Nanak Kwakwane. Yet even within the narrow money-metric approach of income poverty, SAIRR seems to get it wrong.
“Statistics SA releases various data series on income and expenditure, series that many researchers utilise in calculating the extent of income poverty and inequality. Notably, the SAIRR report does not refer to StatsSA datasets. Though such data has some debated problems, it is widely used.
“Despite the fact that numbers and proportions of income-poor people shows a clear decline, the SAIRR report says that ‘people living in poverty have increased, peaking in 2002’. In fact, the report shows and says that the rate of poverty ‘decreased by 0,7% between 1997 and 2002’.
“The critical point however is that there are various dimensions of poverty – apart from income – all of which are important. We should take into account not only the income at people's disposal but also the ‘social wage’, namely the value of those services provided by the state which enhance people's lives – such as education, health, housing and free basic services. The ten-year review of government demonstrated that the impact of social spending substantially reduced inequality.
“More recent studies also, contrary to the conclusion of the SAIRR report, point to the fact that poverty has declined. A study by Haroon Bhorat, Pranushka Naidoo and Carlene van der Westhuizen analysing welfare shifts between 1993 and 2004 indicates, for example, that access to formal housing grew by 42% and 34% for income deciles 1 and 2 between 1993 and 2004, and 21% and 16% for deciles 3 and 4. Access to piped water increased by 187% in decile 1, while the growth was 31% in the 4th decile. Access to electricity for lighting for the poorest households – those in decile 1 – grew by a phenomenal 578%. These statistics make very clear that delivery of these services has been strongly pro-poor.
“But perhaps the most succinct measure of our country's performance is the dramatic decline since 1994 in the levels of asset and service poverty as well as asset and service inequality. While in 1993, 40% of households were asset- (and service-) poor, by 2004 this figure had been almost halved to 22%. While the level of asset- and service-inequality (measured by the Gini coefficient) was 0.32 in 1993, by 2004 it stood at 0.24.
“A separate study by Servaas van der Berg, Ronelle Burger, Rulof Burger, Megan Louw and Derek Yu finds that poverty has stabilised since the political transition and decreased sharply since 2000.
“Utilising a lower poverty line set at R250 household income per month or R3,000 per year in 2000 Rands, they conclude that in more recent years, the proportion of people living in poverty appears to have declined substantially – from 18.5-million in 2000 to 15.4-million in 2004. Those who are not poor increased from 26.2-million in 2000 to 31-million in 2004.
“The study also shows that the per capita real incomes of people in the poorest two population quintiles rose by more than 30% during 2000-2004. The authors conclude that wherever you draw the income poverty line in the range from R2,000 to R4,000 per capita income per annum, poverty decreased sharply since about 2002 after a modest rise at the end of the previous decade. They argue that the impact on the poor of the recent expansion of social grants is likely to have been major, considering that real transfers from government increased by some R22-billion in the last two years (in 2000 Rands). By the end of last year the number of beneficiaries of social grants had reached 10.5-million.
“With regard to upward mobility of the black population, the authors conclude that the numbers of the higher middle class increased almost threefold from about almost 400,000 to almost 1,2-million in 11 years over the period 1993-2004.
“So, there has been progress in reducing poverty. However, we cannot be complacent, because there is still much to be done, and it needs to be done faster and better. But the progress we have made is ground for confidence that South Africa will indeed halve poverty by 2014.”
Chain the canards!
The SAIRR has positioned itself as the liberal alternative to our movement. We must assume that because of this it is averse to using the sources of information cited by Dr Gumede. It could also have used the recently released StatsSA Community Survey 2007, which we reviewed in Vol 7 No 42 of this journal, more accurately to report on improvements in the standard of living of the masses of our people.
Its obvious unwillingness to do any of these things, choosing instead to discover statistics that serve the political purpose of discrediting our movement and government underlines the imperative that we must at all times stand ready to chain the canards!
This page was last updated on Friday 16 November, 2007