What are the Distributional Implications of Halving Poverty in South Africa when Growth Alone is not Enough?

23 September 2012
Publication Type: Working Paper
JEL Code: D30, D31, I32

The South African government has set a target of halving poverty by 2014. Using microdata from the 2005/6 Income and Expenditure Survey, 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. With the poverty line as defined here, about half the South African population is classified as poor. Even so, the aggregate poverty gap is 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 then. It would take average annual growth of 8.7% between 2006 and 2014 to halve both the poverty gap and poverty headcount ratio with the current distribution of income and expenditure. However, projections of the effects of a range of growth and distributional scenarios on poverty, using a new method for simulating pro-poor distributional change, 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.

Working Paper 215
1 April 2011
Journal: Applied Economics 2011; 44(20): 2577-2596