Rural income dynamics in post-apartheid South Africa: implications for reduction of poverty and income inequality - Institutional Constraints to Small Farmer Development in Southern Africa - page 71

4. Rural income dynamics in post-apartheid South Africa:
implications for reduction of poverty and income inequality
Ajuruchukwu Obi and Simbarashe Ndhleve
Abstract
Development interventions aimed at reducing poverty and addressing inequality are
popular in post-apartheid South Africa. This chapter analyzes rural income distribution
using data from a household survey conducted in two rural communities of South Africa.
Data were collected on various socio-economic aspects and sources of income using a semi-
structured questionnaire. The estimation of inequality is carried out using both Lorenz
curves and the Gini decomposition technique. After disintegrating total household
income according to source, empirical results indicate highly skewed income distribution
that mirrors observed patterns elsewhere in South Africa and the rest of the region. Own
agriculture income and pensions/grants exhibit much higher inequality reducing effect
followed by wage income. Own business and remittances appeared to increase inequality
in both communities. There are important lessons for policy makers and practitioners
concerned about poverty reduction.
4.1 Introduction
Progress in eliminating poverty and inequality remain elusive in South Africa. Both urban
and rural areas of South Africa have continued to attract considerable policy and academic
interest in the post-apartheid era as programmes established to redress past wrongs fail
to produce the desired results. Recent years have seen a number of researches that have
revealed sometimes shockingly high levels of poverty, high levels of inequality and in
most cases poor standards of living in various areas of South Africa. World Bank (2006)
reports that, in spite of the strong inequality addressing policies, South Africa still remains
one of the highest in the world in terms of income inequality. Quite appalling figures on
inequality are always reported for South Africa. The level of inequality is confirmed by the
Gini coefficient. A Gini coefficient of one indicates perfect income inequality, while a Gini
coefficient of 0 indicates perfect equality (Provide, 2006). Provide (2006) estimated high
income inequality figures ranging from 0.65 to 0.68 for all the provinces of South Africa.
Furthermore, national figures show that income inequality increased by 5% from 0.64 to
0.67 in the period 1997-2007, post-apartheid era.
High levels of income inequality produces unfavourable environment for economic growth
and development (Provide, 2006). Households' income-generating activities in several rural
areas reveal an amalgam of activities, including farm and non-farm activities. Analyses of