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 78

Figure 4.1. Different sources of income exist among households from both communities and
these mutually exist with differentiated levels of income. The combined effect of these two
levels of differentiation is responsible for high inequality in the distribution of income from
selected sources. Besides the distribution of income shown in Figure 4.1, Table 4.1 presents
the calculated Gini coefficients for all the sources of income both within communities and
across communities.

The calcualted Gini coefficient for total household income of the two communities
combined is 0.40. This is a bit higher than that of 0.34 for Mlungisi. Higher figure have been
reported for South Africa, Provide (2006) reported that South Africa's Gini coefficient was
estimated at about 0.69 in 2004. The Gini coefficients for all the five sources of income were
calculated for both communities. All the communities show evidence for unequality as
shown by higher Gini coefficients for all the sources of income. In Ndakana, wage income
is unequally distributed (0.62) followed by own agriculture (0.43), own business (0.36), and
lastly remittances (0.28) and pensions/grants (0.28) being the two most equally distributed
sources of income. Pensions and grants are paid by the government at a fixed rate and all
recipients receive the same amount once their eligibility is confirmed. It is therefore not
surprising that these are the most equally distributed incomes. Lower figures were found
for the Gini coefficients for wage employment and remittances in Mlungisi. The probable
reason being several households in Mlungisi were employed at the time of the survey. This
has some equalising effect on the distribution of this source of income. Inequality for
own agriculture in Mlungisi (0.55) was a bit higher than that for Ndakana (0.43). This
can be explained by the number of household participation in own agriculture in both
communities. A larger proportion (more than 50%) of households in Ndakana received
income from agriculture and the higher figure for Mlungisi was probably due to lower
participation in agriculture which results in most households receiving no income from
own agriculture.

Table 4.1. Gini coefficients by source of income for Ndakana and Mlungisi (Field data, 2008).

Sources of income Gini coefficients

Ndakana Mlungisi Both communities

Own business 0.36 0.32 0.36

Own agriculture 0.43 0.55 0.50

Wage employment 0.62 0.31 0.50

Remittances 0.28 0.29 0.29

Pensions and grants 0.28 0.18 0.24

Total household income 0.40 0.34 0.40