SA and Southern African Region have Worst Income Inequality, Murray Leibbrandt Tells LSE’s Atlantic Fellows

SALDRU’s Murray Leibbrandt talking to Atlantic Fellows at the Isivivana Centre in Khayelitsha. (Picture: GSDPP)

Atlantic Fellows who are part of a new global programme grappling with the challenge of inequality visited Khayelitsha on Tuesday, 19 September, as part of an “immersion week” in Cape Town. Whilst there, they listened to SALDRU’s Murray Leibbrandt talk about inequality in South Africa (SA) and the region.

The Atlantic Fellows programme for Social and Economic Equity at the International Inequalities Institute is based at the London School of Economics (LSE). It provides the opportunity “for those from academic, third sector, campaign or policy-making organisations to explore the causes of inequalities”. UCT’s Graduate School of Development Policy and Practice (GSDPP) hosted a week-long module for non-residential fellows in Cape Town.

It is well known that SA is the most unequal country in the world, but seeing it plotted on a graph based on actual survey data takes one’s discomfort to new levels. Careful work by the World Bank shows that SA is the most unequal country in the world in terms of income inequality, with seven of the top ten countries coming from Sub-Saharan Africa. Sadly, for those of us living in the region, five of these seven are Southern African countries.

Measurement is just a start, argued Leibbrandt. The point about drilling into the data is to understand the texture of societies and how they work because inequality distorts the potential of citizens in multidimensional ways.

South Africans live in a society that reproduces itself in such a way that an enormous share of the country’s income accrues to the best-off 10% of the population. It takes the education system, health system, government policy and a growth structure to work in a certain way to generate this outcome, he contended.

In response to a question from an Atlantic Fellow about the racial breakdown of income distribution in SA, Professor Alan Hirsch, director of the GSDPP, argued that the South African case is very simple, “You will find virtually no whites outside the top 20% of the income distribution and a very small percentage of black Africans in the top 20%.” The so-called “burgeoning black middle class” does not exist in a manner that has completely transformed our society, Leibbrandt added.

Despite SA having some of the most redistributive policies in the world, as a percentage of the budget and GDP, this is not making much difference because they don’t compensate for other inequalities in the country, Hirsch argued.

Leibbrandt contended further that whilst SA’s tax system is hailed for being progressive, it doesn’t go far enough. “In public discourse, we don’t have any more scope for taxation at the top. In reality, that’s not true,” he said.

Explaining the persistence of inequality in South Africa, Leibbrandt concluded his talk with the observation that wealth is an important part of understanding the dynamics of any country. “A crucial part of the persistence of wealth is inheritance. It’s one of the very interesting cusps of any society, but in SA it seems that inheritance, right now, is off the agenda. It’s a very sensitive issue.”

~ This article is written by Fazila Farouk, SALDRU’s Communications Manager.