The South African poverty statistics exposes the treachery and impotence of the South African government

24 August 2017

This recent Statistics South Africa report that shows that out of a population of 56 million, around 13,8 million people are now living below the food poverty line of R17.38 per person per day exposes the treachery of South African government and the failure of its economic policies.

According to statistics South Africa more than 30 million people out of 56 million are poor. Poverty levels in SA rose in 2015. When applying the upper bound poverty line (R992 per person per month which is the official level of income that is required to buy necessities such as food and clothes) more than one out of every two South Africans were poor in 2015 with poverty headcount increasing to 55.5% from 53.2% in 2011 this translates into over 30.4 million South Africans living in poverty in 2015.

COSATU fully agrees with Archbishop Njongonkulu Ndungane that South African leaders should be ashamed of the poverty statistics. The federation has consistently warned that the poverty, unemployment and inequalities affecting millions of South Africans are a ticking time bomb.

In 1994 the ANC inherited a country which was highly indebted to foreign and local capitalists and whose growth was based on racial discrimination and subjugation of black majority, cheap labour and granting of benefits to only the white minority. The poverty levels we have today can be traced back to the days of British colonialism and apartheid, which were both based on segregation and separate development. The colonial and apartheid government were captured by private businesses such as the chamber of mines, who for advocated a migrant labour system and dispossession of land from the black majority in the form of the 1913 Land Act.   

However, the fact that poverty continues to affect mainly the blacks and to a certain extent coloured communities is a result of policy choices by the ANC government post 1994. The decision to adopt neo liberal capitalist economic policies based on the view that if we remove regulations on business, cut taxes for companies and the rich, the benefits of this economic liberalisation will result in jobs and more income for everyone was an ill thought decision. This economic liberalisation was based on mainly three legs, privatisation of state assets, free movement of capital and removal of exchange controls, and free trade.  

Considering that the ANC’s election campaign for 1994 was ‘better life for all’, the black people of this country have every right to feel betrayed.

It was always clear that the unintended results of continuing with the apartheid economic policies would be to perpetuate separate development or what others call a dual economy and inequalities based on race.   It is the outcome of these policies that have entrenched poverty amongst the black population.

South Africa is not a poor country. Big companies continue to hoard trillions of rands in their bank accounts yet workers are only taking home a pittance. Therefore, the problem of South Africa is the leadership that is scared and in the same bed with white monopoly capital. As a result ,our leaders in both private and public sectors are unwilling to demand  that the private sector should make its contribution to the society by taxing its profits at higher levels (more than 50%) and also by ensuring that they use the profits to transform the lives of the majority.  

It is unacceptable that today we only have three provinces, which have major manufacturing companies Durban, Johannesburg and Cape Town. Therefore, the blame for these perpetual high levels of poverty should be parked at the door of the leaders in government, mainly the DTI, Economic development and Treasury. They have failed the 30 million people who are unable to fully provide for their daily needs.

The DTI is supposed to ensure that SA can protect the domestic market against imports and create jobs, yet its focus has remained on promoting exports without adequately protecting domestic sector and jobs. Measures to protect jobs like low tariffs have been minimal because of the continuation with apartheid economic policies of opening the SA economy to imports.  

The department of economic development is supposed to come up with policies that will ensure that SA is economically self sustainable and not reliant on big monopolies and foreign investors ; and to change the direction of the economy from consumption based economy to one based on  high value added services, manufacturing and local processing of minerals. Treasury has continued with fiscal and monetary policies that favour those with money and who invest in financial assets and property rather than companies that invest in labour intensive projects.

What we need is bold leadership that will be able to confront white monopoly  and foreign capital and to change our unregulated capitalism to a regulated capitalism, which favours the poor and the working class.  Poverty will only be solved in a socialist state where the means of production are used to benefit all and not make profits for individuals and families. However, even in capitalist states the rich and the political elite are regulated and have to contribute towards the upliftment of the poor not through donations or social responsibility but through human development i.e. creating decent jobs, housing cheap transport, electricity, education, health and food.   

It is sad that after almost a quarter of a century after the democratic breakthrough of 1994 many of our fellow citizens are unable to provide fully for their daily needs; housing, i.e. rental or bonds, transport, electricity, nutritious food, decent jobs with benefits, education and health. It is also a travesty that people who are affected by the poverty are black people, who were also victimised by the colonial and apartheid economy. Poor black Africans households have had a poverty share above 90% since 2006. The unemployment rate for blacks is 40.9%, for Coloureds 28.9%, Indians 15.8% and Whites is 8.5%.

Half of those that are employed are earning below R3700 which amounts to more than 8 million workers out of 16.1 million who have jobs, this is in contrast with CEO’s of big companies, who are earning R20 million per year on average (an average CEO will receive R300 000 per month basic salary without share options and other benefits) and these companies currently have R1.4 trillion in their bank accounts. There is nothing which prevents the government from attaching or expropriating a nominal amount from these cash reserves through high taxes to fund the poor and jobs.

The Australian government has introduced a tax on banks assets in order to fund development, our treasury is telling workers about high wages and limited finance. Therefore, the problem of SA is failure to redistribute wealth and not economic growth and failure of leadership to move away from the cheap labour model of the economy that implies that in order to grow the economy workers must accept slave wages.

Last year’s July 2016 U N Conference on Trade and Development report showed that mining companies hid more than R1 trillion of tax invoices to avoid taxes between 200-2014,yet the South African government is pretending as if nothing has happened. This shows the impotence and treachery of the South African government

Issued by Sizwe Pamla, National Spokesperson, COSATU, 24 August 2017