Page 48 - IRMSA Risk Report 2021

3.6

DEEPENING STRUCTURAL INEQUALITY
South Africa is the most economically unequal country in the world, according to the World Bank. The difference between wealthy
and poor in South Africa has been increasing steadily since the end of apartheid in 1994, and this inequality is closely linked to
racial divisions in society. Covid-19 has intensified and accelerated the extent of abiding structural and spatial inequality in our
society.

SCENARIOS FLAGS SUCCESS STORIES
COUNTRY FLAGS C F
OWNING OUR FUTURE Tackling inequality is more complicated
1. LEADERSHIP and politically contentious than tackling
poverty. Given this situation, South
2. INSTITUTIONAL CAPACITY
African researchers have dedicated
3. POLITICS themselves to confronting this major
socio-economic challenge. Examples
4. SOCIAL COHESION of these are the research and civil
5. NATIONAL POLICY society engagement processes that
were undertaken as part of the work
6. SERVICE DELIVERY of the DST/NRF Community of Practice
7. INEQUALITY (CoP) within the Mandela Initiative.
8. ECONOMY https://www.news.uct.ac.za/article/-
PERPETUAL FAKE IT UNTIL WE 2018-09-03-south-africas-inequality-
HANGOVER MAKE IT, OR NOT 9. GLOBAL TRENDS problem-needs-new-thinking
10. CLIMATE

C – CURRENT (2020/21) F – FUTURE (2030)
The country is facing the immediate triple socio-economic challenges of poverty, unemployment and inequality, aggravated by the
country’s ailing economy. People will pay for privilege in an unequal society. There is a market specifically targeted at those that can
afford to pay their way out of the challenges faced by the unfortunate majority, which further exacerbates the divide. This would give
credence to the predictions made by the IMF and economists which suggest that South Africa’s post Covid-19 recovery, will take a form
of “K” demonstrating a heightened divergence in economic classes and a deeper divide in society.

TOP 5 CHALLENGES TO ACHIEVING TOP 5 RISK TREATMENT OPTIONS AND
TARGETS OPPORTUNITIES
1. Legislation: Some apartheid laws still prevail, making 1. Criminalise acts which perpetuate inequality.
it difficult to achieve transformation and therefore
address inequality.
2. Poor Service Delivery: Inefficient and inadequate 2. Feeding schemes assisting the youth (scholars) and
government that is failing in terms of delivering basic disadvantaged communities and South Africa to be
services to the poor and marginalised. considered for inclusion in the UN WFP countries.
st
3. Social divide: We operate a 1 world economy with 3 rd 3. Address the pure capitalistic approach to work towards
world living conditions for the majority of our citizens. embedding a functioning social democracy. Put the
spotlight on success stories as it is skewed to focus on
the negative elements.
4. Education: Access to education has improved, however, 4. Youth and Technology innovation – finding solutions to
quality of education is lacking. societal and other challenges, enabling the youth to enter
the job market through entrepreneurial initiatives, e.g.
Mbali Nwoko in farming and Bulelani Balabala, the man
inspiring township entrepreneurs.
5. Development policies: Government’s social policies 5. Acceleration of the Township Economy Revitalisation
have not succeeded in addressing poverty, e.g. social programme should be a strong focus.
grants are inadequate and used to gain votes.

FACTS AND FIGURES
STATS
• Apartheid laws such as Section 18 (2)(b) of the Riotous Assemblies Act 17 of 1956 and section 1 Thin space of the Trespass Act 6 of
1959 still prevail.
• IMF: 68% of income in South Africa (compared to a 47% median for other emerging markets) is held by the top 20% of the population.
• World Bank: South Africa remains a dual economy with one of the highest inequality rates in the world, with a consumption expenditure
Gini coefficient of 0.63 in 2015.
• South Africa’s largest contributor (at 74%) to income inequality is contributed to the labour market, which is heavily racialised and
gender biased. 93% of the country’s wealth is concentrated in the hands of the wealthiest top 10%, and the remaining 90% of South
Africa owns a measly 7% of the country’s wealth.
UNEXPLAINED EXPENDITURE AND BAILOUTS
• SAA: R10.5 billion “is allocated to SAA to implement its business rescue plan” (October 2020) in addition to the R16.4 billion bailout to
settle guaranteed debt and interest (February 2020).
• SABC: R3.2 billion bailout (R2.1 billion October 2019 and R1.1 billion March 2020).
• Eskom: R138 billion in bailouts through to March 2022 (R112 billion March 2020 and R105 billion in 2019/20 and 2020/21).
• Over the past 12 years, National Treasury has been allocated R162 billion to financially distressed, state-owned companies, with Eskom
accounting for 82%.
CORRUPTION
• Misappropriation of the R500 billion relief package meant to provide food parcels for the needy. Fraudulent claims from the temporary
social grant increase for over 16 million beneficiaries (less than half of those eligible have received them, while others have fraudulently
tried to claim). Private firms claimed benefits on behalf of unknowing employees or deceased people and then pocketed the cash
– or used the benefits paid out for their own purposes. The Special Investigating Unit (SIU) is probing 75 of these businesses for
Unemployment Insurance Fund (UIF) fraud
Sources: IMF, Stats SA, G20 Insights, EWN, eNCA, BusinessTech, Daily Maverick, Trading Economics, Mail & Guardian, Sunday World, Amnesty International, World Bank and
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Corruption Watch.