Inequality and Economic Inclusion

This paper looks at the role that potential poverty-reducing impact that the CWP could have is expanded. While acknowledging that there are significant non-monetary impacts, the focus is on measuring the impact that earning the CWP wage would have on household poverty and inequality. (The Employment Promotion Programme (EPP) Research)

  • Year 2013
  • Organisation Development Policy Research Unit
  • Publication Author(s) DPRU
  • Countries and Regions South Africa

Unemployment and earnings inequality in South Africa have declined in recent years, while the trend in overall income inequality is unclear. Inequality and unemployment both remain at extremely high levels by historical and international standards. There has been a very close relationship between trends in unemployment and earnings inequality in recent years. The decomposition of earnings inequality by employment status reveals the importance of unemployment in accounting for the level and trend of earnings inequality. The distribution of employment in the formal and informal sectors is also found to be important in explaining earnings inequality, as is wage dispersion within each of these sectors. Decomposing overall income inequality by income source confirms the overwhelming importance of earnings in income inequality more generally. Inequality is only likely to be dramatically reduced through a significant expansion of decent work for the low- and semi-skilled. Simulations of an expansion of low-wage employment show that this would reduce inequality, but the effect would be limited if wages are too low. While the introduction of a minimum wage would be expected to reduce inequality, its overall effects are contingent on the extent of any associated job losses.

  • Year 2012
  • Publication Author(s) Fiona Tregenna; Mfanafuthi Tsela

Sugar cane remains a major contributor to the Mauritian economy. In 2003 it was cultivated on 85% of the arable land by 28 000 planters, with most planters being smallholders. One in three rural families is directly or indirectly involved in the sugar industry. Annual sugar production averages 575 000 tonnes of which 507 000 tonnes are exported to the EU under the African Caribbean and Pacific (ACP) - European Union (EU) Sugar Protocol, the Special Preferential Sugar Agreement, which provides a guaranteed price well above the world market price. The share of the sugar industry in the Mauritian economy has dwindled from 25% of Gross Domestic Product (GDP) in the 1970s to about 3.5% in 2003, but still represents about 19% of foreign exchange earnings.

  • Project SADRN
  • Year 2011
Published in Policy Briefs

Session 4A: Is Informal Normal in Low Income Countires? If So, What Does this Mean for Development Policy?

  • Year 2010
  • Organisation World Bank
  • Publication Author(s) Obert Pimhidzai
  • Countries and Regions Common Market for Eastern and Southern Africa (Comesa), East African Community (EAC)

Session 4B: Global Crisis and Poverty

  • Year 2010
  • Organisation University of Pretoria
  • Publication Author(s) Steven F Koch
  • Countries and Regions South Africa

Session 5A: Poverty and Household Welfare

  • Year 2010
  • Organisation Johann Wolfgang Goethe Universitat; University of Exxex
  • Publication Author(s) Stefan Klonner; Patrick J Nolen
  • Countries and Regions South Africa

Session 6A: Subjective Measures of Welfare

  • Year 2010
  • Organisation University of KwaZulu-Natal
  • Publication Author(s) Dorrit Posel; Daniela Casale
  • Countries and Regions South Africa

Session 8B: The Global Financial Crisis - Marco Impacts

  • Year 2010
  • Organisation Human Sciences Research Council
  • Publication Author(s) Catherine Cross
  • Countries and Regions South Africa

Session 8b: The Global Financial Crisis - Micro Impacts

  • Year 2010
  • Organisation University of Pretoria
  • Publication Author(s) Margaret Chitiga et al
  • Countries and Regions South Africa

Maize is the most important staple cereal product consumed in the Southern African region. The purpose of this paper is to examine the origins of the global 2007/8 food price crisis and the impact this had on the trade in maize within the SACU customs union as well as to consider the impact on consumer prices of maize. The reason why maize is central to this issue is not simply because of its roles as the principle staple food product of the SACU region but because much of the global crisis that occurred in 2008 had its origins in changes in US ethanol policy which were related specifically to the maize sector. The paper also considers whether in fact changes in VAT policy with appropriate and targeted poverty alleviation programs will achieve the objective of decreasing poverty in the SACU region. Lastly the paper considers duty on maize meal and processed maize products which serves to raise the import parity price for meal in an already oligopolistic market.

  • Year 2009
  • Organisation TIPS, BIDPA; Trade and Pro-Poor Growth Thematic Working Group
  • Publication Author(s) Roman Grynberg;Maseddi Motswapong
  • Countries and Regions South Africa, Southern Africa Customs Union (SACU), Southern African Development Community (SADC)

The paper has attempted to contribute to a key issue in the current debate on economic development: the link between trade and poverty. The paper focused on the impact of imported chickens on Zimbabwe's poultry industry. The general aim of the study was to find the impact of imported chicken on producers, consumers, retailers and government. The study relied on primary data collected through a survey. Questionnaires and interviews were used to gather information on the impact of imported chickens on producers, consumers and government. The method of ordinary least squares to estimate the model suggested to explain the linkages between trade and poverty. Quantity of domestically produced chickens, quantity of imported chickens and a dummy variable have been used as explanatory variables top rice of chickens, the depended variable. The quantity of domestically produced chickens and the dummy have been found to be significant in influencing the price of chickens on the local market. The quantity of locally produced chickens has been found to have an insignificant effect on the rice of the chickens

The results emanating from the study indicated that the imported chickens have had varied impact on the relevant players in the poultry industry. The consumers and retailers benefited, while producers lost. From the study the consumers benefited from a price reduction of chickens as a result of the influx of imported chicken in Zimbabwe. This translated to an improvement in welfare and hence has poverty reduction effect. The consumer surplus gain was estimated to be $24 334. Producers generally faced stiff competition from imported chicken and hence their production was reduced. Retailers benefited most from price differential margin. They imported chicken at lower price and tried to match though generally at lower price the local producer's prices. Other significant results found were that the imported chickens have an impact on employment. There was an increase in unemployment as a result of closure of companies which are directly linked to poultry production.

The paper concludes with proposing strategies that can be adopted to deal with the supply side constraints of the poultry industry so as to improve its competitiveness and production.

  • Year 2009
  • Organisation Trade and Pro-Poor Growth Thematic Working Group; TIPS, BIDPA
  • Publication Author(s) Evengelista Mudzonga
  • Countries and Regions Zimbabwe

The services sector is increasingly seen as a means to promote economic development and reduce poverty. It is becoming the largest sector, in terms of share of GDP and employment, in most developing countries. The services sector is highly diverse, ranging, from infrastructure services such as telecommunications, construction, transportation, financial services to tourism to business services that directly affect firm competitiveness, to social services such as health or education. Infrastructure services support all types of enterprises. Education, health, and recreational services influence the quality of labour available to enterprises. Business and professional services provide specialized expertise to increase enterprise competitiveness.

  • Year 2009
  • Organisation Services Sector Development Thematic Working Group; TIPS, BIDPA and UoM
  • Publication Author(s) Verena, T. , Vishal, R. and Ken, P.
  • Countries and Regions Common Market for Eastern and Southern Africa (Comesa)

This study reviews the reforms undertaken in the financial sector with respect to regulation and access widening polices. The developments at the macro and micro level of the banking system are also assessed. Empirical analysis of the effects of financial liberalisation on growth by augmenting an aggregate production function with different measures of financial liberalisation. To account for the sources of the effects of financial liberalisation on growth, additional empirical analysis was conducted using panel data analysis of bank level data. Bank level data assists in investigating the effect of financial liberalisation on intermediation spreads, non-performing loans and non-financial costs. The empirical findings do not indicate a positive effect of financial liberalisation on growth. However, they suggest that there was improved efficiency among banks. The critical issue for Uganda appears to be that the efficiency improvements may not have been translated into increased credit to the private sector. There are possible policy choices to ensure that financial liberalisation exerts positive knock on effects to output and subsequently poverty reduction. Some of the proposed policies include the reduction of credit risk to banks through information availability via the credit reference bureau, promotion of further competition in the sector through increased bank entry and more robust loan recovery procedures in cases of default.

  • Year 2009
  • Organisation Services Sector Development Thematic Working Group; TIPS, BIDPA and UoM
  • Publication Author(s) Charles Augustine Abuka and Kenneth Alpha Egesa

Tourism is increasing becoming an important phenomena for developing countries and as such it affects the livelihood of many poor people. According to Yunis (2004), tourism is growing much faster in developing countries than in developed countries. However, its potential for poverty reduction has been insufficiently recognized and exploited in developing countries (PPT 2004). The increasing importance of the tourism sector in developing economies obliges a greater investigation to ensure that tourism becomes embedded in poverty reduction strategies. Tourism is generally viewed as an engine of economic growth rather than as a mechanism for delivering on poverty reduction. It is normally argued that tourism is driven by foreign and private sector interests, and is therefore not well placed to contribute to poverty alleviation (PPT 2004). Tourism can indeed exacerbate poverty through increased local costs, loss of access to resources and social and cultural disruptions. However, tourism has the potential to change lives of the poor in developing countries as well.

  • Year 2009
  • Organisation Trade and Pro-Poor Growth Thematic Working Group; TIPS, BIDPA
  • Publication Author(s) Erwin Naimhwaka
  • Countries and Regions East African Community (EAC), Southern African Development Community (SADC)

This project was designed to explore small-scale mining activities in Erongo Region of Namibia. The main objective was to explore possible contributions of small-scale mining to poverty alleviation in Namibia. The study seeks to achieve three specific objectives, namely activities of small-scale mining, the role of small-scale mining with regard to poverty alleviation, and suggesting policy recommendation that may help to improve small-scale mining activities. With the use of two questionnaires that were drafted, key stakeholders and small-scale miners were interviewed face to face.

  • Year 2009
  • Organisation Trade and Pro-Poor Growth Thematic Working Group; TIPS, BIDPA
  • Publication Author(s) Jacob M. Nyambe;Taimi Amunkete
  • Countries and Regions Namibia

With the EU sugar reforms, the overall economic weight of the sugar sector has fallen. The sugar sector's contribution to GDP is now comparatively small, around 1.9% of GDP in 2008. In this context, the Mauritian government and the private sector defined the Multi-Annual Adaptation Strategy (MAAS) to restructure and establish a more competitive sugar sector. Among the different policies of the MAAS, one measure is the implementation of the Voluntary Retirement Scheme (VRS) which is in line with the right sizing of the labour force and a reduction in the labour costs in the sugar industry. The aim of this study is to assess the impact of the EU sugar reforms on the livelihood of the VRS beneficiaries. Firstly, we analyse their living conditions before and after the reform. We, then, adopt a gender assessment evaluation of the VRS to evaluate its differential impact on men and women. Third, we investigate as to how the land and compensation they benefited have been used.

Lastly, we focus on the training aspect of the scheme. We analyse the different training programmes and see their contribution in improving the living standards of the beneficiaries. In line with the above, focus group discussions and a survey were undertaken. Focus group discussions were conducted on VRS beneficiaries in the North and South of the island. Our survey considers 175 VRS beneficiaries from five sugar estates. We observe that a high percentage of the beneficiaries move to a lower income bracket with their expenditure exceeding their present income level. Further both men and women are affected negatively under the scheme but the impact appears to be more significant for women. Further, most of the VRS II beneficiaries have not yet been trained. For those who have undergone training, they have not yet obtained a new job or applied their knowledge to set up their own business.

  • Year 2009
  • Organisation Trade and Pro-Poor Growth Thematic Working Group; TIPS, BIDPA
  • Publication Author(s) Rojid Sawkut;Tandrayen Verena;Seetanah Boopen;Sunnassee Vinesh
  • Countries and Regions Common Market for Eastern and Southern Africa (Comesa), European Union (EU)

The paper argues for a broad based access to property, broader than access to title allows, with the potential for wider, quicker and more sustained reach. It motivates for a place for tenure security in the second economy strategy as a means for securing access to property, a pre-condition for actualizing the potential that property has to increase access to the economy by the poor. An over-emphasis on access to title has neglected other property based economic opportunities. The paper identifies the ways in which property may increase access to economic opportunities, shifting the emphasis from the dominant focus on the secondary market and capital gains to a more balanced and relevant consideration of opportunity in relation to the concentration of the country’s households on an income poverty continuum. These options are less promising than the beguiling prospect of bringing dead capital to life, or making capitalism work for the poor (de Soto, 2000). But they are more realistic and offer pragmatic and pro-poor avenues of support.

The argument is underpinned by a more sophisticated understanding of the nature of “the urban poor” (or alternatively a more pro-poor approach) than currently prevails in the policy discussions. The paper re-focuses attention on land based livelihood opportunities because of their relevance to the majority of the urban poor. It is a sobering, but realistic, perspective on the accumulation potential of property, and the deep rooted causes of poverty, rather than its symptoms (of which lack of title is an example). This approach is much more appropriate to a second economy strategy which seeks realistic opportunities in response to deep seated problems, rather than grandiose and unlikely achievements. The paper’s understanding of exclusion leads to intervention areas that include action in the “first economy”, rather than merely the imposition of mechanisms that are working for the wealthy, onto the poor. This approach opens the possibility of dealing with causes, rather than symptoms, and to alter the terms of incorporation into the economy in ways that benefit the poor more.

  • Year 2009
  • Organisation TIPS
  • Publication Author(s) Lauren Royston
  • Countries and Regions South Africa

This report provides an analytical reflection on the provision of infrastructure services in urban areas, with the aim of enhancing the access of the poor in urban areas to these services. It commences by considering what is meant by “access” to services, pointing out that much more is involved than simply providing services in physical proximity to the intended users of those services.

The report summarises principles that must underlie the provision of infrastructure services in urban areas for all in society and in the economy, especially the urban poor. Infrastructure is only a means to an end. Specific characteristics of the community to be served are all-important in making decisions on infrastructure. Also, selection of infrastructure (specifically levels of service) and its planning and design is wittingly or (often) unwittingly made in the context of a set of planning, design, construction, operation, maintenance and upgrading assumptions. The validity of those assumptions needs to be investigated - and, if it is found that they are not valid, then those selection decisions need to be reviewed.

Understanding of this is essential in:

• Addressing the end (enhancing the access of the poor to services in urban areas) by the most appropriate means (which may not be an engineering service, but could be by education, or an institutional means);

• Integrating the service with other means to the same end; and

• Selecting levels of service and standards.

The bulk of this report is devoted to a discussion of the three ways that “the poor” in urban areas and “urban services” interface. These three ways are as follows:

The poor get services. Their quality of life is thereby raised. In addition, the availability of these services opens up possibilities for earning income.

The poor getting services directly raises their quality of life. But the services could also (dependent on the peoples’ initiative and other factors as well) enable them to generate income in the short term (in the sense that they can do work, and get paid for it, because they now have water or electricity) and in the future (because they now have electricity to study and so on, and can improve their ability to get jobs, or to get better jobs). Issues of the quality and reliability of services, and ways in which the poor can or cannot cope if services are of poor quality and/or are unreliable, are best discussed under this heading.

The poor get income. This better enables them to get services.

The poor can obtain more services if their income rises or if the cost of services falls. Incomes rising relative to the cost of services gives households greater ability to purchase what they need -- which could include more or better quality services.

Issues of the cost of services are discussed under this heading.

The poor get income from playing a part in the service provision chain.

The poor earn income through building, operating or maintaining the infrastructure, or through selling the service.

Each of these three types of interface needs its own approach, drivers, incentives, 6 facilitators, etc. Nonetheless, they cross-cut: each in some or all other ways affects the other. For example a particular change in technology might be able to both improve reliability (and therefore improve income generation potential) and reduce cost.

The report concludes with a comment about quick wins (in individual situations there is much scope for these, but there are no broad-based (i.e. with national impact) quick wins to be had), and recommendations.

  • Year 2008
  • Organisation TIPS
  • Publication Author(s) CSIR For Urban LandMark

Colonialism and the deleterious impact of Structural Adjustment Programmes (SAPs) and now globalisation. Some parts of postcolonial Africa have attempted to set up ministries of economic development. Others have concentrated on attracting on Foreign Direct Investment (FDI) whilst some others have early on realised that the state and private capital should work hand in hand for development. But these different approaches have not always necessarily had the results that are necessary for development. To make matters more complicated, the continent have to struggle in a context where trade remains inequitable and finding a niche for themselves remains a difficult task. The main reason behind this failure is that development has been seen and interpreted within the narrow confines of economic growth. So rethinking economic growth at the continent level has become imperative and different stakeholders have an important role to play in the process.

In South Africa, during many decades, black people experienced a segregationist politics of a white minority. In 1994, the African National Congress (ANC) promised to create a better South Africa for all. Various ANC governments since then have adopted many economic programmes with the aim to halve by 2014 poverty and unemployment especially among the Historically Disadvantaged Individuals (PDI). However, recent studies in South Africa showed that inequality is widening despite the acceptable levels of economic growth. Reports showed that an overwhelming share of the change in the economy over time explained by high economic growth will continue to be without any improvement of the lives of marginalized ones unless there are changes in wealth distribution within the different layers of the South African population. Therefore, propoor economic growth must be developed in order to achieve the expected results of achieving the Millennium Development Goals (MDGs) in the South African context.

The paper seeks to develop some variables (investment in physical and human capital for example) needed to be included in the structure of South African development theories, which will assist development practitioners to determine the sources of growth and inequality, and ultimately develop strategies aiming at halving inequalities in the country.

  • Year 2008
  • Organisation YENEPAD
  • Publication Author(s) Alain Ndedi
  • Countries and Regions South Africa

Democracy opened the door for transformation in South Africa. In the past decade, various laws, policies and programmes have been implemented with the aim of putting into effect the principles of the new South African Constitution and the Bill of Rights, with the aim of improving the lives of the people of South Africa. Poverty alleviation moreover stands central in national and international policy frameworks. The Accelerated and Shared Growth Initiative of South Africa (ASGISA), amongst others, has the ultimate objective of halving poverty in South Africa by 2014. This paper aims to investigate the determinants of- and how income poverty is transferred from one generation to another. Data from the Kwazulu-Natal Income Dynamics Study (KIDS), which interviewed a panel of African and Indian households from Kwazulu-Natal are used for this purpose. Panel- as well as cross-sectional data analyses are employed to learn about these main determinants of- as well as how the poverty status of one household influences that of the next generation.

  • Year 2008
  • Organisation University of the Free State
  • Publication Author(s) Antonie Pool
  • Countries and Regions South Africa
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