South Africa is narrowing the gap between the rich and poor, but still remains one of the most unequal societies globally according to the World Bank.
In its latest update on the country’s fiscal policy the World Bank noted that South Africa has managed to lift 3.6 million people above the poverty line.
Further, the proportion of the South African population who are living on $1.25 per day or less (an international measure of extreme poverty) has been cut in half through the use of fiscal policies, the World Bank noted.
“This rate of extreme poverty falls from 34.4% before the use of fiscal policy to 16.5% after its use, reflecting mainly the impact of cash transfers such as the child support and disability grants and the old age pensions. These cash transfers lift the income of the poorest decile tenfold,” it said.
The report also showed that the burden of taxes falls on the richest in South Africa, with the income of the richest decile going from being over 1000 times bigger than the income of the poorest decile, to being 66 times bigger after the impact of taxes and transfers.
Things remain unequal
Despite these improvements to the inequality gap South Africa’s improved Gini coefficient still remains one of the highest in the world at 59.6. This improvement, though, was the largest reduction in poverty and inequality of 12 peer middle-income countries, including Brazil.
The Gini coefficient is a measure of the extent to which the distribution of income or consumption expenditure among individuals or households within an economy deviates from a perfectly equal distribution (measured at 0.0).
A country where one person earned all the income and everyone else got nothing would have a score of 100.0.
Before applying its fiscal policy update South Africa was ranked by the World Bank as having the most unequal society in the world – with a Gini score of 77.1.
Data sourced by Business Insider (not applying the World Bank’s updated Gini score for South Africa) still ranks the country as the world’s most unequal society, with a Gini score of 65.0 – though with the updated score it would be ranked 3rd.
The world’s most unequal countries
|South Africa (old)||65.0|
|3||South Africa (new)||59.6|
|6||Central African Republic||56.3|
Conversely, Ukraine is listed as the world’s most equal country, followed by Slovenia and Iceland.
The world’s most equal countries