New research conducted by the South African Centre for Inequality Studies and the World Inequality Lab reveals how wealth is spread across the adult population in South Africa and how wealth distribution has shifted over the last three decades.
According to the study’s authors, the research aimed to investigate patterns of wealth inequality in South Africa since the end of apartheid. It did this by estimating the distribution of personal wealth in the country by combining microdata covering income tax returns, household surveys, and macroeconomic balance sheets statistics.
They found “unparalleled levels of wealth concentration” in the results, where the top 10% of adults in South Africa own 86% of the aggregate wealth – and the top 0.1% close to one-third.
“The top 0.01% of the distribution – approximately 3,500 individuals – concentrate 15% of household net worth, more than the bottom 90% as a whole,” the authors said.
“Such levels of inequality can be accounted for in all forms of assets at the top end, including housing, pension funds and financial assets. We find no sign of decreasing inequality since the end of apartheid.”
The research covered all available data from 1993 to 2017 in its findings. The top 10% wealth share has fluctuated between 80% and 90% between 1993 and 2017, largely as the result of the rise and fall of household debt before and after the 2007-2008 crisis, with no sign of a long-run trend, the researchers said.
“If anything, the available evidence suggests that the share of wealth captured by the top 1% and the top 0.01% may even have increased. This result is particularly striking considering South Africa’s recent history of positive growth – real average income and wealth per adult respectively increased by 19% and 33% from 1993 to 2017 – and greater racial inclusiveness.”
South Africa’s richest 10%
According to the research data, among South Africa’s adult population of approximately 35.4 million people, the average wealth held in a personal capacity is R326,000.
However, among the top 10%, this average shoots up to R2.79 million per person. This is concentrated even further in the top 1% at R17.8 million per person, and the top 0.01% at R486.2 million.
The researchers also included a wealth threshold across the different population groups, indicating the lowest point at which one would enter into any given category.
To enter into the top 10%, you would need a personal wealth of only R496,000. To be a one-percenter, your personal wealth would need to be just over R3.8 million.
The same dataset also includes figures for what could be considered South Africa’s middle class – the ‘middle’ 40% of adults. For this category, the average middle-class adult has a personal wealth of R138,000 – and needs only R27,700 to meet the threshold.
For purposes of the study, the researchers consider personal wealth to be the sum of all households’ assets and liabilities.
PhD candidate and co-author of the study, Amory Gethin, said that the wealth-to-income ratio in South Africa has remained relatively stable since 1993. About two-thirds of assets are financial (pensions, stock, bonds, etc.), while one-third is non-financial (housing and business), he said.
Wealth is the sum of all households’ assets and liabilities. The wealth-income ratio has remained quite stable in South Africa since 1993. About two-thirds of assets are financial (pensions, stock, bonds, etc.), while one-third is non-financial (housing + business). pic.twitter.com/xBQSX8SNKe
— Amory Gethin (@amorygethin) August 2, 2021
The findings from the study broadly align with other data published by international finance groups such as Credit Suisse. While the figures differ somewhat due to the different time periods covered (2017 vs 2020), the overall picture remains true.
According to Credit Suisse’s 2021 Wealth Databook, South Africa’s richest 1% hold about 41% of the country’s total wealth – estimated in 2021 at $763 billion. This is up significantly from the 35% recorded in 2019.
Wealth per adult in South Africa overall amounted to roughly $20,300 (R289,300) at the end of 2020, with an adult population estimated at 37.6 million. However, wealth per adult in the top 1% averages $828,000; among the top 10%, it averages $162,000.
Looking at the balance, the remaining 90% of the population controls only 20% of the country’s wealth and has a wealth per adult figure of only $4,500. This aligns with Credit Suisse’s data which records the median wealth per adult in South Africa at $4,523.
It is apparent from Credit Suisse’s data that South Africa’s wealth is highly concentrated among the super-rich. Approximately 80% of total wealth is held by 10% of the adult population – but the biggest chunk of this is held by the top 1%.