Without Radical Socio-Economic Transformation, our legacies will remain hollow
Winnie Mandela, whose life we have been remembering and celebrating in the past weeks, dedicated her life to the downtrodden and marginalised of our society. When she met Nelson Mandela, this young woman, in her early twenties, was working as a social worker at what is today known as Chris Hani Baragwanath Hospital in Soweto. It must be noted that she chose this job, as the first qualified Black member of staff to fill the post at Baragwanath, rather than taking up a scholarship in the United States.
Having been born in Bizana and living her childhood there, Winnie Mandela knew the pain of poverty. However, she had a deep understanding of the interconnection between the apartheid system and that of poverty in South Africa. For her, the triple oppression suffered by Black women in South Africa, suffering because of their race, class and gender, was the reality brought about by the apartheid system.
It is to this struggle, the eradication of the triple oppression suffered by Black women, that Winnie Mandela sacrificed her life.
In the same week of her passing, AfrAsia Bank, together with New World Wealth, released its report on wealth in South Africa. The report, titled ‘South Africa Wealth Report’, detailed the amount of millionaires and billionaires, all in US dollars, their shopping and investment trends, their homes, among others.
South Africa, the report detailed, had 43 600 US dollar millionaires living within its borders. There are five billionaires, again in US dollars. This means that there are less than forty-four thousand people in South Africa who have net assets worth approximately just under twelve million Rands. At the same time, there are about 2 200 ‘multi-millionaires’, that is individuals who possess net assets worth just under R120 million. To have qualified as a billionaire, one would have had to have net assets in the region of R12 billion.
The report details wealth trends in South Africa over the last decade while highlighting that the country remains the “most advanced and richest” on the continent. While only appearing fifth on the African list of the most populous countries and ninth in terms of land mass, South Africa has twice as many millionaires as any other country on the continent.
In reflecting on the past year, 2017, the report notes that the amount of US dollar millionaires in South Africa grew by eight percent. This, astonishingly, the report attributes to the general rise in total private wealth in the country which grew from 670 billion US dollars, at the end of 2016, to 722 billion US dollars by the end of 2017.
The total private wealth of these millionaires though grew from US$284 billion to US$306 billion in the same year 2016-2017. Needles to mention, that the stronger Rand at the end of 2017 contributed to this increase in US dollar millionaires.
To put this into perspective, the figures suggest that the total private wealth of South Africans grew by 52 billion US dollars last year. Yet the wealth of these millionaires grew by US$22 billion; forty-two percent of the total private wealth growth.
In other words, the growth in the private wealth of 0.07 percent of South Africa’s population accounted for forty-two percent of the growth of total private wealth of the country for the year. This is dreadfully unsustainable.
At the same time, while we are all aware of the fact that the economic growth of the country, as announced by former finance minister, Malusi Gigaba in February’s budget, was a mere one percent, the millionaires’ wealth have grown by a whopping eight percent in the same country. This is clearly indicative of the fact that those gaining most from the economic growth, albeit as small as it is, are the ones at the top of the pyramid.
The added eight percent increase to the number of US dollar millionaires must however be seen in the context of the decade, between 2007 and 2017, when the number of millionaires or at least their wealth rose only by two percent. While this could be attributed to the global financial crisis in 2008/2009, the global village currently has over fifteen million millionaires and 2 252 billionaires.
Therefore with a population of roughly six billion people on the globe, this population of millionaires account for 0.25 percent of the earth’s population. As mentioned, only 0.07 percent of the South African population are millionaires and this once again shows that South Africa is by far out of sync with international standards of wealth distribution. While there is inequality in the world, there is gross inequality in South Africa.
Further figures in the report make more interesting reading, yet always keeping in mind the inequality levels in South Africa. While at the end of 2017, South Africans private wealth totalled US$722 billion, these millionaires accounted for US$306 billion; again, forty-two percent.
Put differently, 0.07 percent of the population in South Africa owns 42 percent of the country’s private wealth.
The report suggests that the average South African has net assets of approximately US$12 900, that is just over R150 000 at the current exchange rate, the second highest on the continent after Mauritius. Yet we know that the vast majority of our people do not have wealth coming close to this amount.
The reality of this report is illustrated in what the report suggests at the areas or towns that have seen an upswing in property prices. The places where these millionaires spend their millions. The report mentions places such as Paarl, Franschhoek and Stellenbosch but we only have to take a drive down the road to Paarl East, Klapmuts and Kayamandi to experience deep deprivation. Plettenberg Bay, the report states, has 130 homes valued at more than R20 million while down the road people in Kwanokuthula lack basic services such as housing, sanitation, electricity and water.
In these realities, these figures make sense and we, as a nation, have no reason to be proud.
In 2011, the World Bank, for example, cited that sixteen percent of South Africa’s population, nearly ten million people, lived on less than two US dollars per day; R24 with today’s exchange rate and in terms of purchasing power parity. In the period 2009 to 2014, in the wake of the global financial crisis, the bottom forty percent of the country had a wealth growth rate of -1.3%. Again, as we saw earlier, compared to the +1% growth rate for the top 0.07% of the population.
The World Bank together with Statistics South Africa indicated that in 2015, 30 million people in South Africa lived in poverty by national standards. This figure was calculated on the national standards of R992 per person per month which is equivalent to R33 per person per day.
In 2015, fifty-four percent of South Africa’s population was living on less than R33 per person per day. StatsSA put the level of inequality in South Africa at 0.7 of Gini-coefficient, the scale measuring inequality; the highest in the world.
When releasing these statistics, StatsSA indicated that the figures for 2015 were harrowing yet they were at least ‘better’ than the figures in 2006 when it was estimated that two-thirds, 66.6%, of South Africans lived below the national poverty line. During what was supposed to be the golden years of economic growth, when South Africa was achieving on average a growth rate of between six to eight percent, 31.6 million people in South Africa were living in poverty.
Sadly, it would seem that we are not yielding Madiba’s advice when he says that poverty is man made. There continues to exist no wealth tax on individuals in South Africa, as one mechanism to address this inequality, and therefore in the injustices continue.
At this time of remembering the example of Mam’ Nomzamo it would do us well to recall the words of Madiba: “Overcoming poverty is not a gesture of charity. It is an act of justice. It is the protection of a fundamental human right, the right to dignity and a decent life.”
Jessie Duarte is the Deputy Secretary-General of the ANC