Cape Town - The proportion of poor people in South Africa has declined over a 30-year period but there has been lack of progress in significantly reducing poverty because of insufficiently high economic growth, says a report compiled by the Ecumenical Foundation of South Africa, a church-based research group involving the South African Council of Churches.

While the authors acknowledge that inequality - the gap between the rich and poor - was widening in all race groups in the country, they also debunk reports that South Africa has suffered in recent years from "jobless growth".

They argue that job-creating high economic growth is the answer to South Africa's ills - at a rate of 4% a year for the next 10 years to reduce the numbers living in poverty from about 45% to 30%.

One of their ideas is to beef up the growth rate is to co-ordinate the skills of government and the private sector - including churches - in spending public money efficiently.

The report, compiled by JP Landman with the assistance of Dr Haroon Bhorat of the Development Policy Research Unit at the University of Cape Town, Professor Servaas van der Berg, economics department University of Stellenbosch, and Professor Carl van Aardt of the Bureau of Market Research, the University of South Africa, finds that there were two reasons for the general lack of progress in turning around inequality and significantly reducing poverty.

They were the demographics of high population growth and comparatively low economic growth.

Between the 70s and the 90s

Between the mid-1970s and the beginning of the 1990s, the economy grew at about 1.5% a year.

"This was about a third of the more than 4.5% achieved in the years between the Second World War and the beginning of the seventies."

Since 1993 growth had "slowly recovered" to reach an average of 3% over the past few years. South Africa had thus doubled its sustainable economic growth rate from 1.5% to 3% since 1993 according to SA Reserve Bank data, the academics state.

The academics stated further that the demographics "leave policy makers with very little choice: more wealth has to be created".

They contend that "the main driver of inequality currently" was no longer the black/white divide, but rather the intra-group divide between rich blacks and poor blacks. The national Gini figure stood at an uncomfortably high 0.6.

Amongst black households it moved decisively up from 0.49 in 1970 to 0.59 in 2000. Amongst whites it moved from 0.43 to 0.49, Indians from 0.42 to 0.51 and coloureds from 0.53 to 0.55.

The academics point out that the Gini coefficient "measures the distribution of the national income" - the measure of equality/inequality. In a perfectly equal society 10% of the population will receive 10% of the income, 20% of the population will receive 20% of income and so on.

"For such a society the Gini coefficient will be zero."

Poverty

Turning to the poverty measure, the academics have "for South African purposes" taken the minimum living level as the cut-off point "below which people live in poverty".

In March 2003 this was taken as R1 871 for a household of 4.7 people as determined by the Bureau of Marketing Research in March 2003.

Adjusted to rand values for 2000 "that would imply an income of R1 489 per month per household of 4.7 people".

Using this level as the benchmark, 46% of South Africans lived in poverty - meaning 20.5 million people in 2000, according to research done by Servaas van der Berg and Megan Louw at the University of Stellenbosch.

This compared with University of Stellenbosch economist Professor Sampie Terreblanche's estimate of about 18 million people - about 40% of the South African population in 2002, the academics noted. This indicated that poverty levels may have dropped.

Arguing that South Africa did not suffer jobless growth, the academics said 1.6 million jobs had been created between 1995 to 2002 but the problem was that "more than five million people entered the labour market".

"That resulted in an increase in the number of unemployed of more than three million. This is the result of too little growth relative to what population growth requires." This was not jobless growth, they said.

Rolling poverty back

"To roll poverty back from its current (approximate) 55/45 level to 70/30 by 2014 (both the level of 30% and the date of 2014 were arbitrary choices) will require about three million jobs by 2014. That means a consistent growth rate of about 4.0% p.a. over the next ten years."

They suggested that while there was room "for support measures like a public works programme", they could not be pursued at the cost of economic growth and a bigger labour market.

"This has important policy consequences. It forces policy makers to make the growth of the economy and the expansion of the labour market their top priority."

They suggested public-private partnerships could leverage the money currently being spent by the private sector including churches, individuals and the corporate sector. If these were linked, they could leverage existing resources and help enhance "efficiencies".

For example, they said many schools were being built by corporations while the money could have been put into existing church schools and rendering "a better return for everybody".

There were other examples of private networks which could be used to spend public money efficiency "and stretching resources further".