## South Africa: Bridging the Income Divide

_IMF Blog, February 7, 2020_

## Source details

**Canonical URL:** [South Africa: Bridging the Income Divide](https://www.imf.org/en/blogs/articles/2020/02/07/south-africa-bridging-the-income-divide)

## Other formats

- [Markdown version](/en/blogs/articles/2020/02/07/south-africa-bridging-the-income-divide/index.md)
- [Structured JSON version](/en/blogs/articles/2020/02/07/south-africa-bridging-the-income-divide/index.json)
- [Bundle manifest](/en/blogs/articles/2020/02/07/south-africa-bridging-the-income-divide/bundle-manifest.json)

## Bibliographic details
- Authors: The Editors
- Published: February 7, 2020

---

### Extent and nature of inequality
- The top 20 percent of the population holds over 68 percent of income.
- The poorest 40 percent possess only 7 percent of income.
- Inequality manifests in unequal access to opportunities—education, health, and jobs—and regional disparities.
- South Africa’s Gini—an index that measures inequality—has increased further in the early 2000s and has remained high ever since.
- Its peers have made inroads in reducing inequality.

### Drivers of persistent inequality
- High unemployment has perpetuated inequality.
- South Africa's unemployment rate is significantly higher than other emerging markets.
- Nearly 60 percent of the country’s youth (aged 15-24) are unemployed.
- The policy of apartheid left already elevated inequality at the start of the 1990s by excluding a large swath of the population from economic opportunities.
- Low growth has contributed to the persistence of unequal outcomes.

### Government responses to inequality
- Progressive fiscal redistribution has been used as a tool to tackle inequality.
- Efforts have focused on:
  - Higher social spending.
  - Targeted government transfers.
  - Affirmative action to diversify wealth ownership.
  - Promoting entrepreneurship among the previously marginalized.
- Rising debt is reducing the scope to further use fiscal policy for redistribution.

### Policy recommendations and way forward
- Existing measures will need to be complemented by reforms that:
  - Promote private investment.
  - Create jobs.
  - Foster inclusive growth.
- These reforms are presented as necessary for South Africa to bridge its great income divide.

*The Editors, February 7, 2020.*

---


## References

- [https://www.imf.org/wp-content/uploads/2020/02/South-Africa-Chart-of-the-Week-FINAL2.docx.jpg](https://www.imf.org/wp-content/uploads/2020/02/South-Africa-Chart-of-the-Week-FINAL2.docx.jpg)

_Source: https://www.imf.org/en/blogs/articles/2020/02/07/south-africa-bridging-the-income-divide_