Inequality in South Africa: Same Country, Different Worlds
Part 2: Why?
In my previous blog I gave a snapshot of what inequality in South Africa looks like today, using recent data. After living in, and working on the South African economy for over two years now, I’m beginning to piece together why it is that South African inequality is world-leading. In this blog post I will try to shed light on some core themes and underlying drivers of South African inequality, and I’ll say upfront this is not meant to be exhaustive.
Credit goes to Zapiro cartoons — for more check his work out here https://www.zapiro.com/, he’s awesome!
A History of Extraction — Cheap Labour
To understand inequality in South Africa, why it’s so pervasive and resilient, we really have to look into the economic history of the country.
In order to extract diamonds or gold from the earth, you need labour. In order to make a ton of money from extracting diamonds or gold from the earth, you need cheap labour. Cheap labour has been the backbone of the South African economy for hundreds of years, it goes back even further than the discovery of diamonds and gold in the 19th century.
A story that stuck with me is from a brilliant history book I recently read called ‘Good Hope: South Africa and the Netherlands from 1600’, and it takes us all the way back to the 1600s when the Dutch East India Company (VOC) set up their trading base in Cape Town. Cape Town was the perfect stop over as the half-way point for ships from Europe on route to India. VOC workers needed food and hence a proportion of their merchant staff were soon tasked to take to the soil and start farming. These newly created farmers needed increasing amounts of labour to tend to the land, and they tried to entice the Khoisan people (the original inhabitants of the Western Cape) to work on their farms. However, the wages they offered were insufficient, and the Khoisan people refused the opportunity. The farmers expressed their frustration to the VOC, and begged for the trading company to bring them slaves. In the end, the VOC agreed and slaves were shipped in from South East Asia and parts of Africa. To me, this is where the legacy of cheap labour in the South African economy begins — back in 1652.
Skipping ahead, in 1867 a discovery was made that would change the course of South African history forever, diamonds. By the 1870s and 80s the Kimberley Mines were producing about 95% of the world’s diamonds. You may have heard the story of the largest diamond ever discovered in South Africa’s Culinan mine in 1905, it was gifted to King Edward VII of Britain, as a birthday present and cut into a number of smaller diamonds. Two of the largest of these diamonds now form part of Queen Elizabeth II’s crown jewels and can be seen in the Tower of London. I actually laid eyes on them a few years back during a visit there as a somewhat conflicted British tourist, marvelling not only at the wonder of the diamonds, but at the exploitative history intertwined in their sparkle.
Closely following the diamond rush in 1884, gold was discovered — and by the 20th century, South Africa was the largest gold producer in the world, accounting for 78% of global production at its peak in 1970. De Beers Diamond Company was founded by Cecil Rhodes in 1888, symbolising the start of the European monopolization of mines.
With these extractive industries fuelling the British empire, African men soon became inputs into the mining production cycle, and racial hierarchy permeated the mining workforce.
The Chamber of Mines; the institute governing the mine workers, gave black workers (who formed roughly 85% of the workforce) limited time contracts, saving the stable, higher-paid jobs for white workers, and discouraged black workers from bringing their families to live nearby. Under ‘the Mines and Works Act’ act, a black employee who had worked underground for 15 or 20 years still could not qualify as a miner ‘competent’ enough to handle Dynamite. Other legislation followed, prohibiting black workers from buying or leasing land outside reservations known as ‘homelands’. Perhaps most shockingly, the South African Chamber of Mines and its members did not increase wages for their black mining workers for not 10, not 20 …wait for it… 80 years! Any mine worker who stood up against their horrific conditions was dismissed, and forced to return to the ‘homelands’ where prospects for work were close to nil.
Both colonialism, and apartheid, created an economic system that kept black wages artificially low. And by 1971 the average annual wage for white workers was $5,678 compared with only $270 for black workers. Some economic historians go as far as saying that race was an easy vessel, to achieve the end goal — cheap labour. Cheap labour meant more profit and a globally competitive edge.
Spatial Inequality — Location, Location, Location!
Source: ‘Good Hope: South Africa and the Netherlands from 1600’*
Above is an 1897 map of Johannesburg (from that amazing history book I keep going on about). Zooming in, you can see how specific locations were reserved for workers of different races. Labour was bought in from all over Southern Africa, and given low quality temporary housing. White workers were allowed to buy land in any area, however black and coloured** workers could only live in their designated housing areas. Johannesburg was a city of miners, which led to other unique characteristics. In 1898, for example, there was just one woman to every 98 men. Separating families in this way had a dire impact on social cohesion.
*A note on language: Language in the 1897 map used to describe different races is not acceptable today, and includes terms that are classed as hate speech in South African law.
** Another note on language: the term coloured can be considered offensive in many Western societies. In South Africa it is considered a common racial categorisation and can be described similar to the term ‘mixed race’ or ‘bi-racial’ in Western societies. The coloured population were originally descendants from African and Asian slaves bought into South African by the colonial powers.
Throughout South Africa’s colonial and apartheid history land laws were used as a method of racial segregation. For example the Natives Land Act of 1913, which was built upon during the apartheid era adding more racial segregation laws — this further solidified existing racial hierarchies put in place during colonialism. Collectively, the series of land acts introduced set aside more than 80% of the land for the white minority and created ‘native homelands’, and separate facilities for whites and blacks, a segregated education system and much more.
27 years post-apartheid, South Africa’s spatial inequality by racial lines remains largely the same. Below are some images from a recent Vox video: entitled ‘Why is South Africa still so segregated’, if you can spare 10 minutes I’d highly recommend you watch it.
Source: Vox video: entitled ‘Why is South Africa still so segregated’.
Pretty striking right? Also, take note of the density, represented by the dots — and how that differs between racial lines. Black Africans live, on average, in very cramped ‘townships’, compared to the leafy green suburbs of the white communities.
Why does a spatially segregated city matter? Essentially, the poorer areas i.e. the black townships, have less access to utilities, meaning more power outages, less water, less internet — oh and more crime, including a high risk of sexual assault. The Cape Flats have some of the highest murder rates in the world, comparable — in some cases worse than war torn countries like Syria. Gender Based Violence in these locations is also rife, a massive issue for the country as a whole.
This spatial segregation leads to more income inequality as the higher paid, formal sector jobs are further away from the black residential areas, which makes climbing up that social mobility ladder a whole lot harder. In Cape Town for example, all job centres are in the Central Business District, which can mean a 3-hour taxi journey for people living in the Cape Flat townships due to the lack of good quality transport infrastructure.
The Inequality Trap
Why does inequality seem to be so persistent? To get to the bottom of this, I asked an inequality expert, Professor Vimal Ranchhod, who works at the Southern Africa Labour and Development Research Unit (SALDRU) based out of Cape Town University, he introduced me to the term ‘inequality trap’.
Perhaps you’ve heard of ‘the poverty trap’? The inequality trap is similar. It’s a situation where high levels of inequality remain unchanged over time due to perpetuating feedback loops. Resulting in South Africa’s economy being stuck in an equilibrium of extremely high inequality.
The economy repetitively privileges the rich over the poor, and does so in such a way that the poor can’t catch up. Inequality traps can work through a number of different systems at once, reinforcing each other, be it economic, social or political.
Investigating just one of Professor Ranchhod’s examples I’ve created the infographic below, which represents an inequality trap in education and shows how this manifests in the labour market in South Africa.
Source: Pellicer, M., & Ranchhod, V. (2016). Inequality traps and human capital accumulation in South Africa. Employment Intensive Growth in South Africa, UCT Press, Cape Town.
For more of Professor Vimal Ranchhod’s research, check out his website here.
In reality many types of inequality traps exist in South African society, these range from access to credit and variable interest rates, to safety, transport costs and social networks. When it comes to spatial inequality, richer districts in South Africa are able to contribute more tax, giving local municipalities more money to improve infrastructure,disproportionately more than poorer districts.
Sadly the impact of Covid-19 in South Africa has been no different, hurting the poor disproportionately more than the rich. Recent research from the World Bank shows that the lowest earners in society suffered a greater rate of job loss from Covid-19. One can also think about how this applies to online schooling throughout the pandemic. Favouring children who have access to the internet, and therefore online learning systems.
Conclusion
South Africa implemented pro-inequality policies for hundreds of years, from colonialism through to apartheid. The country has suffered the misconception that the only way it could compete on a global stage was through artificially cheap labour, using racial hierarchies, such as in the mining production chain, as a vehicle to achieve that. Pro-inequality policies were solidified further in law during apartheid, amplifying spatial inequalities. Throughout South African history and more recently, inequality traps continue working away in the background, benefiting the rich disproportionately more than the poor, reinforcing these historic legacies, despite the progress in policies and governance.
To me, it’s these themes: an extractive economy, cheap labour, spatial inequality and inequality traps — which help explain why South Africa is, and remains, the most unequal economy in the world.
Now that’s not to say, if you have an unequal past, that’s it — you’re stuck with it forever. Some countries have been able to reduce inequality at the same time as being able to experience economic growth: inclusive economic growth. I’ll look into potential ways how South Africa can achieve a more equal society in my next blog. But for now, my closing message is this - 27 years of post-Apartheid South Africa reversing 400 years of systematic inequality is no easy feat.
If you’re interested in learning more about South African history I would recommend the following history books which have helped me understand more about some of the deeply rooted themes discussed in this blog:
- ‘Good Hope: South Africa and the Netherlands from 1600’ (special thanks to JJ who lent me this book)
- Adam Hothschild ‘The Mirror at Midnight’
- Frank Welsh ‘A History of South Africa’
To note: My blog posts are my own personal views, and do not represent the views of the UK government or any of my past employers.
