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South Africa: The numbers – 20 years on

May 29, 2014 | General, Industry Trends, Market & The Economy | 0 comments

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This month’s election gave us much to think about. Hearing the CEO of Goldman Sachs speak about South Africa at the Discovery Financial Planning Conference in Johannesburg last week gave us even more to consider. It was a truly fascinating ‘warts and all’ presentation on where we were in 1994 and where we are now, covering a wide variety of issues.

In 1994, we had 44 million people living in South Africa. Today we have 52 million.

In this year’s May election, 18,5 million people voted, which is an outstanding turnout. A total of 11,4 million voted for the ANC. The ANC voters were primarily black and most of the DA’s votes came from Indians, coloureds and whites.

In 1994, our tax base was 1,7 million people and these individuals contributed R114 billion. Today, there are 15,3 million people who pay R900 billion in taxes. Remember that companies pay the vast majority of these taxes, not individuals.

From 2001, the number of people in LSM 1-4 was 52%, in 2010 this percentage of the population dropped down to 31%. The number of people in LSM 5-10 increased from 48% to 69%.This means that 10 million people moved into the middle to upper income bracket. The largest number of people are now in LSM 5&6 – that’s 12,3 million people, up from 7,3 million in 1990.

The number of people who are on the social grant stands at 16 million. Of these, 70% are young. It is anticipated that this number will remain there until 2017. Government is committed to social grants. This fact helps explain why all these people, who might otherwise have been apathetic towards voting, cast their vote and voted for the ANC. It was their way of protecting that income and who could blame them. In South Africa, 16,6 million people live on less than $2 per day.

In 20 years, the Gini coefficient which represents the income distribution of a nation’s residents has increased. This is a worldwide phenomenon, not just a South African one. Workers in SA are stuck to a CPI + 3% wage inflation, while bosses earn significantly more. Terribly dangerous are the figures that 36% of the labour force is unemployed and 7,6 million cannot find work or have given up. 85% of South Africans still remain poor and 87% of white South Africans are in the middle to upper class categories.

Mining, although declining in importance to the economy, is critical to our exports. It remains 38% of our total exports.

Some good news is that government spending has increased from $37 billion in 1990 to $117 billion in 2014. The spending on the defence and debt service has dropped from 28,5% in 1990 to 12,7%. The cost of servicing debt has decreased from 15% to 9%. Social protection, health and education have collectively increased from 29.3% to 46.3%. Government is desperately trying to reduce the poverty gap. Yet, we all know that these increases in spending on basic services are not necessarily trickling down to the people who need them most.

It’s no surprise to hear that the real problem is the quality of our spending, followed by delivery. Both are too poor and this next administration has to turn this around.

With eyes wide open and armed with the stats, we remain optimistic about the country’s future. We continue to get many things right in SA. But we need to be vigilant and continue to pile pressure on the government to deliver and spend the money wisely and efficiently.

We believe there is potential here to be part of another revolution:  the first truly multi-racial and across-the-social-divide revolution the world has ever seen. But to get there, we need more citizens with skills to stop being passive and actively engage.

How are you doing your part for South Africa?




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