South Africa has made considerable strides toward improving the wellbeing of its citizens since its transition to democracy in the mid-1990s, but progress is slowing. Based on the international poverty line of $1.90 per day, (2011 Purchasing Power Parity, exchange rates), 18.8% of South Africans were poor in 2015, following a decline from 33.8% in 1996. Factors driving this progress include, among others, real income growth, expansion of social safety nets, access to basic services including subsidized housing credit. Yet progress towards poverty reduction has slowed in recent years, with the $1.90 per day poverty rate increasing from 16.8% to 18.8% between 2011 and 2015. This is partly due to structural challenges and weak growth since the global financial crisis of 2008, but increasingly too by labor market developments that demand skills that the country’s poor currently lack. Unemployment remains a key challenge, standing at 27.6% in the first quarter of 2019. The unemployment rate is even higher among youths, at around 55.2%.

South Africa remains a dual economy with one of the highest inequality rates in the world, with a consumption expenditure Gini coefficient of 0.63 in 2015. Inequality has been persistent, having increased from 0.61 in 1996. High inequality is perpetuated by a legacy of exclusion and the nature of economic growth, which is not pro-poor and does not generate sufficient jobs. Inequality in wealth is even higher: the richest 10% of the population held around 71% of net wealth in 2015, while the bottom 60% held 7% of the net wealth. Furthermore, intergenerational mobility is low meaning inequalities are passed down from generation to generation with little change in inequality over time. Not only does South Africa lag its peers on level of inequality and poverty, it lags on the inclusiveness of consumption growth.