Rural-urban gap set to widen after Census 2011

2012-11-03 12:52

State likely to allocate the lion’s share of its R1 trillion budget next year to populous Gauteng

The development and income gap between urban and rural South Africans is set to widen if policymakers follow the findings of Census 2011.

With Gauteng now confirmed as South Africa’s most populous province, government is expected to allocate to the province a lion’s share of its R1 trillion budget in February next year.

On the flip side, the provinces that have seen exoduses because of their dire prospects are set to get the short end of the stick and become poorer.

Efficient Group chief economist Dawie Roodt said the increase in the number of South Africans living in urban areas would make it easier for companies to reach their customers and it would make it easier for government to provide services.

He said migration to urban areas would result in big cities needing more infrastructure investment.

This also means that urban areas may end up taking a big chunk of the R3.2 trillion government wants to spend over the next eight years to upgrade electricity, road and rail infrastructure.

Roodt said: “I don’t have anything against rural areas, but I think it makes sense to build a road that is going to be used by many people rather than few people.”

South Africa is now home to nearly 52 million people, compared with 44.8 million in 2001.

Standard Bank economist Sibusiso Gumbi said: “These figures mean that Gauteng will draw the largest share of revenue from the National Treasury.”

The Treasury allocates the budget according to the number of people living in a province.

This week, Stats SA released the results of Census 2011, which showed that in the past decade Gauteng had overtaken KwaZulu-Natal as the most populous province.

It is now home to about 12.3 million people, compared with KwaZulu-Natal’s 10.3 million.

The census revealed that the real average income of South Africans has increased by 30% in the past decade.

Despite the growth in income, inequality between blacks and whites is still high.

And income inequality is widening among black people.

The average annual household income per race group was as follows: whites R365 134, Asians R251 541, coloureds R112 172 and black Africans R60 613.

However, the difference between high- and low-income groups has narrowed.

In 2001, black income was 11.6% of white income. It was 16.6% last year.

Stats SA gave no explanation for the widening income gap among black people, but Roodt believes the implementation of BEE policies and access to higher education may be the reasons.

He said: “I am pretty sure that the (widening) gap between blacks has to do with a few politically connected blacks like Cyril Ramaphosa and Julius Malema benefiting from BEE. Blacks who have access to better education earn more than those who don’t have access to a good education system.”

According to Roodt, government needs to improve the quality of education for all South African citizens if it wants to reduce income inequality.

Economists also believe that the rapid migration of people from poor provinces to richer provinces such as Gauteng, the Western Cape and, to an extent, the North West, will have a positive impact on the economy and service delivery.

The census also confirmed that South Africa was struggling to create jobs as unemployment was still stubbornly high.

Nearly 6 million people are unemployed in South Africa, with only 13.2 million people employed.

This puts South Africa’s unemployment rate at almost 30% of the working population.

Stanlib chief economist Kevin Lings said there was probably a link between South Africa’s high unemployment rate and the low levels of access to higher education.

The census revealed that only 11.8% of South Africans had higher education qualifications.

Lings said: “As we improve access to higher education and technical skills, we will make progress in reducing unemployment.

“There is a clear message that we need to up the skills levels. There are too many young adults who do not have the right skills.”

While South Africa was making limited progress in producing technical and artisanal skills, it was falling behind countries such as South Korea, which is leading the world in producing engineers and scientists.

About 70% of South Koreans aged 25 and above have engineering and science degrees.

“South Koreans are some of the best in terms of higher education. Across many emerging markets, there is improvement in higher education,” said Lings.

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