Robin Baugus

JSIS201: Making of the 21st Century

Long Paper: 1st Draft
February 10, 2015

Racial Economic Disparity in Post-Apartheid South Africa

Introduction
South Africa is the second largest economy in Africa, falling behind Nigeria. 1 The
majority of South Africa's wealth is in the hands of a White minority. During Apartheid such a
discrepancy was to be expected as national laws overwhelmingly favoured the comfortable living
and prosperity of White South Africans over their Black counterparts. 2 However, as the structure
behind Apartheid was dismantled, it was intended that such inequalities would be mitigated at
the least and eradicated at best. Despite such intentions, South Africa faces an approximately
25% unemployment rate and massive population whose income places them below the poverty
line in such cases the percentages indicate that Black South Africans are the largest
demographic to find themselves in poverty while White South Africans make up the smallest
percentage of South Africa's poor.3,4 Why then, despite the dissolution of Apartheid, has the
South African economy remained heavily biased along racial lines? As, legally, no policies are
in place which necessarily hinder the advancement and economic improvement of Black South
African citizens, it is important to understand why such a trend is not being seen.

1 As of August, 2014 the Nigerian economy consists of a GDP of approximately 510 billion American dollars,
compared to South Africa's 352 billion.
Barungi, Barbara. "Nigeria." - African Economic Outlook. African Economic Outlook, 25 Aug. 2014.
Web. 10 Feb. 2015.
2 Discussed below.
3 Kumo, Wolassa L., Jan Rielnder, and Babatunde Omilola. "South Africa." - African Economic Outlook. African
Economic Outlook, 25 Aug. 2014. Web. 10 Feb. 2015.
4 Discussed below.

There are a variety of factors which may be called into account for such a continued
discrepancy. However, this paper will focus primarily on the effects of crime on South African
economic distribution. It will be argued that, in some ways, the South African economy finds
itself in a vicious circle. Substantial inequality and unemployment among the population results
in an increased crime rate among those populations at an economic disadvantage. Such a trend
can negatively influence investment in South African economy which, naturally, hinders the
economic situation from improving as quickly or in as many ways as it may otherwise. This, at
the very least, prevents drastic changes in the unemployed/economically unequal statistics of the
nation and at worst, furthers the establishment of such discrepancies. The perpetuation of this
economic imbalance further facilitates increased crime rates bringing the problem full circle.
The cyclical nature of this problem makes it difficult for populations already in poverty and who
are unemployed to move upwards economically thus encouraging the continuation of a nearly
Apartheid-like economic discrepancy between the races.

A Brief Glance into Apartheid South Africa

Apartheid is identified as the legal segregation along racial lines of all aspects of
economic, social, cultural, and political life in South Africa between the years of 1948 and
1994.5 Racial distinctions (mandated by the Population Registration Act of 1950) were not
limited to categories of White and Black but also included Colored, (usually economically
ahead of Blacks) and later Indian, and Asian (usually economically ahead of Coloreds
and behind Whites). Effective segregation was primarily obtained through the Group Areas
Act of 1950 (which divided urban areas into zones meant to be the sole area of residence and
work for a single racial group); the Reservation of Separate Amenities Act of 1953 (designating
5 Pieterse, Edgar. "Apartheid." Encyclopedia of Urban Studies. Ed. Ray Hutchison. Thousand Oaks, CA: SAGE
Publications, Inc., 2010. 31-34. SAGE knowledge. Web. 10 Feb. 2015.

racial access to public facilities and instituting segregated schools, hospitals, etc.); and the Bantu
Urban Areas Act of 1954 (instituting influx control regulations requiring non-White South
Africans to carry passbooks providing proof of residence and employment while in designated
White cities and areas).6 Economic inequality was ensured through a variety of other Apartheid
era legislation: the Unemployment Insurance Amendment Act of 1949 (excluding most Africans
from unemployment insurance); the Native Labor Settlement of

Disputes

Act

of

1953

(prohibited the formation of labor unions by Africans and outlawed strikes); and the Colored
Persons Representative Council Amendment Act of 1968 (preventing the participation of
Colored South Africans in parliament) among others. Such legislation was clearly motivated by
a desire to economically hinder Black South Africans.
In the case of the Labor Settlement of Disputes Act, a complaint was lodged with the
World Federation of Trade Unions on June 30th, 1958 concerning a strike which took place at the
Amato Textile Factory in Benoni. The 340 workers who participated in the strike were fired
from their positions and prevented from re-employment. It was unclear whether the prohibition
of re-employment was demanded by the government, however it was certainly clear that it was a
case of racially motivated anti-union discrimination having been practised in respect of
employment on the ground of participation in trade union activity-participation in and direction
of the strike at the factory. While the ruling by the World Federation of Trade Unions may have
done little to alter the discriminatory legislation in question (the committee decided only to
bring [their conclusions] to the notice of the Government of the Union of South Africa.) it is
important to note that these steps towards racial economic disparity were clearly identified as
such by onlookers.7
6 Pieterse, 2010
7 "Definitive Report - Report No 36, 1960." FOA Case Text. International Labor Organization, 2012. Web. 10 Feb.
2015. <http://www.ilo.org/dyn/normlex/en/f?p=1000%3A50002%3A0%3A%3ANO
%3A50002%3AP50002_COMPLAINT_TEXT_ID%3A2898331>.

These attempts at economic segregation were extremely effective. According to the 1960
South African census, Whites made up 19.3% of the population compared to the Bantu who
consisted of 68.3% of the population.8 However, at the time the disparity ratio between the
incomes of White and Black South Africans in 1960 was approximately 11:9, with Black South
Africans earning an average of R433 and White South Africans an average of R5,139. 9 Even in
the final years of Apartheid, the 1993 average income for Black South Africans was R1,173
compared to the R8,149 of their White Counterparts. Of this, Black South Africans were subject
to an average of R1,140 in expenditures (resulting in a net of only R33) while White South
Africans averaged expenditures of R5,986 (a net of R2,163).10

The End of Apartheid

It may be argued that the end of Apartheid began in 1990 with the election of F.W. de
Klerk to the South African presidency. Economically, South Africa was suffering under the
weight of international sanctions. In his opening speech to Parliament on the 2 nd of February,
1990 Klerk essentially called for an end to Apartheid, stating that the government must turn its
attention towards creating a South Africa wherein every inhabitant will enjoy equal rights,
treatment and opportunity in every sphere of endeavour - constitutional, social and economic.
Human rights, socio-economic policy, and the economy were all key elements of his speech as
he called for reform of Apartheid policies. It would be de Klerk's speech which would redeem
8 Marger, Martin. "Chapter 10: South Africa." Race and Ethnic Relations: American and Global Perspectives.
Belmont, CA: Wadsworth Pub., 1991. 357-95. Print.
9 This data is calculated in the value of the 1984 Rand.
McGrath, Mike. "Economic Growth, Income Distribution and Social Change." The Political Economy of
South Africa. Ed. Nicoli Nattrass and Elisabeth Ardington. Cape Town: Oxford UP, 1990. 88-106. Print.
10 This data is calculated in the value of the 2008 Rand.
Liebbrandt, Murray, Arden Finn, and Ingrid Woolard. "Post-Apartheid Changes in South African Inequality."
Income Inequality: Economic Disparities and the Middle Class in Affluent Countries. Ed. Janet C. Gornick and
Markus Jantii. Standford, California: Stanford UP, 2013. 459-85. Print.

anti-Apartheid organizations and call for the release from prison of its members among them
his presidential successor, Nelson Mandela.11
De Klerk's actions provided a form of jumpstart to the South African economy. As
Sebastian Mallaby states in his book, After Apartheid, [a]fter the release of Nelson Mandela
more tourists started arriving; European supermarkets became less shy of South African fruit;
Northern Ireland Electricity bough a consignment of South African coal, shunned by British
power companies for twenty years. foreigners blessed South Africa with 820 million rand of
long-term capital, plus another 700 million rand in short-term loans. 12 Some of the newly
legalized organizations, such as the African National Congress (known as the ANC, later to
become the political party elected to power through their support of Mandela) viewed these
events as proof of Apartheid's failure. In a 1991 explanation of their guidelines on strategy and
tactics, the ANC predicted the legal end to Apartheid by stating that [t]he Apartheid regime and
the ruling National Party have been forced to openly admit that the system of White minority
domination and exploitation has failed and can no longer be maintained. They have accepted that
it is necessary to enter into negotiations with the national liberation movement for the elaboration
and adoption of a new constitution.13
However, despite the call for equality among the peoples of South Africa (including
economic equality), and the legal dissolution of the system which prohibited such equality, South
Africa remains a nation economically divided along racial lines. As it was during Apartheid, the
nation's staggering population of 51,770,560 citizens consists of a majority of Black South
11 F. W. De Klerk's Speech at the Opening of Parliament 2 February 1990. 2 Feb. 1990. F. W. De Klerk's Speech at
the Opening of Parliament 2 February 1990 - The O'Malley Archives. Web. 10 Feb. 2015.
<https://www.nelsonmandela.org/omalley/index.php/site/q/03lv02039/04lv02103/05lv02104/06lv02105.htm>.
12 Mallaby, Sebastian. After Apartheid: The Future of South Africa. New York: Times, 1992. Print.
13 South Africa. African National Congress. Advance to National Democracy: Guidelines on Strategy and Tactics
of the ANC. By ANC. N.p., n.d. Web. 10 Feb. 2015.
<https://www.nelsonmandela.org/omalley/index.php/site/q/03lv02039/04lv02103/05lv02109/06lv02112.htm>.

Africans (comprising 79.2% of the population) as compared to a much smaller population of

White South Africans (8.9% of the population). 14 Economic inequality also remains greatly
disproportionate: in 2008 the average income for Black South Africans totaled R1,537, netting
R295 after an average of R1,242 in expenditures. Meanwhile, White South Africans enjoyed an
average income of R10,685, netting R1,560 after R9,125 in expenditures. As of 2008 postApartheid South Africa, Black citizens still were not making as much as their White counterparts
during Apartheid.15
How does this happen? As briefly mentioned, this paper will focus on the effects of
crime in maintaining such a staggering inequality among the races of South Africa. Crime is
often cited as a factor in South Africa's economic problems. The effects of crime on economic
prosperity are sometimes dismissed, however links have been found by some scholars. In an
analysis of Italian crime and economic welfare, Claudio Detotto and Edoardo Otranto noticed an
inverse relationship between crime and GDP growth, made more prominent in times of recession
when funds which might support economic recovery are being diverted to respond to criminal
activity, though it was noted that there seemed to be a similar effect no matter the longevity of
the crimes (that is to say that isolated instances of sexual assault/murders produced as much an
effect on the economy as a longer string of such crimes).16 Some of these sentiments were
mirrored by Eleftherios Goulas and Athina Zervoyianni who also expanded upon the possibilities
of such a correlation when they stated that they found evidence that increasing crime has no
independent negative effect on growth under favourable economic conditions and, thus, under
14 South Africa. Statistics South Africa. Census 2011: Census in Brief. Statistics South Africa, 2012. Web. 10 Feb.
2015. <https://www.statssa.gov.za/Census2011/Products/Census_2011_Census_in_brief.pdf>.
15 This data is calculated in the value of the 2008 Rand.
Liebbrandt, 2013.
16 Detotto, Claudio, and Edoardo Otranto. "Does Crime Affect Economic Growth?" Kyklos 63.3 (2010): 330-45.
Web.

circumstances of low macroeconomic uncertainty.

Higher than-average macroeconomic

uncertainty, however, enhances the adverse impact of crime on growth, making the effect of the
crimeuncertainty interaction highly significant and negative. Accordingly, crime appears to be
particularly harmful to growth in bad times, that is, when worsening economic conditions make
the return to investment less secure.17
If, then, economic welfare can be adversely affected by increased crime, where does this
crime come from? In the case of South Africa, a vicious circle has been established. Studies
have linked income inequality along racial lines with an increased percentage of Black citizens
below the poverty line in America, Brazil, and especially South Africa. 18 Such a trend is
exacerbated by the fact that the nation currently faces an unemployment rate of nearly 25%,
leaving a quarter of the population the majority of whom are Black at an economic
disadvantage. Furthermore, some criminal actions may be the lingering results of Apartheid
itself. An examination of rape and sexual assaults in South Africa found that during Apartheid
rapists of White women were likely to be executed while the rapists of Black women (especially
by White men) went unpunished. This increased level of inequality and oppression towards
Black women in particular created an atmosphere wherein such violent crimes were no longer
viewed as such, rather they became a part of daily life by nearly every person who heard of it,
including the victim.19 Such attitudes have carried over into post-Apartheid south Africa where
there is thought to be an average of at least 172 sexual offenses committed per day.20

17 Goulas, Eleftherios, and Athina Zervoyianni. "Economic Growth and Crime: Does Uncertainty Matter?" Applied
Economics Letters 20.5 (2013): 420-27. Web.
18 Gradn, Carlos. "Race and Income Distribution: Evidence from the USA, Brazil and South Africa." Review of
Development Economics 18.1 (2014): 73-92. Web.
19 Armstrong, Sue. "Rape in South Africa: An Invisible Part of Apartheid's Legacy." Gender & Development 2.2
(1994): 35-39. Web.
20 "FACTSHEET: South Africa's Official Crime Statistics for 2013/14 - Africa Check." Africa Check. Africa Check,
2014. Web. 10 Feb. 2015. <http://africacheck.org/factsheets/factsheet-south-africas-official-crime-statistics-for201314/>.

Income inequality also results in educational inequality. As a result, nearly half of the
South African population finds itself illiterate. 21 The combined turmoil of illiteracy, lack of
access to education, and poverty, make the creation of economic opportunities and jobs difficult.
This leads to desperate measures in an attempt to make financial ends meet which may result in
criminal activities. Such activities lead to what Mallaby refers to as ungovernability which
[deters] foreign investment, for it is hard to produce much with workers who live in violent
townships and fear for their lives.22

Thus the economic situation struggles to improve,

continuing to incubate the conditions for crime and socio-economic disparity between the races.

Conclusion
Can we blame Apartheid for the lasting effects of racial segregation? Not entirely. The
truth is that racial tensions emerged long before Apartheid - they first began to take shape with
early colonization of South Africa by the Dutch. The overwhelming number of native South
Africans were seen as a threat to incoming Dutch settlers (Boers). The arrival of British settlers
did nothing to prevent racial segregation. While the relationship between the Boer and British
was one of tension, eventually breaking in violence, they did agree on the inferiority of their
Black neighbors. However, while the Boers viewed their Black counterparts as a threat, the
British responded to them from the position of the White Man's Burden: viewing them in a
more paternalistic frame.23
It was the political success of Afrikaner (the eventual cultural identification of Dutch
settlers/boars) interests in 1948 with by the National party which truly kicked off what would
become South African Apartheid, which we discussed briefly above. Until this point white

21 Mallaby, 1992
22 Mallaby, 1992, 221
23 Marger, 1991, 361

supremacy was an idea which was acted upon, often with violence, but generally in selfmotivated forms. The success of the National party allowed for political inequality to be
established, enabling the superiority of Whites in ways that brute force could not do as
effectively. Thus Apartheid is merely the result of many years of racial tensions and white
supremacist thinking: a legal and political continuation of a system already, for all intents and
purposes, in progress.
However, for many South Africans, Apartheid represents the most recent and, perhaps,
shameful example of this long-standing view on racial equality (or lack thereof). As the period
which codified Black inferiority during the formative years of many of South Africa's current
adults (of age to hold positions in political office and make up a large part of today's adult work
force), it stands as the most recent influence on modern race relations who's affects on modern
society are more easily examined than those of racist settlers from generations prior (though preApartheid tensions may certainly be influences in the minds of South Africa's oldest citizens)
While it may be possible for the South African economy to eventually be distributed
among South African citizens in a more equal manner, such distribution is unlikely to occur
anytime soon.

In many ways, the establishment of Apartheid's economic and social

discriminating systems ensured the continuation of such discrimination after its end.

The

mindset of political, economic, and social inequality had already been firmly established in
South African citizens who had been so thoroughly segregated that integration cannot be
achieved with the dissolution of racist legislation.
It is possible that by addressing the crime rates of South Africa directly, in a way which
helps to create more peaceful townships especially, a large step can be taken towards economic
equality and freedom from the vicious cycle which perpetuates it.

Alternative options have also been suggested by some South African citizens as well.
One such possibility is a Basic Income Grant (BIG) wherein the government would provide a
uniform income to every citizen (viewing income, itself, as a basic human right).24 This is a
multi-faceted approach to an already multi-faceted issue, however as it relates to crime and the
vicious circle we have already discussed, such a steady source of revenue may enable those
citizens in poverty to legally purchase and obtain items which satisfy their basic needs rather
than turning to crime. Furthermore it can provide a form of stability as citizens search for jobs or
are trying to get by between jobs a stressful time for any person which may encourage criminal
activities out of desperation.
The legislation required (for the BIG, any other similar alternatives, as well as any
courses of action which may be undertaken to directly address crime and/or income inequality)
would be difficult to implement and potentially costly for the South African government, but it
might be found that these costs would pale in comparison to the economic benefits to be gained
by increased economic equality among South African citizens.

24 Salant, Natasha. "What's the BIG Idea?" Contributoria. Contributoria, Mar. 2015. Web. 03 Mar. 2015.
<https://www.contributoria.com/issue/2015-03/54b936836d750f1d73000022>.

Sources

Barungi, Barbara. "Nigeria." - African Economic Outlook. African Economic Outlook, 25 Aug.
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Outlook. African Economic Outlook, 25 Aug. 2014. Web. 10 Feb. 2015.
Pieterse, Edgar. "Apartheid." Encyclopedia of Urban Studies. Ed. Ray Hutchison. Thousand
Oaks, CA: SAGE Publications, Inc., 2010. 31-34. SAGE knowledge. Web. 10 Feb. 2015.
"Definitive Report - Report No 36, 1960." FOA Case Text. International Labor Organization,
2012. Web. 10 Feb. 2015. <http://www.ilo.org/dyn/normlex/en/f?p=1000%3A50002%3A0%3A
%3ANO%3A50002%3AP50002_COMPLAINT_TEXT_ID%3A2898331>.
Marger, Martin. "Chapter 10: South Africa." Race and Ethnic Relations: American and Global
Perspectives. Belmont, CA: Wadsworth Pub., 1991. 357-95. Print.
McGrath, Mike. "Economic Growth, Income Distribution and Social Change." The Political
Economy of South Africa. Ed. Nicoli Nattrass and Elisabeth Ardington. Cape Town: Oxford UP,
1990. 88-106. Print.
Liebbrandt, Murray, Arden Finn, and Ingrid Woolard. "Post-Apartheid Changes in South African
Inequality." Income Inequality: Economic Disparities and the Middle Class in Affluent Countries.
Ed. Janet C. Gornick and Markus Jantii. Standford, California: Stanford UP, 2013. 459-85. Print.
F. W. De Klerk's Speech at the Opening of Parliament 2 February 1990. 2 Feb. 1990. F. W. De
Klerk's Speech at the Opening of Parliament 2 February 1990 - The O'Malley Archives. Web. 10
Feb. 2015.
<https://www.nelsonmandela.org/omalley/index.php/site/q/03lv02039/04lv02103/05lv02104/06lv
02105.htm>.
Mallaby, Sebastian. After Apartheid: The Future of South Africa. New York: Times, 1992. Print.
South Africa. African National Congress. Advance to National Democracy: Guidelines on
Strategy and Tactics of the ANC. By ANC. N.p., n.d. Web. 10 Feb. 2015.
<https://www.nelsonmandela.org/omalley/index.php/site/q/03lv02039/04lv02103/05lv02109/06lv
02112.htm>.
South Africa. Statistics South Africa. Census 2011: Census in Brief. Statistics South Africa, 2012.
Web. 10 Feb. 2015.
<https://www.statssa.gov.za/Census2011/Products/Census_2011_Census_in_brief.pdf>.
Detotto, Claudio, and Edoardo Otranto. "Does Crime Affect Economic Growth?" Kyklos 63.3
(2010): 330-45. Web.
Goulas, Eleftherios, and Athina Zervoyianni. "Economic Growth and Crime: Does Uncertainty
Matter?" Applied Economics Letters 20.5 (2013): 420-27. Web.
Gradn, Carlos. "Race and Income Distribution: Evidence from the USA, Brazil and South
Africa." Review of Development Economics 18.1 (2014): 73-92. Web.
Armstrong, Sue. "Rape in South Africa: An Invisible Part of Apartheid's Legacy." Gender &
Development 2.2 (1994): 35-39. Web.
"FACTSHEET: South Africa's Official Crime Statistics for 2013/14 - Africa Check." Africa
Check. Africa Check, 2014. Web. 10 Feb. 2015. <http://africacheck.org/factsheets/factsheetsouth-africas-official-crime-statistics-for-201314/>.
Salant, Natasha. "What's the BIG Idea?" Contributoria. Contributoria, Mar. 2015. Web. 03 Mar.
2015. <https://www.contributoria.com/issue/2015-03/54b936836d750f1d73000022>.