South Africa is one of the richest African countries, with per capita gross domestic product (GDP) at $5,678 in 2008, compared with a sub-Saharan African mean of $2,055 per capita.  However, it is also one of the most unequal, and rising aggregate levels of income hide stark differences in poverty across different racial groups and growing levels of income inequality. The country’s Gini coefficient stood at 0.70 in 2008, compared with 0.66 in 1993.  The recent rapid extension in coverage of social grants has helped to limit this growth in inequality and the depth of poverty experienced in the country. For example, in 2008, 54% of the population lived below the poverty line, down from 56% in 1993. This would have been 60% without the social grants.

Since 1994, the South African government has attempted to develop a comprehensive approach to poverty and inequality using a range of instruments and complementary programmes. These include social grants, unemployment insurance, public works programmes for the working poor and the ‘social wage’ package, which comprises access to education, health and other services. With its origins in the 1920s, but restricted for many years to the white and mixed race populations, the system has in the past 20 years expanded coverage significantly across racial groups. The range of instruments deployed has also increased. Coverage of non-contributory social grants is now larger than in any other African country, reaching 14 million people (28% of the population).