A High Standard of Living, Brought Low by AIDS in South Africa

By Erin L. Bacon
2010, Vol. 2 No. 01 | pg. 1/2 |

In 1994 South Africa's regime of apartheid, under which the black majority was suppressed and discriminated against by the white minority, came to an end1. The African National Congress (ANC) won the first free in the same year, and the paty has held power ever since. When Nelson Mandela became president, he and his party promised to improve the welfare of the hitherto-neglected African population. Former president Thabo Mbeki restated these goals in his 2008 State of the Nation Address, saying that must focus on the following goals: “building the infrastructure [needed] to achieve [South Africa's] economic and social goals”; “poverty eradication”; “targeting the critically important area of and training”; and finally, “health for all”2. But as we enter 2010, what impact has this economic program had on the standard of living for the average South African?

The traditional measure of progress is GNP, or gross national product3. However, in the past two decades, a general consensus has arisen that GNP does not paint a full picture of a country's well-being. The International Monetary Fund (IMF) instead has begun to index GNP to a purchasing power parity (PPP). PPP is intended to give a more accurate picture of the economic status of a nation, by accounting for differences in cost of living. In other words, “people in developing and transition economies are able to purchase a greater quantity of goods and services with a smaller amount of money.”4.

The question therefore arises, does having a higher level of established social welfare systems, such as public education or health programs, cause a state to have a higher standard of living than might otherwise be anticipated from analysis of GNP (adjusted for PPP) alone? These programs should in theory mitigate some of the negative standard-of-living effects associated with a low per capita income.

In 2007, South Africa's GNI as measured by the Atlas method in US dollars, was $5,760 per capita, placing it at 88th of 209 countries surveyed in a World Bank study, between Lebanon (87) and Costa Rica (89)5. (GNI is a slightly altered GNP which takes into account foreign remittances as well as domestic production.) However, its PPP was much higher at $9,560 per capita. By either calculation, South Africa fares far better than most sub-Saharan African nations, and is one of the leading developing countries in the world.

The Program, or UNDP, has compiled a Human Development Index (HDI), which is intended to “[look] beyond GDP to a broader definition of well-being.”6. HDI is a composite of life expectancy, literacy and school enrollment rates, and PPP. HDI is therefore the most comprehensive index for determining standard of living. South Africa is classified as a state of “medium human development,” and ranks at #121 of the 177 countries surveyed most in 2005, its most “globalized” neighbors in the rankings being Egypt at 112 and at 128, with a smattering of smaller countries such as Botswana or Guatemala in the intermediary positions7. Numerically, South Africa placed in the upper end of the middle at about 0.67, with Iceland the highest at 0.97 and Sierra Leone the lowest at 0.348.

Since the demise of apartheid in 1994, South Africa's economic and social status have undergone marked changes. GDP annual growth has averaged about 3.5%, with the years 2004-2007 maintaining a 5% increase annually9. Per capita PPP increased from $5700 in 1994 to $9560 in 2007. Measles immunization for children aged 12-23 months grew from 76% to 85%. And finally, the percent of South Africans aged 7-24 who had completed primary school skyrocketed from 77% in 1992 to a reported 100% completion rate in 2004, the last year for which this statistic is available.

It should be noted that a decline in average life expectancy was experienced, to 51 from a high of 63 in 1992, but this can be attributed to the AIDS epidemic which swept Africa in the mid- to late-1990s. This is significant because in May 2000, a solid link was established in a South African government report between AIDS and poverty, with South Africa's economy in 2010 expected to be about 17-20% smaller than it would have been without the disease10. The White Paper for Social Welfare, drafted as part of the ANC's 1994 Reconstruction and Development Program (RDP), further affirmed that “social development and economic development are two interdependent and mutually reinforcing processes.”11.

Most tellingly for our study of quality of life in South Africa, the poverty level (defined as the percentage of the population living on less than $1 US per day) has plummeted from 35% in the decade 1983-1993, to 10% in the decade 1993-2003 – a staggering drop indicating that a full one-quarter of the South African poor were elevated from that status since the ANC took power12. What social welfare systems has South Africa implemented since the end of apartheid that may account for these changes?

Following the election of Nelson Mandela, a new South African constitution was enacted. In its bill of rights, the South African government's guarantees of social welfare are ennumerated, including “adequate housing”, health care, “sufficient food and water”, social security, and education; each article is followed by the provision, with slight variation in wording, that “The state must take reasonable legislative and other measures, within its available resources, to achieve the progressive realisation [sic] of this right.”13.

Between 1994 and 1996, the RDP financed “free medical care for under-six children and pregnant mothers, a school feeding programme [sic], electrification of poor homes and public works projects for unemployed youths” using a several billion rand budget14. From 1996 to 2000, RDP achievements included “4 million more people given access to clean running water,” 0.9 million housing projects built and 1.1 million housing subsidies distributed, 1.5 million new electrical and 4.2 million new telephone hookups, 3 billion rand spent on “poverty relief,” 600 new health clinics, and the realization of free health care for all pregnant women and children under six15. South Africa's hunger rate dropped to 2% by 200716.Overall, 90% of South Africa's welfare budget is spent on social security, but the government attempts to reconcile this imbalance by also offering up to 60% of financing to non-governmental organizations (NGOs) involved in social welfare and/or charity, like the Child and Family Welfare Society17.

South Africa still has a long way to go in order to provide a decent standard of living for all of its citizens. In the CIA's Gini index calculations of income disparity, last updated on 4 December 2008, South Africa had the largest gap between rich and poor of all the countries surveyed, with a coefficient of 6518. The South African government allocated 50.7 billion rand to education in 2001, one of the largest single expenditure items, and 14.8% of the total budget went to education, nutrition, and health care combined; health care spending increased from 24.8 billion rand in 1997 to 32.3 billion four years later, with the Ministry of Health's universal immunization campaign at the forefront19. Nonetheless, 19 million South Africans still had no health insurance in 2001, and only about 56% of health clinics have the equipment and facilities to test for HIV/AIDS. Like in many more developed Western countries as well, South Africa has a devastating shortage of trained personnel, especially teachers, hospital staff, and social workers, which offsets the substantial budgetary outlays for welfare reforms.

In a General Household Survey conducted in 2007 by the South African government, 87.8% of the population indicated satisfaction with services in the public sector20. The legacy of and segregation to be overcome in the post-apartheid period is a huge obstacle to the creation of a modernized, economically successful, and “fair” society, but it is important to remember that only 14 years have passed since the current regime's inception. In comparison to even the “miracles” of the South Asian tigers, Japan, and in the past half-century, South Africa is advancing at an incredible rate. With continued aid from the UN Development Program and the US Agency for , South Africa can be expected to accelerate its progress in the 21st century21.

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