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What can South Africa learn from Brazil in tackling extreme socioeconomic inequality?

September 13, 2013   ·   0 Comments

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Two decades have passed since the end of Apartheid in South Africa, yet vast socioeconomic inequality not only persists but is worsening. South Africa has a Gini Index of 0,63 indicating a substantial increase from 0,596 in 1995 (UNDP Report). This indicates a situation of severe social stratification, ranking as one of the most unequal country’s in the world. Conversely, fellow developing nation Brazil has reduced socioeconomic inequality over the past decade drastically, having once been one of the most unequal countries in the world.

Brazil’s progress has been attributed to the successful implementation of various social protection policies that have had a major impact on extreme poverty. Brazil’s experience serves as a potential source of useful policy prescriptions for South Africa in combating extreme socioeconomic inequality. Various multinational forums and organisations have emerged in recent years recognising this exact dynamic. BRICS (Brazil-Russia-India-China-South Africa) and IBSA (India-Brazil- South Africa Dialogue Forum) feature prominently in this regard.

Poverty in Brazil decreased by 67,3% between 1994 and 2010, meaning 40 million people were transferred into the middle class (IPC-IG Report). Over 13,5 million families currently benefit from its acclaimed Bolsa Familia – a Conditional Cash Transfer Social Protection Programme. Brazil has also more than tripled its minimum wage since 2002.

Since the introduction of Bolsa Familia, 95% of Brazilian children attend school more than 85% of the time. These achievements have resulted in Brazil’s Gini Index reducing from 0,597 to 0,538, indicating greater inclusive growth. Thus Brazil is significantly developmentally advanced relative to South Africa. Even so, its history and socioeconomic structure bare many commonalities to the South African experience.

It can be said that South Africa’s colonial heritage, which culminated in Apartheid and an economy based on dependent international trade, resulted in the establishment of internal socioeconomic structures causing the persistence of underdevelopment for the majority of the population.

Such an extraction is supported by the theoretical approach of famed Brazilian Dependency theorist, Celso Furtado. He designated key factors perpetuating socioeconomic inequality in Brazil. These factors relate to poverty, poor education and unemployment, the rural-urban divide, unequal land ownership and shortcomings in the tax system and public expenditure.

Furtado exposed the consequences of having the majority of the population alienated from development while a wealthy minority connected to external markets, benefiting from the yields of growth. He submitted that combatting inequality can be achieved by facilitating the participation of all citizens in the economy, for homogenised economic growth to be achieved.

In this vain, South Africa’s extreme inequality can be largely attributed to high unemployment, estimated between 25 and 40%. Therefore emulating Brazil’s conditional cash transfer systems and instituting a Basic Income Grant in South Africa, in addition to the other grants already in place, has the potential to make a significant impact on extreme poverty and consequently inequality.

The International Monetary Fund has testified to the potential of spurring economic growth from the ‘bottom up’ as opposed to relying on the traditional trickle-down effect. Despite trade union support for the institution of a Basic Income Grant, the South African government appears constrained by the entrenched socioeconomic structures in place.

The Grant could be financed by marginally increasing the taxes on the wealthy and corporations. However, as submitted by Furtado, the structural impetus to resist such policies has prevented such progressive change from occurring. More so, South Africa would need to enact policies beyond a Basic Income Grant to achieve the progress Brazil has. Increasing the minimum wage and literacy feature as other pressing concerns where South Africa can learn from the Brazilian experience.

Admittedly, South Africa has instituted numerous social protection programmes, including the Child Support Grant, the State Old Age Pension system and the innovative Expanded Public Works Programme. The legacy of Apartheid, as well as current political instability and corruption, are seen as major factors jeopardising the successful formulation and implementation of policies aimed at tackling socioeconomic inequality in South Africa today.

This does not bode well for the future of the majority of South Africans who are deprived of basic public services and the potential of upward socioeconomic mobility. Brazil’s future prospects appear more positive, however it too is experiencing widespread dissatisfaction among the majority who bear the heavy burden of high inflation, some of the world’s highest taxes and poor service delivery.

In Brazil and South Africa, reforms have been made and policies engineered aimed at addressing the pronounced social stratification. However it is clear that more needs to be done to create widespread change. It can be said that globalisation, which has increased the role of multinational corporations, and undermined the role of the state in political economic relations, is the defining obstacle in combating socioeconomic inequality in developing states around the world today.

Furtado did not account for this specifically, relying solely on the government to induce change. Furtado prescribed comprehensive transformation of the social and economic structures of society for development to be homogenised. Therefore policies aimed at addressing the symptoms of inequality are not enough to create substantial change. As long as the overarching interests of the state and MNCs are informed by private gain for a minority, inequality will persist.

Find her presentation on the subject here.

Photo: Cape Town. Ashleigh Kate Slingsby

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