NPC Advisory on Goals 1 and 2 of the NDP

The document provides a diagnostic describing the current trends and profile of the poorest 40% of the South African population who are the focus of Critical Actions 1 and 2 of the National Development Plan (NDP). This is followed by an assessment of what is known concerning the contribution of different economic sectors towards the target of increasing the share of income earned by the poorest 40%, and the multiplier effects of government social spending. The document reports on the contribution of small and micro-enterprises (SMMEs) located in the informal sector, and that which is made directly through job creation programs. Finally, the document proposes components of a policy advisory concerning Objective Six of Chapter Three of the NDP. 1.2 Inequality in South Africa International evidence shows that South Africa is the most unequal society in the world, both in terms of income and wealth (World Bank, 2018). In addition to the social tensions that extreme inequality generates, inequality of this scale hinders economic growth and the reduction of poverty (IMF, 2015). Economic inequalities are also highly correlated with social inequities: inequalities in social outcomes such as life expectancy, health status, and educational attainment that are unjust, unfair, unnecessary and avoidable (Feachem, 2002). Inequality is exacerbated by the impact of climate and other rapid global change, with water scarcity and food insecurity posing the most immediate threats for the vulnerable. The digital divide also contributes to inequality, as made evident in education, health care and entrepreneurship during the Covid pandemic. Finally, extreme inequality exacerbates structural poverty: poverty that persists over time and across generations. In the case of South Africa, almost all forms of inequality are highly correlated with race and with location. Those who are poor largely being black Africans living in the former townships, shack settlements and homelands established during the era of colonialism and Apartheid. Women, youth and disabled people are especially vulnerable. (World Bank, 2018) Responding to this, the National Development Plan (NDP) aims to eliminate poverty and reduce inequality by 2030, setting these as the two . The Plan set a target for the reduction of the Gini coefficient to fall from 0.69 in 2010 to 0.60 in 2030.