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Poverty and ‘Second Economy’ in South Africa: An Attempt to Clarify Applicable Concepts and Quantify Extent of Relevant Challenges

Listed author(s):
  • Vusi Gumede


    (Chief Policy Analyst,The Presidency, Policy Co-ordination and Advisory Services, South Africa)

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    Abstract: Given how the South African government conceptualises poverty, the paper argues that it is in the ‘intersection’ between access to income, services and assets that the issue of overall poverty trends and the magnitude of the second economy since 1994 should be examined. This paper reflects on various pertinent issues in relation to South Africa’s poverty dynamics and it attempts to ‘measure’, after clarification of relevant concepts, the ‘second economy’ challenge in South Africa. Using some tentative definition, the total number of people in the second economy is about 9.5 million, of which 31 percent is women. In terms of age profile, it would seem that it is relatively older people that are found in the second economy. Broadly, people in the second economy are relatively widely distributed across South Africa, with the Eastern Cape Province having most of second economy individuals. In brief, the paper firstly summarises old and new theoretical and technical issues on measuring poverty, secondly analyses poverty from different perspectives and highlights various research findings on poverty trends in South Africa and thirdly clarifies the notion of ‘second economy’ and attempts to ‘measure’ it. The analysis, as tentative as it is at this stage, demonstrates why there is an ongoing debate in South Africa about poverty and ‘second economy’. Clearly, the extent and the magnitude of the challenge that South Africa, like many developing countries, is grappling with are vast. As a way forward, a more rigorous analysis of poverty and ‘second economy’, drawing from the methodology used in the paper, could be pursued further. This would hopefully assist the dialogue about poverty and ‘second economy’ in South Africa. More importantly, policy and programmatic responses to poverty and ‘second economy’ could benefit from a systemic enquiry on relevant dynamics.

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    File Function: First version, 2008
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    Paper provided by University of Cape Town, Development Policy Research Unit in its series Working Papers with number 08133.

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    Length: 32pages
    Date of creation: Jun 2008
    Publication status: Published in Working Paper Series by the Development Policy Research Unit, May 2008, pages 1-32
    Handle: RePEc:ctw:wpaper:08133
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    1. Michael Carter & Christopher Barrett, 2006. "The economics of poverty traps and persistent poverty: An asset-based approach," Journal of Development Studies, Taylor & Francis Journals, vol. 42(2), pages 178-199.
    2. Michelle Adato & Michael Carter & Julian May, 2006. "Exploring poverty traps and social exclusion in South Africa using qualitative and quantitative data," Journal of Development Studies, Taylor & Francis Journals, vol. 42(2), pages 226-247.
    3. Debbie Budlender, 1999. "Patterns of poverty in South Africa," Development Southern Africa, Taylor & Francis Journals, vol. 16(2), pages 197-219.
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