MOSCOW, November 4 (RIA Novosti) — South Africa has cut extreme poverty by half after implementing economic policies three years ago to effectively redistribute income from the rich to the poor, the World Bank said in a report Tuesday.
“This [World Bank’s South Africa Economic Update] shows that the proportion of the South African population that are living on $1.25 per day or less, an international measure of extreme poverty, is cut in half through the use of fiscal policies,” the report stated.
According to the World Bank, 3.6 million people were taken out of poverty as the extreme poverty rates dropped from 34.4 percent before the 2010/2011 fiscal policy to the current 16.5 percent.
The fiscal policy, through which the government adjusts its spending levels and tax rates, transferred more spending to child support, disability grants and old age pensions.
“The reductions [of poverty] are higher than what countries such as Brazil, Indonesia, Ethiopia, Mexico and Argentina achieve through fiscal redistribution,” a World Bank senior economist was quoted as saying in the report.
Through these policies, the country is targeting to eliminate poverty and cut its Gini coefficient (index to represent the income distribution of a nation's residents) from 0.7 in 2009 to 0.6 by 2030.
However, the report noted that despite the progress and poverty reduction, South Africa still remains among the countries with the highest levels of inequality. The World Bank therefore urges the government to incorporate a more inclusive economic growth, particularly in addressing constraints in infrastructure.