African Journal of Business Management Vol.6 (33), pp. 9504-9509, 22 August, 2012
Available online at http://www.academicjournals.org/AJBM
ISSN 1993-8233 ©2012 Academic Journals
Full Length Research Paper
Poverty in a South African township: The case of
T. J. Sekhampu
School of Economics, North-West University, Vanderbijlpark, South Africa. E-mail: firstname.lastname@example.org.
Tel: +2716 910 3408.
Accepted 29 June, 2012
South Africa’s world revered democratic transition lies more than a decade in the past, a period long
enough to evaluate past achievements and challenges. The study reported here provides a snapshot
like view of poverty in a South African township. The results are based on a household survey using
questionnaires. Two poverty lines (lower and upper bound) developed by Statistics South Africa were
used to measure poverty in the area; R322 per capita per month as the "lower-bound" poverty line and
R593 per person per month as the "upper-bound" poverty line. Of the sampled households, 50% where
found to be poor using the lower bound poverty line, and 77% when using the upper bound poverty
line. On average, poor households have an income shortage of 56% of their poverty line when using the
lower bound poverty line. From a policy perspective, developing an economy involves efforts that seek
to improve the economic wellbeing and quality of life of all its inhabitants. A considerable number of
people in the area fail to have a decent standard of living. Information provided through the study is at
the household level and aims at highlighting poverty trends among urban residents in South Africa.
Key words: Poverty, household, township, South Africa.
South Africa’s successful political transition following
apartheid raised hopes of an economic future
characterised by broadly shared growth and greater
access of the majority of the population to economic
opportunities, hence jobs. Economic policies have been
geared towards ensuring macro-economic stability (with
considerable success) and increasing access to basic
social services, especially education and health (Bhorat
and Kanbur, 2008).
The government has also undertaken initiatives with
the ultimate goal of promoting equitable distribution of
economic benefits across the population. The alleviation
of poverty and its associated social ills has been at the
heart of post-apartheid South Africa’s policy
pronouncements. This is much more evident in the 1994
reconstruction and development programme document,
and the 1996 constitution (RSA, 1996; ANC, 1994). The
South African Constitution (1996) and the White paper on
Local Government (1998) encourage initiatives which
seek to address poverty, unemployment and
redistribution in local areas (Nel and Humphrys, 1999).
Various legislative, institutional and administrative
reforms have been undertaken to create an environment
conducive for the improvement of the quality of life of all
South Africans. However, there is still a large majority of
South Africans living in dire socio-economic conditions.
The understanding of the dynamics of urban townships
lies at the heart of unravelling South Africa’s economic
transformation. South Africa’s historical circumstances
have shaped the present configuration of poverty and
opportunities along racial lines. Disadvantaged groups
were systematically left with relatively little in the way of
land and other resources, were not afforded education of
a quality comparable to that of whites, and were
compelled to adopt coping strategies (Aliber, 2001). A
large proportion of the workers from the townships have
to travel these long distances to their workplaces.
Statistics show that the urban areas have continued to
grow at unprecedented rates. A period between 1996 and
2001 saw 5.5 million people moving to urban areas, a
rate of more than a million a year (News24, 2008). The
rapid growth of cities strains their capacity to provide
services such as energy, education, health care,
transportation, sanitation and physical security. This
result in governments having less revenue to spend on
the basic upkeep of cities and the provision of services,
thus results in cities that become areas of massive
sprawl, serious environmental problems, and widespread
poverty (UN, 1995).
The problem of poverty and unemployment has serious
consequences for economic development particularly in
urban areas, and has to be examined at the community
level; more so at the people-based level in order to
encourage viable projects for eradicating the scourges of
unemployment and poverty. The formulation of effective
poverty eradication strategies requires an understanding
of the dynamics of poor households. In order to assess
how far a country has come in the eradication of poverty,
there must be adequate inquiries from time to time in the
form of social surveys which adopt certain definite
standards of measurement (Townsend, 1979). A
snapshot-like profile of poverty at a particular point in
time is a useful tool for presenting basic information of
This study provides a micro-economic analysis of
poverty in a South African township of Kwakwatsi.
Kwakwatsi is a residential township in the northern region
of the Free State Province. The area is a semi urban
residential township for the town of Koppies. Koppies is
located approximately 200 km south of Johannesburg.
The population size of Kwakwatsi is estimated at 13 226
persons. There are 3 443 official residential sites, of
which 3019 are occupied. The strategic national railway
line from the Cape provinces to Gauteng province passes
through Koppies. The area is part of the Ngwathe
Municipality, with its head office in Parys. The aim was to
determine the state of affairs in terms of poverty.
This study was based on a household survey using
questionnaires. Poverty is defined and then measured for
the sampled population. Subsequently, the study
provides a theoretical basis for the study. The
methodology followed will then be explained. The results
will be followed by a discussion and conclusion of the
TOWARDS A MICRO-ECONOMIC ANALYSIS OF
Economic development thought has historically focused
on inequalities between the poor rural and better off
urban populations (Wratten, 1995). This stems from a
predisposed assumption that urbanisation lied at the
developing world’s poverty solution. The belief was that
the transfer of labour from low productivity subsistence
agriculture to the high productivity modern manufacturing
industry would create employment opportunities, thereby
Research in the 1990s showed a greater diversity in
the extent and depth of poverty within urban populations
in the Third World. A comparison of international and
even national estimates of poverty with specific studies of
urban centres showed wide discrepancies (Mitlin, 1995).
This could largely be due to the fact that nationally set
poverty lines are unrealistically low when applied to urban
centres. The cost of living differs widely between rural
and urban areas, and even between the different urban
centres. This in itself necessitates the definition of
specific poverty lines for different locations (Slabbert,
Another important consideration is the asset base of
people in different locations. In rural areas, cattle and
crops can act as assets which can reduce the
vulnerability of households. For urban inhabitants, the
only asset is their labour or the number of household
members who are able to work. The previous mentioned
differences between urban and rural areas make it
important to consider different cut-off levels in respect to
poverty, but also to define specific thresholds for different
urban and rural locations (Wratten, 1995).
The concept of poverty has been a subject of debate
for as long as humanity has existed. This is because
poverty can mean different things to different people. In
popular discourse, poverty is a concept that captures a
range of meanings. Poverty has usually been
conceptualized as a state of being, characterized by a
lack of income that leads to an inability to provide an
adequate level of basic necessities. While ultimately
income is important, the critical underlying resources that
produce income are the assets that the poor have access
to and control over in pursuing their livelihood strategies.
The definition and measurements of poverty are related
both to each other and to other pertinent issues such as
the perceived causes of and the solutions to poverty. The
ways in which politicians, citizens and experts view the
problem of poverty have very different and diverse roots
in social, political and philosophical dialogues.
Present day poverty understanding draws on complex
and sometimes contradictory underlying assumptions
about what people are supposed to need in order to live a
minimally human life; about the obligations between
individuals and society, about the relation between have
and have not, ill-being, well-being and suffering; and
about social life and individual agency (Du Toit, 2005:
15). Generally, recognising what something means in
practice is much easier than defining or analysing it. The
classification of people as poor or in need therefore
requires a clear understanding of what that entails
Poverty can generally be construed in a narrow or
broad sense. In the narrowest sense it means lack of
income. In a broader sense poverty can be seen as
multidimensional, encompassing other issues such as
housing, health, education, access to services and to
other avenues of accessing resources. Poverty can also
be construed in a minimalist or more expansive way: the
9506 Afr. J. Bus. Manage.
most minimalist way is to consider people who are poor
as being those who are unable to survive even in the
short term that is people who are utterly without the
means of survival. A more expansive understanding of
poverty is that people are poor if they are unable to
participate in society as full citizens (Studies in Poverty
and Inequality Institute, SPII, 2007: 10).
An understanding of the cause of poverty and devising
strategies to reduce it is a central component of the
definition of poverty. Recognition thereof reinforces
appreciation of the difficulties of the problem and serves
as a reminder that a search for strategies and an
understanding of poverty draws on the wider body of
knowledge accumulated in the general field of
development. The World Bank (2001) defines poverty as
a situation where one lacks command over commodities
that are deemed essential to constitute a reasonable
standard of living in a society or the lack of ability to
function in a society. This definition also emphasizes
command over resources as well as the lack of
participation or voice in governance and civil matters.
The complex reality of poverty makes it difficult to
capture the nature of this phenomenon by means of
either a single unit or multidimensional definition or
measure. The different existing definitions and measures
take into account an uncharacteristic nature of poverty.
Each definition contains a part of truth, but no single
definition holds the full truth in defining poverty (Fusco,
2003: 5). The main measures of poverty, which are used
in this study, are the headcount index, and the poverty
Survey design and data analysis measures
A survey was undertaken for the collection of household data for
the study. Maps were obtained for Kwakwatsi and sample
stratification was designed on account of the geographical
distribution and concentration of people in the areas. A
questionnaire was designed for obtaining the desired information.
The area was divided into the different extensions and the
questionnaires were apportioned evenly among the inhabited sites.
Plots/sites at which field workers were supposed to complete
questionnaires were identified individually from the map before the
field workers went out. However, where people could not be
obtained for an interview, or where it was impossible to trace the
house, a next pre-selected household was interviewed.
Information was obtained from the breadwinner or the spouse. A
total of 190 households were interviewed by four fieldworkers.
Almost all the households approached were willing to partake in the
survey and 180 questionnaires were completed in May 2010.
Following the guidelines of the World Bank (1990), a poor
household is defined as a household of which the combined income
of all its members is less than the Household subsistence Level
(HSL) as determined for the specific household. If the combined
income of a household is described by yi and the poverty line (HSL)
of the same household is described by z
, the extent of poverty, P
of this household is described by Pi (y
When calculating national poverty lines as a statistical measure,
the most common approach is to estimate the cost of a minimum
basket of goods that would satisfy the necessary daily energy
requirement per person over a period of a month. Statistics South
Africa (2007a) writes that the daily energy requirement, as
recommended by the South African Medical Research Council
(MRC) is 2261 kcal per person. Statistics South Africa estimated
that when consuming the kinds of foodstuff commonly available to
low-income South Africans, it costs R322 per person every month
to satisfy a daily energy requirement of 2261 kilocalories. Statistics
South Africa regarded R322 per capita per month as the lower
bound poverty line.
An upper bound poverty line of R593 was further estimated. The
remaining R271 added to the lower bound poverty line is meant for
obtaining non-essential non-food items. For this study, the two
poverty lines as developed by Statistics South Africa (Stats SA)
(2007a) were used comparably; R322 as the lower bound poverty
line and R593 as the upper bound poverty line.
Ravallion (1998) suggests an upper and lower bound for the non-
food poverty line. The lower bound non-food poverty line is
estimated by calculating the mean amount spent on non-food items
for those households whose total expenditure is close to the food
poverty line and then adding this mean amount to the food poverty
line. The reasoning here is that, assuming food and caloric
sufficiency is one of an individual’s most basic needs, any items
that divert expenditures away from food to the extent that, on
average, the individual is not consuming the minimum number of
calories per day, must be basic necessities.
The headcount index is defined as the fraction of the population
below the poverty line. In this study, the headcount index was
adapted to indicate the fraction of households that fall below their
individual poverty lines. The individual household member’s income
is added together and a poverty line based on the number of
household members is then calculated. A household is deemed
poor if the combined income of its members falls below the poverty
The poverty gap usually measures the average shortfall of the
incomes of the poor from the poverty line while the poverty gap
index measures the extent of the shortfall of incomes below the
poverty line. To provide for a household based analysis of poverty,
the poverty gap was adapted to be a measure for a specific
This part of the study presents the findings of the study.
The information obtained is at household level and is
meant to the trends among township dwellers in a South
Poverty in Kwakwatsi
The headcount index for the sample population is
calculated at 0.50 and 0.77 using the lower and upper
bound poverty line, respectively. This means that 77% of
the sampled households’ income was found to be below
their respective poverty line when using R593 as the
The severity of poverty depends on the distribution of
the poor below the poverty line. Figure 1 show the
distribution of poor households below the poverty line.
The figure shows that poverty is deep rooted in the area.
Of the poor population 61% are earning income less than
50% of the poverty line using the lower bound poverty
Figure 1. Distribution of the poor below the poverty line.
line. The figure also shows that 16% of the poor are
earning income between 0 and 10% of their income using
the lower bound poverty line. Analysis using the upper
bound poverty shows that 14% of the sample population
was earning incomes which are less than 10% of their
poverty line. As an example, if a particular household’s
poverty line is calculated at R 1000, this would mean that
the particular household’s total income is between R 0
and R 100 (0 10% of the poverty line).
The poverty gap is the mean shortfall of the total
population from the poverty line (counting the non-poor
as having zero shortfall), expressed as a percentage of
the poverty line; it adds up the extent to which individuals
on average fall below the poverty line, and expresses it
as a percentage of the poverty line. This measure reflects
the depth of poverty as well as its incidence. The poverty
gap can also be interpreted as an indicator of the
potential for eliminating poverty by targeting transfers to
the poor. The minimum cost of eliminating poverty using
targeted transfers then becomes the sum of all the
poverty gaps in a population; every poverty gap is filled
up to the poverty line (Ravallion, 1992).
The poverty gap index for Kwakwatsi is calculated at
0.57 using the survey data. This means that on average,
poor households have an income shortage of 56% of
their poverty line, when using the lower bound poverty
line. The average monetary shortfall per poor household
was calculated at R732 and R1432, for the lower bound
and upper bound poverty line, respectively. This
represents the average amount needed by a poor
household to make up the difference between average
household income and the poverty line.
Demographic information of sampled households
The demographic information affords an understanding of
the household structures of the sample population. The
classification of the population from different angles could
be a reflective measure of the area’s resources and of
the availability and distribution of such resources. These
demographics form an important part of the government’s
development mandate since households provide the
labour for the production of goods and services, and also
consume the final output of production. In addition, the
size of a particular population is an important determinant
of the socio-economic needs of the population. The
results of the study showed a high average household
size (four) for Kwakwatsi. This is in comparison with the
average household size of three members for Ngwathe
Municipality as a whole (Stats SA, 2007b). The majority
(53.8%) of the sampled population was female, and
46.2% are male.
Regarding the composition of households in terms of
the status of members of the family, the survey results
showed that 12.9% of household members are fathers,
compared with 21% mothers. For the poor (using the
upper bound poverty line), the mother to father
composition was 20.4 to 12.6%, respectively. This
indicates an increased likelihood of single parenting
amongst the poor. The percentage of sons and daughters
in the sample population was 16.4 and 17.8%,
0 - 10
Household income as a percentage of the poverty line
Lower bound poverty line
Upper bound poverty line
0 - 10
Household income as a percentage of the poverty line
Lower bound poverty line
Upper bound poverty line
9508 Afr. J. Bus. Manage.
Figure 2. Sources of household income.
respectively. There were more female (53.8%) than male
(46.2%) household members. The majority of households
were headed by males (63%), while 32% were female-
headed households. There were instances where older
children (5%) had to take the responsibility of family
headship due to lack of parents.
Sources of household income
The respondents were asked about the sources of
household income. Figure 2 shows the different sources
of household income. Government grants seem to play
an important role in the livelihood of the poor as make up
more than 70% of household’s income. The state’s old-
age grant, which is received by people aged 60 and
older, contributes 41% to household income for a poor
household (aggregated using the upper bound poverty
line). For the total population, the major contributor to
household income was salaries / wages (46%).
Perceptions of poverty
The study also collected data on the perceptions of the
respondents regarding their poverty status. This is
important as it recognizes the poor value judgment regar-
ding their socio-economic conditions. Without mention of
any reference group, the respondents were asked
whether they consider themselves poor. Of those who
were found to be poor (using the upper bound poverty
line), 40% said that they consider themselves poor, while
60% said no.
Holman (1978: 16) asserts that people tend to
habitually judge themselves against a reference group.
The poor do the same, having a standard they would like
to attain, failing which, they see themselves as poor.
When it comes to the question of whether they have
enough income to support their family, 32% said that they
do; with 68% saying that their income is not adequate for
the needs of their families.
DISCUSSION AND CONCLUSION
The aim of the study reported in this article was to
provide a snapshot-like view of poverty in a South African
township. The results are based on a household survey
using questionnaires. Two poverty lines developed by
Statistics South Africa were used as an indication of the
minimum level needed for a household to be regarded as
The study showed that poverty is high amongst the
sampled households of Kwakwatsi. The headcount index
was calculated at 0.50 and 0.77, using the lower and
upper bound poverty line, respectively. On average, poor
Help in kind
Poor (Lower bound poverty line)
Poor (Upper bound poverty line)
Help in kind
Poor (Lower bound poverty line)
Poor (Upper bound poverty line)
households have an income shortage of 56% of their
poverty line when using the lower bound poverty line. The
average monetary shortfall per poor household was
calculated at R732 and R1 432, for the lower bound and
upper bound poverty line, respectively.
The respondents were asked whether they consider
themselves poor. Of those who were found to be poor
when using the using the upper bound poverty line, 40%
said that they consider themselves poor. Deaton (1997:
5) cautions against over-emphasizing these approaches
above tested tools of measurement, pointing out that
there are cases where accepting someone's own
assessment of his/her own standard of living could be
misleading. He says that people may be accomplices in
their own deprivation due to social acceptance of certain
situations. He further gives an example that if some
villagers believe that someone who has no sons is poor,
no policy can be developed to eradicate this poverty.
The World Bank (2001) reports that extensive poverty
has lasting harmful effects on society. Poverty is found to
result in hunger, malnutrition, poor physical status and
increased health care costs, which undermines economic
growth at large. In addition, poverty negatively affects
cognitive functioning, leading to the inattentiveness of
learners, which militates against their later success.The
challenge of the new South Africa has been that of
creating wealth and reducing the scourges of poverty for
all its inhabitants. There is a pro-poor rhetoric but this is
not translated into specific outcomes at household level
for many South Africans. The extent of poverty in
Kwakwatsi indicates to an unsustainable economy with
no productive activity.
From a policy perspective, developing an economy
involves efforts that seek to improve the economic
wellbeing and quality of life for a community by creating
and/or retaining jobs and supporting or growing incomes
and the tax base. Poverty reduction is seen by many
policy-makers as the most important goal of development
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