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"Talking to the South African Finance Minister about Poverty":

Pro-Poor Policy and Poverty Statistics

Julian May1

25 June 2004

Posted with permission of the author
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The Poverty Reduction Strategy Paper (PRSP) process being engaged in by over 60 countries has reaffirmed the importance of diagnostic analysis for poverty reduction. In formulating and assessing pro-poor policy, users of such research findings will eventually confront the task of talking about poverty with representatives of the Finance Minister if public resources are to be gathered and appropriately deployed. In many countries this has meant that finance ministries have had to take on new responsibilities such as prioritising the allocation of resources between competing needs, choosing between different intervention options that might achieve the same policy goal and identifying the optimal sequencing of policies. As such, finance ministries are increasingly basing decisions not just on financial considerations and macroeconomic strategy, but also on constitutional obligations and long term developmental objectives2. At the same time, line ministries are being called upon to base their requests for resources on evidence showing output targets, expected outcomes and anticipated long term impacts. Both of these tasks have formidable information requirements that require reliable and more frequent data from government statistics agencies and the capacity to analyse and report on such data. The PRSP approach also expects involvement by civil society in the formulation and monitoring of policy which among other actions will require capacity for critical comment on poverty trends.

In South Africa, the collection of official statistics was severely disrupted during the dying years of the apartheid government and data that described living conditions in the former bantustans and townships were often suppressed. It was not until the 1993 Project for Statistics on Living Standards and Development (PSLSD) that a comprehensive quantitative database of household conditions was created. Since then, Statistics South Africa has undertaken 17 similar household surveys, 2 long form censuses and a number of sector surveys such as the Time Use Survey and Rural Survey undertaken in 1997. Other national data sets that have been collected by other agencies include two Demographic and Health Surveys (DHS) while provincial surveys include panel studies undertaken in KwaZulu-Natal, the Western Cape and the Free State. Finally two Demographic Surveillance Sites provide extensive data for the Hlabisa district in KwaZulu-Natal and Agincourt in Mpumulanga.

South Africa also has comparatively strong capacity for the collection and analysis of data relative to many other developing countries. The country has an official statistics agency that undertook its first data collection in 1904, 36 institutions of higher education with more than 35 000 post graduate students in 2000, numerous research and think tank organisations, and a long tradition of academic and civil society comment on socio-economic conditions (DoE, 2002). Despite a 'brain drain' from universities into government and abroad, social science research remains internationally competitive while increasingly complex data are being collected and analysed by Statistics South Africa and the local research community.

Despite the existence of these surveys, the capacity to analyse the data that are collected, and the evident importance of being able to say something about poverty changes in South Africa during the post-apartheid era, recent data simply do not permit such analysis to be made with any confidence. The results of the 2000 IES have been dogged by controversy and the researchers in both government and universities have expressed dismay over the quality of the data. This situation cannot be tolerated in a country of South Africa's size and complexity and requires urgent attention if future policy development is adequately to meet the challenges of persistent poverty and inequality. It is to be hoped that this workshop represents the beginning a new cooperation between Statistics South Africa, the National Treasury, other government stakeholders and their research partners that will address this need.

In this paper I am going to try to define the broader context within which something would be said about poverty changes in South Africa. My expectation is that other papers will go into more detail concerning the short-comings of existing data, the methodologies that can be adopted to overcome these problems, and the results that have been found. I will first consider why evidence-based pro-poor policy is required at all after a decade in which many countries chose to reduce the role played by government in poverty reduction. I will then review what we think we know about recent poverty trends in South Africa, and make mention of poverty analysis that points towards what might be anticipated once the official statistics have been corrected. I will conclude by making some comments about the way forward.

  1. Associate Professor, School of Development Studies, University of KwaZulu-Natal. This paper has benefited from numerous discussions with members of the South African Statistics Council Economic Sub-Committee as well as with Michael Carter, Else Шyen and Vishnu Padayachee. Further input at the Manchester Conference from the Hon, Mr. Gerald Ssendaula, the Minister of Finance, Development and Planning for Uganda was invaluable, as were the comments made by participants at a FAO Seminar on 11 June, 2004. The interpretations and conclusions drawn are those of the author alone and do not represent the views of the Statistics Council nor of any of the organisations are hosting this workshop.
  2. The title of the paper aspires to capture the irony of Billy Bragg's mid-80's album, 'Talking to the Taxman about Poetry'. I must acknowledge my debt to Maldives' Minister of State for Finance and Treasury, Hon. Mohamed Jaleel for raising the question as to whether it is appropriate for finance ministries to assume these roles.

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