Demographic Transition, Growth, and Wealth in South Africa

Abstract

There is rising concern in South Africa that social security transfers and expenditure on public health may jeopardize the solvency of the public sector, thereby inducing macroeconomic and financial instability. Tito Mboweni, the immediate past Reserve Bank governor, warns of “a social revolution in South Africa similar to those in Portugal, Greece and Cyprus, where taxpayers protested in the streets when governments implemented budget cuts after over-committing on social expenditure” (Mboweni, 2013). For instance, within one and half decades since apartheid ended, social welfare spending has increased by 537.5 percent as a result of phenomenal growth in the number of welfare recipients from 2.4 million in 1996 to 15.3 million in 2011, and still rising. This growth in spending does not include expenditure on public health, which in itself is a significant line item in the budget, partly due to the public health treatment program in response to the HIV-AIDS.¹ Tito Mboweni points to growing unemployment (4.7 million in 1996 and 5.6 million in 2011) as an important factor in the phenomenal increase in the demand for public support.