Three decades on from the end of apartheid, South Africa remains one of the most unequal countries in the world. As the first African country to assume the presidency of the G20, Mlondi Mveli Mdluli sets out what the G20 could do to tackle inequality by fostering inclusive economic growth and creating opportunities at scale.

More than thirty years after the formal end of apartheid, South Africa remains one of the most unequal countries in the world. While political liberation was achieved in 1994, economic disparities – particularly those along racial and gender lines – continue to persist at staggering levels. The recently published 2022/2023 Household Income and Expenditure Survey (HIES) from Statistics South Africa sheds new light on the realities of economic inequality, demonstrating that the gap between Black and White South Africans, as well as between men and women, remains deeply entrenched.

As South Africa’s historic presidency of the G20 progresses – the first African nation to hold this esteemed position – it presents a crucial opportunity to champion the fight for economic equality on the global stage.

The economic gap between rich and poor in South Africa

The HIES data confirm that the legacy of apartheid still looms large over South Africa’s economy. In 2023, the average annual household income for White-headed households was around R676,000, nearly five times that of Black African-headed households, which stood at R144,000. This stark contrast underscores the fact that access to high-income opportunities – whether through education, employment, or ownership – remains largely skewed in favour of historically privileged groups.

It’s true that Black African-headed households experienced a 46 per cent increase in real income between 2006 and 2023, compared to a 7.7 per cent decline for White-headed households. But while this suggests some narrowing of the gap, it is important to contextualise these figures. Black African-headed households started from a much lower base and, as the figures above make clear – R676,000 vs R144,000 – their income growth has not been sufficient to meaningfully alter South Africa’s deeply unequal economic landscape. (We should also note that the decline in White household incomes could be partly attributed to underreporting by higher-income respondents, the emigration of higher-income individuals, or both, rather than an actual redistribution of wealth).

Disparities along racial lines similarly exist when we look at data on wealth as well as rates of unemployment. According to the latest official statistics, the unemployment rate for the country as a whole stood at a very troubling 31.9 per cent in 2024 Q4. But a breakdown by race reveals an even more alarming picture. In Q4 2024, 35.8 per cent of Black South Africans were unemployed, compared to just 6.7 per cent of White South Africans. Over the past decade, the unemployment rate among Black South Africans has risen by 8.6 percentage points, while for White South Africans, it has decreased by 1 percentage point.

Meanwhile, gender disparities also persist alongside racial inequality. The 2023 HIES reveals that the average income for male-headed households was around R159,000, compared to R123,000 for female-headed households: that is, female-headed households earned, on average, 23 per cent less than their male counterparts.

While female-headed households experienced positive real income growth of 21 per cent between 2006 and 2023, compared to a 9 per cent decline for male-headed households, this does not translate into true economic empowerment. Women still face systemic barriers such as wage discrimination, higher unemployment rates and the burden of unpaid domestic labour. What’s more, female-headed households tend to be overrepresented in lower-income quintiles, which restricts their ability to accumulate wealth and break cycles of intergenerational poverty. Women are also more likely to be employed in precarious, low-paying jobs with little job security or benefits. So even when women do see income gains, they are often insufficient to overcome the broader structural barriers that limit their upward mobility.

Despite being in place for decades, policies such as Broad-Based Black Economic Empowerment (B-BBEE) and Affirmative Action have not successfully closed these economic gaps. While these initiatives were designed to redress historical injustices, many critics argue that B-BBEE, in its current form, has been captured by politically connected individuals, doing little to uplift those who remain at the bottom of the income ladder. Similarly, Affirmative Action policies have not significantly improved employment prospects for a large portion of historically disadvantaged groups.

This has led to calls for a re-evaluation of these strategies. Certainly what seems clear is that South Africa needs new, bold policies that directly tackle inequality by fostering inclusive economic growth and creating opportunities at scale. And as the first African country to assume the presidency of the G20, South Africa has a historic opportunity to shape global discourse on economic equality.

Five things the G20 could do to help to reduce inequalities

The theme of the G20 presidency – Solidarity, Equality, Sustainability – directly aligns with South Africa’s urgent need to address income disparities. Here, I set out five ways in which the G20 could help reduce economic inequality, both in South Africa, and beyond…

First, the G20 can play a crucial role in addressing South Africa’s income inequality by promoting inclusive economic growth that targets historically marginalised groups. This would require policies that promote broad-based economic participation, including targeted investments in education and skills development for disadvantaged communities. South Africa’s inequality is deeply linked to the skills gap, with higher-paying jobs often requiring tertiary education that remains out of reach for many Black South Africans. Increased funding for higher education, vocational training programmes and business incubators for Black entrepreneurs would help bridge this divide and foster long-term economic inclusion.

Second, the G20 could exert its influence to help close the gender pay gap. By advocating for pay transparency laws, stronger labour protections for women and greater access to childcare services, G20 economies can set an example for how to achieve gender parity in the labour market. Encouraging greater female representation in leadership positions, both in government and the private sector, is essential to dismantling the structural biases that contribute to gender-based income inequality. Financial inclusion initiatives, such as microfinance programmes tailored to women entrepreneurs, could also provide pathways out of poverty for female-headed households that currently struggle to access traditional banking services.

Third, enhancing social protection systems should be another priority for the G20. Expanding policies such as universal basic income pilots or conditional cash transfers could play a role in reducing poverty and economic vulnerability, particularly for Black South Africans and female-headed households who are often most affected by economic shocks.

Fourth, trade and industrial policy should be leveraged to reduce inequality by fostering local industries that generate employment for historically disadvantaged populations. The G20 can support initiatives that improve access to global markets for African-owned businesses and small enterprises, ensuring that economic growth is not just concentrated in a handful of multinational corporations but is spread more equitably across society.

Finally, technology and financial inclusion offer another avenue for reducing inequality. Digital transformation presents an opportunity to bridge economic disparities by increasing internet access, digital literacy and financial inclusion for underprivileged communities. The G20 should work towards initiatives that provide low-cost internet infrastructure, expand digital banking and offer financial education programmes to ensure that marginalised populations can fully participate in the digital economy. Access to financial services and digital payment systems can be transformative in empowering women and Black South Africans to participate more meaningfully in the economy.

Unpicking structural inequalities – in South Africa and beyond

The structural inequalities that persist in South Africa are not just a domestic challenge – they are a global concern that requires international collaboration. As host of the G20, South Africa is in a unique position to place economic justice at the forefront of the international agenda. For genuine progress to occur, policymakers must move beyond rhetoric and implement actionable strategies that address the root causes of inequality. The G20 must serve as a platform for practical solutions that ensure not just economic growth, but economic justice. Only then can South Africa – and the world – begin to bridge the divides that continue to define our societies.

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All articles posted on this blog give the views of the author(s). They do not represent the position of LSE Inequalities, nor of the London School of Economics and Political Science.

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