Cyril Ramaphosa celebrates as white and Indian household incomes decline

President Cyril Ramaphosa celebrated narrowing the gap in household income between race groups, which resulted partly from a decline in white and Indian household income.

Last month, Ramaphosa told delegates at the Black Business Council Gala Dinner that Black Economic Empowerment is good for the South African economy.

He said that, according to Statistics SA, between 2006 and 2023, black African households experienced real income growth of 46%. The President added that coloured households experienced income growth of 29%.

“While this can be considered progress, the average income of white households is still nearly five times as high as black African households,” he said.

Ramaphosa added that, in terms of household income, South Africa has seen progress in narrowing the gap between racial groups.

However, what he did not mention was that narrowing the gap between racial groups happened primarily because white and Indian household income declined.

From the outset, it should be noted that household income is a poor measure of a country’s wealth or living standard.

Households do not remain the same from one year to the next and are susceptible to social changes, such as when children move out or communal living preferences.

However, because Ramaphosa mentioned household income as a measure of wealth, Daily Investor used this data to assess his claims.

For this analysis, we utilised Statistics SA’s real household income data over twelve years, from 2011 to 2023. This is the latest available data.

Real household income is the nominal income adjusted for inflation, reflecting the actual purchasing power of the household’s income.

Simply put, it shows how much a household can afford with its money and whether it has become wealthier or poorer.

Between 2011 and 2023, the real household income for white and Indian families declined by 2.2% and 8.1%, respectively.

Over the same period, the real household income of black African families increased by 14.4%, and that of coloured families by 7.6%.

The decline in household income of white and Indian families and the increase in black and coloured families is what Ramaphosa saw as positive.

It raises the question whether the President celebrated the rise in black household income or the decline in white household income.

This is the challenge in dividing the country into groups, rather than trying to uplift all citizens, regardless of their group affiliations.

The table below shows the real household income per race group in South Africa, adjusted for inflation.

South African household income in US dollars

Another way to examine South Africa’s household income and assess our performance over the last decade is to consider the real household income in US dollars.

In real US dollar terms, South African households are much poorer today than they were even in 2011.

In 2011, the real average household income in South Africa was $29,019. In 2023, it will be only $11,058.

This represents a 62% decrease in real household income in South Africa in US dollar terms since 2011.