Entrepreneurship and the Economy

Inequality and Poverty

Causes of Socio-economic Imbalances
Socio-economic imbalances are caused by the uneven spread of social and
economic resources. They can be caused by:
• Geographic distribution of resources – people and cities are situated where
there are good resources, e.g. Johannesburg developed because of the
discovery of gold. The miners enjoyed the climate, fertile land and water, so
they decided to bring their families to settle with them. The city started
growing as more and more people arrived and they needed goods and
services to meet their needs. The San, on the other hand, lived in the
Kalahari where there is no fertile land and very little water. They didn’t
have access to shops and had a hunter-gatherer life style, very different to
people who lived in the city.
• Standards of Education – Educated people find it easier to get jobs. They
are also able to create jobs themselves as business people, professionals and
consultants. There are, however, many people far away from city centres,
where higher education and skills training are offered. This makes it
expensive and difficult for people in rural areas to get a higher standard of
education.
• Poverty – Poor people can’t afford good quality food, higher education,
specialised health care, social clubs and sports clubs available to people who
have more money.
• Access to adequate health care – Private hospitals and clinics with highly
qualified and specialist medical staff are situated in cities and towns that
charge high consultation fees. Poor and unemployed people can’t afford to
pay for this level of medical care, so most people in rural areas make use of
basic health care provided to them.
• Government laws that control the distribution of these resources – During
the apartheid, a large part of South Africa did not have access to good land,
good education and adequate health care. But, with the new constitution,
the situation improved.

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Inequality in South Africa
Inequality is when people are treated differently – some people have more than
other people. They have better facilities and access to water. They benefit from
good quality services like health care and education. Unequal situations are often
due to government laws. E.g. During apartheid, the government made laws that
favoured the white people (the minority) at the expense of the black people.
This resulted in:
• poor education facilities and low standards of teaching
• limited and affordable health care
• limited land and farming opportunities
• job protection for white people
To correct these inequalities, a new constitution was adopted after the first
democratic 1994 elections. Laws were put in place to create jobs for African,
Indian and Coloured people:
• The Employment Equity Act of 1998, prohibiting employers from
discriminating and unfair labour practices
• Black Economic Empowerment (BEE) and Broad-Based Black Economic
Empowerment of 2003 (BBBEE), promoting the share of ownership in
businesses, and creating opportunities for workers to gain skills leading to
promotions which result in higher salaries and wages
• The Skills Development Act of 1998 encouraging businesses to offer
education and training at work
In the last 20 years of democracy, pensions have increased and paid to people
who qualify, regardless of race, gender or colour. A lot of money has been spent
in improving education facilities and standards as well as skills training and
health care. The government also implemented the Reconstruction and
Development Programme (RDP) to solve problems like the shortage of housing,
health care and education.

The RDP provided low-cost housing to many people in rural areas.

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Education and Skills to Fight Inequality and Injustice
If a country has poor education it causes a number of problems:
• Not enough schools, desks, books and equipment for teaching
• Poor levels of teacher training and education – under-qualified teachers who
don’t teach efficiently
• Low levels of motivation in students and teachers – if teachers don’t teach,
students don’t learn and pass their exams
Poor education results in people not reaching their full potential – without skills
and knowledge, they can’t make useful contributions to a country’s economy and
improve their own standards of living. This means that they strain the economy
and don’t help the economy to develop, grow stronger and support its population.
A good education and developed skills make it possible to adjust the economic
inequalities and injustices. The government can give everyone the same basic
opportunities, but each of us also needs to accept responsibility in creating good
economic results.

Urban and Rural Challenges

Many people face differences and challenges every day. The differences in rural
and urban areas cause inequalities between the two communities and make it
difficult to break the cycle of poverty.

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The following table shows the differences between rural and urban areas:
Rural Living Urban Living
• Few job opportunities; it’s • More job opportunities, but
easier to live off the land greater competition
• Mostly unskilled workers • Higher salaries, but cost of
with lower wages living is more expensive
• Long-distances between • Public transport services, but
major centres cost a lot to there are longer distances
travel; Travel to work, school between work, school and
and recreation is within recreation to where people
walking distance live
• Limited opportunities in • Variety of choice in education
skills and education; no and training centres, but
tertiary education with higher costs
• Sometimes there are language
barriers when job seekers • Emotional and social support
struggle to communicate in is often not available
business languages (English /
Afrikaans)
• Housing is usually cheaper • Affordable housing is limited,
and many people own their which results in informal
own houses settlements in the outskirts
of towns

Rural Poverty Challenges

Poor households in rural areas rely on a combination of income from
subsistence farming, social grants and money from family members who
work in urban areas or in the mines. Most poor people live in rural areas,
resulting in more movement to urban areas to search for jobs. These are
ways to improve the balance in rural areas:

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• Supporting agricultural programmes – Help rural farmers to be more
productive by:
*providing resources like better seeds and fertilizer
*educating farmers in good farming practices, soil erosion and deforestation
• Improving municipal services by supplying –
*water, electricity and sanitation
*social services like schools and health care
*transportation for people to travel and for markets to develop
• Encouraging local economic development – Municipalities can build up
economic capacity in an area.
E.g.
*use local skills and labour in creating jobs, so that money spent stays in the
area to promote further growth
*promoting sustainable use of local resources to attract money and
businesses into the area, like tourism, wind farms with turbines for
electricity, etc.
• Supporting tourism programmes – Cultural, geographical and historical
features open up the possibility for:
*producing goods like selling curios to tourists, various fresh fruit and
vegetables, etc.
*services like accommodation, restaurants, tour guides, information
brochures, maps of the area, etc.
Urban Poverty Challenges
Children and young people are mostly affected in urban poverty. It is the
result of growth in the poor population in cities and when poor people move
from rural areas to cities searching for jobs.
This results in:
• Managing migration from rural areas to urban areas – People who move,
need to be provided for.
• Providing affordable housing with water, electricity and sewerage –
Housing on its own will not solve the problem of poverty. People also need
employment to be able to afford their houses and to pay for electricity and
water.
• Providing better infrastructure – Most informal settlements and townships
have poor infrastructure and social facilities. E.g. bad roads, little provision
of the basic water supply and electricity, few schools, lack of
telecommunication services, few hospitals and clinics.

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• Promoting local economic development – There is a need to encourage new
and local businesses by:
*identifying areas for growth
*improving infrastructure for businesses
*providing skills training and development
*assisting disadvantaged groups
*supporting informal businesses
• Focusing on environmental issues that affect poor people –
E.g.
*lack of waste management leading to the spread of diseases
*A large population needs coal, parrafin and wood for energy because they
don’t have electricity, which leads to increases in pollution and fire and
safety hazards
*lack of water supply and sanitation leading to water pollution, impacting
on health problems
* many cities have poor households and settlements, which are in areas
where there are environmental hazards like sewage and flooding
• Fighting HIV and AIDS which causes poverty –
*loss of income when people get sick or die
*expense in health care and funerals
*children leave school before they finish, having to look after sick adults or
their younger siblings
*orphaned children
*more loans to pay due to health care

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Creating Sustainable Job Opportunities
These are jobs that last for a long time, not temporary jobs, but jobs that always
need to be done. They bring security to workers – they know if they do their jobs
well, they will be employed for the rest of their lives. They will then afford a
reasonable standard of living and meet needs and wants like food, shelter,
education, etc. People with secure jobs are more likely to work harder and have
motivation to develop their skills at work.
Governments, business leaders and social workers are always trying to create
sustainable job opportunities, which is a worldwide challenge. The more people
employed in an economy, the stronger the economy is. Unemployment is a
problem in our country, and we need a stable economy with sustainable
businesses that will grow and create permanent jobs to meet the needs of the
unemployed.
Sustainable, profitable businesses make it possible to create sustainable jobs, so
businesses that make a profit must be maintained and developed.
The government policies of affirmative action and Broad-based Black Economic
Empowerment (BBBEE) aim to offer in-service training for workers that were
previously disadvantaged, to assist them in developing new skills. Sector
education and training authorities (SETAs) also assist workers in developing new
skills and to find funding for training.