South Africa is distinguished from other countries by its history of Apartheid, in which race‐
based policies resulted in vastly inferior education and labour market opportunities for
African, Coloured and Asian/Indian individuals.2 This resulted in exceptionally high levels of
poverty and inequality constructed along racial lines at the time of the transition to
democracy in 1994, motivating the newly elected democratic government to make poverty
alleviation a key focus of economic policy. The new political regime faced the major challenge
of reforming government institutions which had historically been systematic in
underproviding resourcesto the majority of the population. While the economic, political and
social systems have undergone considerable change in the past two decades, the structural
effects of colonialism and Apartheid are not easily undone. South Africa remains one of the
most unequal societies in the world, resulting in persistently high levels of poverty in what is
today an upper‐middle income country. Using the lower bound cost of basic needs poverty
line developed by Hoogeveen and Ozler (2006), the poverty headcount ratio was relatively
unchanged between 1993 and 2010, falling from 56% to 54% over the period (Leibbrandt et
al., 2010).