The aim of this paper is to explain why poverty and material deprivation in South Africa
are significantly higher among those of African descent than among whites. To do so, we
estimate the conditional levels of poverty and deprivation Africans would experience had
they the same characteristics as whites. By comparing the actual and counterfactual
distributions, we show that the racial gap in poverty and deprivation can be attributed to
the cumulative disadvantaged characteristics of Africans, such as their current level of
educational attainment, demographic structure, and area of residence, as well as to the
inertia of past racial inequalities. Progress made in the educational and labor market
outcomes of Africans after Apartheid explains the reduction in the racial poverty
differential.