Analysis of multidimensional poverty in South Africa

Abstract

Poverty in South Africa extends beyond income deprivation, reflecting a complex web of constraints that limit individuals' freedoms and capabilities. Grounded in Amartya Sen’s Capability Approach, this study redefines poverty as the lack of opportunity to achieve well-being across multiple dimensions with the primary objective to analyze multidimensional poverty in South Africa, and to establish how it can be measured to more specifically address and alleviate it in all its dimensions. This study evaluates poverty through seven interconnected dimensions: living standards, inequality, unemployment, education, health, interest rates and inflation, and financial inclusion. The diversity and inconsistency in existing literature (Kane, 2008; Bici and Çela, 2017; Bronfman, 2014; Rodrigue, Kneebone and Reeves, 2016) underscore the need for a context-specific and updated analysis of poverty in South Africa. Methodologically, the study adopts a mixed approach combining qualitative insights with quantitative analysis through the Vector Error Correction Model (VECM) and supporting diagnostic tests. The most significant finding is that unemployment, school enrolment, real interest rates, and net personal wealth are the most influential drivers of poverty. These results confirm the complex and multifaceted nature of deprivation in South Africa. The study further shows that multidimensional poverty can be measured dynamically through time-series analysis, which reveals long-term relationships between key socioeconomic variables and economic well-being. Key recommendations include integrating education with employment pathways and stabilizing macroeconomic variables such as interest rates and inflation to support sustainable poverty reduction.