Estimating a poverty line: An application to free basic municipal services in South Africa

Figures & data

Table 1: Comparison of selected poverty lines for South Africa (in 2008 prices)

Poverty line	Per capita poverty line 2008 prices	Household poverty line (based on average HH size of 3.8)	Share of FBS poverty line (zm) of R1500	Notes	Source
MLL (1993)	R429.28	R1 631.27	109%	Calculated using the 1993 values	Woolard & Leibbrandt (2001)
SLL (1993)	R575.42	R2 186.61	146%	Calculated using the 1993 values	Woolard & Leibbrandt (2001)
MLL	R2 213.89	R2 213.89	148%	MLL for a household of four people	Landman (2003)
MLL	R2 222.61	R2 222.61	148%	Based on the MLL for an average family in a metropolitan area	Martins (2003)
$1 a day	R139.20	R528.96	35%	$1 a day	Hoogeveen & Özler (2006)
$2 a day	R278.40	R1 057.92	71%	$2 a day	Hoogeveen & Özler (2006)
R322/Cost of basic needs	R515.20	R1 957.76	131%	Cost of basic needs approach – lower bound line	Hoogeveen & Özler (2006)
R593/Cost of basic needs	R948.80	R3 605.44	240%	Cost of basic needs approach – upper bound line	Hoogeveen & Özler (2006)
Sources: Woolard & Leibbrandt (2001), Landman (2003), Martins (2003), Hoogeveen & Özler (2006); own calculations.
Note: HH = household.

Table 2: Social grants beneficiary numbers by type of grant: 1997, 2008 and 2009

Type of grant	August 1997	April 2008	April 2009	% of total, 2009
Old Age Grant	1 742 253	2 218 993	2 324 615	17.37
War Veterans Grant	11 495	1 963	1 649	0.01
Disability Grant	754 830	1 413 263	1 404 884	10.49
Grant in Aid	9 720	0	0	0.00
Foster Care Grant	42 917	443 191	487 510	3.64
Care Dependency Grant	3 815	101 836	105 909	0.79
Child Support Grant	400 599	8 195 524	9 061 711	67.69
Total	2 965 629	12 374 770	13 386 278	100.00
Sources: Pauw & Mncube (2007); calculated using data from National Treasury (2008, 2009).
Notes: The estimated number of beneficiaries for April 2009 is a projection provided by the National Treasury in the 2009 Budget Review. The Child Support Grant was introduced in 1998, the 1997 beneficiaries shown in the table therefore correspond to the Child Maintenance Grant.

Table 3: Comparison of income thresholds for social grants and FBS poverty line, 2008

	Rand value	Share of FBS poverty line
CSG threshold – rural	R2 100	140%
CSG threshold – urban	R2 200	147%
OAP threshold – single person	R2 244	150%
OAP threshold – married couple	R4 488	299%
Sources: SASSA (2009), own calculations.

Table 4: Number and proportion of households eligible for free basic services using six different potential FBS lines

	R750/month		R1500/month		2 x OAP (R1920)		CSG threshold (R2200)		R3000/month		OAP threshold (R4488)
	No. of HH	%	No. of HH	%	No. of HH	%	No. of HH	%	No. of HH	%	No. of HH	%
South Africa	998 302	8.01	3 612 222	29.00	4 980 183	39.98	5 726 041	45.96	7 250 063	58.2	8 710 547	69.92
Urban	433 228	5.34	1 678 120	20.69	2 423 702	29.88	2 847 914	35.11	3 809 989	46.96	4 842 302	59.69
Rural	565 074	13.01	1 934 102	44.51	2 556 480	58.84	2 878 127	66.24	3 440 074	79.17	3 868 245	89.03
Western Cape	34 386	2.70	201 007	15.81	288 862	22.72	349 607	27.50	488 122	38.39	623 985	49.07
Eastern Cape	216 362	12.55	674 379	39.12	863 934	50.12	971 233	56.34	1 170 740	67.92	1 343 068	77.91
Northern Cape	26 069	8.89	98 010	33.42	133 992	45.68	151 990	51.82	191 145	65.17	223 363	76.16
Free State	64 845	7.21	275 149	30.60	373 974	41.59	419 844	46.69	531 019	59.06	651 526	72.46
KwaZulu-Natal	171 393	7.74	689 934	31.16	953 316	43.05	1 092 057	49.32	1 397 136	63.09	1 665 313	75.20
North West	93 649	10.32	298 861	32.93	421 890	46.49	471 136	51.92	572 362	63.07	676 019	74.50
Gauteng	147 549	4.97	544 542	18.35	829 213	27.94	993 377	33.47	1 337 669	45.07	1 735 644	58.48
Mpumalanga	104 843	11.92	305 333	34.71	418 243	47.54	473 239	53.80	583 955	66.38	682 399	77.57
Limpopo	139 204	10.70	525 008	40.37	696 758	53.58	803 557	61.79	977 916	75.20	1 109 231	85.29
Sources: Stats SA (2008), own calculations.
Notes: Households (HH) have been weighted using household weights based on the 2001 Census.

Table 5: Number and share of households eligible for free basic services when using five different potential FBS lines compared with 2008 FBS poverty line of R1500

	R750–1500		R1500–1920		R1500–2200		R1500–3000		R1500–4488
	Change in no. of HH	% point change	Change in no. of HH	% point change	Change in no. of HH	% point change	Change in no. of HH	% point change	Change in no. of HH	% point change
South Africa	2 613 920	20.99	1 367 961	10.98	2 113 819	16.96	3 637 841	29.20	5 098 325	40.92
Urban	1 244 892	15.35	745 583	9.19	1 169 794	14.42	2 131 869	26.27	3 164 182	39.00
Rural	1 369 028	31.50	622 378	14.33	944 025	21.73	1 505 972	34.66	1 934 143	44.52
Western Cape	166 620	13.11	87 855	6.91	148 601	11.69	287 115	22.58	422 979	33.26
Eastern Cape	458 017	26.57	189 556	11.00	296 855	17.22	496 361	28.80	668 689	38.79
Northern Cape	71 941	24.53	35 982	12.26	53 979	18.40	93 135	31.75	125 353	42.74
Free State	210 303	23.39	98 825	10.99	144 696	16.09	255 871	28.46	376 378	41.86
KwaZulu-Natal	518 541	23.42	263 382	11.89	402 123	18.16	707 201	31.93	975 379	44.04
North West	205 212	22.61	123 029	13.56	172 275	18.99	273 501	30.14	377 158	41.57
Gauteng	396 993	13.38	284 671	9.59	448 835	15.12	793 127	26.72	1 191 101	40.13
Mpumalanga	200 490	22.79	112 910	12.83	167 906	19.09	278 622	31.67	377 066	42.86
Limpopo	385 804	29.67	171 751	13.21	278 550	21.42	452 908	34.83	584 223	44.92
Sources: Stats SA (2008), own calculations.
Notes: Households (HH) have been weighted using household weights based on the 2001 Census.

Table 6: Additional cost of using five different potential FBS lines instead of the 2008 FBS line of R1500

	R750/month	2x OAP (R1920)	CSG threshold (R2200)	R3000/month	OAP threshold (R4488)
South Africa	−R3 118 406 620	R1 631 977 354	R2 521 785 948	R4 339 944 194	R6 082 302 083
Urban	−R1 485 156 514	R889 479 923	R1 395 563 884	R2 543 319 956	R3 774 869 484
Rural	−R1 633 250 165	R742 496 954	R1 126 221 944	R1 796 624 357	R2 307 432 599
Western Cape	−R198 777 815	R104 810 931	R177 280 826	R342 528 469	R504 613 362
Eastern Cape	−R546 413 875	R226 139 831	R354 147 538	R592 159 150	R797 746 454
Northern Cape	−R85 825 386	R42 926 013	R64 397 341	R111 110 329	R149 545 723
Free State	−R250 891 837	R117 898 619	R172 621 743	R305 253 566	R449 018 668
KwaZulu-Natal	−R618 619 723	R314 214 392	R479 732 751	R843 691 044	R1 163 626 562
North West	−R244 818 000	R146 773 955	R205 523 956	R326 286 097	R449 949 375
Gauteng	−R473 612 184	R339 612 563	R535 460 286	R946 200 690	R1 420 984 030
Mpumalanga	−R239 184 117	R134 701 916	R200 311 548	R332 395 748	R449 840 144
Limpopo	−R460 263 695	R204 898 585	R332 309 673	R540 319 244	R696 977 800
Sources: Stats SA (2008), City of Cape Town (2009); own calculations.

Table 7: Percentage increase (decrease) in total cost of providing free basic services when using five different potential FBS lines instead of the 2008 FBS line of R1500

	R750/month	2x OAP (R1920)	CSG threshold (R2200)	R3000/month	OAP threshold (R4488)
South Africa	−72.36%	37.87%	58.52%	100.71%	141.14%
Urban	−74.18%	44.43%	69.71%	127.04%	188.56%
Rural	−70.78%	32.18%	48.81%	77.86%	100.00%
Western Cape	−82.89%	43.71%	73.93%	142.84%	210.43%
Eastern Cape	−67.92%	28.11%	44.02%	73.60%	99.16%
Northern Cape	−73.40%	36.71%	55.08%	95.03%	127.90%
Free State	−76.43%	35.92%	52.59%	92.99%	136.79%
KwaZulu-Natal	−75.16%	38.17%	58.28%	102.50%	141.37%
North West	−68.66%	41.17%	57.64%	91.51%	126.20%
Gauteng	−72.90%	52.28%	82.42%	145.65%	218.73%
Mpumalanga	−65.66%	36.98%	54.99%	91.25%	123.49%
Limpopo	−73.49%	32.71%	53.06%	86.27%	111.28%
Sources: Stats SA (2008), City of Cape Town (2009); own calculations.

Table A1: Original poverty line values

Poverty line	1993 prices	2000 prices	2004prices	March 2006prices	Per capita poverty line 2008 prices	Household poverty line (based on average HH size of 3.8)	Share of FBS poverty line of R1500
Minimum living level (per capita)	R164.20			R352.01	R429.28	R1 631.27	109%
Supplemental living level (per capita)	R220.10			R471.85	R575.42	R2 186.61	146%
MLL			R1 713		R2 213.89	R2 213.89	148%
Minimum living levels		R1 389.13		R1 822.54	R2 222.61	R2 222.61	148%
Per adult equivalent HH subsistence level	R251.10				R656.47	R2 494.59	166%
$1 a day		R87		R114.14	R139.20	R528.96	35%
$2 a day		R174		R228.29	R278.40	R1 057.92	71%
R322/Cost of basic needs		R322		R422.46	R515.20	R1 957.76	131%
R593/Cost of basic needs		R593		R778.02	R1 020.76	R3 878.88	259%
Sources: Woolard & Leibbrandt (2001), Landman (2003), Martins (2003), Hoogeveen & Özler (2006); own calculations.
Note: HH = household.

Table A2: Breakdown of poor households by location, using six different poverty lines

	R750/month	R1500/month	2x OAP (R1920)	CSG threshold (R2200)	R3000/month	OAP threshold (R4488)
South Africa	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%
Urban	43.40%	46.46%	48.67%	49.74%	52.55%	55.59%
Rural	56.60%	53.54%	51.33%	50.26%	47.45%	44.41%
Western Cape	3.44%	5.56%	5.80%	6.11%	6.73%	7.16%
Eastern Cape	21.67%	18.67%	17.35%	16.96%	16.15%	15.42%
Northern Cape	2.61%	2.71%	2.69%	2.65%	2.64%	2.56%
Free State	6.50%	7.62%	7.51%	7.33%	7.32%	7.48%
KwaZulu-Natal	17.17%	19.10%	19.14%	19.07%	19.27%	19.12%
North West	9.38%	8.27%	8.47%	8.23%	7.89%	7.76%
Gauteng	14.78%	15.07%	16.65%	17.35%	18.45%	19.93%
Mpumalanga	10.50%	8.45%	8.40%	8.26%	8.05%	7.83%
Limpopo	13.94%	14.53%	13.99%	14.03%	13.49%	12.73%
Sources: Stats SA (2008), own calculations.
Notes: The households have been weighted using household weights based on the 2001 Census.

Table A3: Estimated cost of providing free basic services to households in City of Cape Town, 2008/09

	Number of HH receiving FBS	Cost of FBS provided	Cost per HH
Water	847 000	R259 814 000	R306.75
Sanitation	811 000	R154 278 000	R190.23
Electricity	424 000	R135 834 000	R320.36
Refuse	477 000	R179 333 000	R375.96
Cost per HH of provision of free basic services			R1 193.30
Sources: City of Cape Town (2009), own calculations.
Note: HH = household.

Table A4: Cost of providing free basic services when using five different FBS poverty lines

	R750/month	R1500/month	2x OAP (R1920)	CSG Threshold (R2200)	R3000/month	OAP Threshold (R4488)
	No. of HH	No. of HH	No. of HH	No. of HH	No. of HH	No. of HH
South Africa	R1 190 974 346	R4 309 380 965	R5 941 358 319	R6 831 166 913	R8 649 325 159	R10 391 683 048
Urban	R516 840 527	R2 001 997 041	R2 891 476 963	R3 397 560 925	R4 545 316 996	R5 776 866 525
Rural	R674 133 759	R2 307 383 925	R3 049 880 879	R3 433 605 869	R4 104 008 282	R4 614 816 524
Western Cape	R41 023 023	R239 800 838	R344 611 770	R417 081 664	R582 329 307	R744 414 200
Eastern Cape	R258 120 033	R804 533 908	R1 030 673 739	R1 158 681 446	R1 396 693 059	R1 602 280 363
Northern Cape	R31 100 830	R116 926 216	R159 852 229	R181 323 557	R228 036 546	R266 471 940
Free State	R77 360 371	R328 252 208	R446 150 827	R500 873 952	R633 505 774	R777 270 876
KwaZulu-Natal	R204 472 004	R823 091 727	R1 137 306 119	R1 302 824 478	R1 666 782 771	R1 986 718 290
North West	R111 723 293	R356 541 292	R503 315 247	R562 065 248	R682 827 389	R806 490 667
Gauteng	R176 026 482	R649 638 666	R989 251 228	R1 185 098 952	R1 595 839 356	R2 070 622 696
Mpumalanga	R125 077 866	R364 261 983	R498 963 899	R564 573 531	R696 657 730	R814 102 126
Limpopo	R166 070 491	R626 334 186	R831 232 771	R958 643 859	R1 166 653 430	R1 323 311 987
Sources: Stats SA (2008), City of Cape Town (2009; own calculations.
Note: HH = household.