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Extreme Poverty and the Bite of a Foot Note

We have the highest respect for the work of Statistics SA and for the information it gives to the public. In the polemic Alternative Information and Development Centre (AIDC) wages against corporate power and prevailing economic and energy policies, we constantly rely on Stats SA’s expertise and tremendous experience. AIDC is not the “enemy” of StatsSA. We are users of its reports, tables and diagrams.

After reading the Statistician General Pali Lehlola’s response to our 24 February article in Business Report and the AIDC press statement of 19 February, our admiration now also stretches to the Statistician General’s mastery of the English language. We quote:

The assertion by AIDC stating that Stats SA took instructions from the Department of Health is mendacious, irresponsible and inflammatory. It reflects the amateurish way in which these wannabe institutions frivolously trivialise the importance of evidence and information and its contribution to the development of society. Their unscientific and provocative remarks can only sensationalise and mislead the uninitiated and perhaps this is their ladder to fame. Unfortunately they went on a perilously dangerous rung that will seal their infantile fate.

The substance of that is in the first sentence. Our answer is: Foot Note 9 in the 3 February 2015 Methodological report on rebasing of national poverty lines…, which is what we are discussing, reads as follows:

“Statistics South Africa (2008) used 2 261 kilocalories per-person-per-day as the minimum energy requirement. In this round of poverty lines development the minimum energy requirement is set at 2 100 kilocalories per-person-per day as per recommendation from the Department of Health” [Our emphasis].

Is this true or not true? Are we quoting correctly from the report?

Was the South African Medical Research Council (MRC) consulted before the change? This is why we ask: In the joint Treasury and StatsSA 2007 report, A National Poverty Line for South Africa, we read: “The daily energy requirement, as recommended by the South African Medical Research Council (MRC), is 2261 kilocalories per person.”

The redefinition of Food Poverty is only announced in the above foot note. That is probably why the Statistician General has missed it.

Lower Bound and Upper Bound Poverty builds logically on the definition of Food Poverty (or Extreme Poverty), which is ultimately based on a calorie intake recommendation, as is pedagogically explained in the report.

The redefinition (to the World health Organisations emergency standard) shifts all three poverty lines in South Africa downwards by R25, as can be ascertained by the simple formula on page 10 in the report. Is our R25 estimate correct? It is the task of StatsSA to spell it out. The number should be in the report.

In our opinion, it is also StatsSA that should tell the users, in the report, that the estimated number of poor people changes dramatically when the starting point of the poverty lines is changed. The rebasing of the poor household consumer basket added R14 to the Food Poverty Line. Only that placed an additional 761,000 individuals in food poverty in 2011. From that, AIDC concluded that an additional R25 statistically places another 1.3-1.4 South Africans in food poverty and about 1 million individuals more below the political bench mark “Lower Bound Poverty”.

We made a cautious estimate. How much did the redefinition of Extreme Poverty affect the number of people reported to live below the three poverty lines?

In our view, StatsSA has this time not followed the “general conclusion from international experience” that …” a consistently applied poverty line is a useful social index”, to quote from the 2007 paper referred to above. To shift goal posts without saying what the consequences are for shares of population officially living in three different degrees of poverty is not to be transparent. It is untypical of StatsSA practice.

Finally, the Statistician General’s sulphur smelling advice to simply deflate the 2011 rebased poverty lines with CPI to get an account backward in time is irrelevant to our concerns. The goal posts have been shifted by R25 in 2011 prices. Statistically, the redefinition of Extreme Poverty makes the situation “better” from 2011 and back in time. Does the Statistician General agree with that?

The March 2014 report from StatsSA that made poverty estimates back to 2000 must now be revised. Does the Statistician General agree?

The Government has now an easier task to fulfil its two official goals when fighting poverty. One: That South Africans living below the Lower Bound Poverty Line should be reduced by half from 1990 (in practice from 2000) to 2015. This is the Millennium Goal. Two: That no one should live below that benchmark by 2030. This is the goal of the NDP.

AIDC wants an open exchange about a big policy change in reporting that have far reaching consequences for anti-poverty measures, like social grants. The policy change would have remained unnoticed by the public without our intervention. The Statistician General’s vitriolic response doesn’t do StatsSA any good.

Dr Dick Forslund is senior economist at the Alternative Information and Development Centre.

Posted in AIDC

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