Determinants of rural-urban differential in asset poverty: Evidence from South Africa

Abstract

Since the advent of democratic governance in 1994, poverty eradication has been a central focus of policy development in South Africa. This objective is in line with the first Sustainable Development Goal, which seeks to eliminate global poverty in all its forms by 2030. This study aims to explore the factors that contribute to asset poverty in South Africa, both urban and rural, an issue that data constraints have largely overlooked. This work utilises principal component analysis to calculate weights and appropriate panel data models to identify essential drivers of asset poverty within distinct geographical areas in South Africa. The findings from the random effect probit model revealed that variables such as land ownership, age of the head of the household, being married, and educational status have a significant mitigating impact on asset poverty. However, the factors contributing to rural asset poverty differ somewhat from those contributing to urban asset poverty. For instance, land ownership appears to be a key factor in explaining poverty in rural areas, relative to their urban areas. Additionally, we found that being married and having all levels of education are key predictors of the rural sample based on the magnitudes of the impact. These findings imply that land remains a fundamental component of different livelihoods for rural dwellers and might encourage rural, emerging agriculturalists to participate in large-scale farming. Thus, the government should continue to redistribute land and further assist rural emerging agriculturalists who want to be involved in large-scale farming.