Understanding Persistent Poverty in South Africa: A Time Series Analysis of Macroeconomic Determinants

Abstract The main objective of this chapter is to find out how certain economic factors have affected poverty in South Africa over the three decades as well as why poverty is still prevalent, even though there have been many efforts by the government to grow the economy as well as increase social spending. This chapter has used time series data from 1991 to 2022 from the World Development Indicators (WDI) and used many statistical tests such as unit root tests, Johansen cointegration, along with the Error Correction Model (ECM) with EViews software to examine short-term as well as long-term linkages between these factors and poverty. The findings show that the inflation rate and unemployment rate are the main reasons for poverty remaining high in South Africa, even though the GDP per capita has slowly increased. This chapter suggests that policymakers should design economic strategies that focus on creating employment, maintaining a stable inflation rate, and ensuring that government spending is used wisely and reaches those who need it most. Therefore, after achieving this objective, South Africa can move towards sustainable poverty reduction.