The rich may be getting richer - at a dizzying pace - but the good news is that, thanks to hefty government spending, the poor are not getting poorer.
Total government spending in South Africa is higher than the average for middle-income countries and more than half of that money is devoted to social spending. According to a recent World Bank report, "Fiscal policy and redistribution in an unequal society", this spending makes the difference between life and near-death for millions of South Africans who have little chance of being included in the mainstream economy.
About 1.1million households - or about 5million people - had an average annual income of only R200 a person in 2010-2011. Government transfers in the form of social grants, free basic services, and free healthcare and education, pushed this up to a still-desperate but more manageable R2131 a year.
By contrast, the report shows that the 2.7million richest South Africans enjoyed an average annual per capita income of R207369. After tax and cash transfers this reduces to R141075.
Without these transfers from the rich to the poor through taxation the Gini coefficient would be a jaw-dropping 0.771, by far the highest in the world. With the transfers, the coefficient falls to 0.596, still one of the highest levels of inequality .
However, the lower Gini coefficient assumes that the benefit of spending on health and education equals the amount spent per capita. But, as the report notes: "The recipients of these services may not value them in line with what the government spends on them." Such leakage will raise the Gini coefficient.
The very good news is that cash transfers, which account for R120-billion of government spending annually, are extremely effective and do reach the poor.
"The transfer that stands out as being the most progressive ... is the child-support grant. Among the larger programmes, the next most progressive is the old-age pension," the World Bank says.
The bank commends South Africa for its well-targeted and "quite sizable" cash transfers while warning that "poorly targeted or designed social programmes often result in the benefits leaking to higher income groups".