VULNERABILITY AND POVERTY DYNAMICS IN RURAL AREAS OF EASTERN CAPE PROVINCE, SOUTH AFRICA

Abstract

If the aim of studying poverty is not only improving the well-being of households who are currently poor, but also preventing people from becoming poor in the future, a new forward looking perspective must be adopted. This study analyses determinants of household poverty dynamics in rural areas of the Eastern Cape Province, South Africa using a panel data set on a representative sample of 300 rural households in the Amathole District Municipality. The result of the study shows a significant flow in and out of poverty, which is a sign of vulnerability. While 63% of the sampled households are poor (ex post), while 48% are vulnerable to becoming poor (ex ante) in future. The result of the probit model indicates that age, level of education and household heads' occupation, dependency ratio, remittance/diversified income base, exposure to idiosyncratic risks and access to credit are statistically significant in explaining households' vulnerability to poverty. Implications for policy are discussed.