Journal of Economic Policy and Management Issues

Evaluating the determinants of income inequality in South Africa: An ARDL approach

Malefa R. Malefane — 2026-07-28

This paper aims to build on previous studies and investigate the determinants of income inequality in South Africa with a special focus on the role of inflation. The study examines various variables capturing demographic, structural, economic, and political factors that are deemed to be triggering or reducing income inequality, according to previous literature. In the empirical investigation, the study employs the autoregressive distributed lag (ARDL) approach to cointegration and examines both the short-run and long-run determinants of income inequality in South Africa. The findings reveal that inflation has an aggravating effect on income inequality in the short run and no effect in the long run. In comparison, democracy, government expenditure, bank-based financial development and female labor participation have a significant short-run impact on income inequality, though the magnitude and signs of these variables differ. Based on the findings, this study recommends that efforts to increase the availability and accessibility of credit to the private sector could be promoted by policymakers in South Africa while ensuring that credit extension does not trigger inflation, as it did during the period before 1990. In this view, strategic interventions from various stakeholders, such as the government, the banking sector, local communities, and private entities, could provide finance for development in a manner that would mitigate the gaps arising from unequal opportunities in South Africa.

An exploratory review of electricity subsidy reform in Lesotho: Implications for the utility and households

Moeketsi Mpholo — 2026-07-28

Although electricity subsidies play an important role in protecting poor and vulnerable households, they have to be funded. Thus, this paper uses descriptive analysis to examine the implications of the electricity lifeline tariff in Lesotho on both the utility and households over the period 2014-2022. The analysis is carried out by comparing variables at least 5 years before the implementation with those recorded in the years that have passed since. With the current implementation strategy, the utility sustained significant negative financial effects due to reduced revenue collections. Nevertheless, households experienced positive effects due to the lifeline tariff, such as increased electricity consumption, improved affordability, reduced consumption of polluting sources and increased use of electricity for cooking. Despite these, many households perceived electricity to be expensive and claimed they would reduce their consumption should electricity prices increase. This is corroborated by the declining consumption trend before the introduction of the lifeline tariff, and the fact that households still face electricity and energy poverty. This study concludes that the lifeline tariff is beneficial to the targeted households. However, it should be implemented by charging low-consumption households below cost and high-consumption households above cost to cross-subsidise the electricity consumption of the targeted households.