Poverty a recipe for wider South Africa unrest

JOHANNESBURG (Reuters) - Failure to spread South Africa's economic gains to the poor has fuelled violence against immigrants and could spark wider unrest as living conditions become tougher and higher food prices bite.

More than 14 years after the end of apartheid, millions are still trapped in poverty despite record economic growth averaging five percent in the past four years. The poverty also fuels South Africa's frighteningly high violent crime rates.

Living in squalor in Johannesburg's shantytowns, the poor have taken their anger out on immigrants, killing 42 people, mostly targeting Zimbabweans and Mozambicans.

"We are sitting on a (time bomb). People are poor. They don't have jobs or decent housing and they are sick and tired of it. It's at a point where it is easy for anybody to incite violence," said Prince Mashele, analyst at the Institute for Security Studies.

The government of President Thabo Mbeki rejects suggestions that policy failures are behind the xenophobia, pointing to increasing access to electricity and housing and the expansion of welfare grants to 12.5 million people. It blames criminals.

"If you say the issue is about poverty then what you would have in the rest of the African continent is nothing but this," said Essop Pahad, one of Mbeki's closest advisers.

About 3 million Zimbabweans, fleeing the collapse of their own country's economy, make up the biggest group of 5 million migrants in a population of 50 million.

Even officials say the Zimbabweans are generally better educated than many poor South Africans, who accuse migrants from neighboring countries of stealing scarce jobs.

The attacks have centered on the province of Gauteng, heart of Africa's biggest economy but also where the starkest inequalities are on display.

The slum of Alexandra, where the violence first erupted on May 11, lies in the shadows of Johannesburg's northern suburban mansions where many of the super-rich reside.

A Statistics S.A. survey released in March found 10 percent of the population earned more than 50 percent of the income while the poorest 40 percent accounted for less than 7 percent.

Analysts say mounting instability is in store if the plight of the poor is not rapidly improved.

"This is not just about xenophobia. The next thing you might get some lunatic in the informal settlement say, how can we be hungry when they are rich across (the highway). These conditions are ripe for that sort of uprising," Mashele said.

FOOD PRICES BITE

Largely unskilled and with unemployment at about 24 percent, the poor are now going hungry as food prices climb.

Food price inflation jumped to 15.3 percent in March and is seen remaining at elevated levels in line with global trends.

"It's very bad. It's fish oil, it's bread, flour, rice, maize meal and everything. We have not eaten and there's no food in the house," said Busi Ndlovu, an unemployed mother of two from Alexandra township.

"I used to eat in the morning, during the day and (in the evening). Now I only eat twice," she said.

The International Monetary Fund has warned that higher food prices could lead to unrest, and local analysts agree.

"Mischief-makers could be easily tempted to use this as a lever to arouse social unrest and those in control should use resources to control this in an acceptable way," said Tony Twine, an economist at Econometrix.

Even those with jobs are finding it tough.

"We've had to cut a lot of things. Meat has now become a luxury we can't afford. We've even tried cheaper brands of rice but that is not helping much," said Vincent Sekolo, a clerk.

"The (annual salary increase) this year is like an insult because it hardly makes a difference," he said, adding he now used public transport instead of his car to save money.

"I hate minibus taxis, but they're much cheaper. Things have never been tougher and I don't think they'll get better soon."

The central bank lending rate has gone up by 4.5 percentage points to 11.5 percent since June 2006 and the bank has hinted at another rise. Petrol prices have climbed 33 percent in a year.

Leftist allies of the ruling ANC have blamed Thabo Mbeki's pro-business policies for failing the poor and have pushed for zero value-added-tax on basic food items and more subsidies.

But people hoping for government intervention to help ease the pressure might have a long wait.

"One of the difficulties with all the food prices is that it's very hard to design a system ... the big, big problem is to try and deal with this as a tax measure ... It's very unsuccessfully done everywhere," Finance Minister Trevor Manuel told parliament's finance committee on Tuesday.

(Additional Reporting by Phakamisa Ndzamela, Editing by Barry Moody)