This paper argues that inequality and relative deprivation are the main problems to be addressed in the country, based on the denial of access to facilities and equal opportunities by the previous apartheid government. It focuses on the stark contrasts in living conditions and life-styles between blacks and whites, males and females, urban and non-urban people, the employed and the unemployed, and those doing formal versus those doing informal work. It is based on the findings of the 1994 "October Household Survey" (OHS) of South Africa's Central Statistical Service. The findings show that Africans, who constitute 76% of the population, are more likely to be affected by inequality and relative deprivation. As many as 64% of Africans of all ages, and 70% of Africans aged between 0 and 15 years, live in non-urban areas. Africans are more likely than other population groups to live in shacks in urban areas and in traditional dwellings in non-urban areas, and to have less access to domestic infrastructure such as water, sanitation and electricity. They have also received less education, and are therefore less able to compete with others for jobs in the formal economy. The informal economy consists mainly of service and trade businesses, with little scope for new employment creation. The UNDP's Human Development Index is much lower for Africans, compared to whites. On the basis of the findings, it is argued that large-scale development programmes are required to overcome the inequalities of the past. If this does not happen, there is a danger that there will be insufficient high-level skills in the country to sustain economic growth.