South Africa has run into a big problem – and it’s not sustainable, warns Capitec

South Africa’s employment and social grants numbers have effectively reversed over the last 20 years – and this is now one of the biggest risks for the country, says Nkosana Mashiya, executive of Risk Management at Capitec.

Mashiya said that this forms part of a broader problem with South Africa’s fiscal position and the government’s public finances.

“This (position) has been dwindling over time. But think about it. Today, 18 million people are on social grants, with 14 million taxpayers,” he said.

“Twenty years ago, this was reversed, with just 2.5 million people on social grants, and 12 million formally employed. The situation now is unsustainable.”

Data published at the start of 2021 shows that the number of South Africans on social grants has steadily increased since 1996.

It shows that around 18.2 million people now collect some form of social grants in South Africa.

Financial year Daily stats as of 31 March Population estimates (% share)
1996/97 3 018 909 41 226 700 (7%)
1997/98 2 832 156 42 130 500 (7%)
1998/99 2 923 718 43 054 306 (7%)
1999/00 3 034 381 43 685 699 (7%)
2000/01 3 864 463 44 560 644 (9%)
2001/02 4 033 384 45 454 211 (9%)
2002/03 4 969 666 46 429 823 (11%)
2003/04 6 494 115 46 586 607 (14%)
2004/05 9 421 654 46 888 200 (20%)
2005/06 10 974 076 47 390 900 (23%)
2006/07 12 015 059 47 850 700 (25%)
2007/08 12 423 739 48 687 000 (26%)
2008/09 13 072 173 49 320 500 (27%)
2009/10 14 057 365 49 991 300 (28%)
2010/11 14 935 832 50 586 757 (30%)
2011/12 15 407 194 50 586 757 (30%)
2012/13 16 106 110 52 982 000 (30%)
2013/14 15 932 473 54 002 000 (30%)
2014/15 16 642 643 54 956 900 (30%)
2015/16 16 991 634 55 908 900 (30%)
2016/17 17 200 525 56 521 900 (30%)
2017/18 17 509 995 57 725 600 (30%)
2018/19 17 811 745 58 775 022 (30%)
2019/20 18 290 592 59 622 350 (31%)

By comparison, the Q1 Quarterly Employment Survey (QES) published at the end of June shows that South Africa has continued to lose jobs – and by extension taxpayers.

The year-on-year figures from the Quarterly Employment Statistics survey, released by Stats SA show that formal sector jobs decreased by 552,000 in the first quarter.

The total number of people employed in the non-agricultural sector is now estimated to be around 9.64 million.


Other risks 

Other risks that Mashiya says South Africa urgently needs to address include:

  • Education: Mashiya said he was deeply worried about the quality of education, especially at the primary school level. “Recent employment statistics show that 73% of our unemployed youth did not complete matric,” he said.
  • Electricity: “I’m worried about the security of our supply of electricity. The crisis at Eskom is extremely urgent. The growth this country needs depends on us fixing this situation.”
  • Vaccinations: “I’m concerned about the national rollout of the vaccination programme. We’ve had over a year of lockdowns in one form or another. We’re going to pay some serious damages in the next 18 to 24 months. It’s good we’ve started but we must fast-track the roll-out before there’s more economic damage.”
  • The fiscal position and the government’s own public finances: “This has been dwindling over time. But think about it. Today, 18 million people are on social grants, with 14 million taxpayers. 20 years ago, this was reversed, with just 2.5 million people on social grants, and 12 million formally employed. The situation now is unsustainable.”

Addressing the risks head-on

To fix these problems, Mashiya said that South Africa needs to generate growth. “Growth has been less than 1% for too long now. The last time our economy was creating meaningful jobs was when the economy was growing at about 5% per annum soon after 1994.”

He said that the country also needs more successful public-private partnerships (PPPs).

“I believe we lost a great opportunity by not leveraging the private sector distribution capabilities in rolling out vaccines early on.

“The private sector is geared for distribution, logistics, and cost-saving. The same applies to the production and distribution of electricity. There are examples where these partnerships have worked well.  Telkom is an example of this working in practice.”

Mashiya said that banks are also failing in this regard.

“We are not playing our part well in having crucial dialogues with the government. I think that under the previous administration, we abandoned PPPs. The private sector looked inward – and for ways to exit our investments out the country. I think this was a mistake.”

Mashiya said that ultimately the business sector needs to remember that “we are all responsible for the future of South Africa”.

“The risks I’ve outlined were prominent even before the pandemic; now they’ve become even more urgent to manage effectively.  The fiscal situation has worsened. The lacklustre growth has been made worse. I remain optimistic and have hope that we can turn it all around if we work together.

“The lockdown has also shown us what we’re capable of as a Nation. Who could have thought so many companies could shift their normally office-based activities could run your entirely from home within weeks? Call centres as an example? If we could achieve that, we can achieve a lot more if we collaborate.”


Read: One of South Africa’s biggest banks is making a permanent work-from-home shift

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South Africa has run into a big problem – and it’s not sustainable, warns Capitec