Shock grant data shows why government is pushing for a new ‘basic income’ for South Africa

Social development minister Lindiwe Zulu says that nearly 10 million applied to receive a R350 Covid-19 relief grant between May 2020 and April 2021.

Responding in a written parliamentary Q&A, Zulu said that to date a total of 9,998,879 applications have been received for the relief grant, to date.

However, a study conducted alongside the distribution of the grants shows that 88% of recipients of the Covid SRD grant pooled the grant with their other household incomes to take care of the needs of everyone in the household.

“It is estimated that between the CSG Caregivers allowance and the Covid SRD grant of R350, approximately 36 million individuals benefited from these both directly and indirectly,” Zulu said.

Based on the latest mid-year population estimates from Stats SA (59.6 million), this equates to more than half of all South Africans benefitting from the grants in some manner.

What the grants were used for

The department’s surveys show that the grant was mainly used for the purchase of food.

“This triangulates well with other research indicating that hunger declined during the period May to October 2020 when the relief package was at its maximum level and then increased from November onwards when part of the relief package, and notably the caregivers allowance, was withdrawn,” Zulu said.

The minister said that the withdrawal of this funding ahead of the third Covid-19 wave will lead to more households and individuals becoming vulnerable to hunger.

She said that the interventions were not only able to prevent further deepening of food poverty, but also decrease this from 20.6% to 18.8%. Similar results were found at the lower and upper bound poverty lines.

“Similarly with inequality, as measured by the Gini coefficient, without the relief measures, inequality would have increased from 0.64 to 0.67, however with the relief measures our Gini coefficient has declined to 0.61.”

“The evidence provided by the various research, and analysis, confirms the assumption that ending relief programmes will reduce household demand as well as increase hunger and social alienation.

“These factors will add to social and political stress, which in turn will slow down the economic recovery over the coming year or two at least.”

New basic income grant 

In May, Zulu said that her department will now move forward on plans to introduce a new basic income grant in South Africa.

Zulu said that the need to introduce a basic income grant has become an urgent consideration for the African National Congress-led government.

“To this end, the Department has developed a Basic Income Grant (BIG) discussion document that we have started to consultations on. These consultations are targeted at developing the BIG financing mechanism for the unemployed population group that is aged 19 — 59 years.”

Zulu said that a secondary process around a new BIG is being discussed by the National Economic Development and Labour Council (Nedlac).

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Shock grant data shows why government is pushing for a new ‘basic income’ for South Africa