New ‘Brazilian grant’ and basic income being considered for South Africa: Treasury

The National Treasury has commissioned a study to determine what long-term plan can be devised to replace the government’s current R350 social relief of distress grant and reduce the country’s poverty gap.

Briefing parliament’s Select Committee on Appropriations this week, Treasury said that the study is being conducted through a unit of the University of Cape Town, with the poverty gap being those who fall below the current food poverty line – currently under R624 per person per month.

As part of the work, the group has also been asked to evaluate four or five different initiatives, including:

• Continuing with the current R350 grant;

• The introduction of a Basic Income Grant – effectively a ‘bigger version’ of the R350 grant currently in place;

• A ‘Brazilian model’ that offers grants to the poorest households or families rather than individuals directly. Similar systems are also used in Mexico and the Philippines, Treasury said.

• An extension of the presidential employment programme, which effectively equates to a rapid public employment initiative.

• The introduction of a job seekers’ grant. The government has previously mooted the introduction of a new basic income grant explicitly aimed at the country’s unemployed youth.

The study is expected to be completed in the next week, while the presidency is currently working on its own anti-poverty plans. These are expected to be collated and presented shortly, Treasury said.

The ruling African National Congress (ANC) has agreed in principle on the need for a basic income grant, and the government is now considering the most sustainable way to implement it, Bloomberg reported.

Finance minister Enoch Godongwana warned in a presentation to ANC officials last week that the government has limited budget space to fund the party’s project wish list.

“The fact that the finance minister said there are fiscal pressures does not change the fact that we need to find innovative ways to make sure that we deal with the desperations of people,” Gungubele said.

He said that the cabinet would discuss whether or not the grant would be given to households or individuals.

Godongwana will present a fiscal outlook to the gathering and advise on expenditure pressures and whether there is a need to make any adjustments.

Read: What a basic income grant will actually cost South Africa