Proposed new grant for South Africa under question: report

Finance minister Enoch Godongwana will propose that the Covid-19 social relief of distress grant be terminated and replaced with a ‘family grant’, the City Press reports.

The new grant, set to be outlined in Godongwana’s first medium-term budget policy statement (MTBPS) on 11 November, would only be given to the head of a family household instead of individuals.

However, the implementation of this new grant is reported to be a point of contention between Godongwana and president Cyril Ramaphosa, as it would exclude most of those who currently qualify for the R350 social relief of distress grant – a temporary provision of assistance intended for persons in such a dire material need that they are unable to meet their families’ most basic needs.

An estimated nine million South Africans currently collect the grant, which the president recently extended until March 2022. While a new family grant would significantly reduce the strain on the fiscus, it would also risk alienating a large portion of Ramaphosa’s voter base who would no longer directly benefit.

The proposed family grant is discussed in the following government document made public by GroundUp. It is titled “Draft anti-poverty strategy (abridged version)” and it is dated September 2021.

GroundUp noted that the family grant would only be offered to one million households in the first year, gradually increasing each year by an additional one million households.

The document, it noted, describes the family grant as the “best both from an impact perspective as it eradicates extreme poverty, as well as an efficiency perspective”.

“South Africa’s vision is to eradicate extreme poverty by 2030, which means that no one should live on less than the food poverty line of R624 per month for (2021/22),” the document said.

Citing Stats SA data, it points out that 25% of the population live below the food poverty line of R561 per person per month, while 40% live below the lower-bound poverty line of
R810, and a further 55% live below the upper-bound poverty line of R1,227.

Civil society organisations have condemned the proposal, saying it would leave millions of unemployed people worse off than they were before.

Unemployment and grants

South Africa’s welfare programme has been hailed as the single most significant achievement of the post-apartheid government in reducing income and wealth inequality, which nevertheless remains the world’s highest.

Unemployment is at a record of more than 34% due to the Covid-19 pandemic, with almost four out of five people aged between 18-24 without work.

Data published by the World Bank in September shows that a third of South Africans are beneficiaries of a social grant directly, which rises to close to two-thirds when those who benefit indirectly are included. The World Bank recommends the basic income grant take the form of a “jobseekers’ grant, targeted at the unemployed.

It said that a job-seekers grant, set at R350 a month, could cost R16.2 billion rand a year.

“The dilemma of the future of South Africa’s social assistance system rests in the opposing pull of these two forces: The limited political appetite for cost-saving reforms and the need to consolidate expenditures,” the World Bank said. “Feasible options for broader reform hence need to balance political will and the need to contain costs.”

Read: The tiny tax base that’s expected to help fund South Africa’s new basic income grant

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Proposed new grant for South Africa under question: report