Covid relief grant set to be extended for another year: report

Finance minister Enoch Godongwana is expected to announce the extension of the Covid-19 relief grant by another year when he tables his budget in February 2022.

Citing senior government officials, the City Press also reported that the debate is now whether to increase the grant from R350 to R460.

The grant was first introduced in 2020 to provide relief to those who lost their jobs due to the Covid-19 pandemic but did not qualify for any other state grant or unemployment insurance.

It has been extended several times, and the latest extension put it in effect until March 2022.

Several groups, including unions, have called for the grant to be made permanent and turned into a universal income grant for the country. Some have pushed for the grant’s value to be extended to R500 a month or even R1,500 a month.

A panel of experts has recommended that the country gradually implement a basic income grant, beginning with institutionalising a monthly welfare payment introduced last year to offset damage wrought by the coronavirus pandemic.

While the exact amount of funding will be dependent on how much support government plans to offer to indigent South Africans, it will likely fall to taxpayers to fit the bill for these additional grants – either through increases or adjustments.

The panel said that an entry-level version of Basic Income Support (BIS) could be safely implemented using a mix of financing approaches, including:

• Limited debt financing;
• Tax revenue improvements arising from any demand stimulus; and
• Carefully calibrated tax increases where required.

A report compiled by the group found that 20% of households – nearly 12 million people – fall below the food poverty line (FPL), equivalent to a monthly value of R595.

40% of the population – equivalent to a population of 29 million in 8 million households – fall below the upper-bound poverty line (UBPL), equal to a monthly value of R1,300.  Amongst the poorest 10% of the population, income from social grants makes up 95% of disposable income.

Currently, approximately 9.5 million people receive the R350 distress grant, costing the fiscus around R40 billion. At R460 a month, the cost would be closer to R53 billion.

Read: Every rand spent on South Africa’s new basic income grant will be an extra rand of tax