Godongwana’s R2.2 billion surprise
Finance Minister Enoch Godongwana’s surprise announcement of a R20 hike to the Covid-19 Social Relief of Distress (SRD) grant from 1 April has raised eyebrows among economists, given its questionable timing.
According to the Bureau for Economic Research (BER), the announcement – late on a Wednesday at the tail-end of an address to the National Assembly – came only a short while after the minister tabled the 2024 National Budget, where it would have made more sense to make it.
Making the announcement even more confusing is that the R20 hike does not even come close to covering the rise in inflation since it was first introduced – to match inflation, it would have to be hiked to R430 (+R80).
“This is the first increase since the introduction of the grant in 2020 and does not make up for the full loss of purchasing power amid rising inflation, but the timing of the announcement can conceivably be linked to the upcoming election,” the BER said.
The economists noted that the rise will cost the fiscus about R2.2 billion extra in 2024/25 than anticipated in February.
Godongwana announced on Wednesday that the hike would be part of a “comprehensive social security programme” that will be published for public comment by the Department of Social Development before the end of the month.
Technically, the SRD grant has not been officially extended beyond March 2025 – however, the National Treasury has provisionally allocated funding for the SRD through March 2027.
The SRD grant is allocated R33.6 billion in 2024/25 with provisional allocations of R35.2 billion and R36.8 billion for the 2025/26 and 2026/27 financial years.
The grant is widely expected to eventually become South Africa’s basic income grant.
According to president Cyril Ramaphosa, there are currently 9 million people receiving the grant, though fact-checkers say the real number of recipients is closer to 7.7 million.
National Treasury projections in the 2024 budget documents show the number of people receiving grants is expected to increase from 27.78 million in 2023/24 to 28.31 million this year.
Additionally, over 9.2 million people will receive the SRD grant this year, Treasury projects.
Read: 28 million people on grants in South Africa – with only 7 million taxpayers
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