Ramaphosa doubles down on big grant changes in South Africa

President Cyril Ramaphosa has once again said that the Social Relief Distress (SRD) grant will be expanded to create a more sustainable source of income.

Established in 2020, the SRD grant was used to provide millions of South Africans with access to a small amount of funds (originally R350) to protect them from extreme poverty.

The grant has been expanded to R370 and supports over 10 million recipients in the country.

Speaking at the 2024 State of the Nation Address (SONA), Ramaphosa said that the SRD grant will be used as a basis to create a more sustainable source of income for unemployed people.

“The Social Relief of Distress Grant is as an essential mechanism for alleviating extreme poverty.

“We will use this grant as a basis for the introduction of a sustainable form of income support for unemployed people,” he said.

South Africa’s unemployment rate is currently over 32%, making it one of the highest in the world.

This is not the first time that Ramaphosa has said that the SRD grant would be expanded, with the President repeating similar statements at the 2024 SONA.

Although many critics have stated that the grants create a “dependent society,” many have stated that the grants are essential to protect millions from malnutrition.

Concrete plans to turn the SRD into a permanent basic income grant have been few and far between.

National Treasury poured ice on talk of a basic income grant for South Africa in late 2024, stating that it would cost the economy over R400 billion per year, which is unaffordable without large tax increases.

With the basic income grant potentially reaching 35 million people between 18 and 60 years old, the programme could reach a cost of R400 billion per year.

SRD battle

That said, affordability challenges may not be enough for the Treasury to deny extending grants.

A recent high court judgement ruled that the ‘temporary’ SRD grant is now a permanent feature of South Africa’s social assistance regime.

The government has treated the SRD grant as a temporary measure and has not accounted for it in its long-term budgeting. The grant’s validity has been each year and budgeted for in that financial year.

The state said that the grant would otherwise be unaffordable and requires dedicated funding measures, which is on the basis that access to the grant has been restrictive.

The High Court, nevertheless, ruled that the affordability of the grant from a fiscal perspective cannot be the reason to exclude people in poverty.

The Bureau for Economic Research said that this means that the qualifying recipients for the SRD could rise significantly this year, growing from 10.5 million people currently budgeted for to over 18 million.

This would require an increase of about R35 billion per year to afford it. Treasury said that it is studying the judgement and could appeal the ruling.

More grant details are expected to be heard at the 2025 Budget Speech by Finance Minister Enoch Godongwana on 19 February 2025.