Social Grants and South Africa's Triple Challenge

This piece was written by Sazi Bongwe as a product of an ongoing shadowing experience with the Southern Centre For Inequality Studies

Social Grants as a means of economic upliftment: reflecting on the South Africa’s 2021 Budget

It is no secret that the Covid-19 pandemic has exacerbated many if not all of the existing hardships impacting the lives of South Africans. South Africa’s growth challenge is threefold (often referred to as South Africa’s triple challenge): high poverty, high unemployment and high inequality. Social grants are but one part of a much broader set of policy interventions that aim to meet one of South Africa’s most paramount challenges: how we arrive at genuine empowerment and social upliftment for the country’s most disadvantaged communities. This piece will attempt to unpack why a country like South Africa would need social grants and thus make a high-level assessment of their effectiveness in relation to this triple challenge.

The South African government administers five major social grants. Firstly, the State Old Age Pension (which includes war veterans) provides support to men and women over the age of 60. Secondly, the Disability Grant provides support to adults with disabilities. Thirdly, the Child Support Grant which provides support to families with children under the age of eighteen. Fourthly, the Foster Child Grant provides support to families with children, below the age of 18, in foster-care. Lastly, the Care Dependency Grant provides additional support to families with children, below the age of 18, with disabilities. There has, of course, been the added ‘special COVID-10 social relief of distress grant.’ These grants are funded directly through transfers from the national government. Hence, it is important to consider the budget in full and discuss historical trends as they relate to social grants.

The 2021 budget outlines a government consolidated spending plan with a projected cost of R6.6 trillion, which intends on “[meeting] urgent pandemic-related spending pressures, such as procuring COVID-19 vaccines, expanding the public employment initiative, and continuing social and economic relief measures” with “more than half of the budget allocated to learning and culture, health and social development functions to support vulnerable and low-income households.” It is evident that on a grand-scale there remains a much-needed emphasis on using government resources to facilitate social upliftment, furthered by the fact that the administering of social grants currently accounts for an estimated 4.5% of the GDP in total expenditure.The 2021 budget demonstrates that needed recovery has, for the most part, come at the expense of government programs looking to drive upward social mobility, with social development expected to undergo a 7.7% decline in consolidated government expenditure in the period 2020/21 to 2023/24. In saying that, however, the Budget does reflect a concerted effort to drive empowerment for South African citizens. One of the ways in which it aims to do so is through the continued use of social grants.

However, the Medium Term Expenditure Framework (MTEF) estimates that between the fiscal years of 2021 and 2024 this percentage is expected to fall by 2.2%. This reduction becomes particularly concerning as we consider that while total social grants will be reduced each year, the number of people receiving them is expected to increase by roughly 300 000 people over the medium term. Moreover, this reduction is even more significant in light of the fact that in the past year a greater share of the total population of South Africans relied solely on social grants than in any year before, with a 24 percentage point jump between 1996/97 and 2019/20. This dichotomy - one between reduced social grant expenditure and increased reliance on them - has the potential to significantly worsen the day-to-day lives of a large number of South Africans.

When one considers the current dynamics around social grants, a number of noteworthy points of discussion arise. Between 2020/21 and 2021/22 there has been some adjustment to the average monthly social grant values, and this adjustment sheds light on a crucial shift. While old age, disability, foster care and care dependency all hover around a percentage increase of 1.6% in the amount each person receives, child support has observed a 3.4% increase - more than double of what the other categories have been afforded. However, child support still remains well below the average monthly value allocated to the other grants, with an average difference of around R1400. As somebody without experience in the field and oblivious to the nuances of budget schemes such as this, I found this discrepancy striking at first. I have since come to learn that there are a number of explanations: child support grants can go to up to 6 children per family and thus cater to a lot more recipients, and generally are administered at a lower rate than the other grants. When considered in isolation, it is affirming to see a substantial increase in the grant amount, as the child support grant is crucial in a country like South Africa. especially amid a pandemic where providing for a household has been made that much more difficult.

South Africa’s triple challenge is merely the tip of the iceberg; the combination of our soiled history and volatile present make for an economic and social landscape with multifaceted challenges. Thus, solutions to these problems must also be multifaceted. While they are not the sole solution, the immediate impact of social grants cannot be neglected - for many families, they are a primary source of income (a reality only made more apparent by the pandemic). Yet this heightened reliance is in stark contrast to the adjustments of the 2021 budget as they pertain to social grants, where over the MTEF they will be significantly scaled down. The projections of each type of grant in comparison with one another also shed light on the importance of equally administering social grants in relation to South African society’s most pressing needs. As we begin to move slowly out of the pandemic, the hope is that widespread economic recovery serves to mitigate the damages experienced by families as a result of the reductions in the social grants budget.


South Africa 2021 Budget