Updated grants system planned for South Africa

The government has started a review of South Africa’s grants system, says finance minister Enoch Godongwana.

Approximately 46% of the entire population receives some form of social grant in the country, which has been flagged as unsustainable. However, the National Treasury has also said that it will investigate the possibility of introducing a basic income grant in the country.

Addressing an oral questions and answers session in parliament on Wednesday (9 March), Godongwana said the goal of the review is to develop an optimal support mechanism for grant recipients and help establish an approach to long-term social security in South Africa.

This includes considerations regarding:

  • Social assistance;
  • Social insurance;
  • Active labour policies; and
  • Artisan training for learners exiting vocational training, where we intend to engage not only the private sector, but also municipalities and state-owned enterprises to equip learners TVET colleges with relevant industry experience to enable them to transition to gainful employment.

Godongwana also reiterated president Cyril Ramaphosa’a announcement that the R350 Social Relief in Distress grant will be extended to March 2023, with detailed technical work and engagements will take place to identify the best options to replace this grant.

This is widely expected to include the introduction of a basic income grant.

In its 2022 national budget presentation at the end of February 2022, Treasury said it is still considering proposals around a universal basic income grant for South Africa, but warned that it cannot be introduced in a fiscally irresponsible way.

Godongwana said that, in view of the Covid‐19 related job losses, increasing poverty and inequality, Treasury and the government should seriously consider a basic income grant after the necessary consultations with relevant stakeholders.

“The Covid‐19 pandemic increased national debate on the possibility of a universal basic income grant, and the government is considering various proposals in this regard,” it said.

“Any proposals to expand this system need to be fully and appropriately financed by closing existing programmes to free up revenue, or through permanent increases in revenue collection.”

The R350 Social Distress Relief grant, introduced in 2020 to support those who were left unemployed or destitute due to the Covid-19 pandemic, is widely seen as the base point for a permanent basic income grant for the country, with many analysts expecting it to be made a permanent fixture in the coming years.

Read: South Africa’s biggest pension fund announces increases from April

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