Barry Streek
Some of South Africa’s poorest of the poor – the social pensioners – got a modest 4% increase in their grants at the beginning of July.
In real terms, this meant their pension payouts went down. However, independent research by two United States university researchers shows that South Africa’s social welfare system is making a real difference to the rural poor and to children.
Old age, disability and care dependency pensions went up by R20 to R520 a month, while the pensions paid to war veterans also went up by R20 to R538 a month.
At the same time, social grants for a foster child increased by R14 to R374 and the grant-in-aid by R4 to R94. This means the social grants paid in terms of the social assistance Act have not kept pace with the inflation rate of about 7%.
Still, the nine provincial welfare departments distribute approximately R1,3- billion to nearly three million beneficiaries every month. That is about R15,6-billion a year.
Old-age pensions account for two-thirds of both the number of beneficiaries and the total expenditure on grants. Disability grants account for a quarter.
About two-thirds of the grant recipients are women. Women are more likely to receive grants targeting caregivers, such as maintenance, care dependency, child support and foster grants.
The Department of Finance said in its National Expenditure Survey for 1999 that seven out of 10 old-age pensioners were women “reflecting a lower eligibility age, higher average longevity and greater poverty among women”.
Despite the decline in the grants in real terms, two Princeton University researchers have concluded that South Africa’s social pension scheme is “an effective tool of redistribution, and that the households it reaches are predominately poor.
“Because so many of the elderly among South Africa’s African population live with children, the social pension is also effective in putting money into households where children live.”
The researchers, Anne Case and Angus Deaton, say that although many governments in developing countries profess redistributive aims, and standard efficiency arguments suggest that cash transfers are the best way of accomplishing these aims, direct cash transfers to the poor are rare.
To some extent, the pension payments in South Africa are reaching both the elderly and children.
“The fraction of children living with a pensioner is highest among children whose household per capita income are the lowest, so that the pension not only reaches the households in which children live, but disproportionately reaches children in poverty.”
Quoting University of Natal researchers Elizabeth Ardington and Frances Lund, they point out that social pensions are a significant and reliable source of income, with definite redistributive effects, which lead to household security.
They were also the basis of credit facilities in local markets, contributing to food security, they delivered cash to remote areas where no other institutions did and they were gendersensitive to women. Pension income was more regular than farm income.
Case and Deaton point out that the size of the state pension was gradually equalised across all racial groups during the disintegration of the apartheid regime.
“With the possible exception of the youngest pensioners, none of the current African recipients could have held any reasonable expectation during their working lives that such a pension would be available.
“Given the current distribution of income and of private pensions between races in South Africa, the social pension scheme is largely a transfer from the country’s wealthy white population to its much less wealthy African, Indian and coloured populations,” they said.
“However, in a country with large fractions of the adult population unemployed and children living in poverty, the elderly are perhaps not the most obvious target for social transfers.”
Case and Deaton said they believed the South African experience called for a serious look at direct cash transfers in other countries because its social pension scheme was an effective tool of redistribution.