SA one of the biggest spenders on social assistance globally — World Bank

South Africa spends more on social assistance than most other countries globally, but this aid is still not available to a large share of the working-age members of its population, given unemployment benefits are available only to people who work in the formal sector.

A World Bank review of the country’s social assistance programmes released on Thursday said they were being delivered in an environment of high unemployment, persistent poverty and weak economic growth, which had been worsened by the Covid-19 pandemic.

It said social grants were by far the largest facet of South Africa’s social protection system in terms of the number of people covered. In 2018-19 the South African Social Security Agency paid out 17.8-million grants, and the national school nutrition programme reached more than nine million learners.

About one in three South Africans is a direct beneficiary of a social grant, with nearly two-thirds of the population benefiting directly or indirectly. The system is dominated by older people, child support and disability grants, which are handed out to people who have not paid into a separate unemployment insurance system. 

Three compulsory contributory social security funds — the Unemployment Insurance Fund, the Compensation Fund and the Road Accident Fund — provide conditional income for eligible individuals. 

The Expanded Public Works Programme and Community Work Programme are key interventions targeted at the working-age population; they aim to provide income, work experience and training to the unemployed. 

In response to the document, the department of social development said the report had taken stock of South Africa’s social assistance programmes and found that overall, they were effective, well-targeted, covered a large number of the poor and provided sizable benefits to households.

According to the report, despite the failure to accommodate everyone, social grant payments equate to about 3.3% of GDP.

The World Bank said South Africa’s social assistance system was effective in providing support to the poorest segments of the population and that grants, at the very , reduced the depth of poverty and inequality. 

But it identified weaknesses in the delivery systems, including the lack of a functioning social registry with the ability to link all social services together for citizens.

It also noted that although there were several programmes in the social protection system that covered working-age adults, each was limited in terms of their coverage. The only regular social grant accessible to working-age adults was the disability grant, which is predicated on disability; as well as the unemployment insurance and compensation funds which are accessible only to formal sector workers.

This is an issue in a country in which the unemployment rate has soared to a record 34.4% of the labour force — worsened partly by the Covid-19 pandemic — with almost four of five 18- to 24-year-olds without work.

Recently, there have been renewed calls for a universal basic income grant, but the treasury has said this does not yet feature in its budget considerations.

The calls for a basic income grant have intensified in the face of the negative economic fallout from the Covid-19 pandemic, as well as looting, violence and arson in July, during which businesses in parts of Gauteng and KwaZulu-Natal were devastated.

Anathi Madubela is an Adamela Trust business reporter at the M&G.

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Anathi Madubela
Anathi Madubela is a business journalist with a keen interest in the retail sector.

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