There are signs that the treasury plans to exclude some recipients from the
grants system through a new identity verification process. (File photo)
The government’s plan to slash just over R20 billion from the grant budget has sparked an alarmed response from political parties and advocacy groups, who point to the critical role that grants play in sustaining poor South Africans.
Finance Minister Enoch Godongwana’s medium-term budget policy statement last week announced that expenditure on social grants would be cut from R269 billion in the current year to R248 billion in 2025-26.
The Institute for Economic Justice’s senior policy specialist, Neil Coleman, described the new allocation as “disturbing”.
It is unclear where such a large saving will come from.
Coleman noted that in the budget, the treasury said the grant system would be restructured and that more announcements would be made in February.
“The public has the right to know where this money will be taken from. The treasury is not the policy department and is not responsible for dealing with grants policy,” he added.
There are signs that a new identification scheme will be the mechanism used to achieve the savings.
It is also feared that the social relief of distress (SRD) grant may be in the government’s cross-hairs. The withdrawal of the grant would bring annual savings of R36 billion.
There were signs that the treasury plans to exclude some recipients from the grants system through a new identity verification process.
“They want to reduce the number of grant beneficiaries by introducing an online system to apply for grants. Presently, that system is only used for the social relief of distress grant; all the other grants beneficiaries will have to physically apply for at Sassa [South African Social Security Agency] offices,” Coleman said.
For example, the foster child grant will only be available to those who apply at the nearest Sassa pay-point.
Coleman noted that the online system used to apply for the SRD grant often excludes applicants who need assistance because it cannot distinguish between funds coming into the applicant’s bank accounts from different sources.
“There are applicants who have been unfairly or wrongfully excluded because the bank verification system can’t distinguish between cash received from a family member or maintenance payment for your child and money borrowed from mashonisa [loan sharks],” he said.
As long as there is more than R625 in an account, a person is disqualified from receiving the grant. “If this is applied to other grants, we will have more problems of unfair exclusion,” Coleman noted.
In 2020, Sassa launched an online grant application portal as a pilot project that covered child support, older persons and foster child grants. It has since added other grant categories which will move wholly online.
Eight types of grants are available to needy South Africans: the SRD grant, child support grant, foster child grant, disability grant, care dependency grant, grants-in-aid, the older persons grant and the war veteran’s grant.
According to Statistics South Africa’s latest General Household Survey, the percentage of people who are drawing social grants has steadily increased from 12.8% in 2003 to about 31% in the years 2017 to 2019, before again increasing sharply to 39.4% last year.
The percentage of people in the 18-to-59-year-old age group who received the SRD grant has increased from 5.3% in 2020 to 12.4% in 2023. About eight million people receive the this grant each month.
This costs the fiscus about R36 billion a year, according to Coleman.
The government’s failure to account for the SRD grant in the medium term budget is an indication that it intends to scrap it, said Brett Herron, the secretary general of the Good party.
In a statement, Herron said the government’s “de-prioritisation of assistance to millions of unemployed South Africans is an abrogation of [its] constitutional responsibility to support citizens unable to support themselves”.
Coleman said: “It would be a national disaster if the R370 [grant] is terminated completely. We must not forget that SRD was terminated in April 2021 and we saw what happened in July 2021.”
This is a reference to violent protests and unrest in July 2021, marked by the widespread looting of shops and businesses, and attacks on public facilities and private property, mostly in KwaZulu-Natal and Gauteng.
Although the immediate spark was the imprisonment of former president Jacob Zuma, socio-economic factors linked to Covid also played a role. The grant was reintroduced in August 2021.
Herron said the withdrawal of the SRD grant and “the level of desperation and hunger that this would result in, could very well see a repeat of that situation”.
But Coleman said the fear that the SRD grant would be scrapped is premature.
“I don’t think the government will be able to do that, especially in the context of the crisis that the country faces in terms of levels of unemployment, hunger and poverty. It would be completely reckless,” he said. “If you want to shoot yourself in the foot, abolish the SRD grant.”
In the medium-term budget, the treasury said the SRD grant was temporary and had been extended several times.
“There is little to no linkage between the social security system and the policy goal of increasing employment. Government is considering ways to reform the grant system,” it noted.
Momentum economist Sanisha Packirisamy said an interesting feature of the budget was the indication that the government plans to explore how it can link social grants to enhancing employment opportunities.
“The SRD grant is not going away,” Packirisamy said.
“But to get the R370 the government may ask me to show how many hours of community service I have done by, for example, cleaning a park. I will have to be doing some kind of work.”