Government department responsible for social grants in big trouble

The Department of Social Development (DSD) has claimed it is underfunded by over R9.2 billion, with the outcome of a pending court case threatening to increase its expenses further.

The department said it also struggles with a shortage of social services professionals, which creates a challenge in the service delivery for the sector.

This was revealed in the DSD’s recent presentation to the Standing Committee on Appropriations on 16 September 2025.

In this presentation, the department cited a National Treasury peer review study on the funding of social development services, which found that the DSD is underfunded by over R9.2 billion.

“The implementation of the oversight function over entities is challenging due to the dwindling resources for the provision of capacity and systems for entity continuous monitoring,” the DSD said.

“Funding allocations are insufficient to meet increasing demand from vulnerable populations, particularly in rising social ills and climate-change contexts.”

“Inflation anf rising operational costs affect the capacity to implement programmes and support the NGO sector.”

In addition, the department highlighted a shortage of social services professionals, which created a challenge in the service delivery for the DSD sector.

“The need for social welfare services in critical areas such as gender-based violence and femicide, crime, child protection, violence prevention, substance abuse, trauma counselling, mental health, and care of the elderly outstrips current levels of provision,” it said.

“Demand for social services has increased due to climate change and natural disasters (recent floods).”

The DSD further explained that it faces a potential risk from a court case regarding certain provisions of the Covid-19 Social Relief of Distress (SRD) regulations.

The South African Social Security Agency and the DSD have appealed the initial court ruling in favour of the applicants.

However, if this appeal is unsuccessful, the department could face a substantial increase in expenditure due to a potential expansion in the pool of eligible clients.

Social grants in South Africa

The department further highlighted that the allocation of R34.9 billion in 2025/26 to fund the continuation of the SRD grant only runs until March 2026.

It said no allocation has been made for the next two financial years of the Medium-Term Expenditure Framework, leaving the funding for this grant uncertain.

The R350 SRD grant was initially introduced as a temporary relief measure for struggling households during the Covid-19 pandemic. However, it has been extended every year since and has been hiked to R370.

The government has floated the idea of using this grant as a basis to introduce a basic income grant in South Africa, although concrete plans are still lacking.

Currently, social grants are a major source of income support for around 45% of South Africa’s population.

This covers a variety of social assistance grants, including the SRD grant, the Child Support Grant and the Old Age Grant.

In the 2025/26 fiscal year, R248.8 billion has been appropriated for transfers to households for social assistance grants and social relief of distress.

This figure is set to decrease over the next two years, with R259.7 billion allocated for 2026/27 and R271.4 billion for 2027/28.

“The results of the 2022 census are further proof that our investment in the social assistance programme is working because it has lifted millions of our people out of poverty,” the DSD presentation said.

“This includes 13.2 million recipients of the Child Support Grant and over 4 million adults receiving the Old Age Grant.”

The DSD added that the extension of the special Covid-19 SRD grant has provided the department with an opportunity to press further on social security reforms.

This includes the possibility of Basic Income Support for the “missing middle”, specifically people in the 18 to 59 years of age cohort and those without an income.