Social Development Minister Lindiwe Zulu told Parliament they are addressing poverty by providing 45% of South Africa’s population with grants.
She was briefing the portfolio committee on social development on the audit outcomes of her department’s annual report.
Zulu told the committee that the South African Social Security Agency (Sassa) funds 27.3 million grant beneficiaries, or 45% of South Africa’s total population, at the cost of R232 billion.
The 27.3 beneficiaries include 18.825 million social grant recipients and around 8.5 million Covid-19 Social Relief of Distress (SRD) grants.
Although the state faces funding constraints, the minister said there are growing expectations for the portfolio to deepen its mandate to address poverty, hunger, and economic exclusion.
There are currently consultations regarding a permanent basic income grant (BIG), and she hopes that nobody will stand in its way.
She claimed that her department’s key interventions continue to be underfunded, considering the growth in grant recipients.
“In March 2019, Sassa dispersed 17.811 million social grants. At the end of March 2023, the number grew by 5.5% to 18.825 million,” she said.
President Cyril Ramaphosa also celebrated the increase in grants at the ruling party’s manifesto review in September.
He hinted that the R350 Covid-19 Social Relief of Distress (SRD) grants will be increased and made permanent.
“Many of our people said they want the R350 to be increased and must continue. We hear our people,” he said.
“We also had to expand the social grant system in our country, and as a result, 18 million people get their social grants. On top of that, another 10 million people get the R350.”
“It means that we almost got 28 million people who the government continues to support,” Ramaphosa said.
He boasted that this is an incredible achievement as there is no other government in Africa which has as many grant recipients.
However, many people highlighted that it is an indictment of the ANC government as it shows that its policies failed.
In South Africa, the number of social grant beneficiaries grew from 2.4 million in 1996 to 18.8 million in 2023.
The main reason for social grants is the high unemployment. Most grant recipients are unemployed, making them reliant on the state to survive.
The best way to alleviate poverty and hunger is economic growth through business-friendly policies and a stable political environment.
However, the state has created a hostile business environment which chases away foreign investment and hampers economic growth.
Tax base under pressure
While the government is celebrating the growing number of grant recipients, it faces a significant problem – paying for it.
Former UK Prime Minister Margaret Thatcher’s words that “There is no such thing as public money – there is only taxpayers’ money” are starting to bite.
South Africa is facing a significant fiscal deficit. National Treasury revealed that the budget deficit in the first five months of the 2023/24 fiscal year amounts to R238.4 billion.
When the Eskom debt relief is added, it balloons to R254.4 billion. This is much higher than the deficit of R160.7 billion in the same period in 2022/23.
Renowned economist Dawie Roodt warned that South Africa is heading for a serious financial crisis, with an unsustainable increase in debt to fund the growing fiscal deficit.
The only way to resolve the situation is to spend less or to increase tax revenue. However, both these options are challenging.
The government wants to increase spending ahead of the 2024 general elections, and the tax base is so stretched that increasing taxes further is difficult.
National Treasury’s estimates of individuals and taxable income for 2023/24 clearly illustrate the problem.
It shows South Africa has 7.1 million individual taxpayers, down from 7.4 million a year ago.
So, while social grant recipients are rapidly increasing, South Africa’s registered taxpayers are declining.
What is particularly concerning is that South Africa now has four times as many grant recipients as individual taxpayers.
The table below shows National Treasury’s estimates of individuals and taxable income for the 2023/24 financial year.