Ending the R350 grant would be suicidal for the ANC – Busi Mavuso

Business Leadership South Africa CEO Busi Mavuso said the National Treasury extended the social relief of distress grant for another year because the government knows ending the grant would be “suicidal” ahead of an election year.

This comes after Finance Minister Enoch Godongwana delivered his Medium-Term Budget Policy Statement (MTBPS) on Wednesday, 1 November.

In his statement, the Minister said the R350 per month social relief of distress grant would be extended for another year.

Another R34 billion was allocated to extend the grant. It was initially started during the Covid-19 pandemic to offer relief for struggling households.

“Over the medium term, a provisional allocation is retained while a comprehensive review of the entire social grant system is finalised,” the Minister said.

Mavuso told Business Day TV that she welcomed the Minister’s statement and his emphasis on fiscal consolidation and discipline.

However, she said it was no surprise that the social relief of distress grant was extended even though the government cannot afford it.

“It’s going to cost the government another R34 billion, and although the government knows that they can’t afford the extension, they also know that it’s going to be suicidal to try and remove the R350 grant, especially with the elections that are coming around the corner,” she said.

She said the ruling ANC’s fear of losing votes may influence many of the decisions made in the MTBPS and the 2024 budget.

For example, she is sceptical of whether the government will be able to enforce the debt relief conditions the Minister proposed for Eskom and municipalities.

In the MTBPS, the Minister tabled the Eskom Debt Relief Amendment Bill to enhance the enforceability of the National Treasury’s conditions attached to the utility’s R254 billion debt relief agreement.

The Bill provides for the payment of interest by Eskom on amounts advanced as part of the debt relief loan and for the reduction of the amount of debt relief available to Eskom if the utility does not comply with the National Treasury conditions. 

In addition, the government introduced support to relieve municipalities of their significant debts owed to Eskom.

On application by municipalities, the debt to Eskom up to 31 March 2023 will be written off over three years in equal annual tranches. 

This is provided the municipality complies with set conditions, which include enforcing strict credit controls, enhanced revenue collection, and up-to-date payment of their Eskom monthly current accounts.

“From an Eskom and Municipal debt relief perspective, it will be interesting for me to see if the government will be able to hold the line and enforce the said debt relief conditions,” Mavuso said. 

“Because if they don’t, then the debt will simply build up again, and the taxpayer will have to pay the cost of dysfunctional municipalities again.” 

Mavuso said she is not confident that the government will be able to enforce these conditions on municipalities because it could mean cutting off the electricity supply to municipalities.

“If they cut off to municipalities, it means that the households are going to be affected, and if the households are going to be affected, then it’s going to impact the decisions of the electorate coming into 2024,” she explained.