South Africa

Cyril Ramaphosa celebrates 28 million grant recipients – four times the number of taxpayers

Cyril Ramaphosa

President Cyril Ramaphosa said the ANC’s pro-poor policies mean 28 million South Africans receive grants – far more than the country’s 7.1 million taxpayers.

During the ANC’s birthday celebrations on Monday, Ramaphosa said the ANC’s policies have been pro-poor.

“We have done a great deal in the provisioning of grants,” he said. He added that no African country pays grants to 18 million people.

Add to that the 10 million people who continue to receive R350 Social Relief of Distress (SRD) grants, and the government has 28 million people on grants.

To put it in perspective, when South Africa became a democracy in 1994, the state paid grants to around 2.5 million people.

The grants were primarily old age grants, disability grants and state maintenance grants – the predecessor of the child support grant.

Fast forward thirty years, and there has been a 1,000% increase in people getting money from the state. “Today, all those people are assisted and supported by our government,” Ramaphosa said.

However, he failed to mention that it is because of destructive policies, corruption, and mismanagement that most people need grants.

Instead of having business-friendly policies that encourage investment, grow businesses, and create jobs, the government actively destroys business confidence.

Its policies chase capital out of the country and make investing and building a business in South Africa unattractive.

The result is that South Africa only had 7.1 million individual taxpayers last year, down from 7.4 million a year ago.

It means South Africa now has four times as many grant recipients as individual taxpayers, which many economists warned is unsustainable.

The table below shows the National Treasury’s estimates of individuals and taxable income for the 2023/24 financial year.

Warning about celebrating grants

Renowned economist Thomas Sowell warned against welfare policies like the ANC’s – essentially the idea of what the government can do for the people.

He said decades of expansions of the welfare state globally show that it does not help people and often makes matters worse.

“The financial cost of providing such a guarantee, though huge, is not the worst of the problems,” Sowell wrote.

“The history of what has happened in times and places where people were relieved from the challenge of survival by windfall gains is not encouraging.”

He said in England and the United States, the massive expansion of the welfare state since the 1960s has been accompanied by a vast expansion of social ills.

It includes an increase in crime, violence, drug addiction, fatherless children, and other signs of social degeneration.

South Africa is a perfect example of Sowell’s warning. Exceedingly high unemployment, especially among youth, has led to a big rise in crime and violence in South Africa.

Many economists, including Dawie Roodt, warned that South Africa is on a downward spiral with increased spending, especially on grants, without strong growth in tax revenue.

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 before the 2024 general elections, and the tax base is so stretched that further increasing taxes is difficult.

So, while social grant recipients are rapidly increasing, South Africa’s registered taxpayers are declining.

The solution is to have business-friendly policies and a stable political environment to grow the economy.

However, the left-leaning ANC government is moving in the opposite direction without any signs of changing course.

The chart below, courtesy of GroundUp, shows how South Africa’s grant expenditure has increased since 1994.


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