Basic income grant for South Africa more likely than ever

The top five political parties in South Africa support the implementation of a basic income grant (BIG) or significantly increasing grants, making it very likely that the country could see a BIG soon.

The ruling party has mentioned the implementation of a BIG for years, but little action has been taken to realise their promises.

At the 2022 ANC policy conference, the ANC announced its intention to implement a BIG, financed through a wealth tax, closing tax loopholes, addressing base profit shifting by corporates, and a transactions tax.

“Work is underway to develop a mechanism for targeted basic income support for the most vulnerable within our fiscal constraints,” said President Cyril Ramaphosa in his 2023 State of the Nation Address. 

“This will build on the innovation we have introduced through the social relief of distress (SRD) grant, including linking the data we have across government to ensure we reach all those in need.”

South Africa’s R350 SRD grant was introduced during the Covid-19 pandemic as a temporary lifeline for struggling households and has since been extended yearly.

However, this grant’s payout is set to end in 2025, and its introduction and consequent extension have led many to believe it would be used as the basis for introducing a permanent BIG.

Many are concerned about how the government could afford this grant, as the 2024 Budget revealed a deficit of R347 billion in 2023/24, and the government’s debt continues to grow.

In the 2024 Budget Review, the National Treasury said any extension of the SRD grant or its replacement needs to be funded by a new revenue source or reprioritisation of other spending items.

“Government is still discussing options for a replacement grant and the balance between policy options to support higher employment,” it said.

While no steps have been taken to put these promises into legislation, Finance Minister Enoch Godongwana said that the question is not whether South Africa should have a BIG but rather how it will be funded.

ANC spokeswoman Mahlengi Bhengu-Motsiri also recently said the transition to a permanent basic income payment would be based on the existing SRD grant.

In May, she said they would increase the value of the grant and extend it to reach more beneficiaries.

“The ANC recognises that the basic income support should complement, not replace, existing social security mechanisms,” she said.

Bhengu-Motsiri’s comments followed President Cyril Ramaphosa’s statement that there is a “strong case” for universal credit despite South Africa’s financial problems.

“The challenge remains that millions of working-age adults in our country remain unemployed without any form of support,” he said.

BIG manifesto promises

South Africans went to the polls on 29 May 2024 for the most monumental elections South Africa has seen since 1994.

For the first time since taking power 30 years ago, the ANC lost its majority and is now forming a Government of National Unity (GNU) with opposition parties.

The top five parties in this year’s elections are the ANC (40.18%), DA (21.81%), MK Party (14.58%), EFF (9.52%) and IFP (3.85%). 

All of these parties support the implementation of a BIG in some form, as outlined in their election manifestos.

The ANC promises to strengthen income support through existing social grants over the next five years and use the SRD grant to phase in a basic income support grant.

The DA’s manifesto states it will increase the SRD grant so that, over time, it becomes a BIG. However, the party has elsewhere said it would only investigate a BIG to determine if it was ‘affordable and viable’.

The MK Party promises to introduce a BIG above the poverty datum line of R1,558 for those unable to work.

The EFF has the most extreme promise – a R5,000 grant for unemployed graduates and has called to double all current social grants.

The IFP promises to introduce a similar grant for unemployed graduates amounting to R3,000.

While the formation of South Africa’s new government is still uncertain, the fact that the top five biggest parties in the country support a BIG in some form or another points to a large possibility that the country could see this grant established within the next five years.