SRD grant extended but what happened to basic income grant (BIG)?

During his State of the Nation Address (Sona) on Thursday, President Cyril Ramaphosa said the Social Relief of Distress (SRD) Grant will be extended, which raised questions about basic income grants (BIG).

He said the decision was taken in response to the escalating cost of living and other factors in the country, which leaves millions of South Africans trapped in poverty.

SRD grant extended

The SRD grant provided income to more than 7.5 million people in 2022 ^[1] while approximately 2 million households receive free basic services such as electricity (well…), water, and waste removal.

Since introducing the SRD grant back in May 2020 during the Covid-19 pandemic, the grant has been placed on hold and repeatedly extended. As it stands, it is now set to expire in March 2024.

While the most recent extension of the SRD grant is a step in the right direction, many are questioning why government doesn’t simply implement a permanent BIG.

Purely to get votes?

The reasons why government refuses to implement BIG are not clear, however, some speculate Ramaphosa’s decision to extend the SRD grant is nothing more than a campaign tactic ahead of the upcoming 2024 elections.

If that is the case – and Ramaphosa made the announcement purely to garner votes – nothing would prevent government from cancelling BIG after the elections.

If it isn’t a campaign tactic, the question remains: Why not just implement permanent BIG?

Two decades wasted

After all, it’s been 21 years since BIG was first proposed, even though the debate about basic income in South Africa goes back to 1998.^[2]

At the time, the Taylor Committee of Inquiry into a Comprehensive System of Social Security for South Africa made recommendations to the Presidential Jobs Summit on how to implement it. _^[3]

Two decades later, nothing has been done.

Can government afford BIG?

The question of affordability is also a key concern since around 60% of government’s budget is spent on “social wage”, providing various forms of support and services to households and individuals.

While it is possible for government to afford a permanent BIG, it would still require significant changes to the current budget allocation.

This, in turn, may not be possible within the current fiscal constraints. That said, economist Duma Gqubule believes government can afford to provide BIG for citizens.

Gqubule researched data from the presidency and said a basic income grant could be paid to 9.5 million people between the ages of 18 and 59, “including 3.5 million caregivers.”

Based on his calculations, it would cost approximately R26.6 billion per financial year.

ALSO READ: Basic Income Grant: what it’s all about

Feasibility of BIG in South Africa

As per the report published in 2002, coverage gaps within SA’s social security system underscore “the need for comprehensive reform.” ^[4]

“The nature of structural unemployment in the face of a changing global economy that marginalises unskilled workers and the need to expand the necessary scope of a social safety net.

“Not only do children, retirees and the disabled need social protection, but millions of potential workers are also vulnerable to unemployment and resulting impoverishment.”

Two decades later, unemployment stood at 32.9% during the third quarter of 2022, down 1% from 33.9% in the second quarter. It was 35.3% in 2021.

Given South Africa’s worsening economic challenges, government will be facing a delicate balancing act in providing adequate support to the millions who need it, while also ensuring the sustainability of its programmes and initiatives.

Sources:

^{[1] About 7.5 million people receive the R350 grant, GroundUp. Damons, M (11 October 2022)
[2] A Basic Income Grant for South Africa. University of Cape Town Press. Standing, G., & Samson, M. (2003)
[3] Basic Income Grant: What is the debate about?, GroundUp. Mahafu, M. (6 September 2022)
[4] Committee Report 8: Poverty, Social Assitance, and the Basic Income Grant, (2002)}