The Case for Social Grants in SA

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As of 2017, 17 229 386 South Africans receive social grants, making up 30.5% of the population.[1] This number has grown considerably from around 2.4 million (making up 6% of the population) in 1996.[2] Many, such as Colin Bundy, have treated this expansion in welfare coverage as a sign of success.[3] But it is inappropriate to judge the success of social grants by its coverage alone. This essay will be broadly evaluating social grants in post-apartheid South Africa (SA). There are many grants, and some will be mentioned, but the analysis is broadly applicable to all the types of social grants.

This article will be briefly discussing the history of grants in SA and will then make the case for and then against grants in their current form. Ultimately, this article will find that grants have been successful in lifting many people out of destitution, but have been insufficient to uplift their recipients further, perhaps even holding them back. Moreover, the growth of grant coverage is financially unsustainable, and as too many people are dependent on the system for survival, its crash will be truly dire.

The social grant mechanism isn’t unique to post-apartheid SA. Apartheid was quite redistributive, just favouring white citizens.[4] After the electoral victory of the Labour Party (LP) and National Party (NP) in 1924, the ensuing Pact government created extensive welfare policies to benefit white citizens.[5] The Pension Act, one of these policies, was soon amended to include Africans and Indians in the 1940s.[6] National Party victory in 1948 did not see the removal of these grants along racial grounds, but the relative value of grants was changed. From the 1950s to 1960s, the value of African pensions went from 25% of its white equivalent to 13%.[7] This changed in the mid-70s and had reached boiling point in the 80s, as political resistance dismantled many of apartheid’s aspects and started demanding increased dispensation.[8] Pensions deracialised in 1993, with 1994 and a new dispensation following.[9]

Post-1994 welfare saw major increases in coverage and grant types.[10] At the ANC’s 52nd National Conference, the party expressed concern that people were becoming too dependent on social grants, yet the system continued to expand.[11] As of the 2019 fiscal year, social protection makes up 5% of total GDP, with housing and amenities making up an additional 3.7%.[12]

It is common consensus, Bundy argues, that grants have been a success, lifting millions out of destitution and stabilising households.[13] Leibbrandt et al continue to argue that grants “have been central to poverty alleviation over the post-apartheid years.”[14] In addition, it is also argued that they help eliminate bad decisions from desperation, mitigating risk and allowing recipients to find better job opportunities.[15] Samson et al report that households with social grants have a higher chance of finding employment.[16] Leibbrandt et al also argues that grants are necessary to lift the lowest income bracket to lower-middle, citing that those without access to grants are still in destitution.[17] There is little empirical research, Leibbrandt et al report, that grants affect labour participation.[18] In particular, Potts argues for the success of the Child Support Grant, which she argues has positively affected poor children, leading to greater school enrolment.[19] Succinctly, the strongest case for grants and their success is the millions lifted out of severe poverty and brought to a higher income bracket. Many cite the extensive coverage of grants as a sign of its success, but this may actually prove to be a failure of the system.

The success of the system shouldn’t be measured in terms of how many people are covered. It should be measured by its sustainability and ability to lift people out of poverty. Overdependency runs counter to this, as people dependent on grants aren’t becoming independent or prosperous. Potts argues that the Disability Grant and Pensions, in particular, create a dependency syndrome.[20] The Disability Grant is taken advantage of, and evidence shows that recipients who can work choose not to after receiving the grant.[21] Pensions also create a dependency, as non-recipients living with the recipient, survive off it, rather than entering the labour market.[22] A study by Sinyolo et al found that a dependency on grants leads to a lack of resolve to enter into entrepreneurship or enter the job market.[23] Dependency is a contentious topic, as the dependency may have more to do with a lack of job opportunities than a real dependency on the grants. While grants may be providing an income to the households that depend on them, the fact that it is their fundamental source of income doesn’t mean that the grant is to blame. If anything, it may show the necessity of the grant. Rather, the strongest case against the grant system is simply its cost. The Institute of Race Relations reports that, as of 2017, there are more people in SA receiving grants than people who have formal employment.[24] This is unsustainable, as people with jobs pay the tax that funds the grants. If the current trend continues, the grant system will collapse, leaving many dependents without their primary source of income.

Rather than a sign of success, the rapid growth of the grant system is a sign of failures elsewhere. In the words of Ronald Reagan: “We should measure welfare’s success by how many people leave welfare, not by how many are added.”[25] In this manner, SA’s welfare system has been a failure, in that it has failed to lift people out of dependence and poverty, only acting as a temporary stopgap to destitution until the system runs out of money.

This article has provided a brief history of welfare in SA, then providing a case for and against the current social grant system. It ultimately found that while grants are important to lift many people out of abject poverty, the system fails to lift people out of grant dependence, and that eventually the system will run out of money and collapse. In this manner, the system is a failure that needs to be reformed.

References

Bundy, Colin. Poverty in South Africa: Past and Present. Auckland Park, South Africa: Jacana, 2016.

Cronjé, Frans, Thuthukani Ndebele, Tamara Dimant, Kerwin Lebone, Gariela Mackay, Tawanda Makombo, Unathi Matwasa, Gerbrandt Van Heerden, and South African Institute of Race Relations. South Africa Survey 2018. Johannesburg: Institute of Race Relations, 2018.

Leibbrandt, Murray, Arden Finn, and Ingrid Woolard. “Describing and Decomposing Post-Apartheid Income Inequality in South Africa.” Development Southern Africa 29, no. 1 (March 2012): 19–34. https://doi.org/10.1080/0376835X.2012.645639.

Leibbrandt, Murray, Ingrid Woolard, Hayley McEwen, and Charlotte Koep. Employment and Inequality Outcomes in South Africa. Cape Town: Southern Africa Labour and Development Research Unit, 2010.

Potts, Rebecca. “Social Welfare in South Africa: Curing or Causing Poverty?” Penn State Journal of International Affairs 2, no. 1 (2012).

Samson, Michael, Kenneth MacQuene, and Ingrid van Niekerk. “Policy Brief 1: Social Grants | South Africa.” Inter-Regional Inequality Facility, 2006.

Sinyolo, Sikhulumile, Maxwell Mudhara, and Edilegnaw Wale. “The Impact of Social Grant-Dependency on Agricultural Entrepreneurship among Rural Households in Kwazulu-Natal, South Africa.” Journal of Developing Areas 51, no. 3 (2017): 63–76.

South African Institute of Race Relations. “More South Africans Receive Grants than Have Jobs – a Recipe for Chaos and Violence.” Press Release. South African Institute of Race Relations, 2017. https://irr.org.za/media/media-releases/more-south-africans-receive-grants-than-have-jobs-2013-a-recipe-for-chaos-and-violence/view.

The Reagan Resolve. The Carleson Center for Welfare Reform. Accessed April 7, 2019. https://www.theccwr.org/the-reagan-resolve/.

Footnotes

 [1] Frans Cronje et al, South Africa Survey 2018 (Johannesburg: Institute of Race Relations, 2018),), 746.

[2] Ibid., 746.

[3] Colin Bundy, Poverty in South Africa: Past and Present (Auckland Park, South Africa: Jacana, 2016), 111.

[4] Ibid., 117.

[5] Ibid., 114.

[6] Ibid., 115. This de-racialisation rapidly extended to disability grants.

[7] Ibid., 116.

[8] Ibid., 116.

[9] Ibid., 117.

[10] Rebecca Potts, “Social Welfare in South Africa: Curing or Causing Poverty?” Penn State Journal of International Affairs 2, no. 1 (2012): 76 – 79. Among these grants was the Child Support Grant 1998, that replaced the Child Maintenance Grant. As of 2008, the Child Support Grant makes up 31% of social assistance expenditure.

[11] Ibid., 75.

[12] Cronje et al, South Africa Survey 2018, 222.

[13] Bundy, Poverty in South Africa: Past and Present, 111.

[14] Murray Leibbrandt et al, Employment and Inequality Outcomes in South Africa (Cape Town: Southern Africa Labour and Development Research Unit, 2010), 38.

[15] Ibid., 38.

[16] Michael Samson et al, “Policy Brief 1: Social Grants | South Africa.” Inter-Regional Inequality Facility, 2006, 3.

[17] Murray Leibbrandt et al, “Describing and Decomposing Post-Apartheid Income Inequality in South Africa,” Development Southern Africa 29, no. 1 (2012): 33.

[18] Leibbrandt et al, Employment and Inequality Outcomes in South Africa, 38. This does not necessarily mean that grants do not affect labour participation, only that a correlation hasn’t been made yet on a big enough scale. More study could reveal empirical evidence otherwise.

[19] Potts, “Social Welfare in South Africa: Curing or Causing Poverty?” 82. She does, however, caution that correlation is not causation, and that there are limitations in determining if grants are being spent properly.

[20] Ibid., 75.

[21] Ibid., 84.

[22] Ibid., 86.

[23] Sinyolo et al, “The Impact of Social Grant-Dependency on Agricultural Entrepreneurship among Rural Households in Kwazulu-Natal, South Africa,” 72. This runs counter to Leibbrandt’s assertion that there is no link between grants and labour participation.

[24] South African Institute of Race Relations, “More South Africans Receive Grants than Have Jobs – a Recipe for Chaos and Violence,” Press Release. South African Institute of Race Relations, 2017, https://irr.org.za/media/media-releases/more-south-africans-receive-grants-than-have-jobs-2013-a-recipe-for-chaos-and-violence/view. The amount of grant recipients from 2001 to 2016 grew by 328%, while jobs increased by 24%. According to IRR analyst Gerbrandt van Heerden: “In 2016, there were 15 545 000 people with jobs in South Africa while 17 094 331 people were receiving social grants.”

[25] The Reagan Resolve, The Carleson Center for Welfare Reform, accessed April 7, 2019, https://www.theccwr.org/the-reagan-resolve/. Welfare is even spoken about by the ANC as needing to be a hand-up, not a hand-out. The goal of welfare should be to bring people up to a standard where they can then become economically independent and able to support the system for others. Otherwise, the system becomes unsustainable, as it has become in South Africa.

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