Social grants are critical instrument to fight poverty

The world is currently facing the biggest economic turbulence in ages, owing to the sub-prime lending crisis which started in the US and spread through out the world. While a few world economies are now showing signs of recovery, the reality is that the world economy is not out of the economic woods yet.

Given the interconnectedness of the global financial system, not a single country has not felt the spill over effects of this economic meltdown which has shaken the very foundation of the free market system. South Africa is no exception. As is the norm, when an economy skids into the negative growth territory, it is the poor who bear much of the burden.

With business facing ruin, this means reduced tax for government which in turn affects government spending on basic services such as paying out grants. Through its foresight and careful planning, the ANC government will be able to continue to deliver on its mandate including paying out grants.

According to the figures from the Statistics South Africa, at least 208 000 people lost their jobs in the first quarter of this year. While in the second quarter the number of people who were laid off was not as big as in the first. With more people expected to join the unemployment ranks, this will not only worsen the poverty levels, but will put more pressure on the state coffers as there will be more people who will rely on the state for support.

Given the legacy of apartheid, with more people being relegated to the outer fringes of the labour market, those who are receiving grants are forced to support the whole family, further depleting their meager resources.

Since the dawn of the democracy, the ANC-led government has endeavored to create a comprehensive social security net, to cushion many of our people from the pangs of economic deprivation.

This is in line with the vision of the Department of Social Development, which is to create a caring and integrated system of social development services that facilitates human development and improves the quality of life, and this also dovetails with the 52nd Conference of the ANC in Polokwane.

The conference instructed us to;
• Equalise lifelong learning and economic opportunities for persons with disabilities.
• Accelerate all our programmes in pursuit of the Millennium Development Goals.
• Establish a mandatory system of retirement fund and further establish a broad-based retirement fund that covers low-income groups.
• Strengthen collaboration between the departments of Education and Social Development and other related departments in the provision of Early Childhood Development (ECD).
The conference further instructed us that;
• Grants must not create dependency and thus must be linked to economic activity.
• Low cost retirement fund be created.
• Child support grants be gradually extended to 18 years.
• Pensionable age must be equalised and be set at 60 years.
• Coordinated national drug campaign be intensified to fight substance abuse.
However, the ANC led-government has always understood the fact that this comprehensive security net is not an end in itself but it is aimed at helping our people to keep afloat so that they can graduate to other economic opportunities and self-sustainability.

Critically, the ANC government has always viewed the social security net as a critical pillar in a basket of measures aimed at stimulating the economy of our country. This means that social grants should not be viewed in isolation from the broader mandate of government to create employment and economic growth in our country.

In this regard, one of the critical tasks with which the ANC government was seized with when it assumed political power, was not only to rationalize the social security system in the country but to eradicate the racially skewed social security system in which other races were receiving more than others. This resulted in the apartheid driven system of disbursing of grants being abolished.

Over the past 15 years the ANC government has dispensed social grants such as pensions, foster grants, disability grants, child support grants etc. Initially when the child support grants were introduced they were received by children from birth up to the age of seven. However, the ANC government, because of the acute understanding of the levels of poverty in our communities, has increased the age limit to 14 years and our intention is to raise it up to 18 years.

With the amendment of the Social Security Act, the age of men who receive pensions has been reduced resulting in thousands of men being absorbed into the system. Currently over 13 million citizens are receiving social assistance benefits. Of these beneficiaries, nine million are children. As of January this year, the Child Support Grant was extended to children up to the age of fifteen. This enabled SASSA to enroll an additional 300 000 children.

In order to respond to the current global economic crisis, grants have increased as from April this year to ameliorate the ravages of inflation.

The Old Age and Disability Grants were increased from R960 to R1 010; the Child Support Grant from R230 to R240; the Foster Care Grant increased from R650 to R680 and the Care Dependency Grant from R960 to R1 010. The increases have gone a long to help our people to mitigate the impact of the economic turmoil.

The economic contraction has resulted in a sharp rise in inflation and food prices in particular. South African consumers have faced increased prices of food since 2006 when global food prices started sky-rocketing as a result of bio-fuel production in the US.

This has had an adverse effect on the poor which spend a huge chunk of their money on food. In fact, according to the findings of Income and Expenditure Survey, expenditure on housing, transport and food continues to dominate household consumption, gobbling up 60 percent. It is for this reason that our ANC government has increased the social relief budget from R124 million to R624 million from early this year.

In this regard, the importance of social grants in South Africa in supporting the poor cannot be overemphasized. According to a survey from the Statistics South Africa, social grants have played an increasingly important role in reducing poverty and inequality in the country.

The harsh economic environment characterized by massive retrenchments, increasing food prices and consumer debt has made social grants inherently indispensable as a way of supporting the poor.

In fact, the Income and Expenditure Survey states that because of the contribution of the social grants, poor South Africans account for less than 1,5% of income. This means that with 10 percent of the population earning more than 50% of household income in the country, the situation could be much bleaker without social grants. Because of our apartheid history, it is instructive to note that there is a correlative relationship between the number of people who are poor and their race.

While the ANC government champions non-racialism, however we can ill afford to be blind to this stark reality that those who were relegated to the outer- edges of economic activity during the apartheid era are the biggest beneficiaries of social grants. It should also be noted that social grants have provided a "sub economy" of its own in rural areas, where poverty is depressingly endemic and there are no economic opportunities.

The survey also estimated the gross income of South African households at R929,2 billion. Social insurance and grants account for 6,1% of gross income which is an equivalent of R56,8 billion. This further underscores the importance of social grants in creating equality and reducing poverty in our country.

In order to ensure that we continue to provide a safety net for the most vulnerable people in our society, we have set ourselves the target on registering more people for social grants.

As part of efforts to increase efficiencies in our department, we are working around the clock, with the South African Social Security Agency, to increase the turnaround times with regard to the applications for social grants. In this regard, we are working in tandem with Home Affairs and other relevant government structures to ensure that this is achieved.

With many of our people facing the challenge of HIV and AIDS, our Department has played a key role to ensure that we assist people living with HIV and AIDS as part of the government's comprehensive strategy to deal with this pandemic. It is important to note that we have no doubt that the social grant intervention is a critical one for our country. However, we need to, at times, be the first ones to critic our own social reconstruction policies or their consequences.

In ensuring that those social grants are paid timeously and in a less-dangerous environment, we have partnered with chain stores to act as our agencies or become our pay-points and the Post Office. We need to tighten up monitoring and evaluation mechanisms in order to gauge the impact of our interventions but also to ensure that we do not continue to dispense social grants to people who no longer deserve them.

Fraud and corruption remains one of the key challenges and undermine the efforts of our government. We have put in place a number of measures to combat fraud and corruption. Again, we need to sharpen our preventative measures and we do believe that monitoring and evaluation of the programme will help combat the scourge of corruption and fraud.

While the economic downturn has hit the poor hardest, the ANC-led government in the form of the Department of Social Welfare has provided a safety net which has cushioned millions of South Africans from the ravages of hunger and general deprivation.

In this regard, social grants remain one of the critical government pillars in the fight to help millions of South Africans to keep afloat while searching for opportunities so that they can graduate and be self employed or be employed. Over and above this, with social grants contributing billions of rands into the economy, they generate a lot of economic activities.

The Department of Social Development will intensify its efforts to ensure that we extend the net to more people, particularly in rural areas, where many households depend on these grants for survival. With poverty levels in our country at unacceptable levels, the ANC led government should use social grants to pull out our people out of the rut of poverty.

However, it is critical that we should avoid creating dependency out of social grants. In the long run, we should measure the effectiveness of the social grants by how many people they successfully save from the ravages of poverty.

At this juncture of our economic evolution, social grants remain a critical instrument with which to ameliorate the effects of poverty in our country and to help our people to graduate to other forms of economic activities so that they can be self-sufficient.