The extension of the R350 Social Relief of Distress (SRD) grant for another year will provide basic support for around 10 million unemployed South Africans as they look for work, says president Cyril Ramaphosa.
Writing in his weekly open letter to the public, Ramaphosa said this grant significantly broadens the country’s social safety net, with around 46% of the population now receiving grants.
“Few South Africans need to be reminded how devastating the Covid-19 pandemic has been for our economy.
“Despite the substantial economic and social support package we introduced in 2020, businesses have gone under and as many as two million people have lost their jobs. Many households have been spared from hunger only due to the increases in social grants.”
He added that the pandemic has further worsened the country’s financial position, as less revenue was collected and more money had to be spent on strengthening the health response and providing social support. As a result, the country had to borrow more and do so at a greater cost, the president said.
This follows a decade of huge increases in public spending, even as economic growth remained low.
“One of the most important tasks of this administration has been to restore our public finances to health so that government can perform its role effectively,” Ramaphosa said.
While it promotes growth, the latest national budget also charts a clear path towards sustainable levels of public debt, he said.
“The interest rate that we pay on our debt is higher than our growth rate, creating a risk that debt could spiral out of control if not managed carefully. Our country now spends more on debt service costs than on health, basic education and policing.
Unsustainable levels of debt are bad for all South Africans, but for the poor in particular, the president said.
“The cost of debt reduces the amount of money that government has to improve services, provide social protection and invest in social and economic infrastructure.”
“With this Budget, the country is now on track to reduce the budget deficit – and hence our borrowing requirements – while responding to the challenges that South Africans face, now and into the future.”
Delivering the 2022 Budget Speech in Parliament on Wednesday (23 February), finance minister Enoch Godongwana said the Department of Social Development will receive the largest allocation of R58.6 billion over the medium term.
Some of the largest allocations include:
R44 billion in 2022/23 to continue the special Covid-19 social relief of distress grant (R350 per beneficiary) for another 12 months.
A total of R1.6 billion in the two outer years to initiate a new extended child support grant for double orphans, in order to encourage the care of orphans within families rather than foster care.
A total of R13.1 billion in the outer years to offset budget reductions made in the 2021 Budget and provide for inflationary increases to permanent grants.
In the 2022 Budget Review, the National Treasury said the total number of grant beneficiaries will increase by an average annual rate of 1.5%, from 18.4 million in 2021/22 to 19.2 million in 2024/25.
The department said the numbers exclude the 10.5 million beneficiaries of the special Covid‐19 social relief of distress grant in 2022/23.