Basic income grant for South Africa still a work in progress

National Treasury says that it is still considering proposals around a universal basic income grant for South Africa, but it maintains that it cannot be done in a fiscally irresponsible way.

In the 2021 Mid-Term Budget Policy Speech, finance minister Enoch Godongwana said that, in view of the Covid‐19 related job losses, increasing poverty and inequality, Treasury and the government should seriously consider a basic income grant after the necessary consultations with relevant stakeholders.

These consultations were expected to yield some results by the time of the 2022 budget.

However, Treasury said that it still doesn’t have an answer on the BIG just yet.

“The Covid‐19 pandemic increased national debate on the possibility of a universal basic income grant, and the government is considering various proposals in this regard,” it said.

“Any proposals to expand this system need to be fully and appropriately financed by closing existing programmes to free up revenue, or through permanent increases in revenue collection.”

Speaking ahead of his budget speech, Godongwana indicated that all of South Africa’s social grants would be up for review as the government seeks a sustainable way to support the poor.

Approximately 46% of the entire population receives some form of social grant in the country, which has been flagged as unsustainable.

The R350 Social Distress Relief grant, introduced in 2020 to support those who were left unemployed or destitute due to the Covid-19 pandemic, is widely seen as the base point for a permanent basic income grant for the country, with many analysts expecting it to be made a permanent fixture in the coming years.

President Cyril Ramaphosa announced in his State of the Nation Address at the start of February that the SRD grant would be extended for another 12 months.

According to Godongwana, the extension of the SRD grant – at a cost of R44 billion – could be “comfortably” accommodated in the budget because of a tax overrun, but he stressed that this was a temporary windfall.

The minister said that permanent programmes cannot be funded by temporary revenue and that it is essential to maintain social protection in a sustainable way.

Read: Government to increase social grants in South Africa above inflation