At the peak of the Covid-19 pandemic, many individuals lost their jobs, prompting the government to find a way to financially support affected individuals. The journey to providing this financial support has not been without its ups and downs.
The Covid-19 pandemic is not the first pandemic to hit South Africa, and Statistics South Africa have also highlighted that the country paid a large price demographically due to the AIDS pandemic.
According to the national statistics agency, it is during this time that the country lost economically active adults, which also impacted negatively on the demographic dividend, infant and child mortality reduced overall life expectancy in the country for a number of years.
When it comes to the Covid-19 pandemic, the country is yet to establish the impact of the increased morbidity, mortality and change in migratory patterns during the two-year period.
However, it had been established that many young people were being negatively impacted buy the pandemic and were left jobless as a result.
It is for this reason that the South African government responded by supporting unemployed individuals between the age of 18 and 59-years old with the Social Relief of Distress (SRD) grant.
Since the introduction of the SRD grant, it has been extended a few times and the qualifying criteria has also been adjusted for the grant recipients.
This grant was introduced as a temporary mechanism and will come to its end March 2024.
It hasn’t been an easy journey for the South African Social Security Agency (Sassa) in administering this and other social grants due to technical glitches, backlogs caused by changed qualifying criterion, load shedding causing people to not be able to withdraw from ATMs, just to mention a few.
On the other hand, SRD grant recipients were also faced with the ordeal of returning home empty-handed after a long-wait at the paypoint and also negatively impacting on the lives of recipients that solely rely on this grant to survive.
Social activists have been advocating for the SRD grant to become permanent and the Department of Social Development responded by investigating possible ways to make this a reality for deserving individuals.
It was in 2021 when the department appointed an Expert Panel to investigate the social and economic implications of introducing a Basic Income Support at scale.
This panel conducted investigations on several funding models and these models included sourcing the funding from an increase to Value Added Tax (VAT) or funding an SRD grant through an increase of Personal Income Tax for the top three deciles.
According to the National Treasury, the SRD grant is expected to grow by at least 8.8% every year and its financial implications could reach some R64.9 billion in the 2030/31 financial year, casting an impact on the sustainability of the public purse.
This team also revealed that the SRD arrangement posed limited economic and fiscal risks, should the SRD grant be made permanent.
