South Africa welcomes the new income grant
South Africa will introduce a universal basic income grant as part of a range of packages to help the country’s unemployed, says minister of Social Development Lindiwe Zulu.
Zulu did not provide details of how the grant would be funded or its size, but told a virtual press briefing it would be paid ‘post-October’, Reuters reports.
This announcement follows a parliamentary briefing last week in which the Department of Social Development noted that the demand for income support will go beyond the six month period covered by the R350 Covid-19 Social Relief of Distress (SRD) grant.
The pandemic prompted president Cyril Ramaphosa to announce a temporary top-up of those grants by up to R300, including a R350 unemployment grant, in late March.
However, the country’s unemployment rate is predicted to have soared since the start of the lockdown, with estimates ranging between 400,000 – 1.5
million jobs lost. There are also concerns about what will happen when the Covid-19 grant is no longer paid out.
The Department of Social Development said last week that to address this, it is working on policy proposal on the feasibility of income support to South Africans between the ages of 18-59 who have no income support.
“This is a result of the introduction of the Special Covid-19 SRD grant that has revived the discussion of the feasibility of a Basic Income Grant (BIG) as was recommended by the Taylor Report in 2002,” it said.
The ANC has previouslyt said that it will also look at the feasibility of introducing a basic income grant as part of a series of outcomes decided upon by its National Executive Committee (NEC).
According to a document seen by Bloomberg, the ANC proposes paying a R500 monthly grant to those aged 19 to 59 who aren’t normally eligible for other aid would cost the state R197.8 billion a year.
Between 50% and 60% of the money could be recouped by levying extra taxes on those with jobs, it said.
Reuters notes that a universal grant had seemed unlikely, given soaring public debt and following an emergency budget that proposed sticking to R230 billion in spending cuts.
It added that the universal grant will target around 33 million people between the ages of 18 and 59.
South Africa’s poverty line, including non-food expenses, calculated by Statistics South Africa, is around R1,270 ($76.04). That would put the annual cost at roughly R42 billion, calculations by Reuters found.
Isobel Frye, director of the South African-based Studies in Poverty and Inequality Institute and a Minimum Wage Commissioner, said the universal grant
had been discussed by government over the last 10 months, but the treasury had been reluctant to fund it.
“It was unexpected but incredibly welcome. It suggests there’s been a lot of reflection about the inadequacy of the R350 rand Covid-19 grant,” Frye said.