The government buckled to widespread pressure this week, with the announcement of a year-long extension of the Covid-19 social relief of distress (SRD) grant to 31 March 2024. The grant, which currently stands at R35o a month, was first introduced in April 2020 to negate the effects of the Covid pandemic. It has now been extended for the third time. However, funding for the grant remains a topic of hot debate with the National Treasury previously saying it costs the country R50-billion a year. 

Options that have been offered up to date include a wealth tax on those who earn more than R1-million a year or an increase in VAT. In his Medium-Term Budget Policy Statement on Wednesday, 26 October, Finance Minister Enoch Godongwana says that the grant extension will not compromise fiscal consolidation. “Any permanent extension or replacement [of the SRD grant] will require permanent increases in revenue, reductions in spending elsewhere, or a combination of the two.” 

Godongwana emphasised despite the provision in the mini-budget, discussions on the future of the grant are ongoing and “involve very difficult trade-offs and financing decisions”.  

Earlier this year, the income threshold means test for the SRD grant was increased from R350 to R624 a month, widening the net of those who qualify for the grant. Currently, around 7.5-million people receive the grant and the department of social development expects this to now increase to around 10.5-million recipients. However, with the easing of the income threshold, more checks and balances have been introduced. One of the stipulations, for example, is that South Africans may not “unreasonably refuse” to accept employment or educational opportunities. How this will be enforced or checked has not been spelt out. The more stringent qualification criteria resulted in a rollover of R2-billion of unspent funds as fewer applicants took up the SRD grant. 

Visit Daily Maverick’s home page for more news, analysis and investigations

Godongwana has seen fit to increase non-interest spending by R52.4-billion in 2023/24 and a further R58.5-billion in 2024/25, which is largely to accommodate the extension of the SRD grant. However, these amounts will also cater for improved investment in infrastructure, funding to increase the number of police, and implementation of the State Capture Commission recommendations. 

Two months ago, Treasury proposed a targeted job-seeker grant and a caregiver grant to replace the R350-a-month SRD grant. However, this was rejected out of hand by unions, including the South African Federation of Trade Unions (Saftu). In a statement, Saftu said the group of 4.6 million current SRD grant beneficiaries, who are regarded as too poor and marginalised to seek work, would not qualify for the grant; nor would the group of 1.9 million ‘less poor’ beneficiaries, because they are regarded as better off. So, 62% of current SRD beneficiaries would be excluded from the job seekers grant.

Saftu has instead counter-proposed that government introduce a monthly universal basic income grant of R1,500 for the unemployed and lowest-paid workers. The federation of unions also discounts the idea of increasing VAT on the grounds that it will “hit the poor more than the rich”, instead touting the introduction of a wealth tax, “so that the rich pay more tax”. BM/DM