Could The Basic Income Grant Eradicate Poverty In South Africa?

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South Africa has high levels of inequality, with millions of people struggling to put food on the table and make ends meet. Many experts have been engaging in talks about implementing a Universal Basic Income Grant as a means of putting an end to poverty in the country. 

 


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Statistics South Africa’s (StatsSa) results of the Quarterly Labour Force Survey indicated that the number of employed persons increased by 258 000 to 16,2 million in the first quarter of 2023 compared to the fourth quarter of 2022.

The Agency revealed that the youth remain vulnerable in the labour market, with the first quarter of 2023 results showing that the total number of unemployed youth aged between 15 and 34 years reached 4,9 million.

It is for this reason that some experts have stated that there is a need for a new vision and plan for the country’s economy.

The idea of a Universal Basic Income Grant (BIG) has long been debated in South Africa, with proponents arguing that it could be the key to lifting people out of poverty. 

In an interview, Duma Gqubule who is the founding director of the Centre for Economic Development and Transformation said:

The Basic Income Grant should be against the objective of the poverty line.

Some critics have pointed out that implementing such a programme in South Africa would be costly to fund. Gqubule has argued that more than half of the money that the government will pay out in the BIG will be paid back, as there is a self-financing element of the grant.

He further explained that this will be in the form of Value-Added Tax, there is a stimulus effect that will result in high tax revenues for the government, and also a clawback on people who are already above the tax threshold.

Currently, qualifying unemployed adults receive Social Relief of Distress (SRD) funds for unemployed adults between the ages of 18 and 59 years old but there is a means testing attached to this grant.

Gqubule is of the opinion that vulnerable persons should be receiving at least R663, aligned with the food poverty line, and also proposed the removal of the administrative constraints in the means testing so that the grant is open to more people.

Will The Government Increase The SRD Grant?

Early this year, Finance Minister Enoch Godongwana announced that R36 billion will fund the extension of the SRD grant until 31 March 2024 and R30 billion will be used for inflation-linked increases for other social grants.

Although the grant has received an extension, grant holders will continue to receive the R350 monthly payments from the government agency.

Some lobby groups have shared that the value of the grant is not enough as it hasn’t kept up with the rising inflation costs.

 

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