The Treasury has once again caved in to demands to extend the social relief of distress (SRD) grant, setting aside money to fund it for another year.
The R350 a month SRD grant was introduced by the government in 2020 as a temporary measure to buffer people against the hardship caused by the coronavirus pandemic, but it has been repeatedly extended.
It currently reaches about 8.5-million beneficiaries.
Its future should be settled as part of a comprehensive review of SA’s social protection system, finance minister Enoch Godongwana said. This review should include an assessment of SA’s welfare grants, social insurance funds and its active labour market policies, he told reporters shortly before tabling the medium-term budget policy statement in parliament.
The Treasury has allocated an extra R33.6bn to continue provision of the SRD grant in the 2024/25 fiscal year and made an allocation for “social protection” of R35.2bn in 2025/26, which could potentially extend it for another year. But it again sounded a warning about the risks of continuing unfunded spending programmes such as the SRD grant.
“No policy decisions have yet been made on the grant and no funding solution has been agreed to. For this reason the February budget reiterated that any extension of the grant or any replacement [of it] needs to be funded by a new revenue source or reprioritisation of other spending items. Since then, the fiscal space has declined markedly, reducing the scope for an extension without additional financing,” the Treasury said in the budget statement.
It has tried to contain the cost of the SRD grant by freezing its value — unlike other welfare grants, which are regularly increased to keep pace with inflation. Inflation averaged 4.9% between 2020 and 2022 and is projected to come in at 6% in 2023, according to the medium-term budget.
The lack of an increase in the SRD grant is set to disappoint civil society organisations, which have been campaigning for it and the child support grant to be raised to the food poverty line, which Stats SA puts at R760 a month. The child support grant is R510 a month.
There are more than 18-million recipients of welfare grants excluding the SRD grant, the majority being children.
The Treasury warned that while spending plans for the medium term include inflation-linked increases for social grants (excluding the SRD grant) in 2024/25 and 2025/26, provincial budget allocations for social development would shrink in real terms. This would lead to a funding gap for core services and transfers to nonprofit organisations, and the sector would need to reprioritise resources.
Spending on the SRD and welfare grants is set to rise from a revised estimate of R252.1bn in 2023/24 to R266.5bn in 2024/25, and then to drop to R248.4bn in 2025/26 before rising to R259.8bn in 2026/27.
Consolidated spending on social development is set to grow by an average of 2.6% between 2023/24 and 2024/35, from R369.7bn in 2023/24 to R387.5bn in 2024/25. It will drop slightly to R385.1bn in 2025/26 and then rise to R398.8bn in the outer year.
Correction: November 1 2023
An earlier version of this story incorrectly reported that the SRD had been extended for two years.
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