President Cyril Ramaphosa is set to extend the temporary social relief grant beyond March as the government weighs introducing a permanent basic income grant, according to two people with knowledge of the matter.
Ramaphosa is due to deliver his annual state of the nation address on Thursday — a day after a cabinet meeting decided against making any firm commitments about a basic income grant in the absence of a funding mechanism, according to the people.
But the meeting has given Ramaphosa the thumbs up to announce the extension of the R350-a-month grant to unemployed adults introduced in 2020 as part of the government’s efforts to soften the blow of pandemic-induced lockdowns. In the meantime, the National Treasury is looking at how to fund the basic income grant, which may include an increase in tax.
The cabinet’s decision to not immediately implement the basic income grant could be a reflection of conflicting views among Ramaphosa’s economic advisory team. Some in the
19-member panel suggested a cautious approach to expanding social security in light of SA’s debt level, which was sitting at just under 70% of GDP in 2021. Others on the panel recommended the expansion of social grants to include a basic income grant.
The government has been under intense pressure to use the temporary grant as the basis for a universal social wage in one of the most unequal societies on earth, where more than one in five people is without a paying job.
The grant had been due to lapse at some point in 2021, but such plans were thrown off course by the unrest and looting frenzy in parts of KwaZulu-Natal and Gauteng in July.
Ramaphosa is expected to expand on the cabinet’s decision on Thursday, when he is also due to confirm Business Day reporting this week that some jobs in the economy would be reserved for South Africans, one of the sources said.
In addition, the cabinet resolved to declare service delivery and infrastructure development a national emergency, suggesting that Ramaphosa would use the annual address to touch on two issues central to keeping voters on the governing party’s side, the source said.
The president — who is at the helm of a party that has been on a downward spiral at the ballot box as poor delivery of basic services put off even diehard supporters — has long touted infrastructure spending as the linchpin on any economic revival efforts.
With its budget too stretched to take on any big projects and state-owned companies like Transnet and Eskom in the middle of fixing balance sheets that have been ravaged by state capture, the government has turned to the private sector to pick up the slack.
Business leaders have called on Ramaphosa’s government to start walking the big talk on infrastructure.
“No significant government-led infrastructure project has been initiated since 2018,” Ann Bernstein, executive director of the Centre for Development and Enterprise, said in a statement.
“There is already a strong concern among investors, local and international, about the country’s credibility and capacity to set up fast-tracked projects for private investment,” she said.
“Without speedy action, investors will lose interest and move on,” Bernstein said.
Business Leadership SA (BLSA) says a new social compact must be created over the next five years to lead the country’s economic recovery.
“Other areas that need urgent attention over the next few years are labour market reforms, reforming the skills visa process to ensure the country is able to attract the skills that the country needs, and water reforms addressing sewerage and sanitation (which are approved but need to be rolled out successfully across the country),” said Busi Mavuso, the CEO of BLSA.
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