Not for the first time, the government can sit and listen to the sound of jerking knees — or it can do something useful about poverty and growth. This time the conundrum is what to do about the special Covid-19 grant, which is due to expire soon.
The department of social development wants to extend it until the end of the financial year; researchers, among others, are urging the government to retain it permanently. As is customary in these cases, sections of the media have found economists to issue “dire” (and entirely fact-free) warnings about how this will ensure the country ends up resembling Zimbabwe.
In reality there are good social, economic and political reasons for making it a permanent grant. There is strong evidence that it has reached many people living in poverty and helped them deal with the economic havoc wrought by Covid-19. The National Income Dynamics Study — Coronavirus Rapid Mobile Survey (Nids-Cram), conducted by researchers at the universities of Stellenbosch, Wits and Cape Town, found that at the time of their interviews, the grant had reached 4.3-million people: 12% of the adult population and 24% of unemployed people looking for work. (It seems to have been extended to more people since then). It also found that the grant is reasonably well targeted to people living in poverty, who it has helped cope with the worst economic conditions in generations.
This counters one common argument against grants: that they don’t reach people who need them. Research shows that grants are this country’s most efficient antipoverty weapon; they do more to improve lives than any other programme. But the “dire warning” brigade has other clichés in its armoury: grants break the bank and reduce people to dependency. Neither is true. Spending on grants is a small fraction of the national budget — and they give more value for money than any other spending on human needs. So it makes sense to expand grants even if this means cutting back on other spending. They also reduce dependency because there is plenty of evidence that they help kick-start local economies. This has created opportunities for both large retailers and the people who sell their wares on the pavements around shopping malls in places where there was little economic activity before grants arrived.
All this explains why competent economists are urging that the grant be retained. They actually research poverty and so tend to understand it better than those of the jerking knee consulted by much of the media. Taking grants away is also a threat to social peace. Contrary to common claims, poor people hardly ever rise up in anger because they want to grab what the wealthy have. People, including those who live in poverty, become very angry when what they already have and need is taken from them — one study suggests this may have been a cause of the Vietnam War.
So, while the ever-present SA suburban nightmare — an uprising of the poor — has not happened despite great inequality, people may rebel if grants that are staving off hunger are removed. For the ANC, ending the grant may be a disaster. Research shows they are a key reason people continue to vote for it. This may well mean that, since millions have received grants over the past six months, voters may not punish it at the polls for the pain they have endured this year. But if a grant is removed they may be far less forgiving.
While that is the ANC’s problem, not the country’s, it means it would make good political sense for it to do what it ought to do anyway. Sometimes, what is good for the governing party is good for the country. Extending the Covid-19 grant is sure to help both.
• Friedman is research professor with the humanities faculty of the University of Johannesburg.
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