The IMF says the design and administration of South Africa’s social grants system excludes 15%-42% of the country’s poorest citizens and benefits as much as 20% of better-off households. It calls for reform of the system to close the coverage gaps and cut households that are better off from the system.
South Africa’s social support system costs 3.5% of the country’s economic output as measured by GDP. This is up from 2.5% 20 years ago, a period over which the number of people covered increased from 20% of the population to 40%.
The biggest number of beneficiaries are children (12.6-million), followed by the aged (4.26-million). But old age pensions comprise the biggest outlay in rand terms (R122bn) because of the far higher payout (R2,315 a month) relative to the child grant (R560 a month). Child support costs South Africa R88.9bn a year.
In an annex to the 2026 article IV report on South Africa, IMF staffers said almost 86% of households at the bottom of the income quintile receive social grants. For these households, social grant receipts account for about 70% of their total income and consumption spending.
“This enables households to meet essential needs such as food, education and healthcare, underscoring their importance in supporting vulnerable populations,” said the IMF.
The income quintile method measures the average (per capita monthly) household income of residents, stacking them from poorest (quintile 1) to wealthiest (quintile 5), with each quintile containing about 20% of households.
The IMF added that there are gaps in the social grant system’s coverage, with some of the most vulnerable ― 15% in the poorest quintile and 42% in the second ― not getting any support. Closing these coverage gaps would cost an additional 0.5% to 1% of GDP.
There are two factors: the design of the grant system and its administration. When it comes to design, eligibility is often linked to demographic categories such as age, disability or caregiving status. This automatically disqualifies poor working-age adults who have no dependants.
There are administrative and information barriers too. These include problems with identity documents, limited awareness of social grant entitlements, and the excessive cost of accessing registration and verification points ― a major barrier in remote areas. It also points to inaccuracies and delays in verification processes.
At the other end, means testing at individual rather than household level means people in relatively better-off households qualify for social support if their personal incomes fall below the eligibility thresholds. The threshold for old age and disability benefits is R8,990 a month, R23,200 a month for care dependency, R5,600 for a child grant and R624 a month for social relief of distress.
The IMF also flags the thresholds for old age, war veterans and disability as being too high ― 10 times too high ― relative to South Africa’s food poverty line.
The design of the social grant system ensures inclusivity and reduces exclusion errors, but it also “means that a share of grants flows to individuals who may not need them”.
“Indeed, nearly 20% of households in the top two income quintiles receive social grants that could be more effectively directed toward poorer households,” said the IMF, adding that South Africa is not an outlier relative to its peers.
However, its benefit incidence in the upper-income groups is higher than that in Argentina, Jamaica, Colombia and Brazil.
• Sikhakhane, a former spokesman for the finance minister, National Treasury and South African Reserve Bank, is editor of The Conversation Africa. He writes in his personal capacity.
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