The tough life of budgeting for social grant holders

The national discourse on social grants as set by President Jacob Zuma emphasises that South Africa is creating a “developmental” and not a “welfare” state. The definitional debates on these terms are grounded by the realities of households reliant on social grants. Minister Gordhan announced increases to the social grant, yet when projected inflation is taken into account the majority of grants actually experience a real decrease or a small real increase as shown in the table below.

Grants20102011Rand Value% IncreaseProjected Headline CPIReal Increas/ Decrease
Old Age Grant, disability and care dependency10801140605.64.80.8
Pensioners over 7510801160807.44.82.6
Foster Care710740304.24.8-0.6
Child Support Grant2502601044.8-0.8
Child Support Grant (after September)2502702084.83.2

The numbers are interesting, especially that adding such a small amount as R 10-00 to the Child Support Grant, results in real increase.
The implications are dire. It is commonly held that to break poverty traps, households must be able to craft an accumulation strategy. Simply stated, households must be in a place to withstand a negative household shock. The current increases in grants will however mean that households reliant on grants will find it difficult just to keep to existing living standards. The situation is made more dire, when as noted in the Budget Review, rising food and oil prices are expected.
There is truth that the social grants serve a large number of people and that it is an expensive undertaken. However, the reality of a steady state of poverty must give cause for concern, because breaking poverty traps will require us as a society to make tough choices.

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