Earlier this year at SONA, President Cyril Ramaphosa called for an expanded SRD grant in 2025 to create a more sustainable source of income for the country’s poor. Over the years, SASSA Social Relief of Distress has been a temporary measure and, therefore, budgeted for as such. First established in 2020, the SRD grant paid R350 to those suffering from extreme poverty. Last year, ahead of the May 2024 election, it was upped to R370 for approximately 10-million residents, reports BusinessTech.
Furthermore, Ramaphosa declared an expanded SRD grant in 2025 would be, “An essential mechanism for alleviating extreme poverty. We will use this grant as a basis for the introduction of a sustainable form of income support for unemployed people,” said the President. Currently, the unemployment rate sits higher than 32%and is one of the highest in the world.
EXPANDED SRD GRANT IN 2025
Nevertheless, critics say an expanded SRD grant in 2025 will create an overly dependent welfare society. Those in favour have praised its protection for millions from malnutrition. However, concrete plans to turn an expanded SRD grant in 2025 into a Basic Income Grant (BIG) are yet to come to fruition. For example, National Treasury quashed the idea late in 2024, saying such a scheme would cost R400 billion annually. And it would be unaffordable without large tax increases, probably in the form of a VAT increase.
Moreover, a recent high court ruling decreed the once ‘temporary’ measure must become an expanded SRD grant in 2025. The judge said SRD is a key social assistance regime and that access to the grant should no longer be restrictive. Plus, that affordability of the grant from a fiscal perspective cannot be the reason to exclude anyone in poverty. The department said it would appeal the ruling before the May 2025 deadline. However, should an expanded SRD grant in 2025 go ahead, the number of qualifying recipients would rise to as many as 18 million.
ECONOMISTS CLAP BACK
Meanwhile, the word from economists is that South Africa’s fiscus simply cannot afford an expanded SRD in 2025. Deloitte Southern Africa’s Chief Economist Hannah Marais, quoted by BusinessTech, says government should rater focus on improving employment in the country. However, the idea has been central to the ANC’s ‘pro-poor policies’ for some time now, particularly amidst the nation’s high unemployment and elevated wealth inequality.
Nevertheless, Marais says there should be a ‘certain cushion’ to help the most in need. But the primary long-term focus of the government should be employment sustainability. “This focus should be on creating the right jobs, which create products and add value to the economy,” Marais said.
IMMEASURABLE CONSIDERATION
Likewise, following October 2024’s mid-term budget statement, the National Treasury called an expanded SRD grant in 2025 an ‘immeasurable consideration’. This is in light of there being no means test for a Basic Income Grant in South Africa. Therefore, presuming the grant could potentially reach 35 million people between 18 and 60, it could cost as much as R400 billion per year. Moreover, “Only two countries in the world have true basic income grants, and both have had to scale back due to affordability,” said the Treasury.
So, while an expanded SRD grant in 2025 is broadly supported within the government of national unity (GNU), how to implement it is still the challenge. The SRD grant is meant to come to an end next month (March 2025). However, it’s almost taken for granted that it will be extended yet again like every year, with the cut-off pushed out. Presenting to parliament, the Treasury noted some challenges facing the expanded SRD grant in 2025.
Currently the grant costs R40 billion per annum. However, this could very quickly rise to R170 billion by 2032/33 if the grant becomes permanent. Likewise, if the uptake increases and its value comes closer to the food poverty line. Simply put, “The fiscus cannot afford these large increases without permanent large tax increases,” concluded the Treasury. Your move, Finance Minister …
WILL THE ANC EVER GET ITS BASIC INCOME GRANT?
Let us know by leaving a comment below or send us a WhatsApp on 060 011 0211. Subscribe to The South African’s newsletter and follow us on WhatsApp, Facebook, X and Bluesky for the latest FREE-to-read news.
