There have been calls from the ANC Youth League to increase the SRD Grant Photo Twitter/@PresidencySA
South Africa – In a country facing economic challenges, the Social Relief of Distress (SRD Grant) Grant has been used to ease the burdens of many. However, the ANC Youth League has recently called for a permanent social relief grant for the unemployed, with a particular focus on those with degrees. This proposal suggests raising the current R350 grant to R1 500 and providing a R4 500 Rand grant per month to unemployed individuals with degrees.
To comprehend the implications of these grant increases, we must first consider South Africa’s economic situation. The nation is grappling with a dire economic outlook, marked by a small tax base and looming cost-cutting measures. According to Claude Naiker, Public Servants Association (PSA) spokesperson, These cost-cutting measures could include the closure of government departments and the merging of others. These cost-cutting measures would be put in place in order to extend the SRD Grant which ends in March 2024. These cost-cutting measures could lead to further worries.
“If there’s going to be a closure of government departments or the merger of departments, ultimately there’s going to be a reduction of staff. This will lead to retrenchments in the public service thereby creating a bigger unemployment rate in our country.”
What is alarming is the substantial number of vacancies within the public sector. If these cost-cutting measures are implemented, these departments, which are already grappling with operational challenges due to understaffing, are bound to experience even more significant declines in performance as additional staff members are laid off.
The issue of corruption and maladministration
While there were various cost-cutting measures talked about during the meeting between the Treasury and President Cyril Ramaphosa, one thing was left unspoken about; corruption and maladministration within the government. Corruption in the public health sector, police and education sector is not unheard of. The PSA has been vocal about the need to address these issues, which significantly contribute to South Africa’s economic challenges.
“Government simply does not have the know-how or the political will to get rid of corruption and maladministration. There’s a R5.2 billion problem with the UIF insurance commissioner where they’ve sent out a tender without doing due diligence. Now this money was to be used to try and alleviate poverty, to try and reduce the unemployment rate in our country. Unfortunately, it’s been squandered, it’s been diverted into a situation where it does not create jobs for the most vulnerable in our country.”
When funds are being wasted in such a manner, it raises the question of why the government is considering the shutdown and merger of departments instead of addressing corruption and mismanagement. Even in the event of department closures or mergers, essential resources will continue to be misused as the underlying issue remains unresolved.
Taxpayers footing the bill once again for the SRD Grant
To finance these social relief grants, suggestions to raise taxes and value-added tax (VAT) have surfaced. When examining the tax-to-GDP ratio, which illustrates the extent of citizen taxation compared to the country’s overall productivity, the most recent data from CEIC in March 2023 indicates a ratio of 27.3%. According to the WorldBank, a level of 15% at minimum is needed to meet social goals. While some nations like France, Denmark, Finland and Sweden have a ratio of 40% and above, their respective residents are afforded well-run public services.
Increasing taxes on basic commodities may further burden already struggling citizens. South Africa is already grappling with significant debt repayments, and additional taxes could exacerbate the financial strain on households, said Naiker.
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A grant for the graduates
ANC Youth League President, Collen Malatji, has also called for unemployed graduates to be given a monthly grant of R4 500. When the nation is struggling to pay R350 a month to the unemployed, where will the money for this grant come from? Malatji gave no indication how the government should obtain this money. Naiker also questioned where this money should come from and believes this isn’t something the government should look at right now.
“What we should be doing is investing in other areas of our economies, like public infrastructure, where it will create more sustainable jobs for the graduates. That’s the one area itself. The other area is that the cabinet is bloated. If we get rid of a number of deputy ministers and scale that down, we could obviously save a lot of money there … Let’s look at goals, let’s look at issues that are immediate so that we can save our economy.”
The proposed permanent SRD Grant, particularly aimed at unemployed graduates, raises important questions amid South Africa’s economic challenges. While these grants could provide relief, cost-cutting measures, including potential department closures and mergers, may lead to unemployment and reduced public services. Corruption remains a significant issue, diverting funds from essential initiatives. Funding these grants through tax increases could burden already debt-stricken citizens. While the graduate grant idea is commendable, it should be evaluated in light of broader economic challenges. Focusing on sustainable job creation and prudent financial management may offer more effective solutions. Government should focus more on corruption and maladministration before deciding to take such drastic cost-cutting measures which will undoubtedly only worsen the country.
