Social grants will increase between 4% and 4.7% in the coming year, according to Finance Minister Tito Mboweni who delivered his budget speech on Wednesday.
“Grants reduce inequality and protect the most vulnerable in society,” said Mboweni, pointing out that changes in the social grant provision system had resulted in about R1 billion per annum in efficiency savings.
This cost saving would, in part, go towards raising the daily subsidy per child.
The R1 billion efficiency saving refers to the contract for the administration of social grant payments, which was moved in 2018 from Net1 subsidiary Cash Paymaster Services (CPS) to the South African Post Office (Sapo).
Beneficiaries can now collect their grants from post office branches as well as certain supermarkets, banks and ATMs using a Sassa (South African Social Security Agency) card. The loss of the lucrative contract, which oversees the payment of grants to more than 18 million beneficiaries, saw CPS parent company Net1 report a 41% decline in revenue for the fourth quarter of 2019.
Grant payments could be Sapo’s lifeline
Meanwhile, Sapo has reported that it is incurring as much as R600 million a year in security costs after taking over the responsibility for Sassa payments.
However, presenting its results in Parliament last October, Sapo reported that it anticipates gross revenue of R1.9 billion a year from the Sassa project.
It posted a net loss of R1.1 billion last year, so administration of the Sassa payments is widely viewed as a lifeline for the beleaguered entity.
The social grant increases
|Old age||R1 780||R1 860||4.50%|
|Old age – over 75||R1 800||R1 880||4.40%|
|War veterans||R1 800||R1 880||4.40%|
|Disability||R1 780||R1 860||4.50%|
|Foster care||R1 000||R1 040||4.00%|
|Care dependency||R1 780||R1 860||4.50%|
Source: National Treasury
Over the medium term, the total number of beneficiaries is expected to increase by almost one million, to approximately 19 million by 2022/23.
Child support grant remains low
The University of Cape Town’s Child Institute last year released a report highlighting that the child support grant is too low.
Introduced in 1998 with an initial value of R100, the child support grant has become the single biggest programme for alleviating child poverty in South Africa.
The income threshold or means test to determine who can receive a child support grant is calculated using a formula of ten times the amount of the grant.
This means that in 2020, you can receive a child support grant if you are a single parent with a monthly income of R4 250 or less, or married parents with a combined income of R8 500 or less.
Early childhood development prioritised
Funds amounting to R406.2 million in 2020/21, R517.3 million in 2021/22 and R626 million in 2022/23 have been reprioritised, mainly going towards the early childhood development conditional grant.
As a result, the subsidy rate per child will increase by 23.8% from R15 last year to R18.57 in 2022/23 – by which time government estimates that it will provide access to early childhood development services to almost 700 000 children under the age of four.