Can South Africa’s social grants help people make a better life? Research offers hope

There is now a growing global consensus that additional measures are needed to support the agency of social protection beneficiaries. Such support will strengthen their self-sustaining livelihoods and pathways that would accelerate social and economic improvements and participation in the labour market, and promote wider social and political stability.

For instance, emerging evidence from 104 programmes around the world has found a net gain of $4-$5 when cash and livelihood support are provided. Cash plus labour activation programmes for youth that are designed to address barriers to economic inclusion were effective human capital investments, leading to improved outcomes.

South Africa, which has one of the largest cash transfer programmes, is reviewing its social protection system. At issue is what complementary cash plus employment and livelihoods interventions government needs to consider if it is to introduce some kind of basic income support grant.

Calls for such a grant in South Africa have gained momentum since the government introduced the COVID-19 social relief distress grant in May 2020. It now stands at R370 (about $21) a person a month, reaching over 8 million recipients.

These issues were discussed at a recent two-day policy colloquium on the future of social protection and its potential to promote economic inclusion hosted by South Africa’s Department of Social Development and the Presidency. South Africa will also draw from lessons learnt from the Second World Summit for Social Development in Doha. Lessons learnt will be shared from countries such as Brazil, Indonesia and Ghana. These countries are attempting to integrate or craft economic and social inclusion policies onto existing cash transfer programmes.

The exponential growth in social assistance, especially cash transfers, has helped to alleviate extreme poverty globally. Over the last decade alone, the cash transfers have reduced poverty by 11 per cent on average and extreme poverty by 37 per cent in low- and middle-income countries.

The University of Johannesburg’s Centre for Social Development in Africa has done extensive research in this area over almost two decades.

The centre’s research findings are that social grant beneficiaries in South Africa are pointing the way. Beneficiaries already use grants to improve livelihood outcomes. There is much to learn from how grant beneficiaries are using their agency to improve income and meet consumption needs.

Reimagining social grants

Here I share stories drawn from our research on grants, livelihoods, employment and services over the years. All names are anonymised.

Nandi was 23 years old when our colleague, the late Tessa Hochfeld, interviewed her in 2018. She left school at the end of grade 9. She had three children; one died of pneumonia at 20 days of age.

She is one of four out of 10 primary caregivers who receive the child support grant nationally — now a basic R560 (US$32) a month — who did not pursue any livelihood activity. Livelihood activity is anything that a person does to make a living to meet their basic needs.

Nandi was unemployed and likely to face long term unemployment. Her children are part of the country’s largest cash transfer programme. It is one of the 10th largest in the world, reaching 82 per cent of poor children.

Nandi’s story is similar to that of other young women who are beneficiaries of the child grant. It tells of the complexity of human needs, risks and vulnerabilities that young women face, which is carefully documented in Hochfeld’s book.

Supplementing incomes

Only a quarter of all grant beneficiaries were engaged in informal work in 2021.

They said they were variously motivated to engage in complementary livelihood activities by a desire for self-efficacy, and a strong desire to work rather than sit at home.

They engaged in informal, micro-livelihood activities on the streets as well as in their homes and backyards. These included buying and selling goods, supplying goods, building, repairs, photography and running restaurants or taverns. They also engaged in renting out accommodation, traditional healing, fahfee betting, recycling, farming, community gardening, beadwork, sewing and shoe making.

They received very little support from the government. Some received support from an NGO. Another received one-off technical support from the Department of Agriculture and Land Affairs. The majority turned to their families for support, or to informal borrowing, and used grant money to start their businesses.

Luthando is a 41-year-old ex-offender who wanted to reintegrate into the community. His girlfriend challenged him to earn an honest living instead of robbing other people.

She gave him R150 (about US$8.66) out of his son’s R560 ($32.33) child support grant to buy goods for resale. He borrowed another R300 (about $17.32) from a mashonisa (money lender). He now runs a micro business. He said proudly, displaying his wares:

I can say that everything you see on this table today started with R450 (about $30).

Sthandiso used part of the child support grant for his two sons to become a photographer and a videographer. Two other child support grant recipients pooled their money to buy chickens, pluck them and sell them on grant days. “This way we doubled our money.”

But they faced many obstacles such as a lack of jobs, safety issues, childcare, high transport costs, lack of access to capital and credit, lack of experience, knowledge and information as well as skills in financial literacy, mentorship and coaching.

Sphamandla’s story tells of how his life changed:

I have not yet reached financial independence because I have not gotten to where I want. Having money to feed my family and do some little things is different from being financially independent … It is true that I no longer borrow or depend on anybody to feed my family, but I still have the problem of not having money to buy a house and do other things that I need. But I am hopeful that slowly I will get there through these things I am doing for money. That is why we save money little by little every month.

Looking forward

These stories dispel myths that grants create dependency on government. They do not idolise the grant beneficiaries but open the door to thinking differently about how to support the agency of the millions of men and women who rely on social grants by building their livelihood capabilities.

The stories of the recipients show that there is scope for exploring new areas of employment growth and support for informal workers. A thorny issue is whether there should be behavioural conditions attached to a redesigned Social Relief of Distress grant that would compel recipients to pursue employment and livelihoods.

Given South Africa’s huge unemployment rate, this is not an option. Supporting beneficiary choice and aligning hard and soft incentives could go a long way to supporting human capabilities of people that have been left behind, in promoting social and labour market inclusion and inclusive growth.

One way to do this is to grow and strengthen grant beneficiaries’ participation in the informal economy, which could be an important driver of employment in the country.

Leila Patel, Professor of Social Development Studies, University of Johannesburg

This article is republished from The Conversation under a Creative Commons license. Read the original article.