South Africa to introduce universal income grant – minister

PUBLISHED: Tue, 14 Jul 2020 11:23:04 GMT

JOHANNESBURG (Reuters) – South Africa will introduce a universal basic income grant, the Minister of Social Development Lindiwe Zulu said on Monday, unexpectedly reviving a two-decades-old plan with the aim of supporting millions of unemployed.

The country already has one of the continent’s most generous social security nets, but the COVID-19 pandemic has added to the need both to protect its fragile economy and its high number of unemployed.

Zulu did not give details of how the grant would be funded or its size, but told a virtual press briefing it would be paid “post-October”.

Before the COVID-19 pandemic, the government had planned to spend 309.5 billion rand ($18.51 billion) on social security payments this year.

The pandemic prompted President Cyril Ramaphosa to announce in late March a temporary top-up of those grants by up to 300 rand, including a 350 rand unemployment grant, lasting six months.

A universal grant had seemed unlikely, given soaring public debt and following an emergency budget that proposed sticking to 230 billion in spending cuts.

The treasury did not immediately respond to telephone calls and emails from Reuters seeking comment.

The universal grant will target around 33 million people between the ages of 18 and 59. South Africa’s poverty line, including non-food expenses, calculated by Statistics South Africa, is around 1,270 rand ($76.04). That would put the annual cost at roughly 42 billion rand, calculations by Reuters found.

Isobel Frye, director of the South African-based Studies in Poverty and Inequality Institute and a Minimum Wage Commissioner, said the universal grant had been discussed by government over the last 10 months, but the treasury had been reluctant to fund it.

“It was unexpected but incredibly welcome. It suggests there’s been a lot of reflection about the inadequacy of the 350 rand COVID grant,” Frye said.

Sign Up for Our Newsletter Daily Update
Get the best of CNBC Africa sent straight to your inbox with breaking business news, insights and updates from experts across the continent.
Get this delivered to your inbox, and more info about about our products and services. By signing up for newsletters, you are agreeing to our Terms of Use and Privacy Policy.