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South Africa has been facing issues of poverty reduction, inequality and unemployment for decades. During these times, the economic growth rate has also slowed since the 2008 recession. The annual growth rate averaged 1.1% between 2009 and 2021, slowing to 0.6% in 2023 whilst unemployment looms at a constant rate of 30% or above, Cape {town} Etc reports
South Africa’s Gini coefficient, which is a measure of how income is distributed across the population, is estimated to be 0.63, one of the worst in the world. This indicates that many South Africans live in extreme poverty, despite extensive social assistance measures implemented by the government.
In the 2023/24 fiscal year, there were 18.8 million social grant beneficiaries (about 35% of the population) with an annual cost to the fiscus of R217.1 billion. This is expected to increase to R259.3 billion in coming years.
Social assistance encompasses spending on health, education, social protection, community development and employment programmes focusing on the protection of the most vulnerable groups. In addition, the government has extended the Social Relief of Distress Grant which was introduced during the COVID pandemic.
As such, Business Tech has reported on research conducted by an experienced economist, who aruges that in order to reduce unemployment, inequality and poverty, the South African government will have to adopt a strategy which focuses on extreme poverty reduction.
The team of economists and researches have identified that by transferring an average of R4000 to every extremely poor South African, these individuals would have the means to move into an improved financial bracket.
It has further been reported that approximately 25 million individuals in SA would be eligible for a social transfer of this nature.
The key findings of a study conducted by the group revealed that the South African economy, measured by the level of gross domestic product (GDP), would grow faster (by 0.5 percentage points) when the transfer was designed to support poor people’s progressive engagement in economic participation as opposed to simply providing them with a basic cash grant. One example of this includes improving the running social assistance programmes.
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