South Africa to Replace Emergency Coronavirus Cash Transfer with Basic Income Grant

There is a translation of this article into French

On 21 April 2020, President Ramaphosa announced a 500 Billion Rand relief package in response to the COVID-19 pandemic. The package included top-ups for existing cash transfer recipients and the introduction of an emergency ‘coronavirus grant’. The emergency grant is available to unemployed individuals who are not eligible for the contributory Unemployment Insurance Fund and informal workers who are unable to work during the lockdown.

The announcement of the relief package followed the submission of an open letter to President Ramaphosa by a group of 75 economists and academics calling for the adoption of a Universal Basic Income (UBI). South Africa already had an impressive system of cash transfers in place prior to the pandemic and therefore has the infrastructure required in order to get people cash. Over 30 per cent of the population and approximately 44 per cent of households receive a government-funded cash transfer each month. Despite the impressive reach of South Africa’s social grant system, it has historically excluded economically active adults. Under the emergency grant, working-age adults receive R350 a month for a total of 6 months, beginning in May 2020.

On 13 July, the Minister of Social Development Lindiwe Zulu announced that the government is intending to implement a basic income grant (BIG) from October 2020, the last month the coronavirus grant is available. A discussion document by the African National Congress (ANC) outlined that the government would adopt a graduated approach to implement the proposed universal grant. One of the first steps would be to provide the grant to the economically active and unemployed between the ages of 19 and 59, the same group that is now receiving the emergency coronavirus grant. This includes approximately 13 million individuals.

The final step in the graduated approach would be a universal BIG that would be provided to all South African residents between the ages of 19 and 59, approximately 33 million people. The ‘universal’ BIG would add on to the country’s existing grant system rather than replacing the social grants already in place (including the CSG for individuals under the age of 19 and the Old Age Pension for individuals over the age of 59).  It would effectively create a universal income for working-age adults while keeping a targeted minimum income guarantee for individuals 18 and under and 60 and over. The proposed BIG therefore does not meet the requirements of a universal basic income as defined by BIEN. Nevertheless, it is a notable step towards increasing income security for working-age adults in South Africa.

The announcement for a BIG has come after several failed attempts to extend the country’s social grant system to working-age adults over the last two decades. The first was a proposal for a BIG made by a government-appointed social protection committee in the early 2000s. The second was the push for a Job Seekers’ Grant by the ANC in 2012, which would have provided cash transfers to the working-age population in order to help people look for work. This too made little headway and the proposal was eventually scrapped.

The BIG discussion document drafted by the ANC outlines that the BIG is a response to the economic fallout caused by the COVID-19 pandemic. Yet Isobel Frye at the Studies in Poverty and Inequality Institute shared that the BIG has been under discussion for approximately 10 months, far before the onset of the pandemic. At this point it is unclear whether the BIG will become a permanent feature of South Africa’s social grant system or if it will act as a temporary buffer while the country’s economy catches up after the setback from the COVID-19 pandemic.