The Social Relief of Distress (SRD) grant, a R350 monthly lifeline introduced during the COVID-19 pandemic, has supported nearly 10 million people as of late 2024. But with a strained budget, projected fiscal deficit at 4.7% of GDP and public debt at 73% in 2025, the government faces mounting pressure to end these grants.
It can be seen as a drain on taxpayer money, fostering dependency and discouraging work. Yet, abruptly pulling the plug could deepen poverty and spark unrest, as seen in the 2021 riots. So, how do we transition away from grants while ensuring no one is left stranded?
Let’s explore.
The Case for Ending Grants
South Africa’s fiscal reality is grim. Taxes fund the SRD, pulling resources from critical areas like infrastructure, which needs R1.3 trillion over the next decade for roads, rail, and energy. Many believe grants disincentivize job-seeking, creating a culture of reliance.
With unemployment at 32.9%, the argument goes that redirecting funds to job-creating projects like building bridges or upgrading power grids, would better serve the economy.
Infrastructure investment could generate thousands of jobs, addressing root causes rather than patching symptoms.
The Risk of Cutting Too Fast:
Scrapping grants risks pushing vulnerable households off a cliff. Over 55% of South Africans live below the poverty line, and for many, R350 is the difference between eating and going hungry.
Evidence on grants causing “laziness” is shaky. Studies like those from the International Labour Organization, show small cash transfers stabilize households, often enabling job searches rather than deterring them. Without a safety net, desperation could fuel instability. The 2021 riots, triggered partly by economic distress, are a stark reminder of what’s at stake.
A Balanced Way Forward
Ending grants doesn’t have to be all-or-nothing. A phased, strategic approach could bridge the gap between fiscal responsibility and social stability. Here are five practical steps to make it work:
1. Gradual Phase-Out: Reduce the grant incrementally, say, by R50 every three months over 18 months. This gives recipients time to adjust while signaling the need for alternatives.
2. Skills Training as a Condition: Tie grants to mandatory enrollment in free, job-focused training programs. South Africa’s SETAs could offer short courses in construction, plumbing, or digital skills. Vocational training has boosted employability by 20-30% in similar economies.
3. Subsidize Small Businesses: Redirect some grant funds to tax breaks or low-interest loans for small businesses and cooperatives hiring low-skill workers. The informal sector already employs 2.5 million people.
4. Expand Public Works: Scale up programs like the Expanded Public Works Programme (EPWP), which employs 800,000 annually in roles like road maintenance. Paying slightly above grant levels would incentivize participation while building infrastructure.
5. Protect the Most Vulnerable: Maintain grants for those who can’t work, like the disabled, elderly, or caregivers, who make up about 30% of recipients.
This narrows the fiscal burden without abandoning those in dire need.
The Execution Challenge
These ideas sound promising, but South Africa’s track record raises red flags. Corruption and mismanagement often siphon off funds, only 60% of EPWP budgets reach actual workers due to “administrative costs.” Transparent oversight and local accountability are non-negotiable. Starting with pilot regions to test these strategies could iron out kinks before a national rollout.
Why It Matters
Redirecting tax revenue to infrastructure and jobs is a long-term win, but it’s no quick fix for grant recipients. A clumsy exit could deepen poverty and unrest, while a thoughtful transition could empower people to stand on their own. The government must balance compassion with pragmatism, ensuring the end of grants marks the start of opportunity, not despair.
What’s your take? Should we prioritize training, jobs, or something else to ease this transition? Share your thoughts below.
