The R350 Covid-19 social relief of distress(SRD) grant has been paid to unemployed citizens as part of a R500 billion social and economic support package which was announced by the president in April when the national lockdown commenced. It has been paid for the past six months and was said to be of great help to those 2 million citizens who had lost their jobs due to the Covid-19 pandemic.
Child support grants and old-age pension were also given additions which are all due to expire this month.
Due to the unemployment rate which rose to 30,1% in the first quarter of 2020, there has been a call to maintain the SRD grant permanently.
The Minister of Social Development, Lindiwe Zulu, said that her department has proposed to extend the payment of R350 until the end of the financial year. This comes after a recent survey showed that the R350 made a positive impact on people’s lives.
She also said a team of experts are conducting a feasibility study on the introduction of basic income grants to be paid to unemployed citizens between the ages of 18 and 59.
“There is support from the ruling party and we believe the state has the capacity, but we have to be creative about this. The team of expert and engagement are on an advanced stage about the basic income grant,” said Minister Zulu in a television interview.
Economists, however warned that no country in the world could afford a grant of that kind permanently.
Economist Mike Schussler said the government would have to increase income tax by 12% and increase VAT by at least 2% to afford this.
“This seems highly impossible. The government needs to make a politically compromising decision and focus on creating more jobs. The stats show that over 10 million people are unemployed. If you pay them R350 every month that is R4 billion which translate to 1% of our GDP (gross domestic product), where are we going to get that money from?” he asked.
He said that it would not be sustainable and that it would force the government to borrow money which the international rating agency had warned against.
Economist Professor Bonke Dumisa said that adminisitratively the government was failing to administer the distribution of grants. He said South Africa would be acting rich while it is poor if it maintained the grants permanently.
“We have been warned by the rating agency that South Africa was already boxing above its weight. Our spending is very high compared to what we collect. If this is approved it will be used to score political points and they will be a demand to increase the grants for political gains. Other countries such as Greece are still suffering because of such a decision.
“If the government is not careful we will become like Zimbabwe.”
The more you understand yourself, the more silence there is, the healthier you are. —Maxime Lagacé