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SA tightens SRD grant criteria to counter abuse

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South Africa is tightening the qualifying criteria for recipients of a welfare grant that was introduced to cushion the poor against the fallout of the coronavirus as it considers how best to continue providing support, a National Treasury official said.

The so-called Social Relief of Distress (SRD) grant was first paid in 2020, reintroduced in the wake of deadly riots in July last year, and extended until March 2024 in last month’s mini-budget update.

Read: About 7.5 million people receive the R350 grant

The R350 monthly stipend is intended to help support the jobless in a country where more than a third of the workforce is unemployed, but local media outlets have reported that it has been abused, with more than 5 000 government employees fraudulently receiving payments.

The government has worked with about eight of the country’s banks to undertake income tests for grant recipients and weed out those using multiple bank accounts to get payments, Mampho Modise, the deputy director-general for public finance at the National Treasury, said in a webinar on Wednesday.

Modise said National Treasury is also trying to verify claimants’ employment status.

“We are taking out the ones that don’t qualify for the grant,” she said.

South Africa will spend R243 billion, or almost 4% of gross domestic product on welfare, in the current fiscal year, with most of the money going toward child support and pensions, the medium-term budget shows.

welfare grants, Social Relief of Distress grant, National Treasury, SRD, Mampho Modise,

Stringent qualification criteria will remain in place for future iterations of the welfare payment, Modise said. The National Treasury is working with other state entities, including the Department of Employment and Labour, on options to replace, complement or adjust the grant, she said.

About 7.4 million people out of a working-age population of 40 million receive the temporary stipend.

If the current grant value and take-up rate remain the same and it is extended indefinitely, its cost will likely grow at an average of 8.8% per year to reach R65 billion in 2031, the Treasury said last month.

Without a source of permanent funding, which may include increases in revenue, spending reprioritisation or a combination of the two, that amount “would threaten the sustainability of the public finances,” it said.

© 2022 Bloomberg

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