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SA's economy in a Catch-22 on additional R350 social grants

Civic society's call for the social relief of distress (SRD) R350 grant to be turned into a basic income grant (BIG) along the Food Poverty Line of R624 is a Catch-22 for South Africa's economy, knocked by two years of Covid-19 state of emergency restrictions, which struggles to grow, or create jobs. Picture: Karen Sandison/African News Agency(ANA)

Civic society's call for the social relief of distress (SRD) R350 grant to be turned into a basic income grant (BIG) along the Food Poverty Line of R624 is a Catch-22 for South Africa's economy, knocked by two years of Covid-19 state of emergency restrictions, which struggles to grow, or create jobs. Picture: Karen Sandison/African News Agency(ANA)

Published Jan 25, 2022

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CIVIC society's call for the social relief of distress (SRD) R350 grant to be turned into a basic income grant (BIG) along the Food Poverty Line of R624 is a Catch-22 for South Africa's economy, knocked by two years of Covid-19 state of emergency restrictions, which struggles to grow, or create jobs.

In a meeting last week with President Cyril Ramaphosa and some members of Cabinet, the Institute for Economic Justice, Black Sash, Studies in Poverty and Inequality Institute, Amandla.mobi and #PayTheGrants proposed extending and improving the R350 SRD and creation of policy pathways for implementing a BIG.

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They hold the SRD's existence as reliant upon regulatory powers provided under the State of Disaster, which faces the growing possibility of cancellation.

“Therefore, if the SRD lifeline is not to be prematurely cut, it must now be extended via adoption in the Social Assistance legal framework until at least February 2023, or until a BIG is phased in,” they said in a statement yesterday. This comes as the World Bank approves all of a $750 million (R11.32 billion) developmental policy loan (DPL) for South Africa to aid those negatively affected by the Covid-19 pandemic.

The food poverty line, or extreme poverty line which went up 6.7 percent from R585 in November and is now pegged at R624 per person per month is the amount of money that an individual needs to afford the minimum required daily energy intake.

Investec Economist Annabel Bishop said the DPL for South Africa to aid those negatively affected by the Covid-19 pandemic was seen as market positive, although comes with currency risk despite the low funding cost.

“It will assist in addressing the immediate challenge of financing critical health and social safety net programmes whilst also continuing to develop our economic reform agenda to build back better. The monies are not expected to be ring fenced,” Bishop said.

Bishop said with 7.6 million unemployed and 3.9 million discouraged job seekers, bringing the cost of a R350 BIG potentially to R48.3bn a year, or R32.9bn a year without including the discouraged job seekers, and both without any additional administrative costs, the World Bank envisaged handouts tied to a need for active job seeking.

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The World Bank loan comes on the back of multi-billion rand loans taken in the past two years in response to the socio-economic crisis created by the pandemic.

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