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Social Assistance in South Africa

Seminar on Continuous Cash Transfers – Brasilia Nov 2010

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Poverty and Inequality in SA• Poverty and Inequality part of the apartheid legacy.• Embedded in the skewed allocation of social and human

capital.• Income and Expenditure survey of 2006 :

– 7 percent of household income goes to poorest 40% of the population.

– Poorest 20% received less than 1.5% of income.– Richest 10% earned more than 50% of household

income.• RSA ranks as a middle-income country in terms of average

income, many of its social indicators are comparable to the worlds poorest countries – due to both poverty and inequality.

History of Social Security in SA

• SA’s formal Social Security System extends to the Children’s Act of 1913 and Workmen’s Compensation Act of 1914.

– Workers compensated for illness and injury and care-givers accessed child maintenance grants.

• Older Age Pensions Act of 1928 and Disability Grants in 1937.

• Black people excluded both by law and bureaucratic based discrimination.

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Current approach to Social Security

• Primary focus on implementing Taylor Report: establishment of a Comprehensive Social Security System comprising of 3 pillars: – Social Assistance, – Social Insurance and– Discretionary benefits

Types Of Social Assistance Grants

• Old Age Grants

• Disability Grants

• War Veterans Grants

• Foster Care Grant

• Care Dependency Grant

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Social Assistance

• Since advent of democracy target groups have not changed but has been deracialised and eligibility criteria changed.

• All qualifying children access to CSG:

– 1994 ages 0 to 7 years of age.

– Current children up to 18 years are eligible.

• Old Age Pensions: Men and Women from the Age of 60 receive State Old Age Pensions.

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Social Assistance

• September 2010 there are 14 548 beneficiaries– The CSG is at 10 003 991 and with other grants

total numbers of children receiving cash transfers are 10 667 960

– State Old Age Pensions: 2 620 939– Disabilities: 1 203 567

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Impacts

• It is South Africa’s most effective programme for reducing poverty, and it impacts on inequality.

• Expenditure Survey of 2004/2006 social assistance transfers reduced the Gini-Coefficient for income from work from 0.80 to 0.73. Meaningful transfer of income from higher income groups to the poor.

• Grants also well targeted:– Richest 2 provinces have the lowest take up rate

– Poorest 3 provinces have the highest take up rates.

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Impacts

• Households, included women receiving State Old Age Pension, reported better weight for height indicators for girls.

• Kwazulu Natal Income Dynamic Study indicated significant improvement in the weight to height scores for children. Significant reduction in experience of hunger.

• Households that receive cash transfers have higher expenditure shares on food and education then those poor households who don’t.

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Impacts

• Unemployed in households who receive cash transfers are more likely to seek work.

• Overall the cash transfers have significant developmental impacts.

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Goal 1: Eradicate Extreme Poverty

Poverty line Percent below poverty line

Poverty Gap

2000 2006 2000 2006

Food Poverty line R148 28.5

R20924.8

10.4 7.9

$1.00 (ppp) 11.3 5.0 3.2 1.1

$1.25 (ppp) 17.0 9.7 5.4 2.3

$2.00 (ppp) 33.5 25.3 13.0 8.1

$2.50 (ppp) 42.2

34.8 18.0 12.5

Percent living below poverty lines and poverty gap: 2000 and 2006

Concluding Remarks

• Solidarity Based measure – state and society has to play a role in protecting the vulnerable.

• Barriers – means tests. Need to weigh up issues of affordability to benefits of universal coverage.

• New issue is conditionalities – particularly for children.

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THANK YOUTHANK YOU