Almost half of South Africa’s population receives some form of social grant and this means the country has a strong social security system on paper. Economic experts say that the current is unsustainable with the current unemployment crisis.
The National Treasury says that 46% of the entire population in South Africa currently receives social grants. This scenario is deemed unsustainable on the basis that South Africa has an abnormally high coverage for a developing country.
The Treasury Department stated in a presentation to parliament last week on Friday that if job creation continues to be poor, the system’s sustainability will be impossible to achieve, and the entire fiscal position will be severely strained.
There are currently 27.8 million people receiving grants in the system, with 9.4 million of them being Social Relief of Distress (SRD) grant recipients.
Meanwhile, a KPMG report on Economic Global Outlook says South Africa’s short-term goal of expanding the social wage has generally dominated the government’s agenda.
As a result of the implementation and subsequent expansion of a social grant programme, more people are receiving social grants than are employed.
KPMG Economist, Frank Blackmore says that the danger of South Africa’s current situation is that it is not building the economy and that there is no creation of inclusion for those who were previously marginalized from the economy.
He adds that as a result of this, the country has not been able to develop institutions that draw more of the population into the economy, which is a difficult position to get out of in terms of practical solutions.
Blackmore further states that the government does not seem to have a clear long-term strategy for the country’s economic recovery outside of working on opening up the economy as the Covid-19 pandemic subsides.
The country also needs to focus on making improvements in the energy sector as this is likely to be a catalyst for the improvement of other industries and the growth of other sectors.
Some of the strategies that the government should consider adopting, according to Blackmore, include improving service delivery, particularly in the country’s Health, Education, and Transport departments with a focus on a long-term sustainable growth mandate.