December 10, 2004

Social grants impact positively, says study

South Africa's social assistance programme has proved to have a positive socio-economic impact on the recipients, regardless of the methodology applied. This has been revealed by findings of a research conducted by the Economic Policy Research Institute (EPRI) on behalf of the Social Development Department. The provision of social grants is currently government's biggest poverty relief programme, paying out R50 billion per annum to over 9 million beneficiaries countrywide. These include the Child Support Grant, the State Old Age Pensions, Disability Grant, Care Dependency Grant, Foster Care Grant and the Grants-in-Aid. Dubbed The Social and Economic Impact of South Africa's Social Security System, the report has among others shown that the greatest poverty reducing potential lay in the progressive extension of the child support grant.
The research study shows among others that a 10 percent increase in take-up of old age pension reduces the poverty gap by 3.2 percent while the full take up reduces the poverty gap by 6.2 percent. It shows that the greatest poverty reducing potential lay with the progressive age extension of the child support grant to 14 years of age which will yield a 57 percent poverty gap reduction. The provision of grants also contributes to an increase in a number of children enrolling in schools. Living in a household that receives grants is correlated with higher success rate in finding employment. At the macro-economic level, the social grants programme tends to increase domestic employment while promoting a more equal distribution of funds, the report findings have shown.
Addressing reporters at the release of the findings in Pretoria, Minister Skweyiya said the report evaluated the role of social grants in reducing poverty and in promoting household development as well as examined their effects on health, education, housing and other social services. He said the study also assessed the impact of social grants on labour market participation and labour productivity, thus providing an analysis that speaks to both the supply and demand sides of the labour market. It also quantifies the macro-economic impact of social assistance grants, evaluating their impact on savings, consumption and the composition of aggregate demand, the Minister said.
According to him, the study was relevant to government's three-pronged development strategy, which involved encouraging growth and development in the First Economy and increasing its possibility to create jobs; implementing a programme to address the challenges of the Second Economy as well as building a social security net to alleviate poverty. He also said the findings indicated that social grants not only reduced poverty and contribute to social cohesion but they also had positive impacts on the economic opportunities of households receiving grants. (Bua News, Pretoria)

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