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South Africa Buckles on Welfare Grants, Stands Firm on Wages

  • Monthly welfare stipend to be extended to March 2024
  • Cost of the grant could grow at an average of 8.8% a year
Enoch Godongwana on Oct. 26.
Enoch Godongwana on Oct. 26.Photographer: Dwayne Senior/Bloomberg

South Africa’s government bowed to public pressure to extend a welfare grant that was introduced in 2020 to cushion the poor against the fallout from the coronavirus pandemic, while it held the line in its efforts to contain the state’s wage bill.

The medium-term budget policy statement, presented by Finance Minister Enoch Godongwana to parliament  in Cape Town on Wednesday, increased the projected spending for social grants by 36 billion rand ($2 billion), which will enable the welfare department to extend the 350 rand monthly grant until March 2024. The stipend, which is being paid to 7.4 million people, has been touted as a possible precursor to the introduction of a permanent basic income grant, but the National Treasury has warned that such a program could undermine the sustainability of public finances and draw funds away from other priorities unless the required funding is sourced.