Expanding the Social Security Net in South Africa: Opportunities, Challenges and Constraints

Abstract

For a large proportion of the South African population, social welfare grants are an important source of income. Since 2000, rapid increases in government expenditure on social security have further enhanced the contribution of welfare grants to the income of poor households and have thus been important in the fight against poverty. Given these apparent successes, many are calling for further expansions in social security provisioning, with the idea of developing conditional cash transfer schemes occasionally surfacing in policy circles. However, as we argue in this Country Study, there are various constraints to such expansions of the welfare net. Whereas in the past much of the increased expenditure on social security provisioning could be financed out of government revenue overruns, further increases are likely to be possible only through reallocation of government expenditures. There is already evidence of substitution taking place within the social budget since education and health expenditures have apparently declined in favour of increased welfare transfer expenditures. This trend, we argue, is untenable and may harm the already weak education and health services in South Africa. Conditional grants linked to school attendance and visits to health clinics would place further pressure on health and education services, as well as on the agencies responsible for disbursing and monitoring welfare payments in the country. We argue, therefore, that budgetary and service delivery constraints currently present a strong argument against expansion of the social welfare system in the immediate future.