SA world's biggest welfare state

Johannesburg - Social grant expenditure is estimated at R89bn in the current fiscal year, a figure large enough to prompt some commentators to call South Africa the "biggest welfare state" in the world.

The 2010/11 allowance for social grants represents a 12% increase year-on-year.

State pension, disability allowances, child support, foster care, care dependency, war veterans and grant-in-aid number the available grants in the country.

Johannesburg - Social grant expenditure is estimated at R89bn in the current fiscal year, a figure large enough to prompt some commentators to call South Africa the "biggest welfare state" in the world.

The 2010/11 allowance for social grants represents a 12% increase year-on-year (y/y).

State pensions, disability allowances, child support, foster care, care dependency grants, war veterans and grants in aid number the available grants in the country.

The state pension, available to South Africans over 60, increased 7% y/y to R1 080 per month.

The same amount is paid in a monthly disability grant, available to adult female South Africans below the age of 59 and under-62 males. Applicants for these grants have to provide a medical certificate and not be maintained at a state institution.

The child support grant, worth R250 per month, increased just 4% over the past year.

Interestingly, Finance Minister Pravin Gordhan decided in last week's National Budget to extend this grant to include 18-year-olds, up from its previous age limit of 15. The additional cost to the state of this extension is R12.2bn.

To qualify for this grant, both applicant and child must be South African residents. Applicants may not request grants for more than six non-biological children. Children cared for by state institutions do not qualify.

The foster care grant allows foster parents R710/month - a 4% increase on 2009/2010 levels.

Dependency ratio 'unsustainable'

Additional grants include the war veterans' grant, aimed at disabled South Africans over the age of 60 who fought in the Second World War or the Korean War. This grant has a monthly value of R1  100, a 7% increase on last year.

The care dependency grant is for parents who care for children with a confirmed permanent and severe disability. The grant is worth R1 080/month, up 6% from last year.

Finally, the grant in aid is for older citizens who need full-time attendance by another party due to mental or physical disability. This grant is worth R250/month, up 4% from last year.

A treasury representative said grant increases come into effect on March 1. Applicants can qualify for more than one grant at a time.

News agency Sapa cited economist Mike Schüssler as being critical of the grant system.

"Look at South Africa's dependency ratio - it's three people to one taxpayer and it's unsustainable," Schüssler reportedly said.

Andile Sokomani from the Institute of Security Studies said that the extent of state support is unlikely to discourage low-income earners from being self-reliant.

"That danger is not real at this point," said Sokomani, a senior researcher in corruption and governance at the Sub-Saharan non-profit organisation.

"Nearly half of the South African population is living on under $1/day, but only half of those people are receiving monetary support from the government."

Sokomani estimated that about 12 to 13 million South Africans are reliant on social grants.

He added that the government is attempting to approach social welfare from a sustainable perspective, opting to build skills and protect basic health, as opposed to merely resorting to hand-outs.

- Fin24.com

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