Godongwana warns against 'cycle of dependency' for youth in basic income debate - report

accreditation
0:00
play article
Subscribers can listen to this article
Enoch Godongwana is SA's new minister of finance.
Enoch Godongwana is SA's new minister of finance.
Gallo Images
  • New Finance Minister Enoch Godongwana has said the state needs to invest in improving the skills of SA's unemployed youth, and should be wary of creating "dependence through grants," according to a report in the Sunday Times.  
  • Debate over the introduction of basic income grants has grown due to the economic shock of the Covid-19 pandemic, which worsened SA's already dire unemployment rate.
  • Professor Philippe Burger of the University of the Free State has estimated that the introduction of universal basic income for all SA adults could cost around R240 billion per year.


SA's new Finance Minister Enoch Godongwana has waded into the debate on basic income grants, saying the state should be careful not to create a "cycle of dependency" for SA's unemployed youth, according to the Sunday Times.

Godongwana was named SA's new finance minister last week, replacing Tito Mboweni.

In an interview with Sabelo Skiti on Sunday, Godongwana said that the state should seek to spend money on upskilling SA's 4.2 million job seekers between the ages of 15 and 35. 

Debate within the government and the ruling ANC over the benefits and viability of introducing basic income grants has grown due to the economic shock of the Covid-19 pandemic. 

In early January, President Cyril Ramaphosa said that South Africa needed to discuss whether such grants could "provide a social safety net to the poor."

Godongwana was careful to say that programmes to upskill the youth were only one part of a larger mechanism to "support our people", which must include both "social support and skills programmes". 

While interest in universal basic income has grown, some economists have warned that SA's strained finances may not be able to support new spending commitments.

Professor Philippe Burger of the University of the Free State has estimated that the introduction of universal basic income for all SA adults could cost around R240 billion per year, if every adult received R500 per month.

"Adding more welfare recipients in an economy that is not growing - and therefore not generating more tax revenue […] will be very difficult to do without undermining business confidence even further," he said. 

Mboweni, meanwhile, has been on the fence about introducing such a grant.

In Late July, he said that it would be up to future policymakers to decide whether SA's popular R350 social relief of distress grant could become a basic income grant in the future.

"What I know is that we do need to respond to the dire situation in which our people find themselves," he said.  

"And future policymakers - wherever they might be - may be able to answer the question more appropriately."

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
Rand - Dollar
16.05
+0.2%
Rand - Pound
21.23
+0.1%
Rand - Euro
18.11
+0.4%
Rand - Aus dollar
11.26
-0.1%
Rand - Yen
0.14
+0.4%
Gold
1,783.45
-0.1%
Silver
22.49
-0.3%
Palladium
1,809.00
-0.4%
Platinum
940.03
+0.4%
Brent Crude
69.88
+0.3%
Top 40
64,307
0.0%
All Share
70,808
0.0%
Resource 10
66,503
0.0%
Industrial 25
93,791
0.0%
Financial 15
13,982
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot