Rek Your Cheque: Can Covid-19 grant continue in SA?

Everyone is now eagerly waiting to see if the Covid-19 Social Relief of Distress grant (SRD) is going to permanently continue.

Many people have been severely financially impacted by Covid-19 and the lockdown, and although R350 might not sound like a lot of money, it is enough to buy a loaf of bread every day for those who need it.

In a television interview last week, Lindiwe Zulu, the Minister of Social Development, said that all outstanding R350 relief grants will be paid to approved applicants even though the grant is ending.

She urged those dependent on this income not to panic.

She said applicants, who have been approved, can rest assured they will receive their payments, but unfortunately no new applications will be accepted.

“Let me assure the public and the people who made applications that came out showing that they deserve to receive the money, they will still receive that money even if the grant is ending,” said Zulu.

“Those that deserve to be paid are still going to be paid because we budgeted for that and agreed that we will extend on the basis of payment of those who had applied.

“No one must apply now and think that they will be paid.”

Zulu also said that those applicants who won their appeals after they were rejected will still be paid.

However, economists have warned that no country in the world, much less South Africa, could afford to keep such a grant going permanently.

Economist Mike Schussler said that for this to work, the government would have to increase income tax by 12% while VAT would have to be increased by at least 2%.

Other economists have said that doing something like this is what ratings agencies have warned us against, because it’s going to force the government to borrow money, and that if we are not careful, we could end up like Zimbabwe.

Meanwhile, back at the ranch, SASSA still can’t even get its act together with the current R350 grant payments.

Last week when the grants were paid out, the SA Post Office told customers that a number of withdrawals “timed out” – which means that the money that some people tried to claim on 7 October had been deducted from their accounts, but not paid out.

This left some recipients without any cash in hand and a negative balance in their accounts.

In a statement, the Post Office apologised for the distress caused.

They assured those waiting on their R350 social grant – and other payments made available earlier this week – that any ‘timed out deductions’ would be reversed, and the account status will be corrected for everyone.

“Postbank is aware that some SASSA withdrawals are timing out, deducting the amount from your account although the transaction is unsuccessful.

“These transactions are being automatically reversed, the account status will be correct (after 1pm today) We apologise for the issue,” it said in the statement.

Now, I ask you with tears in my light brown eyes – how hard can this be?

We still have people who were declined for the R350 not knowing why they were declined (though they qualify according to criteria) and we can only hope and pray that the millions of rands from this fund issued to “dead people” has been reversed.

South Africa’s expanded unemployment rate is now at 42% and around 50% of full-time employees earn below R5000 a month.

Research shows that in South Africa, social grant money is largely spent on necessities like food, clothing, transport, electricity.

It also shows that many people who receive grants are still very eager to find work.

So there is no doubt that the social grants across the board (from disability to old age to child care grants and more) do help, but can we afford it?

Should the government also not rather be implementing policy and processes to create jobs, lessen unemployment and not let millions of South Africans be completely dependent on social grants?

More importantly to me though – if the R350 SRD grant is changed into a permanent basic income grant for all the millions of people in SA who need it – do we have the resources to manage and administer it?

Also, to put it bluntly, can we trust that this money won’t be stolen or “mismanaged” either?

No decision has been made by the government whether the R350 Social Relief from Distress grant will be permanently continued.

Rek Your Cheque will keep you updated.

*Moeshfieka Botha is Head of Research and Consumer Education at National Debt Advisors. For more information on debt and personal finance go to www.nationaldebtadvisors.co.za