PRETORIA, Gauteng — As the South African government takes the Pretoria High Court’s ruling on the Social Relief of Distress (SRD) grant to the Supreme Court of Appeal (SCA), the fiscal affordability of transforming the pandemic-era program into a permanent facility has become a central point of contention. According to RMB chief economist Isaah Mhlanga, the financial implications of expanding the grant’s reach and value could place unsustainable pressure on an already constrained national budget.
At the heart of the government’s argument before the SCA is the sheer scale of the financial commitment required to comply with the High Court’s finding. Reports indicate that the additional cost to the National Treasury could reach 93.5 billion rand on top of an already substantial social grant budget.
Mhlanga emphasized that while National Treasury remains a responsible institution and a center of excellence, the numbers being presented are neither hidden nor exaggerated. Currently, the SRD program operates at an approximate cost of 36.4 billion rand. However, a significant gap exists between those who qualify and those who receive the aid. Data from the income and expenditure survey suggests that 16.6 million people meet the eligibility criteria. In contrast, the current budget accounts for only 8.5 million recipients, with roughly 7 million actually receiving the payment. This leaves a shortfall of approximately 10 million eligible individuals who remain unsupported under the current framework.
Compounding the affordability challenge are proposals to increase the grant’s value from its current 370 rand to 624 rand. Mhlanga noted that if the government were to combine expanded eligibility criteria with this increased payout value, the annual cost could surge to roughly 140 billion rand—an amount entirely unbudgeted in the current fiscal landscape.
The macroeconomic environment further complicates the matter. With the South African economy growing at a sluggish 1 percent, tax revenues are currently insufficient to cover critical public infrastructure needs. This shortfall has already forced the government to look toward the private sector as a primary funding mechanism for infrastructure development. Mhlanga argued that funding a permanent, expanded SRD grant would inevitably necessitate deep spending cuts in other vital government sectors.
Beyond the immediate financial calculations, the SCA case also hinges on a fundamental debate: is the SRD grant a temporary crisis intervention or a permanent fixture of the social wage?
Introduced in 2020 in response to the Covid-19 pandemic, the grant has been in place for nearly six years. Mhlanga pointed out that the grant’s continuous annual rollovers have created a perception of permanence, even though the National Treasury has consistently communicated in every budget cycle that it only funds the program one year at a time, with no guaranteed commitment beyond that.
From an economic policy perspective, Mhlanga warned against the dangers of allowing temporary crisis instruments to become permanent entitlements. He stressed that short-term fiscal responses invoked during emergencies should not be crystallized into long-term obligations, especially when the tax revenue base cannot support them.
“If this is made a permanent grant, there are risks in the future such that any response to a fiscal crisis is also going to be used to argue for its permanent nature, which then puts the fiscus at risk,” Mhlanga explained. He concluded that any future short-term fiscal response that is eventually made permanent must be paired with a corresponding, permanent tax revenue source to ensure long-term economic stability.
As the Supreme Court of Appeal deliberates on the matter, the outcome will have profound implications for South Africa’s social safety net and its broader fiscal trajectory.
