President Cyril Ramaphosa argued on Monday that expanding the social wage is not simply an indication that more people need grants today than before, as some have tried to suggest.

Ramaphosa wrote in his weekly letter to the nation that in the past, many of the poor, including working age adults who were unemployed, simply did not receive any support.

He said South Africa’s world-renowned social protection system provided important benefits for many in society, not only those who receive social grants. 

Ramaphosa noted that the country’s social protection system supported economic growth from the bottom up, enabled business activity, and strengthened social solidarity and stability.

It was one of the greatest achievements of the country’s democratic society, and one that citizens should all be proud of, he added.

He highlighted that the Social Relief of Distress (SRD) grant that was introduced in 2020 in response to the coronavirus pandemic had reached more than 11-million people at its peak, and had lifted millions of people out of food poverty.

Ramaphosa explained that 50% of the purchases made by SRD grant recipients were groceries.

He noted that social grants also acted as a stimulus for the economy as a whole, increased spending in townships and rural areas, and improved employment outcomes.

He highlighted that an interview-based study by the University of Johannesburg of informal traders in the Johannesburg CBD, Orange Farm, Mthatha, Mqanduli and Warwick Junction in Durban, found that the SRD grant stimulated customer spending, provided capital to purchase stock, and enabled the new businesses to be initiated. 

Informal traders and SRD grant recipients in Philippi in the Western Cape also told researchers that it had a positive impact on their businesses, he said.

According to another recent study by researchers at the University of Cape Town the SRD grant also increased the probability of recipients searching for jobs and gaining employment.

Similarly, Ramaphosa said many participants in the Presidential Employment Stimulus Initiative (PESI) have gone on to find work after they have completed the programme.

The school assistants programme has provided opportunities for 750 000 young people to date in over 22 000 schools, reaching every corner of the country. 

Over 72% of participants in the PESI said that having gained their first work experience, the programme helped them to gain a foothold in the labour market thereafter, Ramaphosa explained.

He said it was now well recognised that inequality constrained growth, and that growth which took place in unequal societies tended to reproduce those patterns of inequality.

He added that this was the reason why the country’s economic policy was guided by the need to implement structural reforms to stimulate growth and enhance the country’s economic competitiveness, while also expanding social protection and public employment and supporting the social wage.