SA’s ever-increasing social grants are one of the greatest risks to the country, says Capitec exec

By The Daily Friend

The number of South Africans who receive social grants has increased prodigiously over the last 20 years, and this is one of the greatest risks to the country. This is according to Nkosana Mashiya who is an Executive Director and Head of Risk Management at Capitec Bank.

This can be seen as part of the macro issues with South Africa’s fiscal management and public finances.

Says Mashiya: “This (position) has been dwindling over time. But think about it. Today, 18 million people are on social grants, with 14 million taxpayers,”

“Twenty years ago, this was reversed, with just 2.5 million people on social grants, and 12 million formally employed. The situation now is unsustainable.”

Data published in 2021 shows that the number of people who receive social grants has been increasing since 1996.

According to this data, roughly 18.2 million people now receive a social grant in South Africa. Contrast this with information in the Quarterly Employment Survey (QES),  published at the end of June, which shows that South Africa has continued to shed jobs and that the number of taxpayers is declining.

The statistics in the Quarterly Employment Survey show that South Africa lost 552 000 jobs in the formal sector year-on-year.

Mashiya also highlighted other problems that South Africa urgently needs to address:

  • Education
  • Electricity
  • Vaccinations
  • The fiscal position and the government’s own public finances

Mashiya said that in order to fix these problems, South Africa needs to generate growth. “Growth has been less than 1% for too long now. The last time our economy was creating meaningful jobs was when the economy was growing at about 5% per annum from 2004 to 2007.

“I believe we lost a great opportunity by not leveraging the private sector distribution capabilities in rolling out vaccines early on.

“The private sector is geared for distribution, logistics, and cost-saving. The same applies to the production and distribution of electricity. There are examples where these partnerships have worked well.  Telkom is an example of this working in practice.”

Continues Mashiya: “The risks I’ve outlined were prominent even before the pandemic; now they’ve become even more urgent to manage effectively.  The fiscal situation has worsened. The lacklustre growth has been made worse. I remain optimistic and have hope that we can turn it all around if we work together.”

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