Over the last five months, a SALDRU team comprising of Murray Leibbrandt, Ingrid Woolard, Maya Goldman, Ihsaan Bassier and Joshua Budlender undertook a project funded by UNU-WIDER, and in collaboration with National Treasury, titled “Strengthening analytic capacity of the Health and Social Development unit in National Treasury to examine social security policy choices in the context of a constrained fiscus and the post-COVID era”. The project had a strong capacity building component, and was designed to support the unit to reflect on a set of grant options to replace the Special COVID-19 Social Relief of Distress (SRD) grant upon its expiry at the end of the 2021/22 fiscal year.
The process
The project began with a series of seminars from the 31st of May to the 5th of July 2021 for a selection of National Treasury employees on poverty measurements; the benefits and challenges of different household surveys; and on modelling South Africa’s social policy options using a static tax–benefit microsimulation model. This was followed by a period of discussing and refining the simulation options proposed by National Treasury, resulting in the selection of five simulations: increasing the value of the Child Support Grant, continuing the SRD grant, introducing a Basic Income Grant (BIG), introducing a household-based Family Poverty Grant, and introducing a new Public Works Programme or expanding existing programmes. In parallel, the team conducted an in-depth training for three members of National Treasury from the 13th to the 30th of July on running simulations in Stata using the Commitment to Equity (CEQ) Assessment framework. Lastly, a working paper was written to summarise the technical results, published by UNU-WIDER, and authored by the SALDRU team along with one of the National Treasury training participants, Lindi Mzankomo.
The modelling work was based on a CEQ Assessment framework developed in 2020, built off the 2014/15 Living Conditions Survey. Given the lack of post-lockdown household survey data, the team began by updating the data and framework to reflect changes from 2015 to 2021 in income (based on per capita gross domestic product growth), employment (based on the Quarterly Labour Force Survey), and in the policy environment. This in itself was a challenge, and there are plans to release a working paper documenting the updating process towards the beginning of 2022, and making the data publicly available.
A number of engagements were held to gather inputs into the modelling. One such engagement was held with Statistics South Africa (Stats SA) on 5 August to understand important differences between some of the official survey datasets. A second engagement was set up by the World Bank to discuss the Bolsa Familia grant on 30 September, and a third engagement was held with the South African Social Security Agency (SASSA) on 16 September to understand why the SRD had been received by only 9.5 million out of the 21.5 million eligible individuals in the survey. The latter challenged the authors to think a little more about how implementation might differ from the theoretical models explored in the paper.
A first set of preliminary results were presented to National Treasury for comment on 10 August, and a set of draft results were presented on 17 September. These results were shared on October 4th at a forum of Universal Basic Income Grant (UBIG) researchers jointly organised by SALDRU and the Institute for Economic Justice (IEJ), and presented to the Presidency’s Bi-Weekly Catch-up meeting on the SRD grant and Poverty Alleviation Strategy on 8 October. All of these engagements, along with comments on the draft report from various National Treasury staff, improved the nuance of the thinking which went into the working paper.
The controversy
At the UBIG researchers forum, the Family Poverty Grant in particular generated a fair amount of consternation, and resulted in an article in the Daily Maverick by a civil society coalition comprised of the Institute for Economic Justice, Black Sash, Studies in Poverty & Inequality Institute, Amandla.mobi and #PayTheGrants members which criticised the National Treasury for being “determined to unilaterally, and secretively, push through a woefully misguided and unfeasible proposal for income support: the so-called family grant”.
The coalition described the grant as unimplementable, exclusionary and patriarchal. The first is likely untrue, and the third a misunderstanding. The second criticism, however, is worth paying attention to. The grant may be unimplementable in the South African context, although it seems unlikely, given that it has been implemented in Brazil, Mexico, the Philippines and the United Kingdom. It will, however, likely be expensive, time consuming, and require new capacity for complex information sharing between different stakeholders. It will also have potentially negative consequences for how households choose to aggregate or separate. Calling it patriarchal is based on a misunderstanding: in the model we allocated the grant to the household head (it makes no difference for our metrics whether we allocated it to the household head, or to the eldest woman in the household, and we picked the simplest option). It is very unlikely that the grant would be implemented this way in practice.
There is a strong possibility that the grant would be exclusionary, however, for two reasons. Firstly, if the means threshold is set at the Food Poverty Line and existing grants are removed, then many vulnerable individuals will lose their existing access to grant support. Secondly, if the grant is badly implemented, with substantial exclusion errors, then the targeted grant will exclude the very individuals it is trying to help. For this reason, an implementation feasibility study is crucial. In addition to the point on exclusionarity, as Ihsaan Bassier and Joshua Budlender[1] explain in their Op-ed for the Daily Maverick on 8 November, the Family Poverty Grant is expected to become less efficient more rapidly than the other grants if errors of inclusion occur. In summary, if the Family Poverty Grant is expensive to set up, and/or implemented badly, the grant quickly loses its appealing attributes of being low-cost, high-efficiency and high-impact.
A New Frame article by Alex van den Heever, Ivor Chipkin, and Jelena Vidojevic was published on the 4th of November, arguing that the Family Poverty Grant is being used to deliberately block the pathway to a UBIG, with “plainly inferior policies, the only rationale for which is to crowd out the opportunities for wider support for jobless and low-earning adults in South Africa”. They claimed that the R206 billion required to fund a UBIG would be available were it not for the false perception of a trade-off between economic growth (stimulated by spending on infrastructure) and spending on welfare.
Closure
The UNU-WIDER Working Paper titled “Simulation of options to replace the special COVID-19 Social Relief of Distress grant and close the poverty gap at the food poverty line” was released on 8 November, in the midst of further controversy, due to a Groundup article which had leaked a strategy document showing that Government had been moving quickly on a “Draft anti-poverty strategy” for implementing a “Family Poverty Grant” based on a partial reading of preliminary results from the final working paper, and without wider consultation[2]. These actions occurred despite concerns raised by the modelling team on the feasibility of implementation, and recommendations for more research in the South African context.
The working paper and controversy around it is summarised in this article by James Stent of GroundUp, and another by Claire Bisseker in the Financial Mail.
Moving forward
In this author’s opinion, the working paper is only the first of a set of information required for policy makers to take an informed, evidence-based decision on a future grant; recognising that the path we choose will have dependency far into the future.
A responsible decision-making process requires gathering all the relevant information. Government would do well to extend the SRD in the short-term while evaluating the feasibility of the Family Poverty Grant and the feasibility of improving on existing SRD implementation simultaneously. This requires rigorously assessing existing databases, mapping how the information flows between them, and interviewing each data-owner to see how more accurate, higher-frequency information can be shared from businesses and banks with government, and between government departments and ministries.
In addition, at a minimum, Government should open up to submissions from a broader range of stakeholders; take into account multi-disciplinary considerations on the benefits and consequences of a household grant (not from just an economic perspective, but also from, for example, a sociological perspective); and conduct a comprehensive review of the household grant’s performance in different contexts. Such a review could document the lessons learnt from different administrations and assess which known and new difficulties are likely to arise in the South African context.
After all this, if the Family Poverty Grant still appears comparatively appealing, then a rigorously evaluated pilot is a next step. Such a pilot could simultaneously assist with evaluating the claims of UBIG proponents. It could assess the impact on economic growth from grants provided to poorer and more vulnerable households, and compare these impacts with the corresponding effects obtained from households receiving the existing SRD grant.
[1] Joshua Budlender also commented live on the paper and the Family Poverty Grant on the 7th October to Newzroom Afrika.
[2] It was also reported on in BusinessTech on the 31st October 2021.