Finance Minister Enoch Godongwana unveiled South Africa’s 2025 budget with an important announcement for social grant recipients. The government is increasing social grant spending by 5.9%, amounting to R8.2 billion over the next three years, as part of efforts to ease the burden of rising living costs for the country’s most vulnerable groups.
Social Grant Increases
With the Value-Added Tax (VAT) set to rise to 16% over the next two years, the 5.9% increase in social grants aims to help cushion the poor and low-to-middle-income households from the inflationary pressures caused by the VAT hike. The VAT increase—the first since 2018—will make basic foodstuffs and other essential goods and services more expensive, further straining the affordability of vulnerable South Africans.
Details of the Grant Increases
- Old Age, War Veterans, Disability, and Care Dependency Grants: R130 increase, bringing the monthly amount to R2,315.
- Foster Care Grant: R70 increase, making the grant R1,250 per month.
- Child Support and Grant-in-Aid: R30 increase, bringing both grants to R560 per month.
Social Relief of Distress (SRD) Grant Extension
Despite a tight budget, Godongwana confirmed the extension of the SRD grant for another year. Originally introduced in 2020 as a Covid-19 relief measure, the SRD grant of R370 per month will continue until at least March 2026, with an allocation of R35.2 billion for the coming year.
This extension is crucial, as the SRD grant continues to provide financial support to individuals who were impacted by the economic fallout of the pandemic, helping many who are still struggling to find stable employment.
Long-Term Social Protection Spending
The South African government’s total expenditure on social development for the next financial year will amount to R422 billion, with projections to rise to R452.6 billion by 2028. 81% of this expenditure is earmarked for social grants. Over the medium term, social protection spending is expected to grow at an average annual rate of 5.3%, which is above the current inflation rate.
However, Godongwana cautioned that social grant reform and efficiency savings would be necessary to maintain the sustainability of the country’s social security system.
Projected Growth in Social Grant Beneficiaries
The number of South Africans benefiting from social grants—excluding the SRD grant—is expected to rise from 19 million in 2025/26 to 19.3 million by 2027/28. This increase is mainly attributed to the growing population of older South Africans, who will need more support through old-age grants.
To ensure the long-term viability of the social grant system, the government will focus on improving processes, including more biometric verifications of recipients to reduce fraud and increase efficiency.
With rising costs and the VAT increase looming, the South African government’s decision to increase social grant spending demonstrates its commitment to protecting the most vulnerable citizens. These measures will provide some relief, but continued reforms and efficiency measures will be key to ensuring that the system remains sustainable in the years to come.
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