Study shows how South Africans utilize social grants to increase their income as 47% rely on them.

South Africa has one of the most extensive social grant systems in the world: 47% of the population Depends on a monthly grant. Of these, 18 million are permanent beneficiaries and about 10 million are on temporary social benefit Distress Relief Grant. This was introduced during the COVID-19 pandemic for adults of working age who do not receive formal social protection, such as unemployment insurance and for those in informal employment.

The vast majority of grants are Child support grants (500 rand or about $27 USD per month) paid to the child’s primary caregiver based on a test of finances.

There is abundance and universality certificate Such cash transfers bring many positive results. For example, they reduce child hunger, improve school attendance, and help reduce poverty.

Although social grants Spend a lot on foodThere is increasing evidence that it is also being used productive investments in livelihood activities. These are the actions people take to meet their basic needs such as food, shelter, and clothing. Recipients find different approaches To “grow” their endowment by engaging in informal work and other income-generating activities.

But little is known about the nature and scope of these activities, or how government and other social partners such as NGOs, development agencies and corporate social investment initiatives (CSI) can support recipient agency and enhance their livelihood strategies. It is important to consider this against the background of South Africa 32.8% unemployment rate.

To fill this knowledge gap, we conducted a quantitative analysis of the employment status of recipients of social grants derived from Household survey data From 2008 to 2021. We wanted to get a better idea of ​​the number of grant recipients—caregivers of children, elderly people, people with disabilities, and unemployed adults—in informal work and income-generating activities.

We found that 31% of grant recipients are involved in informal businesses. These are jobs without a written contract and where the companies are not registered for taxes. They include care work, informal trade or self-employment. In 2021, grant recipients were 13% more likely to do informal work than formal work. Child support grant recipients were more likely to engage in survival-oriented business activities (11%) followed by 9% of social relief grant recipients and 4% of elderly retirees.

Although the study found that the proportion of social grant beneficiaries who are self-employed appears to be small, this is not the case when compared to self-employment (10%) as a percentage of total employment. In this regard, South Africa is poorer than other upper-middle-income countries such as Turkey, Brazil and Mexico.

Secondly, us Synthesize the results From three qualitative studies by postgraduate students at Center for Social Development in Africa and the Department of Anthropology and Development Studies at the University of Johannesburg.

The stories of grant recipients emerging from these studies show a strong desire to be productive – like getting a job, starting their own business and finding ways to improve income and personal and family well-being. They also faced significant obstacles in enhancing life, reducing poverty and Improve psychosocial well-being. These results indicate the need to design multi-pronged poverty reduction strategies that combine grants and livelihood support services.

livelihood activities

Participants in all three studies expressed strong motivation to improve their lives. Others expressed a strong desire to be independent, to be active and productive.

In all three studies, regardless of the grant received and its value, the interviewees said that the grant money was not sufficient to meet their needs.

They find different ways to “grow” their grants. Some were income-generating activities such as buying and selling goods, providing services such as construction, painting, photography, running restaurants or taverns, renting accommodation and traditional treatment. play some Vahvi (a form of betting) or involved in community gardening, sewing, recycling, and beadwork.

Others have invested in future livelihood strategies such as supporting children in finding work. Some have used their grants as seed money to cover business start-up costs, purchase new equipment such as chip pans, or beads for their craft business or to expand their existing operations.

We also found that some recipients were investing a portion of their grants, primarily through stokvels (a type of informal credit union) or savings schemes. They hoped to reinvest their savings into their business or use the money during an emergency. Across the three qualitative studies, recipients reported that families with multiple income streams were more financially stable.

The most common barriers identified:

• child care responsibilities for women in the home;

• the opportunity costs of working (such as higher transportation and childcare costs);

• Lack of functionality:

• lack of capital;

• the inability to obtain affordable small loans;

• competition for large retail customers;

• Lack of experience, knowledge and skills, for example, financial literacy

• Some have expressed concerns about crime and violence in the community.

Few grant recipients had access to formal support services from the government. Only one group of beadworkers received support from a local cooperative. Most of them turned to their social networks, family and friends to support them and offer guidance, advice and financial assistance. Not getting small loans, they turned to money lenders when they needed to get cash which led to indebtedness.

One of the main obstacles is also related to the precarious nature of informal labor and the lack of protection for vulnerable workers.

Implications for social development policies

Informal employment is an essential livelihood strategy for grant recipients who supplement their income through multiple livelihood activities. Most of them worked in primary occupations, services, sales and trade related to handicrafts. A small percentage are self-employed, running businesses to survive. This is contrary to the view that beneficiaries are passive and detached from the labor market or Don’t want to work.

There is a need for more recognition of informal work and its role in poverty reduction as a goal of national policy. Moreover, social grants as well as complementary livelihood support are needed. These include access to capital, credit and small loans. The development of knowledge and skills, mentoring and training are also crucial.

A few government departments target beneficiaries for livelihood support such as small-scale farming and entrepreneurship programmes. There is a need to explore innovative delivery methods – livelihood support can be built into existing government programmes. Incentives should be provided to those who want to engage in productive activities.

There is scope to expand livelihood support through government organizations, NGOs, development agencies and existing CSI programmes. However, more research and empirical intervention research is needed to inform the design of livelihood support policies and strategies.

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