The Covid-19 pandemic and subsequent lockdowns have significantly impacted South Africa’s economy, leading to a slow recovery.
The lockdown also hindered unemployed individuals' ability to seek employment, which led to the introduction of the Social Relief of Distress (SRD) grant, which now supports around 9 million vulnerable people living in South Africa.
In addition to the SRD grant, the South African Social Security Agency (Sassa) distributes approximately 19 million permanent social grants. Permanent grants distributed by Sassa include the Older Persons pension grant, Disability grant, War Veterans grant, Care Dependency grant, Foster Child grant, Child Support grant, Child Support grant Top-Up and Grant-in-aid.
Sassa and Budget Cuts
Sassa says the significant budget cuts it faces have required a strategic approach to how it will use its budget allocation.
For the 2024/25 financial year, Sassa’s budget stands at R7.91 billion, reflecting a 2% decrease from the previous year after a R461 million reduction in the baseline allocation. This forced the agency to reduce spending and scale down where possible, leaving no room for new activities or social programs.
The agency confirmed that it will continue the implementation of the SRD grant, now set at R370, with an additional R300 million provided as a one-off allocation. The closure of Cash Pay Points (CPPs) and the discontinuation of Over-the-Counter (OTC) payments by Postbank have alleviated some budget pressures.
Sassa's Budget Expenditures
Apart from employee compensation, Sassa’s significant expenditures include cash handling fees for social grant disbursements, bank charges, office and equipment leases, property services such as security and cleaning, medical assessment fees for contracted doctors, ICT services, and communication with beneficiaries.
Their focus will now be on reducing costs related to these expenses.
Budget Cut Strategy
Despite the R461 million reduction, Sassa received R300 million for the SRD grant administration, leading to a net 2% year-on-year budget increase. The budget allocation process prioritised alignment with the Annual Performance Plan (APP) and funding for APP targets, contractual obligations, and essential operational items.
The apportionment of the budget entailed identifying items where the R461 million could be implemented and thus creating no space for funding new activities. In apportioning the budget, a sharp focus was placed on ensuring alignment to the Annual Performance Plan (APP) and that all the targets in the APP are funded.
Sassa will also focus on enhanced cost containment measures for the new financial year, as well as the reallocation of funds from cash handling fees, following the closure of CPPs and discontinuation of OTC payments, to address other budget pressures.
These measures will be strengthened for relevance and impact in the new financial year and Medium Term Expenditure Framework (MTEF).
Challenges Faced by Sassa
In a recent parliamentary briefing, Sassa revealed that the number of grants it distributes increased from 18.7 million in March 2022 to 19.6 million in December 2023, despite budget constraints.
By the end of 2023, Sassa was administering 18.9 million social grants, with the highest numbers in KwaZulu-Natal, Gauteng, Eastern Cape, and Limpopo. Provinces like Limpopo and Eastern Cape see around 40% of their populations dependent on these grants.
The Child Support Grant and Older Persons Grant are the most common, with concerns about the high number of young mothers receiving the CSG.
Payment methods have shifted, with a decline in beneficiaries using IGPS and Mzansi cards and an increase in those using their own bank accounts. From April to December 2023, the number of bank account payments rose significantly.
Sassa aims to process 95% SRD applications annually through to 2027, using a robust verification process to ensure eligibility and accuracy in handling applications.
