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A Universal Income Grant Scheme for South Africa: An Empirical Assessment

By Haroon Bhorat - Director, Development Policy Research Unit.

All comments can be directed to hbhorat@commerce.uct.ac.za

Posted with the permission of Haroon Bhorat
[Complete document - 122Kb ~ 1 min (36 pages)]     [ Share with a friend  ]

Introduction

The post-apartheid period has made it amply clear that perhaps one of the key challenges facing the ruling party, is that of a consistent and coherent strategy designed to significantly reduce poverty levels in the society. Hence, social welfare and poverty eradication interventions are prominent in the policy agenda of the majority government. These challenges have proven all the more acute given that the high incidence of poverty overlaps considerably with the extreme levels of unemployment in the domestic economy. This essentially means that the domestic economy is not (and indeed has not been) functioning effectively as a creator of jobs. The outcome of the latter is that government cannot rely on the growth process alone to reduce national poverty levels. This fact has led to the growing importance of the state as a provider, in some form, to alleviate the potential consequences of high levels of poverty and indigence. At the centre of such an intervention lies the social security system.

Given the above, it has been argued that social transfers from the state to the populace, must be viewed as a key ingredient in any national poverty alleviation strategy. The purpose of this document, in the first instance then, is to provide an overview of the existing social security arrangements within the country. This should serve as a point of departure for understanding both the poverty-reduction opportunities presented by such interventions, as well as the macroeconomic constraints within which such interventions occur. As an extension, the second core focus of the paper, will be to assess the notion of a universal income grant scheme. The latter speaks to an important public policy debate that has been ongoing within the country, about the notion of a income grant scheme. We will attempt, in this paper, to try and contribute to this debate through the presentation of empirical evidence on the possible consequences of instituting such a transfer scheme.



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