Conditional Cash Transfers in South Africa

1
Conditional Cash Transfers in South Africa
2
Social Security in South Africa Cash Transfers

• All grants are means tested (targeted)
• All social grants are payable subject to the
  assets and income of the applicant and, if
  applicable, the spouse.
• There is a pre determined formula to assess the
  amount of grant payable (sliding scale)
• Assets are defined as possessions owned by a
  person and income is defined as money earned or
  received for work rendered.

3
Social Security in South Africa Cash Transfers

• Means Tests for Old Age, War Veterans and
  Disability Grants
• Single Person
• Assets must not exceed R 295 200
• The total annual income of the applicant, after
  all permissible deductions must not exceed R 20
  232 per annum.
• Married Person
• Assets must not exceed R590 400
• The total annual income of the applicant, after
  all permissible deductions must not exceed R 37
  512 per annum.
• A residential dwelling is a example of a asset,
  however the property is not taken into
  consideration if the applicant resides on the
  property. This asset is taken into consideration
  if the applicant leases the property and derives
  an income
• Value of each of these Grants is R820 per month

4
Social Security in South Africa Cash Transfers

• Means tests for Childrens Grants
• Foster Care Grants
• The annual income of the foster child must not
  exceed twice the annual foster child grant amount
  payable.
• The Cut Off Level for the grant is
• R590 x 12 x 2 x R 14 160
• The incomes of a foster parent/parents are not
  taken into consideration.
• Value of this Grant is R590 per month

5
Social Security in South Africa Cash Transfers

• Means tests for Childrens Grants
• Care Dependency Grant
• The combined annual income of the applicant and
  spouse after all permissible deductions must not
  exceed R 48 000. The annual income of the care
  dependency child must not exceed twice the annual
  care dependency grant payable.
• Income of the foster parent of a care dependant
  child is not taken into consideration
• Value of this Grant is R820 per month

6
Social Security in South Africa Cash Transfers

• Means Test for Childrens Grants
• Child Support Grant (CSG)
• A primary care giver qualifies if both the child
  and the primary care giver
• Live in a rural area in an informal dwelling and
  the personal income is below R 13 200
• Live in rural area in a formal dwelling and the
  personal income is below R 13 200
• Live in an urban area in a formal dwelling and
  the personal income is below R9600 per annum
  this is only applicable to a person living in an
  a brick/concrete or asbestos house  
• The value of the grant is R190 per month

7
Service Delivery Success
8
Service Delivery Success

• The 10 Year Review research commissioned by the
  SA government found that
• the Social grants are no longer allocated on a
  racial basis as they were under the apartheid
  system
• beneficiaries of social grants increased from 2.6
  million in 1994 to 10.9 million in March 2006
• the Social Security system, after it was
  decentralized, was the key anti-poverty driver
  between 1995 and 2004

9
Service Delivery Success

• Without social grants, 58 per cent of households
  would fall below the subsistence line, as opposed
  to the current figure of about 53 per cent
• State transfers contribute to two-thirds of the
  income earned by households in the poorest
  quintile
• Even with full take-up of existing grants, over
  half the population, 21.9 million people, would
  remain below the poverty line
• Source Breaking the Poverty Trap Financing A
  Basic Income Grant in South Africa, BIG
  Financing Reference Group, March 2004.

10
Service Delivery Success
Source National and Provincial Departments of
Social Development and National Treasury
11
Service Delivery Success
Source Fiscal Incidence Study, 2005 S. v.d.
Berg, I. Woolard and C. Simkins
12
Service Delivery Success

• The Fiscal Incidence Study of 2005 shows
• That SAs social grants are highly targeted
  towards the poor, which is unique in its size and
  reach for a developing country
• The 1995 social grant concentration curve is
  better targeted towards to poorest 20 of the
  population than in 2000
• However the CSG in 2000 only targeted 0-6 year
  olds and has subsequently been rolled out in - a
  phased approach - to children under the age of 14

13
Service Delivery Success

• The Fiscal Incidence Study of 2005 shows (cont.)
• The social grant concentration index is well
  targeted at -0.431 in 2000 (and -0.434 in 1995)
  due to
• poorer households derive their income from grants
  (almost exclusively)
• the means test is geared to target only poorer
  segments of the population, however the old age
  pension is does cover a larger proportion of the
  elderly population
• there is little stigma attached to grant receipts
  in South Africa, particularly for old age
  pensions

14
Service Delivery Success

• The Fiscal Incidence Study of 2005 shows (cont)
• That SAs social grants are highly targeted
  towards the poor, which is unique in its size and
  reach for a developing country
• The social grant concentration index is -0.431 in
  2000 compared to -0.434
• poorer households derive their income from grants
  (almost exclusively)
• means test operates to target grants only to
  poorer segments of the population, although
  social old-age pensions do cover a very large
  proportion of the elderly population.

15
Service Delivery Success

• Why is grant expenditure in 1995 better targeted
  to the poorest 20 of the population than in
  2000, despite good targeting results?
• The introduction of the CSG could have led to an
  initial weakening of the target
• Many CSG recipients live in households with some
  other income, while pensioners reside in
  households with no other income
• The CSG means test is difficult to implement, as
  it has to be very finely

16
Service Delivery Success
17
Service Delivery Success
18
Service Delivery Success
19
Strengths and weaknesses of the current system

• Strengths
• 11 million grants paid on a monthly basis, with
  over 8 million beneficiaries
• Positive impact on poverty
• Pro-poor and have contributed towards poverty
  directly
• well targeted to address the needs of the poor
  especially those in quintiles 2 and 3

Source Servaas v.d. Berg An Analysis of Fiscal
Incidence sp
20
Strengths and weaknesses of the current system

• Weaknesses
• Despite being well-targeted, grants dont
  adequately address the needs of the poorest 20
  of the population
• There is no income support to unemployed
  individuals unemployment insurance provides
  temporary relief on a contributory basis this
  puts tremendous pressure on the disability grant
• Government services and systems are uncoordinated
  and independent of each other policies,
  programmes and regulations are often
  contradictory or create perverse incentives

21
Strengths and weaknesses of the current system

• Weaknesses
• Government services and systems are uncoordinated
  and independent of each other, even when
  interaction is required
• Government policies, programmes and regulations
  are often contradictory or create perverse
  incentives
• High levels of fraud and corruption due to poor
  verification systems with other key government
  departments

22
Policy Gaps and the Way Forward

• Universal versus targeted/conditional cash
  transfers?
• Tremendous pressure for a Basic Income Grant due
  to high unemployment levels?
• Conditional cash transfers linked to employment
  creation programmes (and skills development)
• Individual versus family grants? Family grants
  could address the needs of households in a more
  wholistic manner, while still investing in human
  capital

23
Policy Gaps

• Government offers numerous services to children
  but these are not coordinated is CCT the way to
  go in South Africa, linking ECD, free primary
  health care, access to the school nutrition
  programme? This is a critical area that needs to
  be addressed without being punitive
• The Human Science Research Council is piloting a
  CCT study in the Kwa Zulu Natal linking the CSG
  to ECD and free primary health