SOUTH AFRICA: Study highlights impact of social grants

[ This report does not necessarily reflect the views of the United Nations]

JOHANNESBURG, 13 Dec 2004 (IRIN) - South Africa's system of social grants has reduced poverty and is playing a developmental role in uplifting poor households, according to a new study.

The research was commissioned by the Department for Social Development and focused on the social and economic impact of the government's main social transfers, such as the State Old Age Pensions (SOAP), Disability Grants (DG) and Child Support Grants (CSG), among others.

According to official statistics South Africa has 7.7 million social grant beneficiaries.

The report, 'The Social and Economic Impact of South Africa's Social Security System', was produced by the Economic Policy Research Institute, which targeted the role of social assistance in reducing poverty and promoting household development.

The main social grants: SOAP, CSG and DG were found to have broad impacts, "due to income sharing within households".

SOCIAL SECURITY AND EDUCATION

"Economic theory suggests that social grants, by raising incomes, affect education in three ways: first, to the extent that there are financial barriers to school attendance - purchasing school supplies, uniforms, tuition, transportation, etc. - the boost in disposable income provided by a social grant could help pay the otherwise unaffordable costs of attending school.

"Second, a grant could relieve the opportunity cost of school attendance; with a cash transfer in hand a family might be more able to forgo a child's contribution to household income (or food production in the case of subsistence farmers) in favour of making a long-term investment in education. Third, by indirectly increasing the resources available to schools, the quality of education may improve, making education a more attractive option to households," the report suggested.

Many poor children were unable to attend school due to the costs associated with education, including the necessity to work to supplement family income; social security grants countered these negative effects by providing households with more resources to finance education.

"The old-age pension transfer programme is particularly effective in this regard. Findings show a positive and statistically significant effect of government pension transfers on school attendance rates of poor children," the researchers said.

The impact of SOAP transfers on poor school-age girls was particularly strong.

"For example, in poor households, defined as those falling into the lower quarter of all households in a given province, ranked by expenditure per capita, school-age boys are three percent more likely to attend school full-time if the household receives a pension benefit. The effect is even more pronounced for girls; girls who live in pensioner households are seven percent more likely to be enrolled full-time in school than their peers who live in households without a pension," the study commented.

It added that "quantitatively, a R500 [about US $86] increase in official pension transfers to a poor household of five would increase the probability of attending school by an estimated two percent for a school-age boy and five percent for a girl ... the positive effects of social security on education are greater for girls than for boys, helping to remedy gender disparities [in education]."

Both SOAP and the CSG were significantly associated with improvements in school attendance. "They contribute to a virtuous cycle, with long-term dynamic benefits that are not easily measured by statistical analysis," the report noted.

IMPROVED NUTRITION

In South Africa nearly one in five households experienced hunger during the year 2000.

Provinces with the highest income - Gauteng and the Western Cape - had the lowest prevalence rates of hunger, but in the Eastern Cape, one of the country's poorest provinces, nearly one in three households experienced hunger.

"However, another of the poorest provinces - Limpopo - had the third lowest hunger prevalence rate in the country. Meanwhile, Mpumalanga - with a poverty rate below the national average - had the second highest hunger prevalence rate in the country."

This could be due to the extent to which social transfers were distributed in the various provinces.

It was clear that "social grants are effective in addressing this problem of hunger, as well as basic needs in general". Research showed that "spending in households that receive social grants focuses more on basics like food, fuel, housing and household operations, and less is spent on tobacco and debt".

The report said all the major social grants - SOAP, CSG and the DG - were significantly and positively associated with a greater share of household expenditure on food.

"This increased spending on food is associated with better nutritional outcomes. Households that receive social grants have lower prevalence rates of hunger for young children, as well as older children and adults, even compared to those households with comparable income levels," the study found.

Receipt of social grants was also associated with lower state spending on healthcare, "perhaps because social grants are associated with other positive outcomes that reduce the need for medical care".

"For instance, the World Bank identifies the important link between improved education and stemming the spread of HIV/AIDS," the authors commented.

The study found that "South Africa's system of social security substantially reduces deprivation, and the progressive extension of the magnitude, scope and reach of social grants holds the potential to dramatically diminish the prevalence of poverty in South Africa".

More details: www.socdev.gov.za

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