Ramaphosa hints at income grant as election nears

South African President Cyril Ramaphosa again hinted at introducing a basic income grant, saying that there is a “strong case” for it despite the nation’s “fiscal constraints.”

Ramaphosa spoke in his capacity as president of the ruling African National Congress during the party’s annual strategy meeting on Monday. Finance Minister Enoch Godongwana will table the nation’s annual budget on February 21, just months before the ANC heads into its toughest election since coming into power in 1994.

Read: ANC says welfare-grant extension non-negotiable

“The challenge remains that millions of working-age adults in our country remain unemployed without any form of support and little prospect of gaining employment until economic growth picks up,” Ramaphosa said at the lekgotla, which sets out the party’s governance priorities for the year.

South Africa’s unemployment rate of 31.9% is one of the highest in the world.

Read: How the social grant system has changed since 1994

“There is therefore a strong case for a permanent form of a targeted income-support grant for the unemployed within our fiscal constraints,” he said. “Discussions should continue among us about what we have termed a basic income grant.”

Ramaphosa said that a temporary stipend introduced during the Covid-19 pandemic — and touted as a possible precursor to a basic income grant — had staved off poverty for more than 2 million people.

Godongwana announced the extension of the R350 ($19) monthly payout to March 2025 during his mid-term budget in November but warned that a comprehensive overhaul of the social-support system was necessary.

The National Treasury has tried numerous times to shut down the unfunded grant but has repeatedly had to re-introduce it, following a series of domestic shocks including civil unrest in 2021 that led to R50 billion in losses to the economy.

Read: Social Relief of Distress Grant extended, gets R34bn

The Treasury’s head of budget office, Edgar Sishi, told a central bank conference last year that the institution had battled to sell spending cuts to government.

“When those things happen, political leaders find it very difficult, they feel constrained in withdrawing the support,” Sishi said.