A Presentation on South Africas Basic Social Protection

A Presentation on South Africa’s Basic Social Protection Floor to the Special Event on South-South Cooperation United Nations HQ, NYC 2 February 2010 By: Vusi Madonsela Director General: Department of Social Development, South Africa

The UN Social Protection Floor • The UN Social Protection Floor (SPF) Initiative promotes universal access to essential social transfers and services. More than 75% of the global population does not enjoy a set of social guarantees that allow them to deal with life's risks. Ensuring a SPF for people who are struggling just to survive is a priority. The SPF is more than just a safety net - it is a beginning, not an end. . . • There is strong evidence that confirms that social protection contributes to economic growth by raising labour productivity and enhancing social stability. Allocation of resources to SPF is an investment in social justice and economic development. Ensuring a SPF for the entire world population presents a considerable challenge, but calculations by various UN agencies show that a basic floor of social transfers is globally affordable at virtually any stage of economic development, even if the funding is not yet available everywhere.

Background • In 1994, Democratic Government inherited a bankrupt economy, with far in excess of 50% of the population living in poverty – faced with colossal social backlogs among the country’s majority. • Pursuant to the Constitution which guarantees both 1 st and 2 nd generation rights, the Government, adopted a broader social protection framework, which guarantees both social transfers and basic social services. • To this end Government adopted a three pillar Social Protection Framework to provide for: – Pillar 1: Targeted cash transfers for the vulnerable, including subsidized housing, free healthcare and free basic education for the poor, and a growing list of free social services. In addition, there is a universal quota of free basic services (water, electricity and sanitation); – Pillar 2: Introduction of a mandatory set social insurance schemes for all income groups up to a threshold, to provide benefits covering specified contingencies; – Pillar 3: voluntary savings over and above pillar 2 providing top up cover for pensions, risk benefits and healthcare.

Social Protection measures of the SA Government • This presentation will focus on Pillar 1 of South Africa’s Social Protection Framework, providing a basic SPF as promoted by the United Nations • The scope encompasses: – – – Targeted Social Assistance; Targeted Free healthcare; Targeted Free basic education; Universal Free Basic Services (water, electricity and sanitation); Public Works Programmes; and A tapestry of free welfare programmes

Types of Cash Transfers South Africa provides the following cash transfers: 1. Old age grant (citizens from 60 years of age - recent age equalisation) 2. War veterans grant (those who took part in World War II or Korean War) 3. Disability grant (subject to a medical assessment report confirming disability – linked to inability to enter the labour market) 4. Care dependency grant (payable to parents or caregivers of disabled children between the ages of 1 to 18 – subject to medical assessment report confirming disability) 5. Foster care grant (payable to a person accorded foster parent status by a court of law- providing care and support to a child other than their own) 6. Child support grant (payable in respect of children from poor families– payable to caregiver. The child to be under 16 in 2010 – progressive extension to children under 18 in 2012) 7. Social relief of distress (payable to any person, other than a beneficiary of all the above grant types, facing undue hardship – emergency / temporary benefit)

Trends in number of Social Grant Beneficiaries Would be great of we can show % growth

3. 50% 3. 00% 2. 50% 2. 00% 1. 50% 1. 00% 0. 50% Expenditure As % Of G

Expenditure and Impact • • • Social Grants consume on average 3, 4% of the Gross Domestic Product and about 12% of total government expenditure. The evidence from micro-simulation confirms the poverty reducing impacts ü Social Grants are effective in addressing the prevalence of poverty; ü Spending patterns in households that receive social grants are more focused on basics necessities like food, energy and education. Developmental Impacts ü Increase school attendance; ü Investment in human capital because of improved school attendance; ü Improve health and nutrition; ü Increase gender equity; ü Promote job searching and labour market participation

Recent expansionary policies ü ü The value of social grants kept up relatively well with the inflation rate safety net will continue to grow over the next few years as a result of recent policy amendments; In 2007 the means tests for all the grants were significantly raised - in the case of the child support grant it was doubled; The child support grant was extended to cover children up to 15 years at the beginning of 2009, and at the end of last year, the law was changed to extend the child benefits, over a three year period, to cover children up to their 18 th birthday Two years ago, Government decided to gradually equalize the age of eligibility for the old age grant for men and women. Effective 1 April 2010, both men and women will qualify from the age of 60.

Health and Education • In 1994, Government introduced Free Primary Health care – since built +700 clinics to deal with supply side challenges; • Government provides free health care to pregnant mothers, people with disabilities, pensioners and the indigent; • Lamentably, the impact of HIV and AIDS reversed many of the gains made in health care, but South Africa now has the world’s biggest antiretroviral programme to respond to the scourge. • While for many years, the poor could have fee exemption for schooling, government more recently introduced a policy of No Fee Schooling for children in low-income areas

Free Basic Services • Free and Subsidized Housing: More than 2. 8 million houses have been built since 1994, providing housing for about 14 million people; • Nationally, 85. 5% of households in South Africa receive Free Basic Water (potable) compared to about just over 50% in 1996. It is believed that SA is the only country in the world that spends more on water than on arms; • Free Basic Electricity of 50 KW is provided to all, with the aim of targeting 3, 1 million (i. e. 58%) of designated indigent households • Since 1994, over 10 million households have access to sanitation, again compared to much lower coverage in 1994, the next slide demonstrates the point. Overall - there has been significant progress in the delivery of basic infrastructure and reducing backlogs. •

Delivery of Sanitation since 1994 to 2009 Delivery Sanitation since 1994 -2009 14, 000 12, 000 Households 10, 000 Access 8, 000 Backlog 6, 000 No. of Households 4, 000 2, 000 0 1994 2001 2009 Access 5, 065, 626 7, 005, 212 10, 029, 435 Backlogs 5, 084, 852 4, 759, 709 2, 998, 779 10, 150, 478 11, 764, 921 13, 028, 214 No. of Households Year It is noteworthy that SA has made considerable progress in delivering basic infrastructure: and accordingly reduced social infrastructure backlogs

Expenditure Trends

Challenges • Initially, many conditions were set for accessing social grants, such as clinic card, school attendance, but the supply side excluded the poorest of the poor; • Access to grants in deep rural areas had to be overcome; • The lack of data to assess coverage at national, regional and local level to improve targeting; • Institutional fragmentation; and • Lack of integrated planning and coordination between government departments

Lessons learnt • There is a need to generate data to assess the gaps in coverage in all spheres of government to improve targeting; • Access to income support became sine qua non to access health care, education, housing; • Detractors argued that social grants may not benefit the poor: our response was to generate evidence which proved important; • Arguments about perverse incentives, dependency also required research disproved by outcomes; • As Cichon and others pointed out: The myth that there is a negative trade-of between equity and growth disproved - SA expanded the social safety net at the same time as it ensured a balanced macro-economic environment; • We had the most significant economic growth in decades between 2001 and 2008 at the same time as the beneficiary numbers grew exponentially.

Regional Initiatives • Proximity to Namibia, Lesotho, Botswana and Swaziland increased knowledge sharing and policy transfer; and • Benchmarking in Latin America includes exchanges with Brazil, Chile and India - reinforces our fortitude to create better lives for the people of the South

Conclusion • SA’s Social Protection Framework was, at design stage, intended to be broad to address the range of challenges in a multi-pronged manner; • The growth of the numbers of indigent accessing social grants has been unprecedented by any standard; • Cash Transfers, complemented by basic services, including health and education will, in the fullness of time, brake the cycle of intergenerational transmission of poverty