The lack of correlation between grants, inflation, and value-added tax (VAT) doesn’t address the long-term issues of the impoverished South Africans who depend on grants to survive, according to experts and grant recipients.
IOL spoke to Kwabe Ntshingile, 58, from Ndwedwe in KwaZulu-Natal, who said, “The proposed increase of R130 is too small, especially in this economy; we live in a time where everything is expensive.
"The increase is not enough for us in the tough economy where food prices and school fees are increasing frequently; now I am forced to work at the age of 58."
In a telephonic interview with IOL, Eunice Mokgatle, 78, from a small village in the outskirts of Mahikeng in North West, expressed her frustration over skyrocketing food prices.
"The grant is not enough; with R2,330, I can only survive for half of the month, and electricity and water are becoming expensive every day."
As it stands, the South African budget for 2025-2026 allocates R422.3 billion for social grants under the social development framework, with R284.7 billion used for individual social grants. A further R35.2 billion is set aside to maintain monthly payments for Social Relief of Distress (SRD) recipients.
Finance Minister Enoch Godongwana's decision to increase social grants aims to protect recipients from the VAT hike while inflation remains at 3.2%. The old age grant increased by R130, and R370 will continue to be awarded as an SRD grant until at least March 2026.
Speaking to IOL, Derrick Nkosi, an independent economist, said, "A social grant is a lifeline for millions of South Africans; the increase of the VAT will be plunging vulnerable populations further into hardship and destabilising the fragile economic recovery.
“The negative relationship between social grants and inflation will force dependents to have fewer and fewer items in their shopping baskets, despite the increase of zero-rated food.
“Social grant consumption doesn’t give back to the economy due to the shortage of skilled labour to elevate the economy. Leaving the inflation flat at 3.2% and increasing social grants is a short-term solution that will eventually catch up with the government, where dependents will increase but there will be fewer contributors to the economy.”
IOL spoke to Itumeleng Makgetla, a political and public analyst, who said, "Despite the fact that the majority of South Africans are experiencing economic hardship, political parties are already contesting by-elections in various provinces and already positioning themselves for the sixth local government elections that will be held in 2026.
“Social grants are unlikely to be tampered with much further and are most likely to remain into the foreseeable future."
Since the formation of the GNU, fundamental disagreements among political parties over social relief have marked policy discussions.
The Democratic Alliance (DA) has filed papers with the Western Cape High Court, challenging the Budget due to the VAT increase.
The DA leader John Steenhuisen, said, “The VAT increase is unlawful and unconstitutional; instead of the budget being amended to address the needs of struggling South Africans, the budget has been passed by the National Assembly with VAT hikes to make life more expensive for South Africans.”
IOL also spoke to Myalezo Dlamini, a political analyst and forensic investigator at the National Building Registration Council, who said, “The rising cost of living in South Africa significantly heightens the importance of social grant distribution, as these grants serve as a critical buffer for vulnerable households facing soaring prices for essentials like food, electricity, and transport.
"Inflation continues to erode the purchasing power of these grants, leaving many recipients unable to afford basic necessities. This underscores the need for ongoing adjustments to social grants, ensuring they align with inflation to maintain their effectiveness. Without such measures, social grants may become insufficient, deepening poverty and inequality.”
Failure to reach a consensus on these critical issues could have far-reaching consequences, undermining South Africa's progress and jeopardising the wellbeing of its citizens. The nation watches with bated breath, hoping for a resolution that prioritises social justice and economic stability.
IOL