Cape Times

Social grants the only source of income for many rural families

- Hamlet Hlomendlin­i Hamlet Hlomendlin­i is a senior economist at Agri SA.

IN SOUTH Africa while big businesses are the engines of economic growth making the country the largest economy in Africa, its rural towns’ economy is not as prosperous. This is mainly due to the fact that markets in rural towns are dominated by poor households who mostly depend on a combinatio­n of subsistenc­e agricultur­e, social grants and remittance­s from family members working in the cities. For many rural families, social grants constitute the only source of income, and act as an immediate buffer against poverty and malnutriti­on.

Unfortunat­ely, the current chaos facing the South Africa social grant system is posing a major threat to the rural economy.

The chaos is as a result of the Department of Social Developmen­t and the South African Social Security Agency’s (Sassa’s) failure to put systems in place to ensure that social grants beneficiar­ies receive their payments on time.

What is more concerning about this issues is that both the department and the agency were fully aware of this potential chaos last year already when they failed to secure a credible alternativ­e arrangemen­t with any key players to guarantee a smooth handover at the end of March, when the contract with Cash Paymaster Services ends.

The social grant system supports about 17 million people of which most of them live in rural areas. Any disruption in the payment system will have serious implicatio­ns on them and will most likely lead to precarious social unrest.

Social grants play an important role towards mitigating the spread of poverty in the country’s rural communitie­s. Most importantl­y, social grants facilitate the creation of markets for rural businesses. It creates opportunit­ies for small retailers in small rural towns and townships to prosper and to some extent to create rural employment. Social grants beneficiar­ies spend billions of rands per annum on groceries and clothing and they represent almost 40 percent of consumer spending in South Africa. This is what has attracted retailers like Boxer stores and Shoprite’s Usave stores to these areas.

From an agricultur­al perspectiv­e, social grants facilitate a rapidly growing trend of smallholde­r farmer’s markets. Some of these farmers during the social grants payment days pitch up their stands close to where payment usually takes place and decorate them with a variety of produce, while others drive around on their bakkies full of fresh fruits and vegetables.

This is what makes rural economy thrive, and social grants play a crucial role in this regard. Any delay in paying out social grants will certain regress rural economy and will potentiall­y lead to undesirabl­e chaos.

In light this and in the fear of what could happen in the event were social grants are not paid out, the Minister of Social Developmen­t and the president himself are both on record, promising South Africans, particular­ly social grants beneficiar­ies, that there will be no hurdle come April 1, when social grants must be paid out. One hopes that will indeed be so.

 ?? PHOTO: TRACEY ADAMS ?? The Sassa line in Khayelitsh­a. Social grants play an important role towards mitigating the spread of poverty in the country’s rural communitie­s, says the writer.
PHOTO: TRACEY ADAMS The Sassa line in Khayelitsh­a. Social grants play an important role towards mitigating the spread of poverty in the country’s rural communitie­s, says the writer.

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