Hope for a happy ending to sad grants soap opera

Could it be that social grants, which have buoyed the ruling party in so many elections, might be the very thing that could now sink it?

The social protection system is a crucial safety net that today provides 17million people with something to fall back on.

Spending on grants in this financial year will be about R140.5-billion and is expected to rise to about R165-billion in 2018-19, mostly due to inflation and the rise in the number of beneficiaries, according to the National Treasury. That is cash for households in which, in many cases, no one has a job, and it's a sizable investment by the ruling party in a big chunk of the electorate.

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Children have been among the greatest beneficiaries, with research showing that grants have boosted school enrolment. According to the South African Child Support Grant Impact Assessment, a 2012 report commissioned by the government and Unicef, children enrolled in the child support grant at birth completed significantly more grades of schooling than children enrolled at age six.

But now grants for children, elderly people, disabled people and foster parents are at risk.

In just seven short weeks, a plan for how grants will be paid needs to be in place, or over a third of the population may have no money for food.

When social grants were introduced in South Africa there was dismay in some quarters. And even today opinions surface about how the system is unsustainable - perhaps people have forgotten what happened 20 years ago in East Asia.

In 1997, the economies of the Asian Tigers - as they were referred to at the time, including Thailand, South Korea, Malaysia and Indonesia - collapsed. Millions of people were plunged into poverty. These countries had no or scant social safety nets to protect citizens from the fallout.

Another Unicef report, titled Economic Crisis and Its Social Impact: Lessons from the 1997 Asian Economic Crisis, published in 2009, tells how food prices spiked alarmingly, jobs dried up and economic growth contracted sharply. In Indonesia, GDP contracted by 13% in the first year of the crisis and food prices soared 81%.

Looking back now through the lens of academic analysis, the real hardship is not tangible in the dry data. For children, the consequences were in some cases irreversible - parents pulled their children, especially girls, out of school to work. As the crisis unfolded, there were reports of desperate families selling their daughters into prostitution. That is something no economic recovery down the line can ever fix.

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Only once the crisis had hit did some of these countries try to implement social protection. But the report concluded that such measures need to be in place before a crisis hits. It also noted that the Asian crisis completely changed the global conversation on social protection - from the view that social welfare systems were "dispensable and even harmful" to the view that they were an essential element of development.

South Africa's economy has not collapsed like those in the Asian crisis, but it is in crisis. And we also face a crisis of incompetence.

Despite knowing for years that a new plan had to be devised to disburse grants after the Constitutional Court ruled the contract with Cash Paymaster Services was invalid, little has been done. Even now, despite a deadline rushing towards 17million people, the government does not seem to have been galvanised into action.

The plan is to bank on the court allowing CPS's contract to be extended. But CPS doesn't want an extension, CEO Serge Belamant told Business Day this week. It wants a new contract on its own terms. Perhaps this has been the plan all along; to rely on the court. If the court agrees that this is the only option to avert a disaster, the ruling party won't be facing an electorate that finally realises it has been betrayed. And if the court doesn't agree, what then?

Enslin-Payne is the deputy editor of Business Times. Email her at enslins@sundaytimes.co.za