Answer to Question #239842 in Macroeconomics for Ruvimbo

Question

The South African Government had to implement lockdown strategies to slow down the spread of the Corona Virus. As part of the strategy, “The President declared a National State of Disaster as a result of the Covid-19 global pandemic. In this regard he introduced a special Covid 19 Social Relief of Distress Grant (SRD) of R350 per month for 6 months to be paid to individuals who are currently unemployed, do not receive any form of income, social grant or UIF payment etc.

This Social Relief of Distress Programme was confirmed in the Regulations made under Section 27(2) of the Disaster Management Act, 2002 (Act No. 57 of 2002): Measures to prevent and combat the spread of COVID-19, as amended.”

To ensure that the right people get the R350 grant, specific targeting methods must be use, discuss the any three approaches to targeting social relieused in South African Social Assistance Programme indicating if the targeting strategy used achieve the programme objective.

Answer 1

Social welfare programs in South Africa include cash assistance, unemployment insurance, medical provisions, and housing subsidies.

Ultimately, the South African government’s stimulus package has been large by global standards and the reach in terms of support to the poor and vulnerable has been impressive. The credit guarantee scheme, which constitutes two-fifths of the stimulus package, requires the private banking system to extend loans to firms in distress. While it is a key component of the stimulus package linking government support through banks to the private sector, its disbursement has been slow and subject to the strict credit criteria of South Africa’s financial institutions. In addition, such support has come at the expense of a massive rise in the fiscal deficit. Any further stimulus packages are likely to prove fiscally unsustainable.