Sassa grants cost taxpayers R250 billion per year

South Africans who receive social grants from the South African Social Security Agency (Sassa) have cost taxpayers over R250 billion in a year.

The amount was revealed by Sassa CEO Busisiwe Memela while tabling the agency’s 2023/2024 annual report before the Portfolio Committee on Social Development in Parliament on Friday, 11 October.

She said 45% of the country’s population benefits from social grants with the majority being in Gauteng, KwaZulu-Natal, Limpopo and Eastern Cape.

28 million beneficiaries serviced by 7.4 million taxpayers

Memela told the committee that Sassa services two different types of groups, the core clients, who are the traditional grants recipients, and the Social Relief of Distress (SRD) recipients, who were added during the Covid-19 pandemic.

The core clients are those who receive the old age pension, child support grant, care dependency grant, war veteran’s grant, disability grant, and foster child grant.

There are nine million SRD recipients, while 19 million people make up the agency’s core clients. In total, the agency has at least 28 million beneficiaries, who are serviced by 7.4 million taxpayers.

Social grants for core clients cost the agency at least R200 billion, and when the SRD is included, the agency disperses grants amounting to at least R250 billion.  

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Tax funding beneficiaries

Each recipient of the SRD grant receives R350 per month.

According to the Department of Social Development, “SRD is a temporary provision of assistance intended for persons in such dire material need that they are unable to meet their or their families’ most basic needs”.

Daily Investor reported the three types of tax revenues that fund social grants are personal income tax, value-added tax (VAT), and corporate income tax.

“Personal income tax is the largest contributor to tax revenue at R739 billion, followed by VAT [Value-Added Tax] at R467 billion and corporate income tax at R303 billion.”

There is a possibility that the SRD grant will change to some form of Basic Income Grant to give financial support to unemployed people, as a plan by the government to address the challenge of income poverty.

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Irregular expenditure

Sassa’s CFO, Tsakeriwa Chauke spoke to the committee on matters of irregular expenditure, as highlighted by the Auditor-General’s report.

The agency had fruitless and wasteful expenditures to the amount of R84 million. The amount can be attributed to cases that they were dealing with.

The first case mentioned by Chauke includes the R74 million that was paid to Cash Paymaster Services (CPS) for bank accounts credited directly by Sassa.

“We have investigated the matter and the necessary steps were taken. All the information was submitted to the AG and the only outstanding leg is the issue between the liquidators of CPS, so we’ll await the outcome.”

The second case is the R3.5 million VIP protection services, which is still in court and they are awaiting the outcome that they can act upon.  

“The third case is related to the situation where Sassa awarded a bid to the second-highest bidder instead of the highest-scoring bid. But in that instance, this matter is also before the court.”

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