Sona: BIG move by Ramaphosa?

South Africa’s current social relief of distress (SRD) grant will serve as a foundation from which a more sustainable form of income support will be implemented, said President Cyril Ramaphosa during his 2025 State of the Nation Address (Sona).

The president was delivering his speech from the City Hall in Cape Town on Thursday evening at a joint sitting of the National Assembly and the National Council of Provinces.

“The Social Relief of Distress Grant is … an essential mechanism for alleviating extreme poverty. We will use this grant as a basis for the introduction of a sustainable form of income support for unemployed people,” he noted.

According to the president, the government spends around 60% of the national budget on the social wage – health, education, social protection, community development and public employment programmes.

“More than 28 million unemployed and vulnerable people receive social grants.”

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Ramaphosa did not elaborate on possible sources of funding or an implementation date for the “more sustainable income support”, but his remarks correspond with the ANC’s earlier pronouncements on implementing a universal basic income grant (BIG).

Moneyweb reported earlier that the ANC, in a leaked document, outlined its plans for a BIG to be implemented this year.

The ANC made a similar undertaking in May last year, mere days before the national and provincial elections, noting that it was committed to instituting a basic income grant in South Africa and that the grant will be financed by new progressive tax measures, among others.

ALSO READ: Basic Income Grant: ANC govt considering funding options, says Lindiwe Zulu

Court ruling on SDR grant 

In a recent court ruling, the government was ordered to “progressively increase” the grant and income threshold. In the ruling, it was also found that some SRD grant regulations were unconstitutional.

The ruling came after civil society groups the #PayTheGrants campaign and the Institute of Economic Justice (IEJ) challenged the government’s SRD grant regulations in October 2024.

They argued the rules deployed by government to qualify for the grant exclude millions of potentially eligible South Africans.

ALSO READ: Covid-19 SRD grants will still be paid this month despite Sassa’s court battle

Fiscal pressures 

The court ruling will no doubt put pressure on Minister of Finance Enoch Godongwana, who will be expected to make an announcement on the matter when he delivers the 2025 budget next Wednesday (19 February).

The institution of a BIG has been discussed for years, but National Treasury and several economists have cautioned that it is currently unaffordable given South Africa’s fiscal constraints, such as a high debt-to-GDP ratio and a shrinking tax base.

It has previously been estimated that a BIG could cost the fiscus R300 billion a year, depending on the scope of beneficiaries.

The World Bank noted in its most recent economic update that South Africa’s overall fiscal deficit for 2024 reached 6% of GDP – the highest level since 2009, excluding Covid-19 in 2020.

Public debt at the end of 2024 increased to 74.9% of GDP – up from 67.6% in 2021.

The SRD grant was instituted in 2020 as an interim relief measure to mitigate the impact of Covid-19. It was initially meant for a six-month period, but it has been extended indefinitely with 2025 as the most recent end date.

ALSO READ: Basic income grant: just empty promises from government?

Local government overhaul 

In his speech, Ramaphosa bemoaned the dysfunctionality of the majority of South Africa’s municipalities and the country’s broken water infrastructure that leaves millions of South Africans in the lurch daily.

He announced the development of an updated White Paper on Local Government to chart the way forward for a modernised local government system.

“In many cities and towns across the country, roads are not maintained, water and electricity supply is often disrupted, refuse is not collected and sewage runs in the streets,” said Ramaphosa.

“In part this has happened because many municipalities lack the technical skills and resources required to meet people’s needs.

“Many municipalities have not reinvested the revenue they earn from these services into the upkeep of infrastructure. Starting this year, we will work with our municipalities to establish professionally managed, ring-fenced utilities for water and electricity services to ensure that there is adequate investment and maintenance.

“We will review the funding model for municipalities as many of them do not have a viable and sustainable revenue base.”

ALSO READ: Can we believe political parties’ promises about basic income grant?

Water infrastructure 

The president also announced the establishment of the National Water Resource Infrastructure Agency in 2026 to allow for investments in water projects.

“Many people in our cities, towns and villages are experiencing more and more frequent water shortages as a result of failing water infrastructure … We are therefore taking a series of decisive actions to resolve the water crisis.”

Ramaphosa noted that government has also addressed delays in major water infrastructure projects like Phase 2 of the Lesotho Highlands Water Project and the uMkhomazi Dam in KwaZulu-Natal.

“We are therefore taking a series of decisive actions to resolve the water crisis, to enable our people to get water where they live, whether in townships or rural areas.”

According to Ramaphosa, the Infrastructure Fund has secured R23 billion for “seven large water infrastructure projects”.

In addition, a licensing system for water service providers will be instituted following the enactment of the Water Services Amendment Bill, which will also enable government to remove licences where providers do not meet the standards for quality drinking water.

This article was republished from Moneyweb. Read the original here.