The Evolution and Impact of Social Security in South Africa
Background paper to the ERD 2010
Paper prepared for the Conference on “Promoting Resilience through Social Protection in Sub-Saharan Africa”, organised by the European Report of Development in Dakar, Senegal, 28-30 June, 2010.
The current economic downturn and the sharp increase in social assistance expenditure in recent years has shown the importance of the social security system of South Africa in order to alleviate poverty and to prevent people from falling into poverty. These size, shape and design aspects of the social assistance system make South Africa an interesting case study, and the objective of this paper is to provide a detailed examination of the South African case. Are cash transfers well-targeted and re-distributive? Do we know if they enhance human capital accumulation? Are they fiscally sustainable? Have changes in social policy been evidence-based or rights based? After a description of the historical background and the evolution of the
social assistance system of South Africa, we provide an analysis of the impact on poverty, and review the impacts on microoutcomes, such as health, education and labour supply. We find that the South African social assistance is a very effective policy instrument to fight poverty and to improve education and health, especially of children living in poor households. Such impacts are crucial for longer-run poverty alleviation. We also have a closer look at the costs of the social assistance system in South Africa and its fiscal sustainability, which has also important implications for other countries in sub-Saharan Africa which
are considering implementing a social assistance system.
Acknowledgements: this paper greatly benefited from discussions with, and comments from, Mahmood Messkoub, Giorgia Giovanetti, and participants at the ERD Meeting Promoting Resilience through Social Protection in sub-Saharan Africa held in Dakar 2010. Funding from the EU via the ERD is gratefully acknowledged.