SOCIAL SECURITY IS NOT JUST A HUMANITARIAN NECESSITY BUT AN INVESTMENT IN ECONOMIC RESILIENCE

By Morapedi Sibeko.

• ⁠The Covid-19 pandemic forced South Africa to innovate and adapt its public finances at an unprecedented scale.
• It also revealed vulnerabilities in relying too heavily on borrowing and volatile revenues.
• ⁠While the pandemic may well have passed, its fiscal and social consequences are still unfolding and will shape South Africa’s approach to social protection for years to come.

When Covid-19 brought the economy to a standstill, South Africa’s social security system became a lifeline for millions.
By March 2022, more than 15 million people had applied for Social Relief of Distress, with 10.9 million approvals recorded.
These steps, along with temporary increases to current social assistance, helped families weather the storm.
Financing this large-scale response required multiple approaches. With tax revenues shrinking during lockdowns, the government turned to borrowing to maintain social spending at the height of the crisis.
Funds were raised through domestic and foreign bonds, as well as concessional loans from the World Bank, the International Monetary Fund, the African Development Bank, and the New Development Bank.
The pandemic reshaped spending priorities.

Highlighting the value of social protection

Social development grew from 17.3% of non-interest expenditure in 2018/19 to 20% in 2023/24. It overtook health as the second-largest budget item after education.
This was achieved partly by cutting the share of funds allocated to other clusters.
For many in the sector, this shift underscored the true value of social protection.
“Social protection is often seen as a cost, yet it should be seen for what it brings,” said Thoko Madonko, a researcher at the University of the Witwatersrand.
“It is support for the poor and for women. It also has the power to stimulate growth. Above all, it is a human right,” she said.

Surpluses were drawn on to support relief efforts.

The Unemployment Insurance Fund (UIF) relied on its reserves to finance the Temporary Employer/Employee Relief Scheme benefit. While this reduced UIF’s investment base, it provided crucial short-term relief to workers and businesses during the hardest months of the lockdown.

Taking speedy action

Covid-19 also tested South Africa’s ability to mobilise resources at speed.
National Treasury responded with an early adjustment budget in 2020, followed by a second one later that year.
Disaster relief funds were used to cover urgent provincial needs, including personal protective equipment. While temporary, these measures demonstrated that the fiscal system could adapt rapidly in an emergency.

Despite the interventions, the pandemic deepened existing inequalities.

Unemployment climbed to a record 35.3% by the end of 2021, while the World Bank ranked South Africa the most unequal country in the world, with a Gini coefficient of 63.
More than R100-billion was spent on income protection measures, yet the long-term question remains: how to sustain social protection without crippling the budget.
The pandemic forced South Africa to innovate and adapt its public finances at an unprecedented scale.
But it also revealed the vulnerabilities of relying heavily on borrowing and volatile revenues.

For researchers, academics, and policymakers alike, the lessons are clear: social security is not just a humanitarian necessity but an investment in economic resilience.
Creation of fiscal space is therefore critical in the scope of developing long-term social protection interventions.
As the debate over a Basic Income Grant continues, the challenge is to strike a balance between protecting citizens in times of crisis and keeping the state’s finances on a sustainable path.
Covid-19 may have passed, but its fiscal and social consequences are still unfolding and will shape South Africa’s approach to social protection for years to come.