Social Assistance Amidst the Covid-19 Epidemic in South Africa: An Impact Assessment

In an attempt to minimise the negative economic impacts of Covid-19 on vulnerable households the South African government allocated R50 billion in additional social assistance spending. The cash transfer package included a temporary increase in existing grants and introduced a new ‘Covid grant’. We assess the chosen package and compare it with an initial proposal to increase the Child Support Grant (CSG). Coverage, cost and welfare effects are calculated to measure the relative impacts in each case. We find that while a significant increase in the CSG delivers resources most progressively, the addition of the Covid grant may potentially reach a much larger group of otherwise uncovered, vulnerable individuals. Critically, this extended coverage comes at a cost to the poorest households, via additional transfers to upper income deciles. However, we identify several categories of vulnerable household groups which suggests that the workers most negatively affected by the pandemic are not necessarily those in the poorest households. The paper emphasises that social assistance to mitigate the consequences of Covid-19 should not be viewed necessarily as a standard poverty reduction exercise, but rather as an attempt to mitigate Covid-related income shocks for the vulnerable who were most negatively affected by the pandemic.