In response to escalating living costs, the South African government has announced a 5.9% increase in social grant allocations, amounting to an additional R8.2 billion over the next three years.
This initiative aims to mitigate the financial strain on low- to middle-income households resulting from the recent value-added tax (VAT) hike.
VAT Increase and Its Implications
The government has implemented a 0.5 percentage point increase in VAT for the 2025/2026 financial year, with a similar hike planned for 2026/2027.
This will elevate the VAT rate from 15% to 16% over the next two years, leading to higher prices for basic commodities and services.
Such increments are expected to disproportionately affect the affordability of essential goods for economically disadvantaged communities.
Detailed Breakdown of Social Grant Increases
To counterbalance the VAT-induced cost pressures, specific social grants will see the following adjustments starting April 2025:
| Grant Type | Current Amount (R) | Increase (R) | New Amount (R) |
|---|---|---|---|
| Old Age Grant | 2,185 | 130 | 2,315 |
| War Veterans Grant | 2,205 | 130 | 2,335 |
| Disability Grant | 2,185 | 130 | 2,315 |
| Care Dependency Grant | 2,185 | 130 | 2,315 |
| Foster Care Grant | 1,180 | 70 | 1,250 |
| Child Support Grant | 530 | 30 | 560 |
| Grant-in-Aid | 530 | 30 | 560 |
These adjustments are designed to provide above-inflation relief to beneficiaries, acknowledging the current inflation rate of 3.2%.
Extension of the Social Relief of Distress (SRD) Grant
The Social Relief of Distress (SRD) grant, initially introduced during the COVID-19 pandemic as a temporary measure, has been extended for another year until March 2026.
This R370 per month grant supports over 10 million individuals and reflects the government’s commitment to providing ongoing assistance to unemployed citizens.
Overall Social Development Expenditure
The Department of Social Development has been allocated R422.3 billion for the 2025/26 fiscal year, with projections indicating an increase to R452.7 billion by 2027/28.
This funding supports various initiatives, including poverty reduction through social grants, social insurance provisions, welfare services, development programs, and advocacy for vulnerable groups such as children, women, youth, the elderly, and individuals with disabilities.
Sustainability and Future Outlook
While the increase in social grant spending is a positive step toward supporting vulnerable populations, the government acknowledges the need for social grant reform and efficiency improvements to ensure the long-term sustainability of the social security system.
Efforts such as enhancing biometric verification of recipients are being considered to achieve cost savings and improve service delivery.
FAQs
Why has the government increased social grant spending by 5.9%?
The increase aims to cushion low- to middle-income households from the financial impact of the recent VAT hike and rising living costs.
Which social grants are affected by the increase?
Grants affected include the Old Age Grant, War Veterans Grant, Disability Grant, Care Dependency Grant, Foster Care Grant, Child Support Grant, and Grant-in-Aid.
How long will the Social Relief of Distress (SRD) grant be extended?
The SRD grant has been extended for an additional year, continuing until March 2026.
