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The Star
01-07-2025
- Business
- The Star
How is South Africa's welfare algorithm failing the poor?
JOHANNESBURG: South African street vendor and widow Brenda Mtshali is furious that an automated message on her phone means she will have to skimp on food for her six children. She is one of an estimated 10 million eligible South Africans excluded from welfare payments due to administrative obstacles, including problems with an algorithm-based income verification check, recent research has found. Mtshali, who sells tomatoes in the Soweto township, had her online application for a Social Relief from Distress (SRD) grant rejected more than half a dozen times, receiving an automated message that said "means income source identified". She said the automated means test – which scans bank accounts for a poverty line threshold of 624 rand (RM 148 or US $34.53) – likely took into account money she was occasionally loaned by family members, which does not qualify as monthly income. But sometimes she was rejected when she had no extra funds in her bank account. She has traveled to her local branch of the South African Social Security Agency (SASSA) several times to query her rejection, only to be told to lodge her appeal online. "We don't want to speak to a computer or an automatic message ... it's like shouting into an empty room and only hearing your echo," Mtshali, 58, said. Responding to emailed questions, SASSA said people who were rejected could appeal online to the Department of Social Development (DSD). DSD did not respond to requests for comment. From Britain to Togo, algorithms are being used to help distribute social grants and welfare payments, but digital rights experts warn they can be inaccurate and biased in some cases. The SRD grants are vital in South Africa, where unemployment stands at about 33%, one of the highest rates in the world. "We know the extent and depths of poverty in the country," said Kelle Howson, a social scientist at the Institute for Economic Justice and co-author of the research on SRD grant exclusion. "There needs to be a move from this restrictive poverty targeting to a system that's much more inclusive," Howson said. 'Failing to reach those in need' The SRD grant program was rolled out to support unemployed and working-age South Africans during the Covid-19 pandemic in May 2020. It is worth 370 rand (RM88) per month. In April 2022, a formal means test was introduced that involved monitoring potential beneficiaries' bank accounts to see if they had more than the minimum threshold of 624 rand. After the new means test was introduced, some 8 million beneficiaries were approved, down from 10.9 million in 2020, according to the IEJ report. This is despite there being an estimated 17 million to 18 million eligible people, the report said. The IEJ surveyed 900 people and found only 10.3% of eligible respondents received the grants – an erroneous exclusion rate of 89.7%. Eighty percent of all rejections were based on the bank verification test, which the IEJ said should only cover 24% of cases. It said all financial inflows – including child maintenance, loans, one-off donations, funds held for others – were incorrectly classified as "means". In May, the national treasury made SASSA's operating budget conditional on the means tests being applied to all social grants, including child support and pensions, the IEJ said. The Ministry of Finance in emailed comments said: "In the age of large data, it is increasingly necessary to build social security registries and cross-checks across multiple databases to avoid incorrect payments and double dipping where it is inappropriate." It also said no grant rejection is permanent, and clients are called in to "verify their income and explain the situation" to ensure public funds are appropriately spent. Applying the means tests so broadly could cause "catastrophic harm to vulnerable groups", the IEJ said, describing bank account surveillance, flawed government data and biometric profiling as "invasive" verification methods. The IEJ report also found only 5% of those surveyed had successfully appealed over two years. Data from SASSA shows 98% of 10 million appeal applications were unsuccessful in the 2024 financial year. With the SRD grant system fully online, "even if you walk into an office for help, you will be redirected to use their online system to appeal," said Kgothatso Sibanda, a Helpline manager with the Black Sash human rights charity that assists grant applicants. Surveillance and survival Howson said data collection was also a rights concern as regulations stipulate that any grant applicant must allow government agencies to verify eligibility through algorithmic checks. This means government agencies can cross-check personal information with credit bureaus or banks, said Howson. "So basically you sign away all your rights to privacy and data protection by applying for a grant," she said. SASSA said its actions were governed by the Social Assistance Act and that "checks and balances are a prerequisite to ensure that we safeguard (the) public purse." The IEJ report said applicants should be allowed to submit supporting documents and means tests should be done over a longer period to rule out inconsistencies. Sibanda said "beneficiaries do not fully understand what they are consenting to" and argued that a hybrid system – online and in-person – would help people with limited digital literacy. "Yes to digitization, but no to leaving people behind, and this system is leaving people behind," said Sibanda. In January, the High Court in Pretoria ruled that some SRD regulations were unconstitutional, but the government has lodged an appeal. In the meantime, Mtshali, her brother and her working-age children, all of whom were rejected, are stuck. They cannot afford to travel to job interviews or print their CVs. When funds are low, Mtshali feeds her family from her stock of tomatoes. "It's now just about getting food on the table, it's about survival," she said. – Thomson Reuters Foundation
Eyewitness News
29-06-2025
- General
- Eyewitness News
IEJ calls for hike in social grant payments, argues it's below national poverty line
JOHANNESBURG - The Institute for Economic Justice (IEJ) is calling for an urgent increase in social grant payments, arguing that current amounts fall significantly below the national poverty line. According to Statistics South Africa (Stats SA), the food poverty line – the minimum required to afford basic daily nutrition – is currently R796 per person, per month. The IEJ said grants such as the Social Relief of Distress (SRD) grant, which stands at R370, remain far below what's needed to cover basic living costs. IEJ researcher Siyanda Baduza said despite the Constitution guaranteeing the right to social assistance, many grant recipients can't afford food for themselves and their families. 'Similarly, the child support grant is also below the child poverty line, it's at R560, and it is also below the cost estimated to be needed to feed a child. 'I think one way to effectively target food poverty definitely would be with an increase in grant value because there's a very strong link between income poverty and food poverty.'
Eyewitness News
30-04-2025
- Business
- Eyewitness News
South Africans shaped VAT reversal: 'When people speak, we must listen'
CAPE TOWN - The value-added tax (VAT) reversal decision was shaped by South Africans and not just political debate. This is according to Finance Minister Enoch Godongwana. The minister says he was also encouraged by the passion shown by South Africans who've been engaged with the developments leading up to the decision to reverse the 0.5% VAT increase. He addressed the media on Wednesday, where he shed light that he would table a revised budget on 21 May 2025. ALSO READ: Treasury's options to make up for revenue shortfall not straightforward: IEJ "Today [Wednesday], there's clarity, VAT will remain at 15%. This decision was shaped not only by political debates but, importantly, by the voices of South Africans. When people speak, we must also listen." He also admits that the discussions with other parties over the last few months were far from easy. "Because of the nature of coalition politics, we couldn't find consensus both in Cabinet, and in the Legislature. I'm not going to put blame on anybody, but that process on its own, because all of us are new in this thing was messy."
TimesLIVE
24-04-2025
- Business
- TimesLIVE
IEJ welcomes government's decision to reverse 'regressive' VAT hike
The Institute for Economic Justice (IEJ) has welcomed the decision to reverse the VAT hike, which it says is a regressive tax that would have disproportionately harmed the poor, low-income workers and the struggling middle class. 'We caution that this reversal should not open the door for budget cuts as appears to be the National Treasury's preference.' It said while begrudgingly conceding on the issue of the VAT hike, the National Treasury and finance minister Enoch Godongwana appeared to double down on their ideological rejection of progressive revenue alternatives. 'This flies in the face of evidence presented in parliament by the IEJ and other civil society organisations, as well as by political parties, which show that many alternatives are readily available.' The IEJ said the 0.5 percentage point VAT increase, at best, would have secured R13.5bn in revenue, which was a tiny 0.5% of the national budget. 'It has recently emerged that the revenue overrun collected by Sars (of about R9bn) alone, without further revenue or budget cuts, largely fills this hole. 'It also highlights the failure by the National Treasury to find innovative ways to raise revenue that can immediately unlock resources to further finance essential services and expand public investment,' the IEJ said. The organisation said there were a number of immediate sources of revenue. These included: ● Tapping into the Gold and Foreign Exchange Reserve Account (GFECRA), which still has over R300bn available to the government; ● Removing tax breaks for high-income earners (those earning above R1m per year), such as those linked to pensions or medical aid contributions. The government spent about R51bn on these in 2022/23; and ● Raising the corporate income tax rate back to 28%, as the previous reduction to 27% failed to attract investment. This would have raised an extra R12bn in 2024/25. The IEJ said that over the medium term, other measures, including a wealth tax, social security tax, and financial transactions tax, are available that could generate significant revenue and reduce inequality.
Eyewitness News
24-04-2025
- Business
- Eyewitness News
Treasury's options to make up for revenue shortfall not straightforward: IEJ
JOHANNESBURG - The Institute for Economic Justice (IEJ) says the options on the table for the National Treasury to make up the expected revenue shortfall are not cut and dried. Minister of Finance Enoch Godongwana has made a 180-degree turn on the value-added tax (VAT) hike proposed in the 2025 budget, following a collective pushback from political parties and civil groups. This means the VAT standard rate will remain at 15%. ALSO READ: The scrapping of the 0.5% VAT increase is expected to result in a R75 billion revenue shortfall. Already battling a high debt burden, the government has previously been warned to avoid raising more debt. Other than raising debt, other alternatives that have been touted by various analysts include lowering expenditure or again dipping into the Gold and Foreign Exchange Contingency Reserve Account (GFECRA). The tax and budget policy researcher at the IEJ, Zimbali Mncube, said reversing tax rebates could also go a long way. 'If they could be reversed, government could also raise revenue very easily and the R75 billion would be covered by that or reversing those repeats. 'I wouldn't say it's even loans or cutting expenditure, it's also about considering every alternative that the government has at its disposal, and we are saying it's time that these are considered.' The National Treasury is set to consider these and other proposals as potential amendments in upcoming budgets, as mechanisms to increase the resources available.
