Assessing the impact of social grants in alleviating poverty in South Africa

Abstract

Amongst many challenges, South Africa is still struggling to address the problem of high levels of poverty in the country more than two decades after the apartheid regime has ended. The government has however remained resolute in its effort to alleviate poverty especially through the provision of social grants. The expansion of the social assistance scheme after the apartheid regime has played an important role in extending benefits to a wider population of South Africans particularly the poor and the vulnerable groups. The effects of social grants on poverty have been proven to be effective. This has been widely tested empirically using the monetary approach as a measurement of poverty. However, few academic works have studied this effect on multidimensional poverty. Moreover, existing studies have focused predominantly on single poverty dimensions. As a result, this study investigates whether social grants reduce multidimensional poverty in South Africa. This study uses the Multidimensional Poverty Index (MPI) as a poverty measurement, which encompasses three dimensions of poverty. This dissertation found poverty to have declined over the years but it is still prevalent amongst households headed by blacks and females residing in the Eastern Cape, KwaZulu-Natal and Limpopo provinces with large household. The relationship between social grants and multidimensional poverty is tested empirically through a logistic regression using the National Income Dynamics Study (NIDS) data for Wave 4, year 2014/15 to be specific. The empirical findings reveal that a R1 increase in income from social grants results in a 1% decrease in the odds of a household being multidimensional poor. As much as social grants reduce multidimensional poverty, they have been found to be statistically insignificant and thus less effective in the reduction of multidimensional poverty.