More Welfare or Less? S.Africa’s ANC Confronts Apartheid’s Legacy

South Africa’s ruling party is being forced to confront a problem that has bedevilled the country since apartheid ended 28 years ago: how to reduce record gross inequality and poverty that hurts the Black majority more than the white minority.

While the issue has never gone away, it has come to a head after the COVID-19 pandemic destroyed jobs and livelihoods.

Unemployment hit a record of nearly 35% last year and anger at the worsening economy has spilled into violent protests and rioting, including last summer when more than 300 people were killed and hundreds of businesses destroyed in the unrest.

The African National Congress (ANC) party is increasingly alarmed at its waning popularity among voters, and a leadership contest is only months away, adding to pressure on President Cyril Ramaphosa to improve the lives of ordinary South Africans.

His preference is to give more free money to the poor. The government introduced a social relief grant in 2020 to support those worst hit by the pandemic, and is debating whether to increase handouts and make them permanent.

Ramaphosa’s stance pits him against sceptics including his own finance minister, Enoch Godongwana, who fear that a proposed permanent basic income grant could be ruinously costly.

Opponents of more generous handouts also say they act as a disincentive to people looking for work and divert resources from basic services like electricity, water and schools.

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After apartheid ended in 1994, the ANC introduced policies aimed at job creation and private sector growth that they hoped would reassure white nationals and international investors and prevent them flooding out of the country.

But it also spent heavily on improving benefits for people who were discriminated against under white rule, including building millions of subsidised homes for the poor.

Despite the huge spend – at 3.3% South Africa spends nearly three times the global median on social assistance as a share of its GDP, according to the World Bank – unemployment is at a record and, on some measures, inequality has got worse.

Economic growth slowed over the last decade as the country struggled with policy uncertainty, political turmoil, an energy crisis and allegations of state corruption under former president Jacob Zuma – who has denied any wrongdoing.

This has piled more pressure on Ramaphosa, both within the ANC and on the streets, where hundreds have protested in recent months to demand the government limit the number of foreign workers in the country and safeguard jobs for South Africa.

Some analysts say that expanding social protection would be a vote-winner for the ANC, which last year suffered its worst result in local elections since taking power.

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Finance Minister Godongwana noted in his budget speech that the social relief grant had expanded an “already extensive social safety net,” now covering half the population.

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Accusations of corruption and mismanagement have also dogged South Africa’s welfare programmes, resulting in long backlogs and shoddily-built homes, and preventing help from reaching many of those in need.

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