No room for South Africa’s lost generation

South Africa’s original lost generation birthed by apartheid has evolved into three, to include those suffering from HIV/Aids and the current generation facing unemployment, says Professor Matthew Lester of Rhodes University.

Lester spoke at the Annual Budget Day breakfast hosted by BDO and Cliffe Dekker Hofmeyr on Thursday, 26 February 2015. He highlighted that although this year’s Budget was a conservative approach to the debt problem, there is still work to be done to eradicate the issues perpetuating SA’s lost generation.

Looking at the country’s growing population, the National Development Plan’s (NDP’s) prediction of 58m people by 2030 had to be revised, explained Lester. According to the StatsSA 2014 mid-year report, which showed a population of 53m, predictions indicate a population of 64m by 2030 with no levelling off. “The NDP is out by 6m people already, and that should call for a review of the NDP as we stand,” he says.

The death rate has also come down to 551 000 with the distribution of antiretrovirals, which was made possible by Zuma’s administration. About 650 000 people are being added to the population per year. It is troubling that more money isn’t being allocated to grants. “A child grant only went up by R10,” says Lester.

However, the employment rates and job prospects do not correlate to this lowered death rate. Children under 18 are taken care of by social grants. The problem comes in when they get older and fall into the 18-65 age group because grants are only available to those who are disabled, says Lester. “Their only outlook is a vote.”

If we didn’t have social grants, we’d have social chaos.

The government has promised National Health Insurance (NHI), but Lester says there’s no way SA can afford a roll-out given the debt trajectory. “The revenue streams stay the same but the expenditure is going through the roof.” Lester proposes that the government get the NHI system working properly and efficiently. “Thereafter get people employed rather than just giving out handouts,” he told Finweek.

Lester says other policies by NDP like vocational training and growth in public works will add pressure in years to come. Possible solutions would be to accelerate economic growth, which the country can’t do because it is not well positioned for it, or to increase taxes, which has already occurred or shift resources to other priorities like social grants. However, the announcement of Budget 2015 shows a low increase in that.

“If we didn’t have social grants, we’d have social chaos. [About] 16.4m South Africans are reliant on social grants. If you took that money away from them, they would starve. Businesses would fail,” says Lester. People spend R200m every year which goes into the economy, and a lot of it comes from grant recipients.

Social grants are not a complete waste. The World Bank report of 2014 shows that the money is not squandered. It shows that more than 50% of the poorest population in SA spend money on food, housing, energy and water. “It is desperately needed in reducing South Africa’s Gini-coefficient. And that is one of the success stories of the last 10 years. It’s how we got 16.4m people safer. We’ve brought 3m people out of poverty through the grant system.”

Lester says that although there are policies to help the lost generation, there has been no progress in answering the problem. “We’ve seen no developments for that in this budget. This has been a holding budget to deal with the national debt situation. It’s made no progress towards the objectives of 2030.”

* This article was featured on Finweek.com

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