As the country moves to level 3 of lockdown, the opening up of the economy comes as a welcome relief to all South African’s, including the most economically marginalised. While the Covid-19 crisis spreads through the country, the media has put on raging narrative inducing a dichotomy of lives vs livelihoods. Yet, whichever side of the debate you buy into, it is always the most vulnerable segments of society that will bear a disproportionate burden of losses to both lives and livelihoods.

In light of this, solutions must be distinguished by their impact on our country’s most economically vulnerable so that gains in poverty reduction and inequality are not eroded beyond repair within the short run. The Inclusive Economies project has highlighted the importance of both the cash grants expansion and policy solutions that will build resilience within the countries informal sector.

The expansion of the social grants system has created a welcome but temporary relief for millions of South Africans who will either see their monthly grant increase for six months or be eligible for the special Covid-19 Social Relief of Distress grant. In unequal contexts, where reconciliation is an ongoing process, social grants have an important role to play. This is further explored through a paper published in May by IJR’s Jaynisha (from Inclusive Economies) and Mikhail (from the South African Reconciliation Barometer). Using Afrobarometer data, they unpack South African’s attitudes towards social grants and grant recipients. Some of the key findings further highlight the importance of social grants as both a social and economic good. Three fourths (76%) of South Africans said that the poor should receive grants from the state. In light of the economic downturn, it is also interesting to note that 66% of South Africans prefer an economy with low unemployment and low wages. This is in contrast to the present South African economy, characterised by high unemployment and extremely unequal distribution of income (almost 70% of income is captured by the top 10% of earners).

The full paper can be found here.

Inclusive Economies has also advocated for further protectionist measures focused on improving the resilience of vulnerable South Africans to economic shocks. If investments are creating value through resilience, then ramping up safeguards means that these groups will be better able to protect not only their livelihoods but also their dignity.

Existing informal settlements, heavily populated by the poor who are dependent on both public transport and community integration, must become the focus for policymakers who need to understand how strategic thinking around infrastructure can alter current patterns and habits that are conducive to contagion.  One consideration relates to the mass rollout of fibre to these communities which will serve as both a protective mechanism and a commercial one, while also closing the digital divide that threatens to deepen inequality and exclusion. Find more here.

Lastly, IJR’s Inclusive Economies project highlights the need for building resilience in the informal sector. Suggestions include the creation of a platform like Kenya’s M-Pesa which allows money and credit to flow through the sector safely. And secondly, creating value within the sector through developing human capital and schemes for workers to own or co-own assets. Reducing informal workers’ reliance on unaccredited loaners reduces debt burdens, thereby creating pathways for growth. Find more here.

The current crisis presents us with the question of how we can continue to pursue policies favouring integration in ways that reduce rather than expose our vulnerability. All the answers may not yet be clear, but it is pertinent that we ask the questions so that we can anticipate and resolve future threats to our population.

Jaynisha Patel – Project Officer, Inclusive Economies

Picture credit: Delwyn Verasamy/M&G)