South Africa can't afford 'welfare state'
South Africa cannot afford to increase its spending on social grants indefinitely because this is not sustainable, says President Jacob Zuma
More than 15 million of an estimated 50 million people in Africa’s biggest economy receive some kind of state welfare.
“We cannot be a welfare state,” SAPA quoted Zuma as saying at a business meeting in Cape Town.
“We cannot sustain a situation where social grants are growing all the time and think it can be a permanent feature.”
With an unemployment rate of 25% of the labour force, millions of South Africans still leave in poverty even 17 years after the end of white minority rule and look to government to improve their plight.
More than a million jobs have been lost since a recession in 2009 and economic growth of an average 3% over the next few years will not be sufficient to make a meaningful dent on joblessness.
The government has said the economy needs to grow by an average 7% to create jobs.
South Africa’s unemployment rate could stoke social unrest and the government has pushed job-creation to the top of its agenda. But it has acknowledged that meeting its target of creating 5 million jobs by 2020 would be tough.
Zuma said the country might have to reduce social grants.
“I am certain we will come to that point. No one will want to sustain this,” he said, adding that taxpayers should develop the country “rather than feed the poor”.
Zuma’s comments are likely to be received well by investors who have been worried that South Africa’s fiscal accounts could deteriorate further as government might be tempted to raise welfare spending.
The National Treasury has said welfare spending in the 2011/12 financial year would be 15% of total expenditure and is expected to rise by an average 7,2% over the next three years.
“This cannot be sustained,” Zuma said.