Grants uplift lives of poor families

SOCIAL grants proved to be helpful in the lives of beneficiaries and went a long way to improving the livelihood of their families and communities.

This was revealed yesterday at the release of research findings of a study commissioned by FinMark Trust.

The research, titled The effectiveness of and use of social grants in South Africa, was conducted by The Institute for Poverty, Land and Agrarian Studies (Plaas) and the Economic Policy Research Institute.

In the research, which dates back to 2003 and was concluded last year, it emerged that social grant recipients were in the statistical portion of people with low levels of hunger and higher school attendance.

FinMark Trust technical adviser Rob Rusconi said the research took a long time because of the geographical spread and the cautiousness not to form inappropriate conclusions.

"The study shows that grant recipients are also likely to have a higher level of activity in financial markets, both formal and informal, and are able to obtain credit on more favourable terms."

The research was conducted in the Cape migrant network and focused on poverty-stricken areas of the Western Cape and rural Eastern Cape, and covered more than 50 households with at least one social grant receiving member each.

In this year's budget allocation, Finance Minister Pravin Gordhan allocated R89billion to be spent on over 13million social grant recipients, with provision made for the "phased extension" of the child support grant up to a child's 18th birthday.

The state old-age pension and the disability grant were increased by R70 to R1080 a month while child support grants were hiked by R10 to R250 a month.

Plaas researcher David Neves said contrary to the general perceptions that social grants were abused, he came across "overwhelming" evidence that in most cases, they were used productively to improve the living conditions of families.

"These grants do make a huge difference in people's lives and even contribute in changing people's financial behaviour," Neves said.

Key findings from the study showed that grants were used for productive assets. Social grants enabled higher levels of saving and were associated with higher levels of engagement with financial markets.

"This occurs particularly with shorter-term transactional vehicles like banks and informal arrangements such as stokvels, but also in longer-term investments that contribute to small business activities," Rusconi said.