South Africa Presidency Proposes R88.5bn Plan Against Poverty amid Economic Constraints

South Africa's Presidency, led by Cyril Ramaphosa, plans an extensive R88.5bn annual budget to combat escalating poverty levels in the nation. This proposal arises when the National Treasury raises alarms over the country's depleting funds.

During a presentation to labour and business leaders, Olive Shisana, the President's social policy advisor, offered potential measures to address the situation. The options included implementing an unemployment grant, supporting food programmes, and initiating more job creation projects.

Shisana's recommendations emphasise the dilemma that the National Treasury encounters to manage spending cuts. The treasury is also grappling with dwindling tax revenues due to power cuts crippling economic activity and issues with the rail network that limit exports.

The nation is entering the run-up to an imminent election, and the ruling African National Congress (ANC) faces the complicated choice between limited social spending to stimulate the stagnant economy or augmenting benefits to sway potential voters' favor.

Shisana's 'Acceleration Plan' to the National Economic Development and Labour Council proposes game-changing initiatives such as: a basic income grant, subsidising child nutrition, supporting informal businesses, financing presidential employment stimulus programs, boosting small businesses, and training programs for women and youth.

During her call with Bloomberg, Shisana confirmed the proposal but did not engage in discussions on the figures, stating these numbers will continue to change and her current focus is on shaping a proposal suitable for the annual budget in February.

Finance Minister, Enoch Godongwana, expressed warnings regarding the R350 per month unemployment grant, suggesting that maintaining this standard could result in undesirable measures like heightened value-added tax or potentially adverse job losses.

Timely evaluations of these measures are recommended every year to ensure feasibility and efficacy. However, concerns over disagreements within government regarding fiscal policies and proposed innovations are also surfacing and could potentially impact these plans.