1. Introduction

The developmental challenges facing the country are many and varied. The Constitution, in the Bill of Rights, Social Assistance Act, and other legislative provisions provide for the rendering of services within the constraints of available resources.

The country inherited a social welfare system that had a unique combination of historical forces that significantly impact on and hamper the capacity of the current system to address poverty and related issues such as unemployment, HIV and AIDS. The developmental approach transcends the residual approach that has dominated welfare thinking in the past. The social development approach aims at collective empowerment, facilitating processes that help the poor, vulnerable and marginalized to regain power and control over their lives. It recognizes the interrelated, intersectoral and integrated nature of service delivery, which should of necessity be reflected in the attitudes, behaviour and set of values that promote this approach.

Social grants provision, which has been confirmed through empirical evidence to be enormously successful in poverty alleviation, have over the years been the primary focus of and a tool used by government in its fight against poverty. The provincial expenditure trends on social development show an overall average annual growth rate of 28,8% from 2001/02 to 2004/05. The major contributing factor to this growth was the significant expansion of the social safety net over the last 4 years which was largely driven by rapid growth in beneficiary numbers for almost all social grant types. The beneficiary numbers increased from about 3.6 million in April 2001 to about 9.4 million in March 2005. The Child Support Grants (CSG) account for most of the increase in the number of beneficiaries. The number of children in payment has increased from 1.1 million about three years ago to over 5.5 million in March 2005.

In general the significant growth in social grants beneficiaries was as a result of efforts put by the department to improve access to social security by the poorest of the poor through targeted awareness campaigns focusing more in rural and other remote areas. With regard to the CSG, which accounts for most of the increases, the numbers were driven by the policy decision taken by Government to extend the benefit from children in the age cohort of 0-6 years to the children who are 13 years of age up to their 14th birthday. This policy change was implemented in a phased approach with children between the ages 7-8 years being eligible to receive the grant in 2003/04 financial year, children between the ages 9-10 years eligible to receive it in 2004/05 financial year and those from 11-13 years receiving it in 2005/06 financial year.

The overall average growth rate in expenditure for other social development services, excluding social assistance, was 16,45% from 2001/02 to 2004/05. The point needs to be made that this average moves from a very low base. The total actual expenditure for other social development services was R2, 3 billion in 2001/02; R2, 7 billion in 2002/03; R3, 2 billion in 2003/04; and R3, 6 billion in 2004/05. This reflects a sharing ratio of the total expenditure between social assistance and other social development services of 90:10 in 2001/02, 92:08 in 2002/03, 92:08 in 2003/04 and 93:07 in 2004/05.

It is clear therefore that, overall, the rapid growth in the Social Development budget has been in the area of social assistance and the proportionate share of the budget for the other social development functions, which include the critical welfare services rendered to the elderly, the children, the disabled, the frail and other vulnerable groups has, over the last 4 years showed a decrease. This effectively means that a lot of infrastructure and service delivery backlogs in the provision of developmental welfare services have accumulated in the past and the department is very much concerned about this.

2. Transformation of social development services

As mentioned earlier, the focus of the department over the last decade has been predominantly on social security. This was necessitated by the high levels of poverty in the country, and the need to address inequities of the past. The crowding out effect of the social security budget however, has resulted in the curtailment and neglect of other services. It must be acknowledged however that the socio-economic consequences of poverty and unemployment have a huge impact on the livelihoods of individuals, families and communities and their capacity to function maximally in their environment.

In response to the above, the Department has developed a comprehensive service delivery model for integrated social services which aims to ensure, not only an increase in resources, but also a more equitable distribution thereof. This new model is underpinned by a policy on financial awards to non-governmental organizations (NGOs) and other service providers which will see increased flow of funding to previously disadvantaged areas and funding to those institutions that ensure that the government’s social welfare policies are implemented. In addition to this, the Department has costed the Older Person’s and Child Justice Bills and is in the process of finalizing the costing of the Children’s Bill. These Bills will necessitate significant budgetary allocations over the MTEF. The budget bids submitted to National Treasury reflect quite significant requests to increase allocations for integrated social development services for 2006/07 to 2008/09 financial years to ensure that provinces will have adequate capacity to implement the new policies.

In view of the shifting of the social assistance function from provinces to the national government and the establishment of the Social Security Agency to take over the responsibility of grants administration and payments, the national and provincial departments of social development have been engaged in restructuring processes and repositioning themselves to shift the focus from social security to other social development services which were often neglected in the past as indicated above.


Social services are a critical part of the country’s broader development agenda The focus of social services is to build social cohesion and social integration of the poor and vulnerable into the mainstream of society, through integrated social welfare and development programmes. Failure to expand the range of developmental services result in community instability that might have dire consequences for the social fibre of our society, such as high levels of substance abuse, domestic and other forms of violence and abuse, and other social ills that we see in our country.

The department needs adequate capacity to facilitate social development in conjunction with, and to add value to the economic development processes of the country. The lack of resources in social service delivery has resulted in, amongst others, poorly developed protection services, inadequate resources to provide other social services to the poor and to promote sustenance of their livelihoods, skills flight of the most essential professionals, and an inability of non-governmental organizations to provide agency services because of lack of resources, which has resulted in closure of such organizations, loss of personnel to government and services reverting back to the state or collapsing.

To further illustrate this, the following can be highlighted:

Whilst there has been increased growth in the personnel expenditure of the department, the growth in the number of social service professionals has been relatively low. Social workers and community development practitioners are the main agents of change amongst other social service professionals. Social work has been declared a scarce skill due to the demand and the skills flight to other countries, sectors and departments. The retention strategy which is in the process of development by the social development sector is meant to address this, and the improvement of salaries of those in government has been effected as a first phase thereof.

However, there are serious challenges. Whilst government is not responsible for the salaries of NGO’s, they are dependant on government subsidies for service delivery. Secondly, the current capacity of social workers in both government and NGO’s is below the norm, with three provinces (Northern Cape; Western Cape and Gauteng) ranging between 62% and 75%; two provinces (Free State and Eastern Cape) at 35% and the rest below 26% of the norm. This category of personnel is mainly responsible for rendering statutory services (e.g. current and new services outlined in the Older Persons, Children’s and Child Justice Bills), which are obligatory to government. According to a rapid analysis done in various provinces and based on the norms indicated in the service delivery model, the country will need more than 7000 social workers in the next three years. While Social Workers render statutory services, it should be noted that the ultimate is to ensure that self-reliant communities are created through relevant developmental intervention strategies. Such developmental services are rendered by Community Development Practitioners. The complimentary nature of social work and community development impacts also on salaries of Community Development Practitioners, which also have to be reviewed.

In addition to the above, the support (including financial support) that the department has given to NGO’s, who are our partners in service delivery, has declined over the years, and that has affected service delivery. For example, Mpumalanga is the only province that has had a significant increase in subsidies paid in respect of social worker salaries during 2005/6; even then, this was to bring it closer to subsidies of other provinces.

Analysis of provincial budgets from 2002/03 to 2005/06 indicates that generally provincial subsidies to NGOs have been allocated on an ad-hoc basis and in some provinces either remained constant, decreased or increased marginally over these years. Budget pressures exerted by the rapid increase in social grants and the resultant cuts in budget allocations largely influenced this. As indicated earlier, this has resulted in closure of some of the critical services. In addition, the rural and peri-urban areas, as well as other previously disadvantaged areas are the most affected in terms of service coverage. For example there is a huge backlog in foster care, which is a statutory obligation and is geared towards vulnerable and orphaned children, and could effectively address the plight of child headed households.

Table 1: Analysis of provincial subsidies to NGOs (2002/03 to 2005/6)










Eastern Cape

146 770

130 909

114, 670


Free State

65 867

131 152

99 597

119 087


324 465

249 657

298 825

218 174

Kwa Zulu-Natal

129 366

143 985

213 052

243 774


33 095

39 138

39 686

51 634


58 750

56 114

60 634

61 682

Northern Cape

30 937

28 682

38 318

38 958

North West

37 224

37 107

37 684

47 362

Western Cape

246 209

224 784

272 735

310 312


1 072 683

1 041 558

1 175 201

1 246 548

In an attempt to address these issues, the Service Delivery Model for Developmental Social Services was developed. The Service Delivery Model addresses the following key critical areas:


3. Conditional grants for the MTEF

The Department managed the following conditional grants during this financial year:








  1. HIV and Aids (Home/Community- Based Care)





  • Integrated Soc Dev Services
  • 388,000




  • Social assistance transfers grant
  • 52,023,313




  • Social assistance admin grant
  • 3,382,055










    3.1 HIV and AIDS Grant

    The purpose of this grant is to provide social welfare services to orphans and vulnerable children who are infected and affected by HIV and Aids, within family and community context, in partnership with non profit making organizations (NGOs, CBOs and other community organizations) and to develop and support institutional structures and professionals, community workers and child and youth care workers through targeted training programmes in order to ensure effective delivery of services.

    The social impact of HIV and AIDS is evidenced by an increase in the number of orphans and child-headed households and manifests itself in the disintegration of families and communities. Currently, there are close to a million children in South Africa who have lost one or both parents to HIV and AIDS. This number will increase in the years to come. The extended family’s capacity to cope with the demand to care for children who are affected and/or infected by HIV and AIDS is overstretched.

    The Department aims to mitigate the impact of HIV and AIDS on vulnerable groups and reduce the vulnerability of youth and women to HIV and AIDS through this grant, which has been in existence since 2001/2002 financial year, and other coordinated intergovernmental initiatives. A total number of 688 Home/community based care centres country-wide are supported by this programme. To date more than 261 076 orphans and children made vulnerable by HIV and AIDS have been identified in various parts of the country and are receiving appropriate care and support services. In the last financial year these centres provided support to more than 412 690 families that are vulnerable and supplied them with, amongst others, food parcels and supplements, cooked meals, school uniforms, bereavement support and burial assistance.

    3.2 Integrated Social Development Grant

    This is a new grant introduced at the beginning of this financial year as a transitional measure in phasing out the Food Emergency Relief Grant whose purpose was to provide poor and vulnerable households with food relief on a short-term basis. The National Food Emergency Scheme, as it was called, proved to be unsustainable and very complex to manage and a decision was taken to phase it out. The purpose and objective of the previous grant was then changed from food distribution to focus more on the provision of appropriate social welfare services and development interventions, and for immediate and appropriate short-term relief to vulnerable individuals and households who are not receiving any form of assistance in terms of the Social Assistance Act, 1992

    3.3 Social Assistance Transfers and Administration Grants

    In 2005/06 financial year, an amount in excess of R55 billion for the Social Assistance Transfer and Administration Grants has been voted to the National Department to flow as conditional grants to provinces to enable the national government to deliver social security during the transition period while setting up SASSA which is expected to be fully operational by the beginning of 1 April 2006. Of this amount, about R52 billion is allocated for social grant transfers and R3.3 billion for the administration.

    The number of beneficiaries in payment and the value of social grants are the main cost drivers of the social assistance budget. The Department estimates that the social assistance budget is projected to grow by 15.6% in 2005/06 and by 18.3% over the medium term because of expected increases in the number of grant beneficiaries.

    This part gives an overview of the overall trend with regard to beneficiary numbers and spending on social grants between April 2005 and September 2005. Analysis is based on the SOCPEN Payment Extraction Reports before they are reconciled with actual expenditure by provinces. In this period, provinces have spent an amount of R25,139 billion against a budget of R52 billion allocated for the current (2005/06) financial year.

    3.3.1 Analysis of social assistance spending trends

    While expenditure on disability grants has stabilized, spending on foster care grant is increasing due to the rapid growth in the number of beneficiaries from over 61 000 in April 2001 to more than 280 000 in September 2005.






    3.3.2 Analysis of trends in beneficiary growth

    All provinces experienced slower growth in beneficiary numbers between April 2005 and September 2006. Slower growth in beneficiary numbers was largely as a result of the indemnity project, which was initiated by the Department towards the end of last year as discussed later on in this report.

    Old age beneficiaries have been growing steadily in most provinces. Between April 2005 and September 2005, this grant increased by 0,14% which is less than the projected growth rate of 0,19%. Slower actual growth in this grant is due to the impact of indemnity. Coverage of intended beneficiaries is generally high for this grant, with more than 75% of all elderly accessing the grant. It is projected that about 87% of the elderly would qualify for this grant in terms of the means test, ranging from 97% in Limpopo to 67% in the Western Cape. The growth in numbers for old age will remain stable over the medium term and in line with demographic trends for the elderly, unless a policy change is effected.

    Although the disability grant declined between April 1999 and April 2000, it increased from 631 758 in April 2001 to 1,2 million in April 2004, above 30% growth in the Eastern Cape, Free State, Gauteng, KwaZulu Natal, Limpopo, Mpumalanga, North West and Northern Cape. This significant increase could be ascribed to increased communication initiatives through awareness campaigns, improved accessibility, utilization of disability panels and better access to medical practitioners to undertake medical assessments. The Department has developed national uniform procedures for lapsing disability grants before terminating the benefit.

    Since October 2004, after implementing uniform processes and procedures for reviewing temporary disability grants, the total number of beneficiaries has been declining from about 1.3 million to 1,2 million. For purposes of making grant projections, the Department makes a distinction between temporary disability and permanent disability. Growth patterns and reality reflect that while over 150 000 temporary disability grants were lapsed, a high percentage of these find their way on the permanent disability category. Although the temporary disability grants numbers are declining significantly, the real increase is in the permanent disability category. Therefore, between April 2005 and September 2005, this grant has increased steadily in most provinces.

    Going forward, the growth in disability should stabilize as a uniform assessment tool is rolled out. The current coverage rate is in line with the estimates of the disability population as reflect by Census 2001 information.



    Between April 2005 and September 2005, this grant increased at an average growth rate of 2.01% compared to a projected growth of 2.09%. Growth is most rapid in the Eastern Cape, Mpumalanga, Free State, Limpopo and North West. It is noteworthy to point out that the number of foster care children as a proportion of the total children population is much higher in the Western Cape, Gauteng and Northern Cape than in the provinces just listed. Strong growth continues in this grant as the gap between those entitled and those in the system in the previously disadvantage provinces is being closed. Current growth is retarded by the lack of capacity to investigate the destitute children’s circumstances, the latter in turn being due to limited capacity of social workers as well as the limited capacity by the judicial system to process applications. These are in part due to historical challenges as the court system functions weakest in the poorer provinces. Where the courts are processing applications, there has been less restrictive approach, as courts no longer refuse to grant foster care status to family members. It is argued that an additional, and critical factor includes the impact of AIDS related deaths of parents. Of course, the increase in these deaths, coupled with an increased awareness of the grant, also has an impact on the number of beneficiaries eligible for this grant.

    The Department may be facing significant budgetary pressure in respect of the foster care grant as the backlogs are being addressed and as the possibility of pressures are caused as a result of increases in the number of orphans across the provinces.

    Since April 1999, the Child Support Grants accounted for most of the increases in the number of beneficiaries for social security grants. The number of children in payment has increased from 34 471 in April 1999 to over 5,5 million in April 2005. However, between April 2005 and September 2005, growth on the child support grant for children aged 0-6 has been decreasing as a result of clean-up initiatives including the impact of indemnity project. Over 50% of applications for indemnity are for the child support grant. However, growth on the extension of the child support grant has been rapid.

    As the last phase of the extension of the child support grant to children under the age of 14 years is being implemented, the growth should stabilize significantly over the medium term.


    4. Measures to contain expenditure over the medium to long-term

    4.1 Improvement in administration processes

    The decision to shift the social assistance function from provinces to the national government and the establishment of the South African Social Security Agency (SASSA) means that the national Department of Social Development will now become the assuror of service delivery for social security whilst the Agency takes over the responsibility for administration and payments. Its main focus will be to develop and implement policies, norms and standards for service delivery and monitor and evaluate the impact and quality of service delivery.

    The Agency’s responsibility will be to manage and administer the delivery of social grants, from the process of the application, the approval and payment. To give effect to an efficient and effective management and administration of the social assistance, SASSA will be given more flexibility than is otherwise the case with core government departments. The Agency will ensure the rolling out of the implementation of the norms and standards that have been developed by the department.

    Ongoing challenges in respect of the IT systems and technology lead to a project to assess the areas of functionality improvements that could be undertaken. To this end, a report was completed and a full-scale SOCPEN enhancement project begun. In addition, to address the above grants payment and information system challenges, a new governance framework for Information Technology management was developed, a strategic architecture information systems plan introduced, and the design and development of an electronic document management system completed.

    The Department has, over the years, faced daunting challenges in respect of the access to pay points for service delivery. To improve efficiency, the department focusing on strategies and projects to increase access to points, to optimise their use and to ensure that beneficiaries are serviced with dignity when they make face-to-face contact with Departmental staff. A key area of intervention has over the years been the facilities and conditions at pay points.

    The strategic initiative is to find an optimal distribution of pay points that will provide equal access to all beneficiaries. Accordingly, a geographic information system was built taking account of all points of payment, Post Office outlets and the banking infrastructure with a view to incorporating these points in future payments. Provinces should thus phase out pay points that are obsolete and build new ones to enhance access. Discussions were held with representatives of the Post Office and financial institutions with a view to partnering in the distribution of pay points and providing access for beneficiaries at lower costs. To this end, the migration to financial institutions for beneficiaries was initiated. This provided welcome relief at pay points where congestion was being experienced and has led to savings in distribution costs.

    4.2 Fraud Strategy

    In December 2004, the Minister of Social Development made a public offer of indemnity to all those beneficiaries who had unwittingly been receiving social grants, despite not being eligible for such benefits. This however, excluded public servants and crime syndicates who were defrauding the system. There was an overwhelming response to this announcement with more than 86 000 applications for indemnity having been received by end of March 2005, the deadline for applications. All these grants were thereafter suspended in the system. The Department had generated reports, which indicated that the Department is losing a lot of money as result of fraudulent activities. The purpose of the indemnity process was to encourage those who have been defrauding the system to come forward and declare their activities, to avoid criminal prosecution.

    The highest number of applications was received in Limpopo (36 723) and KwaZulu-Natal (10 418). Over 50% of the applications granted amnesty are for the child support grant. The Department has also through its fraud hotline received many calls from people who wanted to either cancel or lodge applications for indemnity and those inquiries have been referred to relevant provinces. Some have not asked for indemnity but have cancelled their grants and others just stop collecting their grants.

    4.3 Data interrogation and clean up

    An audit of the SOCPEN system through a data interrogation exercise also revealed that about 41 000 civil servants were receiving social grants. The Department then embarked on a massive investigation to establish the extent of fraudulent beneficiaries among this number. To this end, the Department has engaged the services of the Special Investigating Unit (SIU) to assist with the investigation and prosecution of those who are wrongfully accessing the social grants system.

    4.4 Lapsing of temporary disability grant

    Although the disability grant declined between April 1999 and April 2000, it increased from 631 758 in April 2001 to 1,2 million in April 2004, above 30% growth in the Eastern Cape, Free State, Gauteng, Kwa-Zulu Natal, Limpopo, Mpumalanga, North West and Northern Cape. This significant increase could be ascribed to increased communication initiatives, improved accessibility, government’s decision to register everyone eligible prior to the extension of the CSG, utilization of disability panels and better access to medical practitioners to undertake medical assessments. The rapid growth in the disability grant has led to an increase in the social assistance budget.

    The agreement on the new definition of disability as well as the finalisation of the standard disability assessment tool for accessing disability grants, which will be used by all provinces is expected to yield significant savings in terms of streamlining the management of disability grants.

    5. Policy and other legislative developments likely to have an impact on future provincial spending patterns


    Social Grants growth of the period under review has been significant, increasing from R21 billion in 2001, to R52 billion in 2005, growing further to over R61 billion in 2007/08. Going forward these should stabilize and targets are being achieved and administration effectiveness and efficiencies pave the way to a more sustainable social grants system.

    In the area of welfare and developmental services, long playing second fiddle to social security, we have witnessed suppressed growth and significant service delivery limitations over the last four years. As the provinces transition the social grants function to national, we ought to see significant expansion of developmental services based on the implementation of the new service delivery model, the financial awards instruments, the Older Persons and Children’s Bills.


    Enquiries: C. Pakade

    Chief Financial Officer

    Department of Social Development

    Tel. (012) 312 7690

    Mobile 0833957384