Impact of special COVID-19 social relief of distress grants in South Africa: A CGE analysis
Impact of special COVID-19 social relief of distress grants in South Africa: A CGE analysis
This paper assesses the outcomes of the Special COVID-19 Social Relief of Distress Grants (SRDG) program. A gratuity of R350 ($26.5) per person and per month was granted to low-income households following a national lockdown on 26 March 2020, aimed at alleviating the spread of the COVID-19 pandemic. Our simulation results indicate that the SRDG program improved the real incomes and consumption for all households. The decline in GDP (-0.1021%) is cushioned by the fact that both exports and imports were negatively affected as the lockdown restrictions obstructed all international trade activities. Despite the welfare gains, South Africa's fiscal and macroeconomic indicators suggest that the program is likely better considered as an automatic stabilizer in fiscal and social policy planning rather than as another component of social protection. The shock applied to the economy is limited to the total amount of the cash transfer allocated by the government. A static CGE model seems suitable in this study as econometric analysis is unsuitable for the simple reason that there is lack of time series data. The originality of this study lies in the use of the CGE model for assessing the outcomes of such cash transfer to low-income households in South Africa.