Trouble looming for almost 11 million South Africans

The National Treasury has doubled down on its stance that extending the SRD grant is unaffordable for the country.

At the same time, there are warnings that the Department of Home Affairs’ new identity verification fees will also hurt grant recipients. 

The National Treasury has reiterated that the SRD grant, introduced initially as a temporary measure during the COVID-19 pandemic, is fiscally unsustainable in its current form. 

New administrative policies, including an unprecedented increase in identity verification fees, also risk cutting off vulnerable citizens from crucial financial services.

Despite being extended in 2025 for another year, the SRD grant remains in limbo.

The Treasury has allocated R35.2 billion to fund the R370 monthly payment this financial year, but that commitment comes with strong reservations. 

Treasury officials have warned that a recent High Court ruling requiring the government to expand eligibility and adjust the grant’s value for inflation presents a significant fiscal risk.

The judgment, handed down in January 2025, found key regulations unconstitutional – particularly the online-only application process, the R624 income threshold, and the exclusion of one-time gifts from income calculations. 

The court ordered the government to gradually increase the grant to align with the rising cost of living. 

However, the state has appealed the ruling, leaving millions of potential beneficiaries in limbo as the legal battle continues.

Rendani Randela, Treasury’s head of public finance, said the ruling would force the government to expand the grant to thousands more people, something the state cannot afford. 

“That judgment is a fiscal risk on its own,” he told Parliament. “Social assistance is not the only programme we have. 

There’s no way we can’t have a mechanism to filter out undeserving recipients. If we don’t challenge it, it is unaffordable.”

Treasury’s concern stems from the already immense pressure on South Africa’s social wage, which consumes 61% of the national budget. 

Treasury argued that other forms of social support already exist for many SRD recipients, and warned against “double-dipping.” 

Another blow 

While civil society has long called for the SRD to become a permanent basic income grant, no such decision has been made.

The 2022 budget set aside R44 billion to support 10.5 million people until March 2023, but this proved insufficient for the 10.9 million people identified as eligible.

In the 2024 budget, the SRD was allocated R33.7 billion for an estimated 9.24 million beneficiaries. However, demand has again exceeded expectations. 

Exacerbating the crisis is the Department of Home Affairs’ controversial decision to raise the cost of digital identity verification by 6.500%,  from around R0.10 to R10 per verification. 

Tyme Bank CEO Coenraad Jonker has warned that this move will have dire consequences for SRD recipients and other low-income South Africans who rely on affordable, digital-first banking.

In an open letter to Home Affairs Minister Dr Leon Schreiber, Jonker called the hike “anti-poor” and “completely out of kilter with world best practice.” 

He noted that the new price is twice that of Pakistan, widely regarded as one of the most expensive countries for identity verification, and dramatically more than in emerging-market leaders like Peru. 

He argued that the fee increase undermines financial inclusion and breaks the economics of serving the poorest customers.

“For banks like Tyme, which operate entirely digitally, real-time ID verification is central to keeping services low-cost,” said Jonker. 

“Our cost will jump from R130,000 a month to R13 million, a 100-fold increase. That’s simply not sustainable.” 

While Tyme Bank could absorb the cost in the short term, Jonker said no business can operate indefinitely at a loss. 

“Either we raise prices, which makes services unaffordable, or we cross-subsidise, which isn’t viable long term.”

Jonker acknowledged that the current Home Affairs system is broken and requires investment, but said it was wrong to fund those upgrades by effectively taxing the poorest South Africans. 

According to Jonker, the reality is that Tyme Bank has been able to serve SRD grant recipients profitably because of its low-cost operating model, which is now at risk.