Assessing poverty dynamics in social grant dependent household: a comprehensive analysis

Abstract

Poverty persists in many countries especially those in the sub-Saharan African region where the levels have been getting worse. The extent of poverty has been worsened in the last 5 years by the many exogenous factors that have gone beyond the control of individual countries. From Covid-19 in late 2019 to early 2020 going all the way to 2021, to Ukraine Russia war that disrupted global supply chains, to the war between Israel and Hamas that have left countries divided. Several countries have also witnessed natural disasters like cyclones and heavy rains and tidal waves that have caused irreparable damage to livelihoods.  In the wake of these external factors over and above country specific a number of governments introduced social grants as safety nets to help households in danger of abject poverty. This study assesses the dynamics of poverty within social grant-dependent households in South Africa, exploring the extent to which social grants mitigate poverty across varying levels of deprivation. Using 2023 data from a representative national survey, the analysis applies conditional probability models to examine the influence of social grants on household poverty risk, considering three distinct poverty thresholds: the Food Poverty Line, the Lower Bound Poverty Line, and the Upper Bound Poverty Line. Findings reveal that households receiving grants experience a statistically significant reduction in poverty risk, particularly at the lower poverty levels, underscoring the effectiveness of grants as a targeted poverty alleviation tool. However, unemployment, single-headed households, and racial disparities are found to compound poverty risk, pointing to the need for an integrated approach that combines social grants with employment and empowerment programs. Female-headed households are especially vulnerable, showing a higher likelihood of poverty across all poverty lines, likely due to factors such as lower income and greater caregiving responsibilities. The study concludes that while social grants play a critical role in reducing poverty risk, additional measures are essential for addressing the underlying socioeconomic disparities that affect poverty dynamics. Recommendations include increasing grant values to match inflation, expanding job creation efforts, and implementing targeted support programs for the most vulnerable demographics, particularly single-parent and female-headed households. These measures would enhance the efficacy of social grants and support long-term poverty reduction efforts in South Africa.