n AfricaGrowth Agenda - Is there space for additional social spending in South Africa?

Volume 2011, Issue 4
  • ISSN : 1811-5187


It has widely become apparent that one of government's fundamental functions is that of achieving redistributive objectives; this is true for both developed countries as well as developing countries where redistributive programmes are typically narrower in scope and executed as public expenditures directly targeted at the poor (Broadway and Marchand, 1998). Collection of revenue mainly in the form of (progressive) taxes and provision of public goods and services, as well as transfers render the government an important role player in the enhancement of welfare of the people. It could be argued that government's strife for efficiency by providing goods and services that the private sector cannot provide, as dictated by classical welfare theory and that for equity by provision of social services and transfers to maximise social welfare, as dictated by public choice theory, all should bode well for the poor (Birdsall and James, 1990; Sahn and Younger, 2000). It is thus imperative to investigate how and to what extend these objectives are reached and if they have their intended impact on the poor as far as income distribution and poverty are concerned. The legacy of pre 1994 apartheid rule that perpetrated racial restrictions on markets (both labour and product), have resulted in a systematic coercion into poverty of disadvantaged races. As such, the transition to a democratic dispensation in 1994 marked the beginning of a purported new economic era of equal opportunities for all. This article specifically discusses the benefits and costs of social spending programs to the poor in "new" South Africa.

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