At the EFF’s Mpumalanga provincial manifesto rally, Economic Freedom Fighters leader Julius Malema urged the government to raise the Social Relief of Distress (SRD) grant to at least R4,400 a month, a figure that works out to R52,800 per person per year for the 8.2 million current recipients.
For small-business owners and entrepreneurs, the headline number is more than a political slogan. It translates into a potential surge in tax pressure, because the extra spending would have to be funded by the same narrow tax base that already supports 28 million grant recipients.
Malema framed the increase as the first step toward a broader basic income grant (BIG). He told the crowd that the higher grant should be “funded by taxpayers”, signalling that the cost would be shouldered by everyone who pays income tax.
Efficient Group chief economist Dawie Roodt, speaking to Truth Report, called the proposal “cheap politics”. He warned that “if we increase the grants to R4,400, then that’s going to break the bank without any doubt”.
What the numbers really mean
At R4,400 per month, the 8.2 million SRD recipients would receive roughly R36.1 billion each month, or about R433 billion a year, before administrative costs or any expansion of eligibility. The National Treasury has estimated that if a High Court ruling forces it to drop exclusionary checks, the pool of eligible recipients could grow from about 8.3 million to as many as 18 million, costing between R93.5 billion and R139 billion a year even if the grant rises only with inflation. The EFF proposal would cost several times more than that worst case.
South Africa’s tax base is already thin. Roodt noted that around 7.7 million taxpayers support the 28 million grant recipients, and that the top 2.4 percent of earners contribute 77 percent of personal income tax. He argued that the country is at the peak of the Laffer Curve for personal income tax, a point where higher rates can actually reduce total revenue because compliance falls.
These figures matter to anyone who pays tax, including owners of small enterprises that already feel the squeeze of high payroll taxes and electricity tariffs. A larger grant programme could mean higher corporate tax rates, increased VAT, or new levies that would directly affect operating costs.
The Department of Social Development has said it is drafting a BIG model based on the SRD grant, with legislation expected to start in the 2027/28 financial year. Roodt did not dismiss the idea of a BIG altogether; he suggested bundling existing specialised welfare grants into a single payment, part cash and part vouchers for services such as education and health.
Data from Ipsos shows that four in ten South Africans rely on social grants, and more than half of households have either one or no income earner. Among 18- to 24-year-olds, 34 percent receive a grant, with 73 percent of those relying on the SRD as their main source of income. Rural dependence is higher at 50 percent, compared with 34 percent in metropolitan areas.
For entrepreneurs, the tension is clear: a larger grant could boost consumer spending in low-income communities, but the financing would likely come from higher taxes or reduced public spending elsewhere, for example on infrastructure that supports small-business growth.
Treasury’s own estimate of what a wider SRD grant would cost shows how little room the budget has, even before any increase in the grant itself.
Until a detailed fiscal impact study is released, the proposal remains a political promise and an economic warning. Small-business owners should watch how the debate evolves, as any shift in tax policy will affect cash flow, hiring decisions and long-term planning.
Read more about the fiscal context at National Treasury and the grant policy at Department of Social Development. For ongoing coverage of policy impacts on businesses, visit our Regulatory & Policy section.
BusinessTech reported that the National Treasury’s own modelling shows that if exclusionary checks are lifted after the recent High Court ruling, the pool of eligible SRD recipients could swell from roughly 8.3 million to as many as 18 million. The Treasury estimates that meeting that expanded demand, while also nudging the grant up in line with inflation, would add between R93.5 billion and R139 billion to the annual fiscal outlay. That estimate is for the grant at roughly its current level. At R4,400 a month, the cost for today’s 8.2 million recipients alone would be about R433 billion a year, and more than R900 billion if 18 million people qualified.
Entrepreneurs should keep an eye on three signals: the Treasury’s forthcoming fiscal impact study, parliamentary debate on the BIG bill, and any interim budget adjustments that aim to fund a larger SRD grant. A rise in disposable income among low-income households could boost demand for basic goods, but any accompanying tax hikes may raise operating costs, affect hiring decisions and alter cash-flow forecasts. Monitoring these developments will help small-business owners calibrate pricing, staffing and investment plans ahead of any policy shift.
