Submission to the Joint Budget Committee in Parliament

Executive Summary 1

The importance of using the Budget as a tool for poverty reduction 4

 
Executive Summary

This submission gives attention to the following three issues:

• The importance of using the Budget as a tool for poverty reduction in the context of unemployment, revenue and growth trends in South Africa;
• How government addresses the needs and rights of poor people through the MTBPS 2003; and
• The challenges arising from the MTBPS 2003 regarding the more rapid eradication of poverty in South Africa.

• Addressing poverty and delivering socio-economic rights through the Budget remains a huge challenge. As Minister Manuel pointed out with reference to the recently released report Towards a ten year review, after almost ten years of democracy the poor are very much still with us. Even with some success in rolling out a range of programmes targeted at meeting basic needs, millions of South Africans (including millions of children) still have too little income to live a decent life. Hunger is still widespread. Millions of people experience obstacles to realising their basic constitutional socio-economic rights.
• At the same time - and critically – the prospects are still moderate for poverty to be reduced through job creation in the market economy. It cannot be predicted if or when economic growth in South Africa will accelerate enough to generate sufficient jobs to impact on the growing official unemployment rate, let alone to have a significant impact on poverty reduction. As a result, the state has an elevated role in eradicating poverty through the Budget (and other interventions).
• Thus it is important to note that the MTBPS 2003 is presented in a context where poverty remains prevalent in our country and the chances of poverty being reduced via private sector employment-creation remain slim. This raises the importance of using the Budget (and other interventions) to address poverty. Furthermore, the task of designing a pro-poor budget in the MTBPS 2003 was made all the more difficult by the revenue position being tighter than expected.

• Given the fiscal austerity stance of government over the recent past and the decision to increase the budget deficit:GDP ratio, government was able to rise to the challenge of addressing the needs of the poor in the MTBPS 2003. In the new allocations and MTEF spending plans for 2003/04-2005/06 announced in MTBPS 2003, government facilitates poverty reduction and alleviation through the following:
• Engaging in a prudent fiscal policy and investment in key areas that are important to facilitate economic growth trickling down into poverty reduction.
• Continuing with the expansionary thrust in spending introduced in 2001 and allowing for a real increase in non-interest expenditure in real terms. In all the years of the MTEF real consolidated national and provincial expenditure on services increases (even if at a declining rate and if the pace is slower than between 2002/03- 2003/04).
• Prioritising allocations to sectors and programmes that are important for giving effect to the socio-economic rights of the poor. Here the highlights are investment in infrastructure, HIV/AIDS programmes and in particular the anti-retroviral programme (ARV), basic services, the expanded public works (EPW) programme and social assistance programmes, particularly the Child Support Grant (CSG) programme.
• In the MTBPS 2003, government has succeeded in producing a good balance. It has managed to substantially raise real expenditure on key programmes for the poor even though growth prospects in the near future are moderate and the revenue position was not as good as anticipated. Government is to be commended for continuing the expansionary pro-growth pro-poor fiscal stance that it began to adopt in 2001 after the period of restraint under the umbrella GEAR strategy, despite a tighter revenue situation.
• The MTBPS 2003 also makes it explicit that poverty can only be addressed with any certainty in the near future if government proceeds further with its direct initiatives affecting incomes of the poor. This acknowledgement is reflected in the attention given to the increasing unemployment rate and the introduction of the EPW programme. There is a recognition that South Africa cannot rely on uncertain private investment and growth to address the poverty crisis, even if the role of markets is critical to any long-run solution.
• However at the same time, the expanded public works programme cannot be expected to have more than a limited impact. As such, this programme cannot be seen as a substitute for expanding direct income support by enlarging the social security net. As section two below reveals, little has been made apparent in the MTBPS 2003 on the size and nature of the EPW programme. The MTBPS suggests that the programme targets 750 000 short-term jobs over five years. Conversations with Treasury officials and other government officials suggest that the programme is likely to target 1 million jobs over the five year period. While this is a welcome move in the right direction, it will not bring about a significant shift in the poverty crisis. Therefore, the EPW programme should be treated by government as only one small step in a continuing process of expanding direct income support to the poor. This is in line with the suggestions of the Taylor Committee Report (Ministry of Social Development 2002).

• In order to make swift progress in the eradication of poverty, it is important not to focus exclusively on the allocation of new money to key programmes delivering services to the poor. It is as necessary to consider what challenges arise from the MTBPS 2003 in terms of budgeting and programming for the poor in future. Section 3 of this document examines in more detail some of the key challenges that need to be addressed in programming and budgeting for the poor with reference to the four programme areas prioritised in MTBPS 2003.
• Key questions in this regard are:
• What are the obstacles that need to be overcome to ensure that the funds allocated to HIV/AIDS activities (and in particular the ARV programme) are spent quickly and effectively?
• It is good that so much more money has been allocated to extending basic services at the local government level, but will the funds be spent quickly and how can we ensure that they are?
• What challenges need to be addressed to ensure that the EPW programme is rolled out quickly and the allocations are spent well?
• And critically, how can we further extend the social security net to ensure that no one in South Africa has to suffer "the daily terrorism of hunger" and the right to a basic income for everyone is realised?
• Government has made tremendous progress in extending income support to the poor by expanding social assistance and other programmes. Approximately half of those in need of income support now receive support directly. However, more still needs to be done, so that in line with the spirit of the Constitution, no one suffers an inability to meet basic needs.

It is broadly accepted that the South African Constitution and various other legal human rights instruments oblige us to ensure that the Budget (and other policy instruments) are used to deliver the comprehensive set of socio-economic rights given to everyone in the Bill of Rights. According to the Constitution, it is imperative for scarce resources to be used in such a way as to facilitate all South Africans having sufficient income to meet basic needs and access to basic and social services (such as health, education, water, sanitation and shelter).

The twin crises of deep poverty and unemployment persist. Research shows that poverty is tightly linked to the structural unemployment crisis. HIV/AIDS also increases and deepens poverty. It is difficult to measure the poverty crisis and reveal the extent to which socio-economic rights are still not being met in South Africa. Poverty incorporates suffering beyond that associated with insufficient access to resources (such as hunger, ill health or lack of access to education). It also involves psychological suffering associated with discrimination and social exclusion that goes hand in hand with insufficient access to income and services.

The approach to measuring poverty that is now most common is to focus on income as an indicator, supplementing this with other indicators and qualitative data (such as inputs from poor people themselves). This approach has its own limitations, particularly in deciding on an appropriate income poverty line. It is beyond the scope of this submission to engage in this methodological debate. However, it is important here to draw attention to the following points about the extent and severity of the poverty crisis and to consider what prospects there are to reduce poverty in the near future through employment-creation in South Africa.

• Depending on the income poverty line used, researchers put the number of South Africans living in poverty at anywhere between 45 and 55 % (Ministry for Social Development 2003:29). If Actuarial Society of South Africa (ASSA) 2000 population estimates are used for 2003 (47 105 335) this translates into between 21.1 and 25.9 million poor people in South Africa. Assuming a poverty rate of 50%, 23.5 million are poor.
• According to a recent measurement of child poverty, which set the poverty line at R430 in 2001 rands per capita per month and used the Income and Expenditure Survey (IES) 2001, 75% of children in South Africa are poor. Using the IES estimate of the number of children, this implies about 13.3 million poor children.
• Food insecurity (hunger) is extensive. For example the National Food Consumption Survey, conducted in 1999, concentrated on children age 1 to 9 but also looked at hunger at the household level. According to the survey findings, 52.2% of children age 1 to 9 experience hunger at least five days of the month. Almost 75% of children either experience hunger or are at risk of hunger. 45% of the population in rural areas and 26% in metropolitan areas go hungry at least a few times a month. 17% of people living in rural areas go hungry at least once a week and 5% of those living in urban and semi-urban areas go hungry every day.
• Unemployment, in Manuel’s words, "remains a critical policy challenge". While job creation has broadly kept pace with economic growth (Seria, Business Day, 13 November Ibid), the unemployment rate has been rising. The official unemployment rate is 31.2% and the expanded rate is 42% (Statistics South Africa, Labour Force Survey, March 2003).
• Economic growth cannot be relied upon to have a large impact on poverty and the unemployment rate in the near future. Even though growth rates are positive and forecast to be higher than this year (see Table 1), they are not much higher than over the last three years. According to private sector economists, the forecasts may be a little optimistic (See Business Day, Ibid). In addition, there is no reason to expect a sudden change in the nature of the skills of the poor and the demand for labour, so as to facilitate a better match between them. The limited prospects for the private sector to absorb large numbers of the unemployed in the near future are also highlighted in a recent research study by a team of economists (led by Bhorat and Leibbrant) at the University of Cape Town.

• Of course, it is imperative for poverty reduction that the economic growth rate becomes fast enough to begin to decrease the unemployment rate. It is also essential for the various skills development initiatives of government to begin closing the gap between the skills of the unemployed and the demand for labour in the economy. However, the point is that this mechanism can still not be relied on to reduce poverty. This underscores the importance of government investing in programmes that deliver services to the poor in the fight against poverty.
• Economic growth is also critical in the challenge to reduce poverty for its role in providing the revenue needed to finance programmes for the poor. As a number of researchers have pointed out and as the MTBPS 2003 also stresses, "fiscal consolidation and stabilisation of the public finances" between 1996 and 2000 (the programming period of GEAR) provided room for fiscal policy to become more expansionary and supportive of growth from 2001. Critically, it also gave government space to step up investments in programmes targeted at delivering services to the poor so that they can meet their basic needs (see Idasa 2001 and 2002 and Streak 2004).
• MTBPS 2003 was presented against the backdrop of a slightly different revenue position. For the first time since the introduction of the Medium-Term Expenditure Framework in 1997, budget revenue projections had to be adjusted downwards in the MTBPS. In this year’s MTBPS, the main budget revenue projection for 2003/04 has been adjusted downwards by R4.6 billion to R299.9 billion. The total tax revenue estimate for 2003/04 has been revised downwards by R6.3 billion. These revisions have been based on a review of macro-economic conditions, mainly lower-than-expected economic growth and a stronger currency. Table 2 sets out the revised estimates. Main budget revenue projections for the two outer years of the MTEF period, 2004/05 and 2005/06 were also adjusted downwards, by R5.3 billion and R3.4 billion respectively.

In the context of a tighter revenue position, government managed to continue the trend (adopted since 2001) of substantially raising real expenditure on services without compromising fiscal sustainability. It found room for an expansionary pro-growth and pro-poor fiscal stance by raising the budget deficit. It was able to raise the budget deficit without compromising fiscal sustainability because of fiscal consolidation and the stabilisation of the public finances over the past seven years (MTBPS 2003:33).

Table 3 below shows the adjustments made to the main budget deficit:GDP ratio planned for 2004/05 and 2005/06 at the time of the release of the 2003 Budget. It also shows the budget deficit:GDP ratio planned for 2006/07. It can be seen that by the latter date, government plans to once again have a relatively low budget deficit – less than 2.8% of GDP.

Source: MTBPS 2003:64 Table 5.3 and own calculations. GDP inflation given on page 32 of MTBPS 2003 used for calculation of real values.

Three important points emerge from a consideration of the rate of increase in non-interest consolidated national and provincial expenditure:

• While real growth is expansionary for the first year of the MTEF period, it is less so than between 2002/03 and 2003/04.
• The rate of increase in non-interest expenditure declines in the outer years of the MTEF.
• The rate of increase in real non-interest expenditure is sufficiently large to allow for real increases in non-interest consolidated national and provincial spending per capita (See Table 6 below).

The picture sketched above of the rate of expansion of non-interest spending excludes local government. If local government is included, the rate of expansion is slightly faster. This is because in the division of revenue, local and provincial government’s shares increase over the MTEF, with local government having by far the greatest increase. However, local government expenditure constitutes a small share of total government expenditure, so the impact on the total rate of growth is not large.

The MTBPS 2003 is to be applauded for prioritising the needs of the poor in the distribution of planned spending across sectors and programmes. Table 5 illustrates the real growth rates in planned expenditure across sectors for the period 2003/04-2006/07. It shows that:

• Social services allocations, and in particular those for welfare and social security, have a rate of annual average growth for the period 2003/04-2006/07 that is above the annual average growth rate for service spending as a whole. Social service spending has a growth rate of 3.9% against the 3.6% for all services together. Welfare and social security spending has an annual average growth rate for the period of 7.1%.
• Health services have also been prioritised. This is reflected in the above average annual real rate of growth for the period 2003/04-2006/07.

Within sectors, at the programme level, the three-year expenditure plan as put forward in the MTBPS 2003 prioritises investment in programmes delivering services that are particularly important in the fight against poverty. In addition to the continued prioritisation of infrastructure spending, the four initiatives outlined below have particular potential to impact beneficially on the lives of poor South Africans.

The MTBPS 2003 prioritises allocations to municipalities for rolling out - more quickly - basic municipal services (of which the main ones will be free). This includes water and sanitation, electricity, refuse removal, roads and community facilities. This was channelled through two streams:

• The equitable share and related conditional grants; and
• Infrastructure conditional grants.

The Department of Provincial and Local Government (DPLG) and other service departments encourage municipalities to spend their equitable share on basic services. The equitable share of local government increased substantially between 2002/03 and 2003/04. Between 2003/04 and 2004/05, it is set to increase by 13.1% in real terms. Over the entire period 2003/04 and 2006/07 it is set to increase by 7.4% in real terms.

The infrastructure grant is specifically for bulk, connection and reticulation infrastructure for basic services, roads and community facilities in poor areas. This grant increases by 14.5% in real terms between 2003/04 and 2004/05. The real annual average increase over the period 2003/04 and 2006/07 is 7.6%.

The EPW programme has recently been identified by government as one of the key strategies in meeting the growth and development challenges of our country. In the MTBPS 2003, it is flagged as a key spending priority. It is important to note that while the MTBPS 2003 highlights the EPW programme as a key initiative for the poor, it says little about exactly how much has been allocated to the programme.

The MTBPS 2003 alludes to a large reallocation of resources towards provincial and local government to implement the EPW programme. However, it does not provide details on the exact amounts allocated to the programme over the five-year implementation period. It says that the programme aims to create 750 000 work opportunities over the next five years.

To shed some more light on what the envisaged programme entails, as well as the size of allocations and how many jobs it aims to create by when, BIS contacted officials at National Treasury and the National Department of Public Works. It also investigated what President Mbeki said about the programme in an Address to the National Council of Provinces on 11 November and drew on a recent research study by McCord (2003).

These investigations revealed that the intention is to implement the EPW programme in phases over a five-year period, targeting about 1 million unemployed workers. Sub-programmes that form part of the EPW programme are to be organised according to four sectors: infrastructure; environment and culture; social; and economic. Government departments involved in the programme will include Public Works, Environmental Affairs and Tourism, Agriculture, Education, Health, Social Development and Trade and Industry.

BIS managed to gather projected allocations for three of the four sectors for the five-year implementation period:

• Infrastructure - R15 billion has been allocated, which will form part of the conditional infrastructure grants to provinces and municipalities. A conditionality has been added to these grants that require departments to include infrastructure projects that are labour intensive.
• Environment and culture - R4 billion has been allocated, which includes allocations to existing programmes like Working for Water, Land Care and Working on Fire.
• Social sector - R600 million has been allocated for programmes such as home-based care and early childhood development. These social sector allocations will be channelled through non-governmental organisations and community-based organisations. National Treasury envisages an increase in the social sector allocation.
• Economic sector – allocations not yet been determined.

The implementation of the EPW programme in the infrastructure and environment sector as well as the culture sector essentially involves the continuation of existing public works programmes. This is not the case with social and economic sector programmes, which are still in the planning phase. The Department of Public Works hopes to have more clearly developed plans for these sector programmes by February 2004.

In Budget 2003, government announced an increase in the age eligibility for the CSG. This meant that the age limit for eligibility would be raised to children under nine in April 2003/04, to those under eleven in April 2004/05 and to those under 14 in April 2006/07. The ideal would have been to see an upward adjustment of the age limit that allowed all children to benefit more quickly from the CSG. Nonetheless, the Budget 2003 announcement was regarded as a welcome policy change. The size of provincial equitable shares was adjusted upwards in Budget 2003 to facilitate the extension. A special conditional grant, called the Child Support Extension Conditional Grant was also introduced. The size of the allocations to the Child Support Extension Conditional Grant in Budget 2003 was 1.1 billion for 2003/04, 3.4 billion for 2004/05 and 6.4 billion for 2005/06 (Budget Review 2003:163).

The spending plans announced in MTBPS 2003 incorporate more allocations for the roll-out of the extended CSG programme. The implementation of the CSG programme is at the moment still financed by two streams of funding – the provincial equitable share and the newly introduced conditional grant. In MTBPS 2003, the provincial equitable share was adjusted upwards to facilitate provinces rolling out the extended CSG programme (MTBPS 2003:66). In addition to raising the equitable share of provinces so that roll-out would be able to meet demand for the CSG by older children that are becoming eligible, an amount of R2.5 billion was "added to the conditional grant in 2006/07 to provide for additional beneficiaries" (MTBPS 2003:79).

The size of the provincial equitable share was also adjusted upwards in MTBPS 2003 to help provinces meet growing demand for the dependency and foster care grants. This move is welcome as the demand for foster care grants and in particular dependency grants has been increasing rapidly over the last couple of years.

The fourth new spending initiative in MTBPS 2003 at the programme level that will have clear benefits for the poor concerns HIV/AIDS activities and specifically, the roll-out of the antiretroviral treatment (ARV) programme. Support can also be expressed for the dual funding mechanism - using both conditional grants and allocations made through the equitable share. However, while appropriate, the latter does introduce some liabilities and will require efforts by the provincial departments of health to ensure that these funds are allocated for HIV/AIDS activities.

Table 7 below indicates the various allocations made directly or indirectly to HIV/AIDS in the 2003 Budget and MTBPS 2003. It illustrates that the total for HIV/AIDS activities over the MTEF three-year period is almost R12 billion. In the MTBPS 2003, an amount of 1.9 billion extra was allocated - specifically for the ARV programme.

* The amount for the original conditional grant for 2006/07 was not available in the 2003 Budget. The amount of R567million is estimated.

** The allocation for the HIV/AIDS Directorate for 2006/07 was not available in the 2003 Budget. Therefore it has been estimated using a 10% increase from the previous year’s allocation.

*** The allocation for the ES for 2006/07 was not available in the 2003 Budget. Therefore it has been estimated here based on the global amount of R4.8billion indicated by the Minister in the MTBPS Speech.

The Joint Health and Treasury Task Team for ARV costing estimated that the total additional funding requirements for the first year for a 100% roll-out scenario would be between R200 and R300million, while a 50% roll-out would require R100 million. The task team believes the 50% roll-out is "a more realistic forecast of both likely uptake and of implementation capacity for a national ARV programme" (South African Joint Treasury and Health Task Team 2003:79). It would appear that R300 million is sufficient for a 100% roll-out of the ARV programme in the first year. However, the budgeted amounts for the two following years appear to fall somewhere between the funds required for the 50% and 100% roll-out scenarios. The funds required will steadily increase as the uptake increases.

The increased allocations to HIV/AIDS in MTBPS 2003 are to be welcomed. This shows that national government is committed in fighting the HIV/AIDS epidemic. However, BIS research on HIV/AIDS funding flows has identified challenges faced by provincial departments in spending HIV/AIDS funds. Some of these are identified in section 3 below.

The division of revenue between local, national and provincial government reflects the prioritisation of expenditure on sectors and programmes important for the poor. Provinces and local government have the overwhelming responsibility for financing and implementing most poverty reduction programmes. These include, as explained above, the four programmes prioritised in the MTBPS 2003: basic services, the Child Support Grant, expanded public works and antiretrovirals.

In the spending plans introduced in the MTBPS 2003, the shares intended for local government and provincial government rise relative to national government. The share for provinces rises from 56.8% in 2003/04 to 57.1% in 2004/05 and 57.7% in 2006/07. The share of local government increases from 4.2% in 2003/04 to 4.5% in 2004/05 and 4.6% in 2006/07.

Provincial conditional grants see particularly strong growth in real spending, driven by the increase in the child support conditional grant. The distribution of resources across spheres of government proposed in the MTBPS 2003 for the MTEF period 2003/04-2006/07 is illustrated in Table 8.

Government is to be applauded for facilitating poverty reduction in the spending plans introduced in MTBPS 2003.

Yet, the spending initiatives introduced in MTBPS 2003 are but a small component of what needs to be done to ensure that all South Africans realise their constitutional socio-economic rights and that poverty is eradicated. Many challenges remain and will have to be overcome. The task goes beyond the need for government (led by National Treasury) to find more resources to allocate to existing programmes in order to expand service provision to the poor. In addition, the challenge for government will also be to re-think its policy direction in some programmes (such as social assistance programmes) and to allocate resources to new programmes for the poor (such as new social assistance programmes or more public works programmes). It also extends to managing the implementation of programmes that already exist for the poor in ways that ensure that all funds allocated to programmes are spent quickly and effectively.

This section of this submission document raises a number of implementation and design challenges in each of the four programme areas prioritised in MTBPS 2003. As already stated, the prioritisation of these programmes is an important step towards addressing the needs of the poor. The challenges below represent potential obstacles that could undermine the desired impact of these programmes.

Research by the Idasa Budget Information Service’s AIDS Budget Unit (ABU) indicates the following challenges in HIV/AIDS spending:

• There is a need to ensure that funds allocated for HIV/AIDS programmes through the provincial equitable share are allocated to the HIV/AIDS activities they are destined for.

• There is a need to build capacity to spend funds allocated to HIV/AIDS.

• More effective communication channels are required.

• There is a need to improve tracking and monitoring.

2. Challenges relating to spending of funds allocated to basic services

Progress in the implementation of free basic municipal services has been mixed to date. The continued roll-out of the free basic services programme depends on the broad institutional context in which service delivery occurs. Some of the key challenges identified by the local government research project at BIS are listed below:

• There is a need to address conflicting approaches to reforms in inter-governmental fiscal relations.

• There are municipal shortfalls in service planning capacity.

• Institutional arrangements around service delivery need to be developed.

2. The expanded public works (EPW) programme

Due to the novelty of the EPW programme and because BIS has not itself undertaken any research on public works (including the new programme), we are hesitant to make concrete assertions about the challenges around spending the funds allocated to the EPW programme. However, the following challenges have emerged out of discussions with various government officials and consultations with an expert on public works in South Africa in the last week:

• There will be a need to facilitate the effective co-ordination of the programme across sectors and departments.

• Government will have to ensure the spending of funds allocated to provinces and in particular to local government.

• Effective programme monitoring and evaluation systems will be required.

• There will be a need to overcome inflated expectations of what the EPW programme can do for the poor

Research by the Children’s Budget Unit (in the Budget Information Service at Idasa) has highlighted a couple of the key implementation challenges that need to be addressed to facilitate the rapid roll-out of the extended CSG programme. This section concludes by highlighting the challenge that many believe government must address with regard to the provision of direct income support (mainly through social assistance) to stay true to the spirit of the Consitution.

• There is a need to address differential provincial performance and capacity.

• There is a need for better data on eligible children to improve costing, budgeting and monitoring.

• How will the creation of the National Social Agency facilitate roll-out?

• The drive to provide birth certificates and identification documents to promote access in remote areas must be continued

The various initiatives to expand delivery of basic and social services and direct income support to the poor in MTBPS 2003 are very laudable. However, they are still insufficient in the light of the extent of the poverty crisis and moral and legal imperative (legally enshrined in the Constitution) to ensure that all people have sufficient income to meet basic needs.

It is true that South Africa’s social assistance programmes are extensive and advanced for a developing country. Moreover, through these programmes and others such as the Integrated Nutrition Programme (INP) and the provision of affordable schooling and health services, government has made rapid progress in assisting the poor. Considering the provision of income support through social assistance grants alone, the success in expanding income support to the poor is immediately visible. Table 9 on the following page shows that 7.2 million people were directly benefiting from grants in October 2003. Of course, the income given to actual beneficiaries flows to others in households who are not directly benefiting, so the number benefiting is even greater.

Source: National Social Development Department, from SOCPEN.

Government estimates that 3 507 177 children aged 7 to13 will be added as social assistance grant recipients with the full phasing in of the CSG programme (National Department of Social Development 2003). As stated above, its seems as if the EPW programme will lead to income support for 1 million people if the programme unfolds as is now being planned (this is an optimistic scenario, the MTBPS 2003 suggests 750 000). This will make the total number directly receiving income support from the state about 11.7 million. This is a significant amount of beneficiaries. Using an estimate of the income poverty rate of 50% (in between those found in the Taylor Committee Report) and our estimate of the number of people in South Africa, then 49.7% of the 23.5 million people in need of income support will be receiving it. In addition, this still excludes those indirectly benefiting and the handful of other programmes government has put in place to provide income support.

However, the current set of programmes target only children up to the age of 14, severely disabled or fostered children, the elderly and adults that because of a disability cannot work. Unfortunately, these programmes still do not meet the needs of all South Africa’s poor. In the process, it leaves out the millions of people who are unable to find jobs in the market economy due to structural unemployment, children over 14 and orphans that have not yet been officially fostered. The exclusion of half the population of the poor from the social assistance net appears out of line with poor people’s constitutional entitlement to social assistance. Civil society and government need to work together to investigate how even in the current climate of less than expected revenue, social assistance programmes (or other programmes) can be developed to provide income to all South Africans that do not have enough to meet basic needs. A situation in which people in South Africa have to suffer ‘the daily terrorism of hunger" because of lack of prospects for employment in the market economy and failure to access the entitlement to a minimum income implied by the Constitution, cannot be allowed to continue.

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