equalize it with that of women. Total spending on all direct cash grants amounted to some 3.3 percent of GDP in 2010/11 (excluding free basic services of 0.5 percent of GDP), and is more than twice the median spending across developing countries (World Bank 2009).

Other items included in social spending include 0.5 percent of GDP in the form of basic services such as power, sanitation, water supply, and refuse removal (free basic services, or FBS) which were provided free to low-income households (note that the modality of delivery of these services varies across municipalities as described in Box 2). In addition, 12.6 percent of GDP was spent on in-kind transfers via health (4.1 percent of GDP) and education (7 percent of GDP) outlays, while 1.5 percent of GDP was devoted to housing and urban in-kind transfers, which includes RDP housing.<sup>16</sup> In this study, we utilize direct cash transfers, inkind transfers in the form of health and education. Together, these items account for 43 percent of total spending and 85 percent of social spending. It

|Figure 2. Social Spending and Subsidies<sup>15</sup><br>(percent of GDP,ranked byGNIper capita)|
|---|
|16000<br>16%|
|14000<br>14%|
|8000<br>10000<br>12000<br>8%<br>10%<br>12%<br>r capita<br>of GDP|
|6000<br><br>6%<br><br>I pe<br>are|
|0<br>2000<br>4000<br><br>0%<br>2%<br>4%<br><br>GN<br>Sh|
|Direct Transfer<br>Education<br>Health<br>Subsidies<br>GNI per capita (2011 PPP, right axis)|
|Source: Armenia (Younger and Khachatryan, forthcoming), Bolivia (Paz et al, 2014), Brazil<br>(Higgins and Pereira, 2014), Ethiopia (Woldehanna et al, forthcoming), Indonesia (Jellema et al<br>forthcoming), Mexico (Scott, 2014), Peru (Jaramillo, 2014), Uruguay (Bucheli et al, 2014),<br>Lustig (forthcoming) based on Guatemala (Cabrera et al, 2014), Costa Rica (Sauma et al, 2014)<br>and El Salvador (Beneke et al, 2015), and own estimates for South Africa based on IES<br>2010/11.|

was not possible to include the remaining items of social spending due to data limitations. Box 2 describes the main features of each of these social spending programs in South Africa.

# **Box 2. Main features of the key social spending Programs included in the fiscal incidence analysis for South Africa**

# **Cash transfer programs**

Social assistance is prioritized in the national budget in line with section 27(1) of the Constitution which states that “everyone has the right to have access to ... social security, including, if they are unable to support themselves and their dependents, appropriate social assistance.” Social grants are targeted at categories of individuals who are unlikely to be able to provide for their own needs, namely the elderly, the disabled and children.

It is estimated that the fiscal year 2014/15 the Old Age Grant will have reached just over 3 million people aged 60 years and above, up from 2.6 million in 2010/11. The value of the Old Age Grant is currently R1,350 (US$127.5) per month, having kept pace with inflation in recent years. The Old Age Grant is currently means-tested, but reaches over 80 percent of age-eligible individuals. The intention is to phase out the means-test and to make the grant universal by 2016. The disability grant (which has the same monetary value as the Old Age Grant) is currently

> 15Does not include contributory old-age pensions.

> 16However, this category of expenditure was not included formally in the incidence analysis owing to lack of detailed administrative data on housing values. However, we do present results on the coverage of RDP housing by decile to assess who benefits from this program.

7