Impact of the Budget on Social Service Delivery and Poverty
February 1999

Children, the most powerless and vulnerable, have probably been the most adversely affected by the overpowering state of poverty in our country. South Africa's population comprises 50% children (19,755,600 million) and they suffer from poor nutrition, inadequate health and welfare services, lack of clean water, sanitation, basic education, inadequate social security, inadequate protection from abuse and neglect and an environment of violence and crime.

61% of South African children, under the age of 16, live in poverty. They experience the highest poor and ultra-poor poverty rates.

Our infant mortality rate is 4 times higher than that of countries with comparable economies.

Of the 1,2 million children who are born annually, 85,000 die before their fifth birthday.

23% of our children under the age of6 suffer from chronic malnutrition or stunting. Poverty, a lack of resources, inaccessibility of resources and unhealthy conditions are major factors causing illnesses and death among our children.

The socio-economic impact of HIV/AIDS and the impact of the growing epidemic on children and families, are severe. Women and children are particularly vulnerable to infection. AIDS has a disorganising impact on families
- it is a family disease in that children are directly affected by almost every adult case of AIDS. The increasing social and economic burden of caring for these children will not be adequately met by the extended family which is already experiencing great stress and disorganisation. Already great demands are made on the Child Welfare Movement, to meet the needs of children infected, affected or orphaned by AIDS. This system is already overburdened due to the lack of human and financial resources.

There is a strong correlation between poverty and the abuse of children's rights to protection and well being. After assault, the most commonly reported crimes by the "very poor" was child abuse and rape.

15336 children were raped - 1997
122 children were subjected to - 1997
9000 were physically abused - 1997
. 1 399 children under the age of 17 were murdered
816 were under the age of l2
It is estimated that 200 000 children between the ages of 10 and 14 and another 200 000 between the ages of 15 and 18, are engaged in various forms of paid labour.

Child prostitution, the 'silent" crime against children, is also increasing. It is estimated that over 10 000 children are living on the streets and some are used for commercial sex.

The 1997/1998 data of the Child Welfare Movement indicated that the Movement, dealt with

1206 abandoned children;
1369 new reported cases of abandoned children;
888 orphaned children;
2367 physically abused children;
2805 sexually abused children;
5878 neglected children;
9049 children were found to be in need of care in terms of the Child Care Act.

Only one in ten pre-school children are in Early Childhood Development programmes.

The school going child has also been adversely affected by poverty and its consequences.

39% of households in our country are headed by women. The poverty rate amongst female-headed households is 60%, considerably higher than the rate of 31% male headed households. An added burden to the women in the rural areas with its lack of facilities and services, is that these women, usually grandmothers, care for children - it was estimated that 1,5 million children are cared for within the extended family due to the fact that 50% of women in the labour force are aged between 25 and 44, their childbearing and parenting years.

Women constitute 500/o of the poor and 50% of the ultra-poor - women and children are deemed to be the poorest in the country.

As signatory to the World Summit for Social Development, Copenhagen 1995, the South African Government committed itself to:

creating an enabling economic environment for people to achieve social development - which means that Government has to ensure an economic environment that promotes equitable access for all to income, resources and social services;

eradicating poverty - which means that Government must, in partnership with Civil Society

ensure that national budgets and policies are oriented to meeting basic needs, reducing inequalities and targeting poverty, as a strategic objective;

seek to reduce inequalities, increase Opportunities and access to resources and income, and remove any political, legal, economic and social factors and constraints that foster and sustain inequality.

Poverty is mostly defined as people lacking material means to provide for basic needs, but in S.A. poverty is also rooted in the inequitable distribution of resources. Poverty is not only the state of being poor or deficient in money or means of subsistence but also a state of being deficient or poor in opportunity and choices. The human development sector regards the lack of opportunity and choices as being more relevant as it focuses on the causes of poverty and leads directly to strategies of empowerment and other actions to enhance opportunities for everyone. Human poverty is a more fundamental threat for the poor as it deals with the most basic of deprivations i.e. illiteracy, shortened live span and lack of access to public and private resources. Poor people need both capabilities - income and opportunities and choices - it is not an either/or situation.

Welfare is the fourth largest vote in the Government budget, accounting for 10% of the total. However

approximately 90% of the Welfare budget is allocated to social security, in the form of old age pensions, pensions for the disabled, maintenance grants and social relief The old age pension programme consumes 60% of the social security budget;

less than R 2 billion rand is spent directly on supporting children and families through the Welfare budget. That means only between 13% and 14% of the Welfare budget of provinces is spent directly on children and families. Of this 73% (R 1,3 billion) is taken up by cash grants. 18% (R 0,3 billion) is subsidies to welfare organisations and 9% (R 0,2 billion) by services provided by provincial welfare departments. Between 0,3% and 0,4% is therefore spent on government transfers 2nd welfare services to children.

Less than 10% of the Welfare Budget goes towards services, a percentage that has been shrinking gradually over the years to its present all time low. This meagre percentage of the total welfare budget not only needs to finance the entire operations of the Department of Welfare, but also the subsidisation of State supported NGO welfare services. Within this scenario the subsidised voluntary welfare sector, like the Child Welfare Movement of South Africa got the short end of the stick. For several years now we have been facing a dramatic reduction in state subsidies in real terms. State subsidies comprise only 45% to 50% of the running expenditure of child welfare organisations. This situation has the following ironically tragic implications:

In spite of the commitment to the developmental social welfare model and social development in general, the processes are seriously hampered due to lack of finance.

The widespread curtailment of essential, child protection and child development services in the most impoverished and disadvantaged communities, despite sincere efforts to re-focus, re-prioritise and redistribute services towards a just and equitable service delivery system. Early Childhood Development programmes, for example, which should receive the highest priority because of its fundamental preventive and developmental nature, as well as the fact that it provides a safety-net or vulnerable children, have been curtailed significantly throughout the country.

No expansion of services can take place, despite increasing demands for our services due to commonly acknowledged widespread conditions and practices violating children's rights. Abusive, poverty related conditions impact severely on children, while large sectors of society are still excluded from protective and developmental services due to financial constraints.

The Child Welfare sector in South Africa, still responsible for the bulk of protective and developmental services to children, faces a total collapse unless there is a serious rethinking on the availability of State finances for these services which are fundamental in the process of social development. It is a fallacy to think that the huge gap of 50 to 55% between State subsidies and the actual expenditure of welfare organisations can be secured through fundraising and donations.

For Child Welfare at the moment this would amount to approximately R4Om to R5Om without considering the low levels of remuneration of staff and the dire need for the expansion and development of our services.

The salaries of staff employed by Child Welfare and other voluntary organisations are much below the salaries of their colleagues employed by the State, resulting in an exodus of well-trained and experienced staff to join government departments. High staff turnovers with a lack of continuity are not only very costly to already battling welfare organisations, but also has a strong demoralising effect on staff, impacting negatively on productivity, commitment and loyalty.

The recruitment and training of volunteers are also becoming more and more difficult due to the financial hardships that need to be faced by management volunteers.

The need for transformation within the voluntary welfare sector is seriously hampered by black staff leaving our services to join government departments for more lucrative remuneration packages. In the Child Welfare Movement, for example, it is very difficult to achieve transformation by means of the implementation of our Affirmative Action Policy.

Social security has always been the safety-net for poor people.

Our recommendation to split the welfare budget into social security and social services, will ensure that the vital services to children are strengthened;

We are especially concerned about the number of homeless children in the country.

Child Welfare data indicates a 50% increase in the number of abandoned children, an increase in the number of orphaned children and an increase in the number of children affected and infected by AIDS.

Children should not languish in institutional care waiting for family placements. The recruitment of foster parents and adoptive parents are therefore crucial for their healthy development. Unfortunately, the majority of our population lives in poverty and although they are willing to care for children, they are unable to do so financially.

These vulnerable communities lack the infrastructure and resources to contribute towards the development of support structures for their vulnerable or at risk households. Yet they are the ones who are expected to bear the main burden of dealing with the consequences of AIDS, including caring for the millions of orphans.

It is imperative that we make it possible for communities to take on this responsibility by offering incentives like grants and subsidisation as well as developing resources. The Welfare Budget should make special provision for foster care grants and subsidised adoption and/or other kinds of assistance e.g. food parcels.

Another major concern is the shortcomings of our new Child Support Grant which only caters for the needs of children between the ages of birth and seven years.

Although the new Child Support Grant has distinct advantages reaching 30% of the poor children between the ages of birth and seven, it also has many disadvantages. The present phasing out and eventual removal of the maintenance grant system, will be negative for those currently on the system.

The children in the age group 7 to 18 are left extremely vulnerable. The cost to society may be very large with

children separated from their parents - being institutionalised or placed in foster care - at a much higher cost for the state;

children being abandoned - already child welfare data indicates an increase of 50% in the number of abandoned children for the year

an increase in the number of children in child labour - sometimes the only income in a family;

an increase in child prostitution - the only way to survive;

an increase in children living on the streets.

What is even more worrying is that the implementation of the Child Support Grant is failing dismally. Although by phasing out the maintenance grant the government has saved an estimated R4 million, which was supposed to be redistributed in the form of a child support grant, this is not happening because of

the inaccessibility of the grant as a result of too strict criteria,
lack of capacity to administer this grant.

We therefore believe that, in spite of the Child Support Grant's goal to reach more children, it seems that this has not been achieved. In fact this failure as well as the simultaneous phasing out of the maintenance grant, means that more women and children are exposed to poverty (bearing in mind that women and children constitute the bulk of the poorest of the poor, in South Africa).

The Child Support Grant should be expanded or programmes developed to include children in the age group 7-18. We believe that social security should be offered to these impoverished female-headed households and accessibility to the Child Support Grant be improved by

doing away with the overly stringent criteria;
the Department of Welfare rapidly overhauling its implementation plan for the Child Support Grant, e.g. utilising the expertise of the voluntary welfare sector as well as other Non Profit Organisation.

Government alone cannot solve or address our country's poverty problem. The input of civil society is imperative - especially that of the NGO sector. The input from the private sector and individual initiative has always been the great strength of our country and an effective supplement to Government effort.

The NGO sector, however, needs to be financially strengthened to enable them to implement programmes that address the needs of our people and especially that of our children. We, however, commend Government for its efforts to alleviate poverty and believe that the goal of eradicating poverty is attainable if

it is a well orchestrated, co-ordinated effort with the involvement of Government, civil society, the NGO sector, business and other role-players with clear role clarification, focus and goals;

existing poverty alleviation programmes are linked within a proposed National Plan/Strategy, which includes job creation programmes;

efforts are focussed on the root causes of poverty and special priority given to the needs of women and children who, as implied by the aforementioned information, bear the greatest burden of poverty;

special effort is made to ensure that our children have access to resources -education, especially early childhood education, health, justice, social services, protective services and provision of clean water, sufficient food and shelter;

economic growth is linked to human development. Investment in our children will have high social and economic returns as it will assist in addressing the problem of poverty in the future.

Welfare NPOs lost funding from its traditional donor base when government established the RDP Fund and approached these donors. The result was that the donors withdrew their donations from M)Os in order to transfer these funds to the

NPOs were thus left without essential funds and not only had to curtail the services and retrench staff, but also had to learn to survive with a financial backlog from which very few have recovered up to now.

Other threats to Non-Profit-Organisation's funding efforts are

the economic situation in the country;
cut backs in government assistance to children's services;
scrapping of the scratch card system in view of the establishment of a National Lottery.


We know that the social responsibility budget is a heavy "burden" for government to carry - especially in view of all its other responsibilities. We however live in a country where inequality and the results thereof have left us with many social problems that need to be addressed.

NPOs who up to now to a great extent relieved government of this burden, have been struggling to make ends meet because of a marked decrease in its financial resources -both in terms of assistance from government and support from the private sector.

We believe that government can create a more enabling environment for NPOs and in the same time develop a culture of giving (philanthropy) in our country by providing tax concessions to NPOs and their donors. We have found that communities take pride in "looking after their own". They want to be involved in their own development and caring for their needy, however, they need government to support them in their endeavours by:

The private sector can be motivated to make greater contributions to the services of NPOs, by granting them tax concessions. Business believes that "charity is the responsibility of the state" and that their ultimate responsibility is to act in the best interest of their shareholders. A businessman explains:

"As a corporation, you re only permitted to deduct expenses directly related to your business; seen in these terms, donations for charity are not business related, and therefore constitute a private expense. That's fair enough, but if the government wants to encourage corporations to lend financial Support to charities, it's a bit churlish to tax the very income that's going to be supporting them."

Another one says:

"Companies making substantial donations receive no tax relief. In effect we re being taxed twice; firstly, on the profit which we're earning and secondly, by having to stand in for the state, the very institution which should be shouldering the social responsibility. I believe this unsympathetic attitude is abominable, and the time is long overdue for government to pull itself out of the Middle Ages and follow the practice of other advanced nations."

From the afore-mentioned statements, it is obvious that companies will not assist government in reducing its expenditure on welfare and other social programmes unless it gives incentives to business and create a win-win situation. In India, the USA etc, where tax deductions to donors to social causes is a matter of policy, there is proof that government spending has eventually been markedly reduced. In fact, according to the NGO Coalition, "international research indicates that the value of contributions made to development far out strips the income government could have received from tax

In terms of section 18(a) of the Income Tax Act, donations to universities, technikons and colleges are tax deductible, yet the educational element in "Early Childhood Development' is ignored. As our research shows the majority of 0-6 year olds in our country fall within the poor and ultra-poor categories. However, only 9% of them are in any type of Early Childhood Development programme.

If we neglect the vulnerable children in their early years in life especially in the first 2 years of their life, where they learn the most we do not have a hope to build a stable and healthy nation. Early Childhood Development programmes provide a "safety net" for vulnerable children. The state has cut back on the very little support it has given these programmes, 90% initiated and run by NPOs. Many of them are closing down. Assist us in stopping this, by broadening the provision of section 18(a) to include literacy and other forms of training as well as any other services aimed at the social development of the South African community.

It is strongly recommended that a tax deduction of 10% on donations to both the corporate and individual donors to social responsibility organisations, be considered as a matter of urgency.

We, as welfare organisations are grateful for the tax benefits we currently receive from government. Without it, we would have had to cease our services a long time ago. We therefore support the call that these benefits also be made available to other NPOs.

The NGO Coalition's request for a review of the level of funding is supported
-that the allocation be increased to at least a "start-up budget" ofR~,5 billion.

That criteria for funding and administrative requirements be simplified in order to make it more "user-friendly".

One area where immediate change is possible is to restructure the debt -particularly the debt owed to the Public Investment Commission. This would release up to R15 billion per year for poverty eradication and infrastructure development.

The revenue NPOs have lost as a result of the scrapping of their scratch card systems can be recouped if the National Ubuntu and Development Trust is awarded the contract to be the Welfare Distribution Agency.

Considering the aforementioned scenario through which the notions of empowerment human capacity development and the protection of the most vulnerable is negated, we need to express our opposition to an economic policy indicative of a developing country that has fallen prey to the ideology of globalisation imposing uniformity on how we deal with budget deficits, inflation rates, the affordability of social welfare systems and so forth.

This ideology, dictated by the developed, highly industrialised world renders South Africa as a developing country with different priorities, highly vulnerable to the destructive effect of large scale speculation and disinvestment from our country.

South Africa can least afford a curtailment in expenditure, required for facilitating social development and the capacity building of individuals and communities, to take control over their destinies. A hard-core pursuance of economic growth without sufficiently balancing it with protective and social development strategies, will continue to produce scarred and debilitated generations, unable to benefit from economic development. Therefore the question remains: If national economic markets dictate a curtailment in social spending, can we afford not to adequately invest in our people?

Andre Kalis

Lynette Schreuder

Thelma Matthee