Abstract
M.Com. (Development Economics)
Since 1994, the South African government has expanded the social assistance programme in the form of social grants, with the main objective of alleviating poverty within the country. Despite the increase in social grant beneficiaries, 53.8 per cent of the citizens are still living below the upper bound poverty line in 2014. Previous studies suggest that the poverty rate might decrease if social grant recipients and their households participate in savings activities. The majority of social grant recipients are located in rural areas, townships and informal settlements in urban areas. The aim of this study is to investigate whether households in an informal settlement, who receive one or more social grants, save a portion of their income, and what their savings behaviour is.
A quantitative research approach is used to answer these questions. A structured questionnaire, consisting of both open-ended and close-ended questions was administered to 215 households in Freedom Park, Soweto, who receive social grants. The sample was systematically chosen. The collected data was analysed using tobit, normal and robust ordinary least square, and probit regression models. The descriptive analysis show that out of the 215 households with social grant recipients, 150 households save some of their income but mostly in burial societies and stokvels. Other instruments utilised by the surveyed are post office bank account, investment account, bank account and cash hoarding.
The regression results indicate that indeed households with social grant recipients in Freedom Park do save. Independent variables that are statistically significant in influencing household savings are social grant income, income earned from economic activities and consumption. As a result one of the policy implications is that households with social grant recipients could be encouraged to save a portion of the social grant income received. The households should also be advised to engage in other economic activities that generate income for the household. Additionally, restrictive measures could be set in place to discourage household indulgence in luxury goods and services as they lead to household dissaving.