Documents the historical context for the current cash transfer programs in South Africa, examines evidence concerning the aggregate impact of these cash transfers on poverty levels, and argues for a stronger focus on active labor market policies to complement the extensive system of cash transfers. There are two separate aspects of social security: the insurance concept (social insurance) and the redistribution concept (social assistance). In some respects, South Africa is an exceptional case for a developing country in the extent of its social assistance provision, with cash transfers going to more than a quarter of the population. It is a middle-income country with almost no public debt, so the cash transfer programs are financed from tax revenue rather than donor funding or borrowing. The immediate objective of cash transfer programs is to alleviate hardship among vulnerable groups, and reduction in poverty over the postapartheid period has been strongly associated with the expansion of social grants.