Report

2015-05-28

Southern Africa Labour and Development Research Unit

University of Cape Town

At the time of the transition to democracy in 1994, the South African social security system was already notably well developed for a middle income country (Lund 1993; Van der Berg 1997; Case and Deaton 1998). This fact can be ascribed to the way in which the system developed under apartheid as a welfare state for whites which was then incrementally expanded under social and political pressure to incorporate other groups. Thus, at the advent of the new post-apartheid society some important planks for a social assistance system were in place. Since then, a set of policies have been implemented that have expanded this system substantially. Direct spending on cash transfers currently stands at 3.5 percent of GDP. This is more than twice the median spending of 1.4 percent of GDP across developing and transition economies (World Bank 2009).

This paper was prepared for the Annual Bank Conference in Development Economics (ABCDE) in Stockholm, 31 May - 2 June 2010. Ingrid Woolard gratefully acknowledges support from the World Bank and the UK Economic and Social Research Council (RES-167-25-0076). Murray Leibbrandt gratefully acknowledges support from the Research Chairs Initiative of the Department of Science and Technology and National Research Foundation.