Advancement Grant

A universal advancement grant is a once in a lifetime grant intended for every adult South African, to be used for any purpose whatsoever. For example, it can be used for education, training, investment, home ownership, travel or any other purpose.

The motivation for such a grant comes from the ‘fees must fall’ movement. Instead of adopting an unrealistic position that education can be provided for free (try and get a trolley of groceries for free from one of the supermarkets) the DDF have come up with a way which makes it possible for everyone wishing to attend a tertiary institution to do so and have the fees paid for them, such that even those who do not use that benefit for that purpose, can receive the same benefit but apply it to whatever purpose they desire.

Assuming an adult population of thirty five million, which basically remains stable (that is births equal deaths every year, perhaps a bit unrealistically) with an employment career of 47 years (from the age of 18 to 65) then each year 1/47th of 35 Million would become eligible for an advancement grant. We are suggesting an advancement grant of R200 000. This is about the cost of a four year professional degree at a South African university at the time of writing.

If in year one, say 750 000 of the population qualify, that would cost R149 Billion.

But what of the remaining 34.25 Million of the adult population who do not qualify in year one? We will call these the “Left Behinds”. The proposal for this group is that they should receive their R200 000 spread equally over the next 20 years (240 months). That would cost R6.825 Trillion. If paid out to them evenly over 20 years at an interest rate of say 6% pa, that would be about R10.920 Trillion or R546 Billion per year. Paid out to 34.25 Million each month over 240 months would be 10.92T/240months/34.25 Million per month, or R1328.47 per month per person left behind.

All this would initially be funded by a Total Economic Activity Levy (TEAL), as set out below:

If we assume a R2.8 Trillion GDP for 2017 that would equal a Total Economic Activity of 2.8 X 30 or R84 Trillion flowing through the banking system (a relationship previously established here). Each Rand of that flow represents both a deposit and a withdrawal from the banking system so the actual amount to TEAL would be R168 Trillion.

R546 Billion as a percentage of R168 Trillion is 0.325% while R149 Billion as a percentage of R168 Trillion = 0.089% or about 0.09% (=151.2 Billion).

The annual Advancement Grant of R149 Billion and the annual Left Behind Grant of R546 Billion (in total R695 Billion) could be funded annually by a TEAL of 0.09% + 0.325% in total 0.415%. 0.415% of R168 Trillion is R697.2 Billion

Annual Advancement Grant Funding:

Grant

R168 Trillion TEALable amount

TEAL

Total Grant Amount pa

Advancement

‘0.090 % of R168T

R151.2 Billion

R149.00 Billion

Left Behind

‘0.325 % of R168T

R546.0 Billion

R546.00 Billion

Annual Total

‘0.415 % of R168T

R697.2 Billion

R695.00 Billion

There are justifiable concerns about giving young adults with little life experience such a large sum of money. Some form of mentoring and support would need to be developed so that inexperienced recipients are not fleeced of their grant by unscrupulous scam artists, and are encouraged instead to use their grants intelligently and for their own benefit.

There is a similar concern for recipients of the Basic Income Grant and a network of professional mentors also needs to be set up for those recipients. Probably the same support network can be used for the Advancement Grant and the Basic Income Grant.

The fairness issue is addressed by the whole of society funding the benefit and the whole of society receiving the benefit. Admittedly the more economically active will contribute more than the less economically active, but as much as possible everyone is treated equally and fairly. No South African pays for the benefit without receiving the benefit and no South African is left behind.

Some of the initial thinking behind the grant is discussed here No Free Lunch ll and here How to pay for an advancement grant.  Also see TEAL: The Big Picture.