Restructuring Free Basic Services to Support Equitable Development

About this brief THE SOUTH AFRICAN CONTEXT – South Africa is characterised by high poverty and inequality. More than half of all households live below the upper bound poverty line, which for a household of four means a total monthly income of less than R6,536 in 2024. Forty per cent of households live below the lower bound poverty line: a total monthly income of less than R4,436 for a family of four. Some 25 per cent – almost 4.5 million households – live below the food poverty line: less than R3,076 total income for a family of four. Living below the food poverty line means that the entire income of the household is less than what is required to purchase minimum daily calorie requirements. Our research shows that the developmental level of access to services is unaffordable for the approximately 25 million people (some 7 million households) who live below the lower bound poverty line. The FBS policy was envisaged as a key component of the social wage; an important means for poor households to meet a minimum standard of living despite their limited income. However, the current structure and management of the free basic services – which was intended to significantly reduce this barrier to access – is not delivering the intended pro-equity development impact: • Millions of poor households are not receiving these benefits because of the exclusionary indigent policies of their municipalities; • The current level of benefits – particularly electricity – makes up only a small part of the developmental level of access; and • The onerous conditions imposed by many municipalities on free services beneficiaries effectively prevent beneficiaries from using these services to engage in productive activities and increase the administrative costs of implementing the FBS policy. We believe that significant socioeconomic benefits can be obtained by redesigning the current FBS and indigent register system, as set out below. These recommendations have been developed with the current f