The current economic downturn and the sharp increase in social assistance expenditures in
recent years has shown the importance of the social security system of South Africa in order
to alleviate poverty and to prevent people from falling into poverty. These size, shape and
design aspects of the social assistance system make South Africa an interesting case study and
the objective of this paper is to provide a detailed interrogation of the South African case. Are
cash transfers well-targeted and redistributive? Do we know if they enhance human capital
accumulation? Are they fiscally sustainable? Have changes in social policy been evidencebased
or rights based? After a description of the historical background and the evolution of the
social assistance system of South Africa, we provide an analysis of the impact on poverty and
review the impacts on micro-outcomes such as health, education and labour supply. We find
that the South African social assistance is a very effective policy instrument to fight poverty
and to improve education and health especially of children living in poor households. Such
impacts are crucial for longer-run poverty alleviation. We also have a closer look at the costs
of the social assistance system in South Africa and its fiscal sustainability, which has also
important implications for other countries in Sub-Saharan Africa which are considering to
implement a social assistance system.