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How Social Grants Foster Entrepreneurship in Underprivileged Areas

Social grants are a form of assistance rendered to people who need support. They are financial programs set up by the government or non-profit organizations to cushion the effect of financial hardship. 

Social grants mainly support recipients with food, medical care, and shelter. They may also help beneficiaries by creating economical solutions like training and employment. 

Beneficiaries may be chosen based on demographic factors, income level, or other criteria. Generally, beneficiaries of these financial assistance plans often include older people, foster kids, disabled people, and low-income earners. 

Social grants effectively enhance the living standards in underprivileged areas by supporting disadvantaged people. 

Promoting entrepreneurship is one of the most significant impacts of social grants in underprivileged areas. In South Africa, they launched the SASSA grants which were social grants with an aim to eradicate poverty by giving needy people income support. Individuals were able to do an online sassa status check in order to see if they were eligible for the grant. The platform also helped to track the progress of the payouts. 

More specifically, social grants foster entrepreneurship in the following ways:

Building Sustainability

In underprivileged areas, regular sources of income are not always available. Since there is little or no income, residents of such regions are often hopeless and would pick job security over starting a business from scratch. The need to earn money as soon as possible puts pressure on residents of underprivileged areas. This pressure makes it impossible for them to engage in entrepreneurship.

However, with the availability of social grants, this pressure is reduced to the barest minimum. By providing steady income support, social grants help disadvantaged people build sustainability by creating small businesses. As entrepreneurship thrives in these areas, it mitigates the cycle of poverty.

Enhanced Security

One of the most significant ways social grants enhance entrepreneurship is by giving people more financial security. Entrepreneurship involves taking risks, and residents of underprivileged areas can’t afford the risk. All of their resources are in their businesses, so when losses occur, it is devastating. They have to start from scratch since there is no ‘safety net’ to minimize the effects of losses. Lack of financial security makes residents of underprivileged areas step away from entrepreneurship.

Social grants serve as the ‘safety net’ by lessening the impacts of possible entrepreneurial losses. It encourages disadvantaged people to take calculated risks since they have a ‘safety net.’ With social grants, these residents can still meet their basic needs even if they experience an initial business setback.

Initial Capital

Residents of underprivileged areas always have little or nothing to save. These individuals can barely afford their basic needs- expecting them to save is rather idealistic. This implies they can’t set aside financial resources to venture into entrepreneurship. On the other hand, they cannot get loans because they are ineligible. Without capital, residents of underprivileged areas can’t afford to buy equipment and goods or secure a space.

Social grants often serve as much-needed financial aid for disadvantaged people. Beneficiaries might decide to save grant income over a period and set up a business. Social grants empower beneficiaries to set their entrepreneurial plans in motion.

Skill Development

Aside from a lack of financial security and initial capital, a lack of knowledge makes residents of underprivileged areas unable to become entrepreneurs. In most cases, disadvantaged regions don’t know entrepreneurial trends or concepts. 

As mentioned, social grants are not just about providing basic needs; they often extend to enhancing recipients’ skills. Since social grants aim to reduce financial hardship and mitigate the effects of poverty, it includes training programs.

These training programs equip residents of underprivileged areas with skills to succeed in their businesses. When social grant beneficiaries understand the business opportunities around them and how to leverage them, they get better results. As more residents of underprivileged areas carry out business skillfully, economic growth gradually occurs.

Infrastructural Support

From bad roads and unstable electricity to unreliable internet, different infrastructural problems affect entrepreneurship negatively in underprivileged areas.

However, these areas can pool resources from social grants to tackle their infrastructural problems. Eradicating infrastructural issues help underprivileged areas carry out business more easily, resulting in higher profits.


The impacts of social grants on entrepreneurship in underprivileged areas are gradual but profound. Social grants foster entrepreneurship by providing initial capital, financial security, developing beneficiary skills, and enhancing sustainability.

By fostering entrepreneurship, social grants enhance self-sufficiency in beneficiaries.

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