South Africa has one of the most extensive social assistance systems among developing countries; however, the proportion of the population below the national poverty lines remains relatively high. Thus, we develop a micro-macro framework to assess the economic growth implications of expanding South Africa’s social grant system under alternative conditions. We find that conditional poverty-alleviation social transfers foster growth while unconditional redistribution towards lower-income earners can hinder economic growth. From policy perspectives, we show that the transfer of purchasing power to extremely poor beneficiaries and their economic participation are required for poverty-alleviation social transfers to have positive economic outcomes.