The universal basic income grant for South Africa would spoil the poor with poverty

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We regret the inconvenience to beneficiaries, and we would like to point out that the gold Sassa card also gives beneficiaries the option of accessing their cash at any ATM or supermarket, the Post Office said. File photo: African News Agency (ANA)

The provisions for the universal basic income grant for South Africa would only increase poverty and highlight inequalities among the population rather than remove them, thereby spoiling the poor with only deeper pockets of poverty.  The idea of universal basic income is based on a cash payment made at regular intervals by the government to members of society; the income is paid irrespective of employment status or earning levels of the society.  Its supporters hold that it would reduce poverty, inequality and improve livelihoods.

Why would the government want to introduce a universal basic income grant to the people of South Africa?  In a recent SAfm radio broadcast interview, presenter Stephen Grootes drew pro-grant arguments from his guest, Isobel Frye, Executive Director of the Studies in Poverty and Inequality Institute (SPII). She reckons that the grant could bring stability to the country, and will promote solidarity within the society.

One reason for it to be universal is to remove the idea of ‘shame’ of receiving a grant from the state. Frye also noted the world-leading inequality in South Africa and claimed that the grant would address income inequalities. Also in support of the grant was Prof Mark Swilling, Chairperson of the Development Bank of Southern Africa, also a guest on the show. The professor motivated that the grant would grow the local economy by increasing the demand in the domestic market which currently hangs very low in the country.

An example of an implemented basic income grant which can be commended for taking nationals out of poverty and reducing household poverty is the case of Namibia’s universal basic income grant project that was trialed from 2007/8-2012/13.  The basic income grant pilot project of Namibia was implemented in 2007/8 in the Otjivero-Omitara settlement of the Steinhausen Constituency, where N$80 was provided per person each month to a very small population of approximately 1000 people.  The pilot ran from 2008 to 2009, with bridging payments continuing at a lower rate until everything came to an end between 2012 and 2013 when the funds were entirely depleted.  According to a 2017ProCon report, the trial decreased poverty rates, where the household poverty rates fell from 76% to 37% after just one year. 

It is very well to commend the basic income grant for its solution outlook to improve the lives of the poor and unemployed.  I commend fully for that objective.  However, I come to question policy influencers who are pro the universal income grant when they declare that it will bring equality in South Africa’s socio-economy. 

To explain it simply – if you give people who are employed and/or well off the same amount of money that you give to people who are poor and/or unemployed, then you are not changing the inequality among them,  you are in fact feeding the inequality by making the rich richer, and the poor poorer in comparison.

There are approximately 17 million people who are on welfare in South Africa, and only nine million who are employed.  Government should rather allocate quality resources for those in need of welfare instead of over feeding a well-fed fish.  Government should consider rather giving nine million times more welfare measures to the 17 million people who need the assistance.  If the universal basic income grant is to stabilize income inequalities then in the case of South Africa, it would only lend devastatingly to the opposite outcome of an unequal society with unequal incomes. 

Noting the context of South Africa’s history of segregation laws under the Apartheid colonial system from the early 1930s, national development for the country should have equity and transformation highly apprehended.  One of the enduring legacies of Apartheid South African is its highly divided and unequal society; with the country’s 2015 Gini coefficient at 0.63; the highest internationally, according to the World Bank’s 2018 report.  When South Africa adopted its democracy in 1994 ending apartheid governance, it was already highly unequal, and during the periods after 1994 inequality in the country has worsened.  The report found further that the high inequality has become a major limitation to higher levels of economic growth “as it undermines policy certainty and depresses investment”. 

Although it is worth acknowledging that the country made significant strides since 1994 in investing in the social policy sectors, the World Bank report stated that there was still required sustainable measures in inequalities, and that “a silver lining in this very challenging social, political and economic environment is the evolving nature of inequality in South Africa, on which policy interventions could further build”.  South Africa thereby needs to take this opportunity to assess the implementation of equitable policies for socio-economic development. 

The universal basic income grant is a steady solution for supporting the poor and the unemployed, however the ‘universality’ of it could only push the poor into poverty from a higher step, in comparison to the rest of society, and these are considerations policy makers should make in development stages of the universal basic income policy.

 

Bongiwe Tutu is a driven author, inspired by universal growth and progress. She holds a Postgraduate in Politics and International Studies from Rhodes University and an Honours degree in Journalism and Media Studies from Wits University.