Clever BIG could be answer
Namibia has shown how well-thought-out social assistance schemes reduce poverty and dependence and grow economies
The leader of the SA Unemployed People’s Movement was looting a Durban supermarket, her mouth full of stolen chicken and chips, when she launched her demand for a monthly grant from the state. You could argue that it was not the best way to win friends and influence important people, but Nizipho Mteshane certainly caught the media’s attention. Warning that her criminal protest was a message to the state about hungry South Africans and their struggle to make ends meet, she said, “We want the government to provide the unemployed people of this country with a R1 500 basic income grant”.
Nizipho’s admittedly inflated welfare aspiration was simply shrugged off by KwaZulu-Natal premier Zweli Mkhize, who said the often-discussed basic income grant, dubbed BIG, would bankrupt the government and act as a disincentive to self-improvement. After condemning the demo, his clunky suggestion was that the unemployed should turn their energy to community-building activities.
In fact, the BIG is perennially under scrutiny by all sorts of groups in South Africa, a country with several existing social grants exclusively targeted to the poor, and more in the pipeline. Although it is designed, like the State Old Age Pension, to make life less tough for those who endure unacceptable hardship on a daily basis, the BIG idea is to pay a federal dividend to all citizens equally in order to avoid the psychologically damaging stigma of means testing.
Versions of the BIG have been implemented successfully in a number of Latin American countries (where it is given on clever conditions that ensure kids go to school and family members enroll at clinics, so that it becomes a leg-up for all concerned rather than an unconditional handout). Closer to home, the recently evaluated halfway findings of a pilot project in Namibia show that one of the world’s best-researched poverty reforms can work well in local conditions.
It was set up in Otjivero-Omitara, a settlement of 1 000 people to the east of Windhoek, after the Namibian government rejected as unsustainable the idea of the basic income grant. Running for two years from January 2008 and funded by mainly German churches, its initial results show that a minimal cash injection of Namibian $100 a month helps to eradicate crime and extreme hunger as well as promoting health, education and employment.
According to one report on changes brought by the Namibian project – which offers an inspiring blueprint for the much-needed development of South Africa’s dying rural towns – Otjivero’s adult residents used to be idle most of the time. Namibia’s version of the BIG has led to a marked increase in economic activity, particularly through the formation of small businesses that include brick-making, baking of bread and dress-making. The grant has also contributed to the creation of a local market by increasing households’ buying power.
These findings contradict critics’ claims in both Namibia and South Africa that the grant would lead to laziness and dependency. “A BIG has the potential to make it possible for local people to be active actors and partners in the local economy – not only consumers of goods and services,” says an independent evaluation of the Namibian project. It quotes Emilia Garises, a dressmaker who started a business with materials purchased from BIG payments, saying her dresses are the kind residents of Otjivero will buy because she consults neighbours on their cut and design. “I made these dresses, and one cost N$150. If I make five dresses, I make a profit of N$750 in three weeks’ time. People are very much eager to support my business,” she explains.
Some critics continue to promote the BIG’s most often cited alternative – a mass public works programme, but this is a costly exercise administratively and almost impossible to envisage on an appropriate scale when you consider the serious project management challenges that exist in every sphere of our economic life.
While the cost of rolling out even a modest monthly BIG is certainly formidable, South Africa remains one of the world’s most economically unjust societies – with a Gini co-efficient critically close to 0.7 – and urgently needs a redistributive remedy. But it does not have to be a one-way deal: the state could get some impressive returns for its BIG buck through cleverly thought-out policies designed to move the poor out of their rut and simultaneously help society.
Over the past 15 years, the anticipated creation of quality jobs has not happened and mass poverty remains a reality that will not recede without the boldest of interventions. Although the BIG would probably have to be funded mainly through unpopular increases in indirect taxations such as VAT, it would immediately add vast spending power to the national economy (not to mention the boost it would bring to the dignity of the desperate citizens who took to the streets recently).
Having witnessed angry demonstrations arising from the state’s failure to include the poor in our collective material development, SA’s politicians should be only too well aware that the cost of not making a significant move towards a more prosperous economy and a more just society may be open rebellion. If the ANC fails to engage popular defiance, repression may become the state’s (like its failed predecessor’s) only option.
The fact that Latin American countries facing similarly daunting social problems to ours have successfully implemented universal grant schemes – that foster school attendance, spread preventive health care, encourage adult literacy and slow the rural exodus to overcrowded cities – is often cited as a reason for the BIG to be adopted locally. But although a number of high-powered probes into its viability have hailed the BIG as an affordable SA reform, recommending a range of tax recovery scenarios with only marginally increased deficit spending as the way forward, it has yet to win the support of key policymakers like Trevor Manuel.
One aspect of the BIG’s success in Latin America that may have been overlooked by local researchers is its payment to mothers – not to men – which is among the reasons this form of poverty redress is seen by the World Bank and other international institutions as the best way of spreading wealth more evenly through society.
Although South African women have lately come to the fore in public affairs, including Durban’s much-publicized supermarket protest politics, they are often prevented from playing an active role in financial decisions despite bearing the brunt of economic hardship in the family. The BIG has the potential to enhance gender equality in a society deeply burdened – not least in the tragedy of HIV/Aids – by violence and prejudice against women.