Africa, Economy & Trade, Headlines, Human Rights

DEVELOPMENT-SOUTHERN AFRICA: Regional Calls to Think BIG

Kristin Palitza

DURBAN, Aug 25 2005 (IPS) - To some, the introduction of a basic income grant (BIG) in South Africa is an unimaginable luxury – and the idea of implementing BIG in other, poorer African states simply laughable.

Nonetheless, the South African campaign for BIG, which began four years ago, appears to be resonating elsewhere in the region. (Basic income grants are given to every legal resident of a country irrespective of age or income, with proponents arguing that they reduce poverty and stimulate economic growth.)

Earlier this year, Namibian activists began a similar initiative in their country. This came after a study done by, amongst others, the University of Namibia, found that BIG could be financed by an increase of 6.5 percent in the country’s value added tax.

The idea of an income grant is also reported to be cottoning on in Malawi, Mozambique, Zambia – and even as far afield as Ghana.

Pumi Yeni, national coordinator of the South African BIG Coalition, says the group is talking to activists in all four of these countries to help them establish national campaigns for a grant.

The coalition comprises 32 non-governmental organisations, churches and trade unions. Its hope is that a regional drive for BIG will strengthen the hand of national initiatives.

“If governments are too poor to pay out a BIG, the BIG movement will at least compel them to implement better poverty-related policies within their own scale,” notes Yeni.

If BIG does gain support elsewhere on the continent, the grant may still prove a hard sell in South Africa, however.

Government sees BIG, which would cost about 15 dollars per month for every citizen, as a path to bankruptcy: Finance Minister Trevor Manuel estimates that 12 billion dollars would be needed to fund the initiative annually.

According to the most recent figures issued by national statistics institute StatsSA, authorities are already spending a substantial amount on other social grants – 6.8 billion dollars a year, at last count.

A Johannesburg-based research organisation, the Free Market Foundation, also believes that South Africa is too poor to burden itself with the large expenditures BIG would entail. “People must be given the capability to earn a living themselves,” says the foundation’s director, Eustace Davie, adding that BIG would put a dampener on economic growth.

Rather than an income grant, the foundation would like to see a relaxation of South Africa’s strict labour laws. Persons who are jobless for six months or longer should be allowed to work for less than the minimum wage, suggests Davie, in a bid to ensure that more people have some form of employment. StatsSA puts the country’s unemployment rate at 41 percent.

Nonetheless, the BIG Coalition insists the income grant is feasible: by its calculations, the initiative would cost the country a more affordable 7.3 billion dollars a year.

The income disparities which were created along racial lines during apartheid have made some uncomfortable about setting up an income grant which stands to benefit the wealthy, as well as the poor.

Coalition members claim, however, that South Africa’s tax system could be restructured to ensure that those with high incomes paid back the grant through a solidarity levy, which in turn could be used to lower the overall costs of BIG.

The argument that officials already spend a substantial amount on other types of grants is also questioned.

In 2002, the Department of Social Development released the findings of an inquiry which found that almost 12 million poor people were excluded from the social welfare system because they were not eligible for any of the existing grants. The same study (entitled the ‘Consolidated Report of the Committee of Inquiry into a Comprehensive Social Security System for South Africa’) found that about half of the country’s population of 44.8 million lived in poverty.

“We need a comprehensive programme that covers everyone and not only certain parts of society,” says Yeni, who believes a basic income grant can also be seen as a constitutional obligation in South Africa.

This is based on the fact that the constitution entitles everyone to social security. “Grants are not a privilege, they are a right,” notes Yeni. According to independent research commissioned by the BIG Coalition, a national income grant would lift 6.3 million people out of poverty.

Another argument against BIG concerns the fear that income grants would lead to a culture of dependency.

For its part, the BIG Coalition claims that an income grant will give many the means to go out and seek employment – not encourage them to rely on government hand-outs.

 
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