South Africa is experiencing a significant political shift after the African National Congress (ANC) lost its majority in the recent general election held on 29 May.
Numerous political discussions are expected as the ANC and its rivals negotiate on forming a governing coalition.
A common goal among various political parties, including the ANC and its primary antagonist, the Democratic Alliance, is to sustain or augment income support for adults. This includes monthly Covid relief payments aimed at the most impoverished households.
As The Guardian writes, the ANC has proposed an ambitious plan. A week before the general election, it announced a deepened commitment to convert the current Covid grant system into a universal basic income (UBI) policy within two years of coming into power.
This move would make South Africa the first nation to embark on a UBI policy to provide a regular grant to all people aged 18 to 59, regardless of employment status.
Presently, South Africa’s Social Relief of Distress (SRD) grant benefits individuals whose monthly income falls below the food poverty line, which is the minimum required to afford food that meets daily caloric needs.
The ANC aims to gradually allow more people to qualify for these grants by increasing the income threshold for eligibility.
The current threshold is based on the poverty line from 2021, which has since risen, but the means-testing threshold has not, leaving some people in need without access to the grant.
The concept of a universal basic income has been discussed for years as a method to combat inequality.
Prominent figures such as Elon Musk have suggested it as a way to counteract job loss due to automation, and Martin Luther King viewed it as a solution to widespread poverty.
The pandemic brought the idea into sharper focus as many governments provided financial support to citizens.
Most SRD grant recipients, 93% to be exact, use the funds to purchase food.
Moreover, research from a large UBI project in Kenya by GiveDirectly revealed that recipients often used the money to save for significant purchases, improve dietary nutrition, and start up businesses.
Despite the advantages, UBI was mostly seen as a political argument until the pandemic. During that time, many governments issued emergency financial support to citizens. For instance:
- Spain introduced an anti-poverty payment of €1,015 per month for 850,000 households.
- The US under the Coronavirus Aid, Relief and Economic Security Act provided $1,200 to all adults earning less than $99,000 annually.
- In the UK, furlough payments and a self-employment support scheme distributed £100 billion to those out of work, along with an increase in universal credit payments by £20.
Once the pandemic subsided, many nations enacted austerity measures to manage the increased governmental debt.
In the UK, research indicated that if the uplift in universal credit had been maintained, the number of households in severe poverty would have been limited to 1.5 million in 2022. Instead, the rate of destitution increased to 2 million.
Contrarily, South Africa continued its Covid grants despite general austerity measures pushed by the ANC. When these payments were briefly halted in April 2021, widespread riots ensued, resulting in their reinstatement by August.
However, the system is deeply flawed. The grants amount to only R370 (about £16), which is not enough to meet the extreme poverty or “food” poverty line. Millions of eligible people do not receive the grant regularly. According to the Institute for Economic Justice (IEJ), this is mainly because of an exclusionary design. The grant is digital, limiting access for those without computers or internet, and uses automated means-testing that often excludes qualifying individuals.
Many unemployed South Africans, including Elizabeth Raiters, face frequent rejections.
Raiters, involved with the #PayTheGrants campaign, joined the IEJ in court actions against the government in mid-2023, disputing regulations that bar millions living in poverty from receiving monthly payments.
The IEJ and #PayTheGrants campaign advocate for a basic income grant, particularly for minimum wage workers due to low wages. As Raiters puts it, despite perceptions of progress, life on the ground remains extremely challenging for many.
Positive outcomes have been observed in other basic income trials.
For example, in 2022, the Welsh government provided monthly payments of £1,600 for two years to young people leaving care.
Although final results will not be available until 2027, the initial feedback has been “fantastic.”
Similarly, the Irish government published findings in May from a basic income initiative giving €325 a week to 2,000 artists.
After the first year, participants reported that the payments enabled them to recover from illnesses, focus on more ambitious projects, spend time with loved ones, and access therapies. One artist mentioned feeling at home and capable of making a meaningful difference.
Howson from the IEJ argues that the basic income proposal is fundamentally about distributing wealth more equitably in South Africa, where the top 0.1% of the population owns almost a third of the total personal wealth.
The IEJ has explored various funding options to sustain a basic income, including social security taxes, wealth taxes, or increased VAT from heightened consumption due to the grant.
The essential point, as Howson highlights, is that the resources necessary to finance a sustainable basic income do exist in South Africa.
This initiative represents not a concession to the scale of poverty, but rather a new developmental approach.
