Economy

The Basic Income Grant: An extensive engagement with poverty alleviation tactics and challenges

by Siyanda Nombika

At least 22 million South African citizens are affected by poverty. Ninety-five percent of those affected by poverty are African and seventy percent subsist in informal settlements and rural areas. This is primarily because of the apartheid legacy which created numerous structural inequalities among different races. However, social grants serve as means to decrease these statistics as they are measures of redistribution.

The impacts of the social grants have shown nothing but positive results towards poverty alleviation. Among these social grants stands the basic income grant (B.I.G), which proposes a slightly different approach.

While the Basic Income Grant has not been implemented, because it has not yet been granted approval by government, the civil society organizations view the B.I.G. as a potential future positive contributor towards poverty alleviation and they are calling for its introduction. However, even though contribution towards poverty alleviation is anticipated, some of the features and potential impact of the B.I.G. remains unchallenged, thus leaving unpacked realities which make it unclear as to whether the B.I.G. will lessen poverty or create undesirable consequences.

The South African Constitution provided an assurance of 'security for all', especially on those who were grossly denied access to resources by apartheid. Because of this heritage of inequalities, citizens are still struggling to access social development programmes, thus challenging the successful implementation of social investment. Ideally, the Basic Income Grant can serve as an essential instrument in providing effectiveness to the implementation of such constitutional obligations. This is because the B.I.G. is a universal grant that is available to every citizen. It also does not allow the usage of the 'means test' to necessarily determine whether an individual deserves it or not.  This is aimed at eliminating administrative responsibilities and corruption that is often associated with grants that usually subject individuals to means tests. Therefore, B.I.G comes as a social right that everyone possesses. However, while this can be seen as an advantage, what remains to be seen is whether the B.I.G. will eventually perpetuate crime associated with grants.

A telephonic interview with Dr Meth, a poverty and development analyst at the University of Cape Town,  revealed that with the current state of the crime rate, criminal activities like forging documents, for example identity documents, are possible. Therefore, such activities will lead to citizens receiving multiple grants. This can also lead to foreigners receiving the grants when in all fairness they are not eligible to receive them.

Further, an analysis produced by the Committee of Inquiry (chaired by Prof. Vivienne Taylor) presented the Basic Income Grant as an instrument which does not only have the capacity to alleviate poverty; they presented it as a grant that has the capacity to enhance skills development, contributes to job creation, contributes towards achieving economic equity, and serves as mechanism to encourage and maintain social security. However, what remains unpacked is the appropriate approach that will be taken to achieve these. Also, it remains unclear as to how skills development will be implemented. The Basic Income Grant will be adequate to provide primary education to an individual but it does not have the potential to further afford tertiary education where one can acquire skills that would be a necessary advantage in accessing the labour market. This is because the grant is for satisfying the basic needs of a poor individual (which include; food, shelter, clothing, health, etc), and not sufficient for subsidizing costly tertiary education.

According to Dr Meth, the Basic Income Grant is the device to eradicate poverty. It does not have any link with the skills development aspect. The only link it has with the labour market is that it encourages job seeking which eventually contributes towards lessening the unemployment rate as people are employed.

It is important to take into consideration that although the Basic Income Grant encourages job seeking, this does not guarantee employment. Most of the people who will be receiving the grant are on the fringe of breadline survivors, and do not have the skills that are essentially required for access into the labour market. Also there are urgent needs that need to be addressed before taking the risk of spending the little income from the grant on transportation, whilst job hunting. At some stage, those who are unsuccessful in job hunting will give up, thus discouraging others who might be still thinking about entering the labour market. This discouragement of job seeking then creates an element of dependency on the limited B.I.G. - a new problem for social investment.

Nomkhosi, a senior researcher at the IOLS Research Unit at UKZN, contends that: ''There are women who are currently receiving the Child Support Grant who keep on bearing more babies because there is an income sustaining them. These people are literally dependent on the grant and giving birth increases income into their pockets. They don't see a point of going job hunting because they have an income that satisfies their needs.''

The other aspect that was presented in the Committee of Inquiry report is that the Basic Income Grant will not cause harm to government expenditure because it is financed through progressive taxation. However, this will increase the food prices as it will raise the VAT percentage as well as the Income Tax percentage.

According to Dr Meth, ''the tax policies are suggesting a reduction on tax values in South Africa as we are subjected to alarming tax values.'' If the tax values are reduced, the introduction of the Basic Income Grant will encourage a raise in the tax values, thus making the adjustments suggested by the tax policies useless.

The Committee of Inquiry report further confirms that the Basic Income Grant is also an essential tool of supplementing the existing grant; it does not substitute them. It serves as a tool to expand the coverage of the current social development programmes. It also encourages the usage of the existing banking infrastructure, as payments will be made through Post Banks. However, what remains to be verified, is the issue of sustainability: 'How far can the Basic Income Grant go?' With the current developmental, poverty and unemployment issues, it becomes a priority to clarify the disadvantages that the grant will face, which might lead to further inequalities and unanticipated consequences.

''The problem that we are currently facing is what to do with the large number of unemployed people? The other anti-poverty devices e.g. Extended Public Works Programme, does not go as far as covering all the unemployed people, but with the Basic Income Grant it is possible to cover everyone who avails themselves.'' Dr Meth

Finally, questions need to be raised around whether the Basic Income Grant addresses the issues of transparency and access in the realm of social service delivery. The grant can be available but the means to deliver it might be inadequate and inefficient. The poor are currently not participating in public development programmes. The only time they get a chance to participate in a public programme is when they are placing their votes on the voting ballots but after that their collective voice is hardly given any attention. In this way, their often grievous experiences and opinions remain unnoticed and so their concerns cannot contribute towards the formulation of comprehensive policies that give effect to their lives. Therefore, this issue guarantees that they remain trapped in poverty as it is only those with the means to organize resources who can participate in economic development. Thus such issues leave serious concerns unchallenged, and the big question of, 'Will South Africa bridge the class divide?'

Siyanda Nombika is an honours student at HRM Programme, UKZN.