South Africa is currently facing its most dramatic political transition since the end of apartheid, with the African National Congress (ANC) losing its majority in the general elections on May 29, 2024. This momentous occurrence has triggered a period of difficult discussions between the ANC and its political opponents as they seek to build a coalition government.
The coming weeks will see heated conversations among political parties about forming a new government. While there are many opposing viewpoints, most parties, including the ANC and its main challenger, the Democratic Alliance, agree on the significance of preserving or boosting income support for adults. This includes continuing to provide monthly COVID-19 assistance payments to the poorest households.
Commitment to Universal Basic Income (UBI)
The ANC has proposed a major initiative to convert the COVID-19 relief payment into a universal basic income (UBI). This announcement was made a week before the elections, and the ANC intends to execute the policy within two years of forming a new government, according to the Guardian.
If successful, South Africa would be the first country to implement a universal basic income (UBI), providing regular payments to all citizens aged 18 to 59, regardless of job status.
Current State of Social Relief in South Africa
Individuals in South Africa who receive the Social Relief of Distress (SRD) grant have a monthly income that falls below the food poverty limit.
The ANC intends to expand this support to all adults by gradually raising the income criterion. Currently, the means-testing standards are based on the 2021 poverty threshold, which has since grown, eliminating some low-income persons.
Historical Context and Global Perspectives on Basic Income
The concept of universal basic income (UBI) is not new. It has been debated globally for decades as a potential remedy to rising inequality. Visionaries such as Elon Musk promote Universal Basic Income as a means of addressing employment losses caused by automation.
At the same time, civil rights leader Martin Luther King Jr. saw it as a potent tool for ending poverty. The concept gained traction during the COVID-19 pandemic, when many countries provided emergency financial assistance to their residents.
Economic Benefits of UBI
According to research, providing direct financial support to the poorest households can have a significant economic impact. Kelle Howson, a senior researcher at Johannesburg’s Institute for Economic Justice (IEJ), argues that these payments stimulate economic activity by raising expenditure among low-income households.
According to the IEJ, almost 93% of SRD payment recipients use the money primarily for food, demonstrating the importance of these payments in their daily existence.
International Case Studies
Several foreign case studies demonstrate the potential benefits of Universal Basic Income (UBI). In Kenya, a big UBI study done by GiveDirectly revealed that recipients used the payments to considerably improve their lives. They saved for major purchases, improved their diets, and began small enterprises. Similar positive results have been reported in other trials around the world.
For example, during the pandemic, Spain implemented an anti-poverty payment program that offered €1,015 per month to 850,000 households. In the United States, the Coronavirus Aid, Relief, and Economic Security (CARES) Act provided benefits of $1,200 to persons earning less than $99,000 per year.
The United Kingdom enacted the furlough plan and self-employment support measures, allocating £100 billion to persons impacted by the pandemic and temporarily raising universal credit payments.
Post-Pandemic Policy Shifts
As the pandemic ended, the political landscape shifted, and many governments resumed austerity measures to handle the increased borrowing that happened during the crisis.
In the United Kingdom, the National Institute of Economic and Social Research did a research that found that if the government had continued to expand universal credit payments, extreme poverty could have been greatly decreased.
However, the decision to discontinue these additional payments resulted in a significant increase in destitution, causing more people to face extreme financial hardship.
South Africa’s Unique Approach
Contrary to global trends, South Africa has maintained its COVID-19 funding despite calls to enact stricter financial restrictions. These grants were temporarily suspended in April 2021, resulting in violent protests. As a result, the government promptly resumed the grants in August of the same year.
However, there are a few problems with the current system. The Social Relief of Distress (SRD) payments are insufficient, covering only half of the amount required to achieve the food poverty threshold. This signifies that the money offered is insufficient to cover basic food requirements.
Furthermore, millions of people who qualify for the stipend do not receive it every month. This is due to issues with the application and distribution processes, which make it impossible for many people to receive the financial assistance they require.
Criticism of the Current System
The IEJ and the #PayTheGrants campaign are vocal critics of the current system. They feel that the computerized application process and automatic means-testing frequently exclude qualified individuals, particularly those without dependable internet connection.
Elizabeth Raiters, an unemployed South African and passionate advocate, discusses the daily hardships experienced by individuals who are denied assistance. The IEJ has even filed legal action against the government, claiming that the laws unfairly prevent millions from getting assistance.
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What is the Universal Basic Income Grant (UBIG) proposed by SASSA?
The Universal Basic Income Grant (UBIG) is a proposed financial support initiative by SASSA aimed at providing a regular income to South Africans aged 18 to 59 who have little or no income. It is designed to help alleviate poverty and improve economic stability.
Who will be eligible for the Universal Basic Income Grant in 2024?
Adults between the ages of 18 and 59 with minimal or no income are expected to be eligible for the Universal Basic Income Grant. Specific eligibility criteria are still under discussion.
How much will beneficiaries receive under the Universal Basic Income Grant?
The exact amount is yet to be confirmed, but estimates suggest a range between R800 and R1,200 per month, depending on government funding and policy decisions.
When will the Universal Basic Income Grant be implemented?
While discussions are ongoing, the Universal Basic Income Grant is expected to be introduced sometime in 2024 or 2025, pending final approval and logistical preparations.
How will the Universal Basic Income Grant be funded?
The funding for the grant will likely come from a combination of increased tax revenue, government reallocations, and international aid. The government is currently exploring sustainable funding options.
What is the expected impact of the Universal Basic Income Grant on poverty?
The Universal Basic Income Grant is expected to reduce poverty by providing a consistent financial safety net for low-income individuals, improving their access to basic needs and increasing economic participation.
How can I apply for the Universal Basic Income Grant?
Once the program is officially launched, application procedures will be announced by SASSA. Beneficiaries will likely be able to apply online or at local SASSA offices.
Is the Universal Basic Income Grant different from the SRD grant?
Yes, the Universal Basic Income Grant is intended to be a permanent solution, unlike the SRD (Social Relief of Distress) grant, which provides temporary relief during emergencies such as the COVID-19 pandemic.
