South Africa is currently navigating one of its most significant political transformations since the end of apartheid. Following the ANC’s loss of its majority in the 29 May 2024 general elections, the country is now facing complex coalition negotiations. As political parties work to form a new government, one point of common ground among them is the importance of maintaining or expanding income support for adults, particularly continuing the monthly COVID-19 relief payments to the country’s most vulnerable households.
Commitment to Universal Basic Income (UBI)
In a landmark policy announcement, the ANC revealed plans to convert the COVID-19 relief grant into a universal basic income (UBI). This initiative, which was disclosed just before the elections, is set to be rolled out over the next two years if the ANC secures a place in the new government. If implemented, South Africa would become the first country to introduce UBI, providing regular payments to all citizens aged 18 to 59, irrespective of their employment status.
Current State of Social Relief in South Africa
The Social Relief of Distress (SRD) grant plays a critical role in South Africa, providing financial assistance to individuals with monthly incomes below the food poverty line. The ANC’s plan involves gradually expanding this support to include all adults, starting with raising the income threshold. The current means-testing system, based on the 2021 poverty line, has been criticized for excluding many who are still in need due to inflation and economic changes.
Historical Context and Global Perspectives on Basic Income
Universal Basic Income has been an idea discussed globally for decades, with varying degrees of support. Visionaries like Elon Musk advocate for UBI as a response to job losses caused by automation, while civil rights leader Martin Luther King Jr. saw it as a means to eradicate poverty. The concept gained significant attention during the COVID-19 pandemic when many governments implemented emergency financial relief to support their citizens.
Economic Benefits of UBI
Numerous studies highlight the potential economic benefits of UBI, particularly its impact on low-income households. According to Kelle Howson, a senior researcher at the Institute for Economic Justice (IEJ), direct financial transfers significantly boost economic activity by increasing spending among vulnerable communities. Around 93% of SRD grant recipients in South Africa use the funds primarily for food, underscoring the importance of this support for their survival.
International Case Studies
Various international trials of UBI have demonstrated positive outcomes. In Kenya, a large-scale UBI experiment led by GiveDirectly showed significant improvements in recipients’ lives, including better nutrition, savings for large purchases, and the establishment of small businesses. Similar positive effects were seen in other trials, such as Spain’s anti-poverty scheme, which provided €1,015 per month to 850,000 households, and the U.S. CARES Act, which included one-time payments to struggling families during the pandemic.
In the UK, the government implemented the furlough scheme and increased universal credit payments during the crisis, resulting in a temporary reduction in poverty levels. These international examples provide valuable lessons for South Africa as it considers expanding its social relief efforts.
Post-Pandemic Policy Shifts
After the pandemic, many governments, including those in the UK and the U.S., returned to austerity measures to recover from the financial impact of the crisis. Research by the National Institute of Economic and Social Research revealed that had the UK maintained higher universal credit payments, it could have significantly reduced extreme poverty. Instead, cutting these payments led to a spike in hardship, highlighting the importance of sustained financial support for vulnerable populations.
South Africa’s Unique Approach
Unlike many other nations, South Africa has continued providing COVID-19 relief grants even amid growing financial pressures. These grants were temporarily halted in April 2021, causing widespread unrest and riots. In response, the government reinstated the grants by August of the same year. However, critics point out several flaws in the current system, including the fact that the SRD payments are insufficient to meet the food poverty line, leaving many recipients struggling to make ends meet.
Additionally, millions of eligible individuals do not receive their grants regularly due to issues with the application and distribution systems. This failure to adequately deliver aid has led to calls for reform from various organizations, including the IEJ and the #PayTheGrants campaign.
Criticism of the Current System
Advocacy groups like the IEJ have been vocal about the problems with the current social relief system. One major issue is the digital application process, which excludes many people, particularly those without access to reliable internet. Elizabeth Raiters, an unemployed South African and active campaigner, speaks about the daily struggles faced by those who are unfairly denied support.
The IEJ has taken legal action against the government, arguing that the digital means-testing regulations unfairly leave out those most in need of assistance. These ongoing challenges point to the need for a more inclusive and effective system of social relief.
Conclusion
As South Africa embarks on a political transition, discussions around Universal Basic Income and social relief will continue to be crucial. The ANC’s commitment to turning the COVID-19 relief grant into a UBI represents a bold step towards addressing inequality, but challenges in the current system must be addressed to ensure that support reaches those who need it most. With global examples supporting the effectiveness of such initiatives, South Africa has the opportunity to lead the way in implementing a sustainable solution to poverty.
