South African money. File photo: Henk Kruger/African News Agency (ANA)
South African money. File photo: Henk Kruger/African News Agency (ANA)

A Basic Income Grant is a big deal?

By Opinion Time of article published Jul 31, 2021

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By Monde Ndlovu

NELSON Mandela’s South African dream, which was driven by democratic values and constitutionalism and anchored on the rainbow nation chronicle, is being challenged by our socio-economic landscape.

In Mandela’s words: “As long as many of our people still live-in utter poverty, as long as children still live under plastic covers, as long as many of our people are still without jobs, no South African should rest and wallow in the joy of freedom.”

In the past few weeks, the South African democratic order was, at face value, challenged in a way that was never seen before. The government was in turmoil about correctly categorising the unrest and pinning down its true cause. The contradiction of statements made by top leaders in this regard has also deepened the divide between the government and the people.

The continued lockdowns to curb the rapid spread of Covid-19 has also contributed to the shaking of our democratic order. In truth, even though our democratic order was shaken in the past few weeks, the social unrest exposed weaknesses that have been embedded in the socio-economic and political environment for many years.

South Africa remains one of the most unequal societies in the world, according to the World Bank.

When all levels of poverty are included, as defined by Statistics South Africa, this is coupled with around 15 million formally employed, 18 million on social security and more than 30 million living in poverty.

According to the Department of Higher Education and Training, 6% of the adult population have degrees, 6% have diplomas and 3.4% have TVET certificates. The economy is triangular shaped, meaning that we have a few people at the top who enjoy the spoils of democracy and most of the others are at the bottom. Most developed economies are diamond shaped, a few at the top and bottom, and most in the middle who represent the middle-class. Without a majority middle-class in any emerging economy, the political and economic order is at risk.

Therefore, considering a Big (Basic Income Grant) will cushion the unemployed who are able to work and those who have lost hope in searching for employment.

President Cyril Ramaphosa said a Big “will validate our people and show them that we are giving serious consideration to their lives”.

This clear commitment from the president, along with the minister of social development, on moving forward with a Big is an indication that the government is beginning to accept the crisis the country is in. Naturally, we need more than statements and commitments, but radical action in this direction. The reinstatement of the Social Relief of Distress (SRD) grant should be the beginning of establishing a permanent Big.

The Big should be set at the upper-bound poverty line of R1 268. The figure is being lobbied for by Black Sash and more than 80 organisations. According to the Applied Development Research Solutions, which is an economic modelling company, a grant at the upper bound poverty line, which is R1 268, would reduce poverty by 66% and inequality by 14%.

Adjacent to the Big, is the job guarantee. The Big should lead to a job guarantee that ensures that there is a movement in productive civilians to sustainable jobs. The government should increase the public works programme to include Big beneficiaries. The government has vast tracks of land where the beneficiaries could learn skills and trades, coupled with the private sector in import substitution. The other crucial productive initiative is for Big beneficiaries who have degrees to assist the government in all municipalities to deliver basic bulk services through administrative support and learnerships.

The Big and job guarantee are not silver bullets to confront all our problems, but they are a necessary step in stabilising the country as it strives to transform.

A hybrid finance model can be instituted to finance the Big and possible job guarantee. South Africa has been avoiding a wealth tax discussion that could finance the Big and job guarantee. A 3 to 4% wealth tax on the top wealthiest individuals should be considered. This should also include an increased corporate tax for the top 40 JSE listed companies.

In addition to this, the private sector could take over infrastructure development in the country and free up the fiscus for the Big and job guarantee. The move can be backed up by off-take agreements and government guarantees.

Nelson Mandela’s words must pierce through our minds, in a time when we need bold leadership and contextual ideas to propel us forward for our collective prosperity.

*Monde Ndlovu is head of advocacy and thought leadership in the Black Management Forum.

** The opinions expressed don’t necessarily reflect those of IOL.

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