South Africa is undergoing its most significant political transformation since the end of apartheid, following the African National Congress (ANC) losing its majority in the general elections held on 29 May 2024. This monumental shift has set the stage for a period of intense negotiations as political parties, including the ANC and the Democratic Alliance, work toward forming a coalition government.
As the country moves into this uncertain political climate, there is a strong consensus among major political parties about the importance of continuing income support for the most vulnerable citizens. This includes the continuation of the monthly COVID-19 relief payments aimed at the poorest households.
Commitment to Universal Basic Income (UBI)
In the wake of the ANC’s election results, the party has laid out a bold plan to transition the COVID-19 relief grant into a universal basic income (UBI). This announcement was made just a week before the elections and, if the ANC forms the next government, the party aims to implement this policy within two years. South Africa would become the first country to introduce a UBI, providing regular payments to all individuals between the ages of 18 and 59, regardless of their employment status.
Current State of Social Relief in South Africa
The Social Relief of Distress (SRD) grant, which provides assistance to those with incomes below the food poverty line, currently supports millions of South Africans. The ANC plans to extend this support to all adults by gradually increasing the income threshold. However, the current means-testing criteria are based on outdated poverty line figures from 2021, which have since been adjusted, leading to some needy individuals being excluded.
Historical Context and Global Perspectives on Basic Income
The concept of universal basic income (UBI) is not a new one. It has been discussed for decades as a potential solution to rising inequality. Public figures like Elon Musk have endorsed UBI as a response to job losses caused by automation. Meanwhile, civil rights leader Martin Luther King Jr. saw it as an effective tool to combat poverty. The idea gained widespread attention during the COVID-19 pandemic, when many governments introduced emergency financial support for citizens.
Economic Benefits of UBI
Studies show that direct financial support to low-income households can stimulate economic activity. According to Kelle Howson, a senior researcher at the Institute for Economic Justice (IEJ) in Johannesburg, providing UBI would increase spending among low-income households. A report from the IEJ reveals that 93% of SRD grant recipients use the money primarily for food, demonstrating the essential role these payments play in ensuring daily survival.
International Case Studies
Several international case studies highlight the potential positive impact of UBI. In Kenya, a large-scale UBI trial conducted by GiveDirectly revealed that recipients used the funds to improve their lives by saving for significant purchases, improving their diets, and starting small businesses. Similar benefits have been observed in trials across the globe.
- In Spain, the government introduced an anti-poverty payment scheme, distributing €1,015 per month to 850,000 households.
- The United States provided $1,200 in direct payments through the CARES Act during the pandemic to adults earning under $99,000 annually.
- The United Kingdom implemented the furlough scheme and self-employment support measures, providing £100 billion to those affected by the pandemic, along with a temporary increase in universal credit payments.
Post-Pandemic Policy Shifts
As the pandemic subsided, many governments returned to austerity measures to manage the increased borrowing that occurred during the crisis. In the UK, a study by the National Institute of Economic and Social Research found that continuing the increased universal credit payments could have significantly reduced extreme poverty. However, the government’s decision to halt these payments resulted in a rise in financial hardship for many families.
South Africa’s Unique Approach
In contrast to the global trend, South Africa has continued its COVID-19 relief grants despite pressure to implement stricter financial policies. These grants were temporarily stopped in April 2021, which led to widespread unrest and riots. The government quickly reinstated the grants by August 2021.
However, South Africa’s current social relief system faces several issues. The SRD payments are insufficient to meet the food poverty line, covering only half of what is needed to support basic food needs. Moreover, millions of eligible individuals do not receive the grant due to problems in the application and distribution processes.
Criticism of the Current System
Organizations like the IEJ and the #PayTheGrants campaign have been vocal critics of the current system, pointing out that the digital application process and automated means-testing often exclude those without reliable internet access or proper documentation. Activists, such as Elizabeth Raiters, a South African unemployed woman, have highlighted the daily challenges faced by those who are unjustly denied support. The IEJ has even taken legal action against the government, arguing that the system unfairly excludes millions of eligible people from receiving much-needed aid.
Conclusion
South Africa’s political future is at a crossroads, and the introduction of a universal basic income (UBI) could mark a transformative step toward addressing income inequality and poverty. While challenges remain in the current relief system, the proposed UBI plan offers a promising solution to support millions of South Africans as the country navigates its evolving political and economic landscape.