South Africa has some of the worst income inequality and unemployment in the world. Its largest political party recently pledged to make universal basic income a reality. But, as campaigning around UBIG takes centre stage in the run up to 2024, what is often overlooked is how the system will be administered. This is important because it will determine whether the grant is effective and fair.

What is a universal basic income?

A basic income is an unconditional cash payment from the state to all citizens, regardless of whether they work or not. It is an alternative to existing social welfare programmes such as unemployment benefits, food stamps, and subsidised housing. While different proponents of basic income have different ideas about how high the payment should be – Andrew Yang’s proposal is around a thousand dollars a month – there is broad consensus that it should be enough to cover the cost of essential living needs.

In South Africa, where one in three employed adults are jobless, a basic income would be a game-changer. It would empower people to work, start businesses and develop skills, without worrying about falling into poverty. It would also reduce the pressure on public services that are currently helping to provide care for those who can’t support themselves, such as hospitals, clinics and home care services.

The campaign for a basic income has broad support from civil society organisations and politicians across the ideological spectrum. The ANC’s 2024 manifesto promises to increase the Social Relief of Distress grant, which is the closest thing we have to a basic income, while other political parties are considering including it in their manifestos. However, there is a risk that as the debate around a basic income gains momentum, government officials will try to water down its significance by limiting its scope and imposing strict conditions on who can receive it.

Why is South Africa a good candidate for a universal basic income?

South Africa is a country with some of the highest levels of income inequality in the world. While the country has a strong social assistance framework with grants like the Child Support Grant and Older Persons’ Grant, millions of able-bodied adults do not receive any permanent, non-contributory social protection, leaving them vulnerable to hunger and poverty.

A basic income could help fill this gap by giving all South Africans a regular, unconditional payment to cover their living expenses. It would not replace other forms of social assistance, but supplement them and provide a safety net to help people cope with shocks like unemployment or illness. It can also help reduce the impact of technological changes that are rapidly reducing jobs across many sectors, including in agriculture and mining.

As the 2024 election approaches, a basic income has become a key issue in public debates about the country’s future. Some parties are pledging to introduce it, while others are criticising National Treasury’s reluctance to increase current social grants.

In a webinar hosted by Rosa Luxemburg Stiftung Southern Africa, the Mail & Guardian and AIDC, the Minister of Social Development Lindiwe Zulu joined Princess Majola of the Assembly of the Unemployed and Dominic Brown of AIDC to discuss why and how the country can implement a basic income. The panel was moderated by Zikhona Ntshona of the Mail & Guardian.

How can South Africa implement a universal basic income?

As the 2024 elections approach, the debate around a basic income grant is becoming heated. The governing African National Congress (ANC) has pledged to introduce a basic income grant if it wins the election. The campaign has sparked fierce disagreements about whether such an initiative is financially feasible, what the value of the grant should be and how it could be administered.

A basic income would not solve all of South Africa’s problems, but it is an important tool to insulate the country’s most vulnerable citizens, reduce inequality and provide a catalyst for economic change. The social movement behind the idea is growing in momentum, with civil society groups like the Assembly of the Unemployed and Rosa Luxemburg Stiftung South Africa joining forces with labour unions and economists to advocate for it.

While it is too early to say what the exact structure of a basic income in South Africa will look like, there are some general points that everyone agrees on. For example, the basic income must be unconditional. “Poverty is a construct – it’s not because of pathological laziness, but rather that people lack the means to make their own choices,” says Isobel Frye from the social justice think tank the Social Policy Initiative. She adds that a basic income is also crucial for stimulating the economy to a sustainable growth rate and creating employment.

Who will benefit from a universal basic income?

The idea of regular, no-strings-attached cash payments has captured the imagination of many during the COVID-19 pandemic. It is a policy that has been touted by Elon Musk as the answer to robots taking human jobs and by Martin Luther King as the solution to widespread poverty.

As the 2024 national election looms closer, basic income has moved from being an ideologically polarising concept to becoming a political possibility. Some political parties have committed to implementing an income guarantee if elected, with the ANC calling for its Social Relief of Distress grant to be increased and converted into a basic income grant within two years of forming a new administration.

Civil society and major trade union confederations, including the Institute for Economic Justice (of which the authors are affiliated), continue to push for a basic income that is indexed to various national poverty lines and free of behavioural conditionalities. Multiple modelling exercises indicate that a policy of this nature is fiscally feasible in South Africa and, if financed through additional progressive taxation or other non-regressive measures, would have substantial impacts on poverty and inequality alleviation and growth.

Arguments against a basic income, most notably those from National Treasury, have largely centred around its supposed cost. However, Kelle Howson, senior researcher at the Institute for Economic Justice, notes that Treasury often exaggerates costs while underestimating resulting economic benefits such as job creation and the recoupment of initial investment through increasing tax revenue.