by Guest Contributor | Nov 27, 2020 | Opinion
Universal Basic Income (UBI) is meant to provide financial security and address job losses. Africa is one continent where UBI is critical. During the COVID-19 outbreak that has rendered many people jobless, it could have been used to prevent them from sliding into poverty.
Universal Basic Income is unconditional cash transfers to recipients guaranteed by the government. Recipients are entitled to the income regardless they are earning or not. The universal basic income is not taxable and recipients can use it for any of their needs. The government has no obligation to follow up on how the payment is used.
Currently, there is no country with a Universal Basic Income in Africa, but there are schemes that can help transition toward a UBI policy. There have been trials in some countries in Africa, such as Kenya, Uganda and Namibia. The trials that were conducted in the three African countries showed positive results. What benefits can we expect from a universal basic income in Africa?
Eliminate Poverty by Generating Income
By introducing Universal Basic Income in Africa, recipients can improve their financial status from low-income earners to medium-income earners. The recipients will have more disposable income to cater to their needs.
This would have been beneficial at the time when many Africans have lost their jobs due to the COVID-19 pandemic. Basic income will help to support families and prevent them from sliding into poverty.
Ease of Access to Education for Children
With the guarantee of basic income, children can access education without having to work to support their parents. The lack of income leads to increased school dropouts and consequently early marriages.
Children drop out of school to help their parents generate additional income through informal employment. When casual jobs are not available, children get married early to seek solace and financial support from their spouses.
Providing basic income would help children stay in school since they do not have to look for employment to support their families. While children are in school, early marriages can be eliminated and help them gain an education and live a dignified life.
Promote Entrepreneurship and Increase Job Opportunities
Through UBI, people will have access to more disposable income. When people have access to disposable income, they can take risks and start businesses.
Starting a business requires some capital and enough funding before it can start generating revenue. Basic income can be directed to startups since the government needs not to follow up on how it is used.
The impact of basic income is that people can take risks and start businesses that will consequently create job opportunities. Companies will also help the economy through corporate taxes and income taxes.
Improve Mental and Physical Health
Basic income helps people lead a better life, improving their physical and mental health. The lack of disposable income to cater for the basic needs leads to stress and depression, pushing people to live in deplorable living conditions. Moreover, the lack of income hinders people from accessing health insurance.
The same way the government provides free health and education, it is also best that African governments invest in UBI for the financial security of their citizens. With disposable incomes, recipients can secure health insurance and live a dignified life.
A study carried out by GiveDirectly Organization in 63 Kenyan villages, provided each adult 0.75 dollars per day. The results of the study showed that recipients had an improvement in consumption and well-being. The recipients increased their investments in livestock and home improvement.
Financial and Social Inclusion
The problem of social inclusion is rampant in Africa. The lack of basic income leads to social marginalization, preventing people from accessing modern services like insurance, bank services and technology, such as access to mobile phones.
UBI would help to alleviate social marginalization by assisting people in accessing modern services.
For instance, the government can remit basic income through banks or mobile transfers. As such, people will open bank accounts and buy mobile phones to receive the money. This way, marginalized people can enjoy modern services.
Reduce Financial Gaps between the Rich and the Poor
One of the ways to fund Universal Basic Income is through taxes. Income taxes can lead to a fair distribution of wealth by taxing high-income earners and reducing wealth gaps. Africa is the leading continent with huge income disparities between the high-income earners and low-income earners.
Low skilled workers barely get incremental increases in their wages, pushing them into adverse poverty with increasing inflation. Through UBI, the government can tax high-income earners and redistribute the proceeds to low-income earners.
Family Cohesiveness and Stability
In many African countries, there is domestic violence due to the inability to cater to family needs and depression. The survivors of domestic violence cannot leave their spouses because they lack a stable income. If the survivors can access basic income, they can leave their spouses and meet their basic needs.
Also, if there is a guaranteed income, depression and stress can be eliminated, reducing domestic violence.
In many African countries such as Kenya, parents give birth to many children for cheap labour and security during their old age. If there is a guarantee of regular income, parents would not need to raise many children to support them when they grow old.
How to Fund the Universal Basic Income in Africa
There are many ways through which African governments can fund Universal Basic Income through taxes and creativity. These are some of the ways to finance the Universal Basic Income in Africa.
Reducing Government Expenditures
Reducing government expenditures can set aside some monies that can be directed to fund basic incomes. African governments can reduce some funding to revenue-generating state corporations. Some of the revenues they generate can be directed to the basic income initiative. Most of the recurrent expenditures for government institutions can be halted.
Higher Taxes for High-Income Earners
Through higher taxes from higher-income earners, governments can generate funds to finance basic income initiatives. It would also help to reduce income disparities between the rich and the poor. For instance, governments can introduce a luxury tax and wealth tax above a fixed net worth.
Increase Corporate Taxes and Reduce Financial Benefits to Leaders
African governments can increase corporate taxes by three percent to generate additional revenue for UBI. Additionally, governments can reduce some benefits for politicians. The monies can be redirected to a basic income to promote recipient welfare.
Final Thoughts
African governments should invest in basic income for its citizens. Basic income is equally important in a nation like other social amenities such as health and education. It leads to general wellbeing, social cohesion, and productivity. In addition, by affording basic needs such as food, shelter and clothing, citizens live a dignified life. Finally, basic income will promote mental health. Poverty and social injustice can lead to poor mental health and related illnesses.
Author Bio:
Vincent Nyoike is a Kenyan research writer with vast writing experience. He is a graduate of the University of Eldoret with a degree in Applied Statistics with Computing. He has also pursued a course in Certified Public Accountant. From his experience in business, he enjoys writing on finance and business topics, with a particular focus on Africa. He also works on SEO projects for private international organisations.
A translation into Chinese can be found here.
by Guest Contributor | Oct 13, 2020 | Opinion
Rampant disparities within the capital/labor share, increased pressure on climatically vulnerable communities and mass international migration due to economic hardship or violence. All that without mentioning the ever-haunting specter of automation-induced unemployment and, finally, the outbreak of a world-reaching pandemic: these are some of the ongoing cataclysmic trends that are making an ever increasing number of academics, policymakers and multilateral organizations revisit the adoption of Universal Basic Income (UBI) models. The idea of furnishing guaranteed, unconditional and universal basic income for people within an assigned geographical locality – and potentially the entire globe – has ebbed and flown from the pages of authors of all walks of the political spectrum for over two centuries. It appears, though, that such an idea is regaining momentum at this point in history, a somewhat unexpected moment, given the worldwide rise of nationalistic and illiberalism worldviews. The ambition of this proposal is not to promote an exhaustive comparative assessment of competing proposals currently taking place – or being aspired at – around the world. Instead, this working paper stands as an introductory effort to be followed by a more robust case study of existing schemes, which should bind them under the theories of Multipolarity. This proposal launches the cornerstone of a debate assessing the concrete costs and political coordination challenges that are likely to arise in a scenario of massive and ideally genuine universal effort to start or scale-up existing UBI initiatives through the deployment of digital financing techniques, including its most disruptive variations such as cryptocurrencies.
See the full text here
Written by: Julio Lucchesi Moraes and Carlos Freire
Related article by Daniel Mermelstein: Basic Income and cryptocurrency
by Malcolm Torry | Sep 28, 2020 | News, Opinion, Research
McKinsey, the consultancy company, has published an article about the Finland Basic Income experiment.
The final results from Finland’s experiment are now
in, and the findings are intriguing: the basic income
in Finland led to a small increase in employment,
significantly boosted multiple measures of the
recipients’ well-being, and reinforced positive
individual and societal feedback loops. …
As with any policy analysis, the results of this
experiment remain subject to debate and can’t
necessarily be generalized. As a result, the
experiment does offer an object lesson in the
complexity of designing and implementing
a randomized control trial of basic income.
Nevertheless, more research on basic income is
required. We can hope that Finland’s example
will inform and inspire others as they set up their
own experiments.
by Malcolm Torry | Sep 15, 2020 | Research
Luca Michele Cigna has written a master’s degree thesis about trade unions’ positions on Basic income: Looking for a North Star? Trade unions’ positions in the Universal Basic Income debate
First, unions’ propensity to support a UBI depends on
the degrees of socio-economic insecurity. In contexts characterised by high levels of poverty,
unemployment and precariousness, UBI proposals look more attractive in the eyes of union leaders.
Secondly, welfare regime generosity is a strong explanans of trade unions’ support. Less
encompassing welfare systems encourage trade unionists to regard UBI as a legitimate policy
alternative. Third, trade unions’ attachment to the work ethic and the insurance principle affects their
preferences for unconditionality and universality in policy settings. Fourth, their role in the industrial
landscape, and their degree of organisational inclusivity, have a strong influence on UBI support.
by Gery Petrova | Aug 3, 2020 | News, Opinion
The EU Commission has said from the 25th September 2020 signatures can be collected from EU residents in connection with a new European Citizens Initiative. If the European UBI family succeeds in gathering 1 000 000 signatures, divided among a minimum of seven countries, then ECI delegates will be able to present a proposal to the European Commission which, if approved, would hopefully convince EU governments to start paying Basic Incomes to all of their citizens.
Bulgaria suffers from a number of problems, and in particular population loss and economically active citizens leave the country for better opportunities elsewhere. Angel Petrov writes:
The population decline carries long-term economic costs. Over time, a shrinking workforce becomes unattractive to investors and unable to subsidise the pension and healthcare needs of an ageing population.
Poverty and inequality are significant problems in Bulgaria. Bulgarian people currently receive the lowest income in the European Union while the cost of living is increasing. This is paradoxically occurring during 25 years of steady rise in productivity and mostly rising GDP. The Gini coefficient (2019) is 40.8 and rising.
The Corona crisis measures
All government ‘aid’ described below is highly bureaucratised and full of conditions, and in addition the funds are often paid late due to the complicated and sluggish administrative processes citizens are subjected to. The aid consists of:
- Cash payments of €192 only for families with 14 year old children for the duration of the state of emergency (2 or 3 months)
- over 2 months the unemployment fund will pay 60% of the income of the employees from sectors most heavily influenced by the COVID-19 crisis for up to three months. In addition to employers in sectors where operations have been suspended as a result of the social distancing measures (tourism, sports, culture, etc.), any other employer that can prove a 20% y/y drop in revenue in March is also eligible for the 60% salary subsidy.
- The measure has been extended until 30th of September 2020.
This is the main stimulus. However, the working population has doubts that the administrative process will be efficient enough (it is expected that most companies will receive the aid in October and November 2020). Furthermore, many small and medium businesses don’t have the means to pay 40% of the salaries. Some critics see this policy as supporting big companies which will absorb the unemployment caused by the lack of help for small and medium companies.
- To date (1st August 2020) 129 million leva (64,5 million EUR) have been distributed to 8400 employers, that is 13% of the 1 billion leva (511 million EUR) allocated by the government. Close to 35% from these people have taken aid only for one month.
- On the 10th of April the Bulgarian Central Bank enacted a moratorium on debt repayments. Overall the number of people who have debts in Bulgaria is almost 3 million. By the 10th of May, 102 000 have applied for temporary cancellation on payments (usually 6 months) towards their loans, and 80 300 have been approved. Changes in these numbers are expected.
- The processes are not transparent, efficient and timely
- The measures are conditional and selective and not universal
- Most of the governments support is expressed in loans rather than direct payments
In conclusion the measures so far have the potential to create another wave of workforce immigration towards Western countries, weakening further the economic future of Bulgaria because:
The case for a UBI emergency pilot in Bulgaria
The unnecessary agony of the Bulgarian nature and people can be prevented, and UBI is a key step that can be collectively taken to compensate over three generations who have given their talents, energy and time towards creating shared wealth spreading beyond the country borders. It’s time for common dividends to be distributed to their rightful owners.
Bulgarian UBI advocates are working hard to unite the people around the idea that once social and economic stability is achieved through unconditional payments of around 1000lv (500 EUR) Bulgarians will have the time and capacity to build a new system that meets their needs and corresponds to a consensus based on democratic values. Due to the inflexibility of the national currency (it is tied to the euro), the dominant proposal on how to implement Basic Income in Bulgaria at the moment is by restructuring the tax system and national budget in a way that will pay the UBI bill with the collection of Value Added Taxes and Excise Taxes paid by the sellers. The idea is for every Bulgarian citizen with an active address registration to own a bank card issued by the Bulgarian Central Bank which will serve people as a payment method to be used to receive a Basic Income that would meet basic needs like rent, utility bills, food, clothes etc.
A UBI emergency pilot hosted in Bulgaria would not a utopia, and the EU could rescue its reputation by supporting it. It is an opportunity to trial universal basic income on a national level using the Bulgarian state financial infrastructure to distribute funds to the people.
The EU Commission would also have a vested interest in embracing the project, as the positive results would increase cohesion and trust, and would give hope to other states that the European experiment is not another way to practice concentration of power.
It’s time for evolution not only for Bulgaria but also for the EU. UBI is a win-win solution and will literally bring Bulgaria back to life. People outside long to return to their roots and work for the wellbeing of their parents and the next generations. The EU owes this to the people of Bulgaria and Bulgarians owe it to themselves, their ancestors, the children, and the European natural environment that happens to be surrounded by Bulgarian borders. We have too much to gain and nothing to lose.
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RESOURCES:
More details on COVID related government aid.
Interview (Georgi Nedelchev, in Bulgarian)
UBI Project Paper (in Bulgarian)
Videos:
Discussion on Universal Basic Income (in Bulgarian)
Is UBI possible? Discussion (in Bulgarian)
UBI and Poverty (in Bulgarian)
