You searched for poverty | Page 41 of 238 | BIEN

An analysis of a Basic Income scheme proposed for the UK

by Malcolm Torry | Jul 23, 2020 | News

There is a translation of this article in French.

Karl Widerquist and Georg Arndt have written an article in which they evaluate a particular Basic Income scheme for the UK: ‘The Cost of Basic Income in the United Kingdom: A Microsimulation Analysis’

The article can be read here; and a pdf can be downloaded here.

Abstract

This article uses microsimulation analysis to estimate that the net cost of a roughly poverty-level Universal Basic Income (UBI) for the United Kingdom is about £67 billion per year or 3.4% of GDP. The scheme examined involves a UBI of £7,706 for adults and £3,853 for children with a marginal tax rate of 50% on net beneficiaries. The cost of this UBI scheme adds only 39% to the cost of the UK’s existing transfer system and only 8.7% to the UK’s total government spending. About 70% of UK families would benefit from the transition to this UBI scheme, with the average gain for each net-beneficiary family being £4,056. The figure of £67 billion is a “net cost” in two senses. First, it subtracts the amount of UBI that individuals pay themselves as they simultaneously receive a UBI and pay higher taxes to finance it. This calculation alone shows that the cost of UBI is only about one-third of the often-quoted-but-not-very-useful concept of “gross cost,” which ignores the fact that it costs nothing for a person to give themselves a pound. Second, this article also adds and subtracts the costs and savings involved in integrating the UBI scheme into the UK’s existing tax and benefit system. This calculation further reduces the scheme’s cost to 13% of gross cost. Under this scheme, the percent of UK families with incomes below the current official poverty line would drop from 16% to 4% and poverty among children and the elderly would all but disappear. The largest increase in incomes would be felt by those most deeply in poverty so that absolute poverty would virtually disappear.

A review of the article can be found here.

A brief review of ‘The Cost of Basic Income in the United Kingdom: A Microsimulation Analysis’ by Karl Widerquist and Georg Arndt

by Malcolm Torry | Jul 23, 2020 | Opinion

There is a translation of this review in French

The article by Widerquist and Arndt can be read here; and a pdf can be downloaded here.

Widerquist and Arndt use microsimulation analysis to estimate that the net cost of a poverty-level Basic Income for the United Kingdom (£7,706 per annum for adults and £3,853 for children) is about £67 billion per year or 3.4% of GDP. The paper makes a useful contribution to the current debate about financially feasible Basic Income schemes for the UK.

The authors correctly recognise that their scheme is ‘not optimised for political feasibility’. This is true. British benefits policy is quite path dependent—that is, it tends to continue in its existing direction—mainly because of the extreme complexity of the tax and benefits systems. Change is normally incremental, and this will be particularly true during the next few decades because of the difficulties that the Government has experienced attempting to combine a handful of means-tested benefits into the new means-tested ‘Universal Credit’. Only a Basic Income that made a very small number of changes to the existing systems would be likely to be considered for implementation during the next few decades, whatever the political ideology of the Government. Widerquist’s and Arndt’s scheme makes multiple major changes all across the systems, and so would be unlikely to be considered for implementation.

There are particular aspects of the scheme that would make the scheme even less politically feasible. The authors are commendably honest about the political infeasibility of their suggested 50 per cent basic rate of Income Tax. Equally politically impossible would be the abolition of National Insurance Contributions and National Insurance benefits such as the Retirement Pension, even if that would be replaced by a new Basic Income for elderly people. National Insurance is a concept deeply embedded in the British psyche, and any government that tampered with it would suffer the consequences. It is not insignificant that when the new Single Tier State Pension, which is very close to a Citizen’s Pension, was implemented, a National Insurance Contribution record conditionality was retained. Under the circumstances, the only option is to retain the National Insurance system: although making it fairer, for instance by charging contributions at the same rate across the entire earnings range, rather than at a reduced rate for higher earners, might be politically feasible.

The authors propose a ‘hold harmless’ mechanism to ensure that low income households that would otherwise have suffered losses on the implementation of the proposed scheme would not in fact do so. The losses occur because the authors have decided to abolish all existing means-tested benefits except for Housing Benefit and various disability benefits. The problem is that they have not specified how the ‘hold harmless’ proposal would be administered. The only feasible way of achieving such a mechanism would be to reintroduce a means-tested benefit that would mirror the benefits that had been abolished. It might be objected that simply recording each household’s disposable income at the point at which the scheme was implemented would be sufficient: but that would only tell the administrators how much to pay on the day after implementation. If would not protect households from subsequent differences between the old system and the new once household circumstances started to change. Only a means-tested benefit could do that. The UK Government has found it difficult enough to combine a few existing means-tested benefits into a single new one. To abolish most existing benefits and then to implement a wholly new one with a particular aim, all at the same time as implementing Basic Incomes and changing the tax system, would be administratively and therefore politically impossible.

The paper contains a useful discussion of the difference between the gross cost and net cost of a Basic Income scheme, and quite rightly points out that rather too many commentators fail to understand the importance of the difference. The authors calculate that the net cost of their scheme would be £67bn per annum. This might be only 3.4 per cent of GDP, but it would still have to be found from somewhere. Suggestions are made at the end of the paper, one of which is that the whole £67bn should be paid by the top 30 per cent of earners. No government would want to alienate that group of voters to that extent, rendering the proposal politically feasibility. We are therefore left with sharing the burden across the earnings range, although not necessarily via an additional Income Tax. What the authors don’t seem to realise is that wherever the money was found it would impact household living standards. For instance, let us suppose that additional consumption taxes or a new carbon tax were to be employed to fill the gap. In either case prices would rise, household disposable incomes would be affected, and the statistics given in the paper for poverty levels and household gains and losses would no longer be correct. Only a Basic Income scheme that fully specifies the funding method, and that calculates the reductions in the Income Tax Personal Allowance, increases in Income Tax rate changes, and other changes, that would achieve a net cost of zero, can be sure that statistics on poverty levels, household gains and losses, etc., generated by microsimulation would be those that would be seen when the scheme was implemented. A scheme with a net cost above zero leaves us entirely in doubt as to the effects of the scheme. This means that in the case of the scheme researched for this paper none of the outcome statistics can be believed.

There are two ways of approaching the question of the financial feasibility of Basic Income schemes: 1. to research the effects of a particular scheme and then decide whether it would be feasible, or 2. to set feasibility criteria and then seek a scheme that would fit those criteria. The second of those approaches is the one that follows scientific method and is therefore the method that ought to recommend itself to social science researchers. The paper under review employs the first of the two methods. As far as the author of this review knows, only his own research follows the second method—a fact that never surprises him because the second method can take days of testing of alternative schemes before a scheme that fits the criteria can be found, and there is always the possibility that no scheme will be found that is anywhere near to being feasible. Widerquist and Arndt reference a 2019 paper that employs the second of the two methods. The most recent such research can be found here.

Widerquist and Arndt are to be commended for contributing to the UK’s strong research tradition on the financial feasibility of Basic Income schemes. If further research were to take account of the hesitations discussed in this review, and were to employ the second of the two methods outlined in the previous paragraph, then their future research would make an even bigger contribution.

Brazil: COVID-19, UBI, and ultraliberalism

by Guest Contributor | Jul 18, 2020 | Opinion

Lena Lavinas

It is undeniable that the new wave of engouement for UBI (universal basic income) that has shaken the US, the EU, India and so many other parts of the globe in the wake of COVID-19 has also reached Brazil. Everywhere, the simple idea of guaranteeing a regular income, duty-free, underwritten by the State, appears to be the way forward to mitigate the still unmeasurable consequences of the appalling disruptions brought about by the pandemic. UBI would swiftly reduce income insecurity, preventing poverty; it could also significantly contribute to accelerate the economic recovery in the post-COVID-19 era by stimulating aggregate demand.

The idea of a UBI was galvanized when governments promptly decided to extend the amount, coverage, and length of different sorts of monetary transfers to confront the gravity of the multiple crises created by the COVID-19 outbreak. Unemployment benefits, job allowances, one-time pay-checks, welfare benefits, or even special forms of credit line have spread out to inject liquidity in the economy. All of a sudden, we have a new opportunity for making the case for UBI.

Brazil was no exception. The comprehensive national social security system created in 1988 that provides free, universal health care (among many other rights) had been made vulnerable by years of underfinancing. But the system continues to be the most effective and democratic institution when it comes to guaranteeing social rights and wellbeing in Brazil. When the COVID crisis hit, the federal government and Congress could have reinforced social assistance, public healthcare, unemployment insurance, and other job allowances — all constitutive dimensions of the Brazilian social protection system. Instead, they united to favor ad hoc measures that, though sounding generous, are inevitably temporary.

The ultraliberal government of President Jair Bolsonaro backed a bill that Congress approved unanimously early April to adopt an “emergency basic income” program that would last the entire state of emergency declared on March 20, 2020. In principle, this program should expire on December 31, 2020, along with the state of emergency. In Brazil, a state of emergency allows extraordinary spending, suppressing the 2016 cap imposed by a constitutional amendment that impeded any real increase in social spending until 2036 regardless of economic growth or rise in tax revenues.

It bears reminding that Brazil is the only country in the world to have passed a law on Basic Income in 2004, hours prior to the adoption of the Bolsa Familia Program. Yet the law remained a dead letter and largely unknown to most Brazilians. To date, it remains unclear why the Workers’ Party started its mandate presenting a bill on UBI, which was approved without encountering any opposition, too soon after paying no heed to it. Today, despite the existence of a UBI Law, activists, progressive parties, and members of Congress chose the easiest way out, bypassing the already existing institutional framework. They chose a transitory and short-term program over existing law. This narrowed sighted strategy further debilitates Brazil’s social security system, because it deepens defunding. It also fails to bring greater comprehension of what a UBI is in the public opinion, thereby further diminishing the chances to make it a true, permanent, and unconditional right.

Today’s “emergency basic income program” provides a three time-payment – now extended to four months – of R$ 600.00, the equivalent of $120 USD per month. It is means-tested. Anyone over 18 years old (threshold waived for single mothers) living with a monthly per capita household income below half a minimum wage (R$ 552.00 / $110 USD) qualifies. The Minister of the Economy estimates that this benefit has reached 54 million people, encompassing the target-population previous recipients of Bolsa Familia, informal and precarious workers, and the unemployed who registered. Let’s not forget that Brazilian monthly median per capita household income, including labor income and all forms of social benefits, like pensions and welfare schemes, corresponds to R$ 862.00, equivalent to $172.00 USD. A monthly stipend of R$ 600.00 is therefore a very significant figure that amounts to 70 percent of the median per capita income and is three times higher than the Bolsa Familia cash transfer. It was the first time that Brazil set the bar so high with regard to compensatory benefits.

It is worth noting that indigenous and traditional black communities who were proportionally the most hardly hit by the pandemic have been denied the right to this temporary benefit, which is very telling about the challenges for universalizing rights in Brazil. The mortality rate among indigenous in the Legal Amazon is 150 percent higher than the national average. The deficiency of the specific care system for native peoples, the invasion of their lands by miners who can take the virus into their territories and communities, and continuous deforestation are pointed out as reasons that can explain such a high mortality rate and lethality. Faced with the threat posed by COVID-19 to indigenous communities, opposition parties passed a law in early July in Congress that provides for a set of 16 emergency measures to protect some 800,000 indigenous people. President Bolsonaro, however, immediately vetoed the most important ones, such as guaranteeing the supply of drinking water, food baskets, hygiene products and specific ICU beds for indigenous people infected with the virus, arguing that the Union could not afford mounting non-essential expenditures. Brazil remains a very unequal society and has not yet reckoned with its colonial structures of racialized discrimination.

The Brazilian Bureau of Census (IBGE) just published the first results regarding the impact of the Emergency Basic Income Program: 38.7 percent of all Brazilian households received the program, with the bottom 40 percent benefitting most. 45 percent of all Brazilians received the temporary emergency workers’ allowance and three-fourths of all monetary transfers benefitted the 50 percent at the bottom of the distribution scale. According to IPEA, this allowance has compensated 45 percent of outstanding earning losses due to the pandemic. It also increased by 2,000 times the average income of the poorest 10 percent. This is good news, especially because the recovery of the economic activity that has been noticed in early July significantly relies on the rebound of household consumption.

There is now strong evidence that providing monetary transfers at large scale and in substantial amounts that make a real difference in people’s lives is a powerful mechanism to boost economic activity, prevent destitution and humiliation, and help people cope with all sorts of hardships.

Did the crisis and the measures adopted increase the support for a true UBI? Are Brazilians really aware of the challenge and motivated to fight for it? In 2013, I carried out a national survey to assess how Brazilian society values social policies. There was a specific question on UBI. Back then, 51 percent disagreed, and one-third agreed with the idea of implementing a UBI. The current estimates are unknown since no survey asking the specific question has yet been re-conducted. But let us keep in mind that the current emergency workers’ allowance is no UBI.

The question is whether or not the evidence aforementioned would suffice to bolster the implementation of a true UBI in Brazil.

During the pandemic, doctors, health workers, and the many who support the universal public health care system (SUS) persevered in order to advance a temporary program, called ICU Beds for All. In Brazil, for every 5 ICU beds fully equipped in the private sector, we have only 1 in public hospitals. The problem is that only 25 percent of all Brazilians have subscribed to private health insurance, whereas 75 percent go public. Given that a significant and growing number of ICU beds were underutilized in the private sector, a campaign was launched to create a pool of ICU beds, coordinated by a public entity, to improve access and sort out the waiting list problem. But no agreement could be reached and today Brazil is second only to the United States, with 1,7 million confirmed cases, and 68,000 fatalities, both figures broadly underestimated given that testing is rather rare in Brazil. It is now obvious that the COVID-19 pandemic was insufficient to unite Brazilians, even when so many lives are lost.

This paradox raises two major concerns:

Is UBI the most urgent need for Brazilians? Will it be possible to couple a universal basic income at a relatively significant amount at least to eradicate abject poverty with other universal social policies that are urgently needed such as public healthcare, good public education, social housing, adequate sanitation? Is this affordable?

To what extent would endorsing UBI strengthen the social security system already threatened by austerity measures derived from the cap on public spending and by attempts of the Bolsonaro government to fully reshape it through tax reform and the merging of different social benefits restricting them to poverty relief programs?

————————————————————

In regards to the first question, what would be the cost of a UBI in Brazil? Of course, the cost depends on the design of the program. To get a rough idea of the cost of a very basic program, let us consider a stipend that would be equivalent to the monthly benefit of Bolsa Familia today, which is R$ 200 per month ($40 USD). This amount should be acceptable by all parties and civil organizations across the political spectrum. The difference lies in the fact that it would apply to individuals (UBI) rather than households (Bolsa Familia Program).

Let us then imagine that when the law was approved in 2004 the Brazilian government decided to implement the program starting with children under 5. Given that it would be impossible to grant a stipend to all Brazilians, the idea is that we would launch a UBI by targeting the children to prevent intergenerational poverty. The new benefit will accompany the beneficiaries throughout their lifetime as an unconditional right. Focusing on children sounds appropriate because the pension system in Brazil provides a satisfactory income security to the elderly: 85 percent of all seniors over 65 receive a public pension, either contributory or non-contributory, whose monthly amount (floor) corresponds to no less than a minimum wage.

By providing a UBI of R$ 200.00 to children under 5 in 2004, today’s number of potential recipients under 20 years old totals 60,7 million people (IBGE, PNAD 2004 & PNADc 2020). This would cost R$ 323 billion, or 10 times the annual spending with the Bolsa Familia Program (R$ 32 billion or, 4.4 percent of GDP in 2019). The good news is that 57 percent of all stipends would go the bottom 40 percent of the distribution. The current Emergency Workers’ Allowance Program amounts to R$ 150 Billion, consequently less than half of the proposed UBI, reaching an almost equal number of recipients.

To grant $40 USD a month to 60 million people in 2019 is three times higher than the federal spending, with the public healthcare system (only R$ 117 billion or 1.64 percent of GDP). Such a program would also surpass by 11 percent of all benefits conveyed by the federal government (including higher education, housing, sanitation, labor, and agrarian initiatives), which accounts for R$ 289 billion (Lavinas 2020).

In 2019, outstanding federal social spending amounted to R$ 1.73 trillion. Paying a basic income of R$ 200.00, therefore at the level of the current anti-poverty Bolsa Familia program, would compromise 27.5 percent of all social spending. That same year federal social spending in kind corresponded to only 4.12 percent.

Monetary transfers remain the bulk of social spending, accounting for 68 percent. Should Brazil continue to expand cash transfers, to the detriment of providing running water, sanitation, housing, equal standards in education and healthcare? The most recent data from IBGE (2018) show that 31.1 million Brazilians (16 percent of the population) have no access to tap-water, whereas 72.4 million (37 percent of the population) lack proper sanitation. Not to mention decades of deep housing shortage affecting millions of poor and low-income families who end up living in slums, which makes them less immune to all sorts of diseases in times of pandemics.

The second question relates to the future of the Brazilian social protection system, which was underfinanced for quite a long time, and now risks being completely dismantled. The Minister of the Economy, an old member of the Chicago Boys who worked for the Pinochet Regime, intends to overhaul social security. He initiated a pension reform in 2019, making it harder for informal workers to get a full pension at retirement.

Now, that same ultraliberal minister proposes the creation of a “Brazil Income Program”, resulting from the merging of a large number of benefits, both contributory and non-contributory. Workers’ rights like job allowances, unemployment benefits, and other benefits alike will all be suppressed and replaced by an anti-poverty program to reach 57 million people, granting a monthly stipend of R$ 232 per month, 15 percent above the average payment of Bolsa Familia. They expect to spend R$ 52 billion per year with this new program, which is less than one percent of the 2019 Brazilian GDP. This means that the coverage against risks and poverty will be shortened and people’s autonomy and wellbeing consequently corroded.

In addition, the government intends to provide a voucher to pay for private daycare for two million children up to three years old, which will increase prices and fees and discriminate based on income. Lessons from Chile are well-known to envision that in Brazil things could be different. A voucher of R$ 250,00 corresponds to 10 percent of what middle-class families pay for private childcare in cities like Rio and São Paulo. The best daycare centers, however, charge double or triple. According to the government, churches could be interested in providing this service, an idea that breaks with the logic of secularism in the provision of public education.

Both concerns point to the ineluctable call for a joint perspective associating basic income and universal public provision to democratize access and opportunities by fully de-commodifying wellbeing. Otherwise, under financialized capitalism, a guaranteed income will just serve as collateral propelling citizenry to take out loans and go indebted in order to meet their financial obligations.

Early July, that same Congress that approved the Emergency Workers’ Allowance Program voted for the full privatization of water supply and sanitation, maybe having in mind that enlarging access to cash to those most affected by the pandemic would also make it easier to expand further a business model grounded in denying basic human rights and ensuring huge profits for pension and mutual funds that today drive investments in infrastructure in developing and emerging countries. After the longest and most severe recession Brazil has faced over a century since 2015 and given the growth projections ahead (-9.1 percent for 2020, according to the IMF), fiscal resources will dry up while competing and clashing issues will fill up antagonisms, stirring tensions. All the care may not be enough in designing social policies if the goal is eventually to forge a truly egalitarian society in the country.

The major differential of a UBI is to de-commodify labor. It is thus equally crucial to de-commodify the social reproduction of labor, by ensuring that education, daycare, healthcare, training, and other basic needs will also be fully de-commodified. Otherwise, UBI will perform as a powerful pro-market mechanism, upholding income-related and highly segmented private provision, mostly through the financial sector, and fueling rather than overcoming discrimination and inequality.

Canadian artists call for an income guarantee

by Malcolm Torry | Jul 16, 2020 | News

75,000 artists have signed a letter calling on the Canadian government to implement an income guarantee.

We, the undersigned, are calling upon the Government of Canada to honour its
commitment to poverty reduction and instate a Basic Income Guarantee to
make a historic investment in a better tomorrow;

We call upon the Government of Canada to hereby reduce the inequities
exacerbated by the COVID-19 pandemic: to remove the financial obstacles
faced by our most vulnerable, to alleviate gender-based poverty, and to address
the economic inequality based in persistent racism and colonialism;

We call upon the Government of Canada to implement a universally accessible
and unconditional basic income program that guarantees an income floor to
anyone in need.

To read the letter, click here

And here to read the press release.

Clarifications

We asked the letter’s authors to clarify a number of definitional matters left unclear in the letter.

BIEN’s definition of a Basic Income is ‘a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement’.
The letter is clear that the payments envisaged would be ‘regardless of work status’, so there would be no work requirement.
The letter asks for an income that ‘guarantees an income floor to anyone in need’. Such an income floor could be provided by an income-tested benefit rather than by a Basic Income. The authors have written to clarify that in the Canadian context a ‘means test’ is a test that covers a variety of assets, incomes, and behaviours, and that the income proposed in the letter would be income-tested, but would not suffer from the other tests associated with a Canadian means test.
Most of the global Basic Income debate assumes that a means test necessarily includes an income test, so the normal assumption is that a Basic Income paid ‘without means test’ would be paid without an income test, and so would be paid at the same amount to everybody of the same age. The income described in the open letter is income-tested, and so is not a Basic Income according to the normal assumption.
The letter is not clear whether the payment would be paid on an individual or a household basis. The authors have written to say that this issue ‘was not discussed at any time by the authors of the letter’.

We can conclude that if the income envisaged by the letter were to be paid on an individual basis, and if it were to be paid without an income test, then it would be a genuine Basic Income according to BIEN’s definition.

Namibia – UBI success and institutional failure

by Gery Petrova | Jul 14, 2020 | News, Opinion

1. Namibia – country background

A South West African state with a troublesome colonial history, Namibia has a population of around 2,5 million people and is one of the least populated countries in Africa due to its extremely dry climate. The country is rich in natural resources like – diamonds (annual value of mined diamonds around 1 billion US dollars)¹ , uranium (4th largest producer in the world), gold, zinc, copper ². Other important industries are fishing, agriculture and tourism.

Unfortunately for the majority of the Namibian people the benefits from an abundant national wealth are not equally distributed. Namibia ranks as one of the most unequal places on the planet where 50% of the population live on less than 5.50 USD per day ³ and in 2017 27% ⁴were living below the poverty line. A place where people have not enough food to sustain their nutritional needs.

On top of poverty, hunger and the impact of climate change contributing to suffering, there are some additional challenges:

Unemployment rate 2018 – 33.4% where female joblessness is prevalent ⁵
HIV/AIDS epidemic – number one cause of death ⁶
Gender inequality and violence against women and children ⁸
Child forced labour and child trafficking ⁷

Children are trafficked within Namibia for forced labor in agriculture, cattle herding, domestic work, and commercial sexual exploitation. San children are particularly vulnerable to forced labor on farms or in homes. ⁷

The list goes on.

2. The Universal Basic Income Pilot Project in Namibia ⁹

In the context of the socio-economic situation described above The Basic Income Grant Coalition comprised of citizens’ organisations (the Council of Churches, the National Union of Namibian Workers, the National NGO Forum, the Namibian Network of AIDS Service Organisations, the Legal Assistance Centre, and The Labour, Resource and Research Institute) funded and ran a pilot project the purpose of which was to trial and study the application of Universal Basic Income in Namibia.

From January 2008 to December 2009 every resident of Otjivero – Omitara (about 1,000 people) received a monthly allowance of (N$80 = USD 4.5 ) which was paid regularly until March 2012.

The research had the following results:

social cohesion – the community established an 18-member committee to advise members on how to spend their allowance wisely
it attracted migrants who could benefit from the favourable environment. More sharing meant that the value of the monthly allowance dropped from N$89 (USD 5) per month in January 2008 to N$67 (USD 4) in November 2008
poverty dropped by 39% among residents who were sharing with migrants and 60% in cases where the allowance was spent only by the resident
income-generating activities like brick-making, baking of bread and dress-making jumped 15% and a local market was created as people had a bigger purchasing power
by November 2008 child malnutrition decreased 32%
people with HIV could afford better food and medication
school drop-out rate fell to almost 0%
healthcare became more accessible to residents as they could afford it
crime fell by 42%
the basic income grant empowered women and made them more secure as they did not have to engage in transactional sex services

In conclusion, the pilot project had a dramatic overall positive effect on the selected community. The Basic Income Grant Coalition calculated that the cost for nationwide implementation of unconditional universal basic income for all would be N$ 1.2 – 1.6 billion (USD 71 – 95 million) per year, equivalent to 2.2 – 3% of Namibia’s GDP (2019 – 12.37 USD Billion) ¹⁰

In short, UBI in Namibia was and is feasible. The missing component then and now remains the lack of political will to apply the project on a national level.

3. Government response regarding the pandemic crisis in Namibia

Following from the brief summary of state of affairs in Namibia and an example of a possible solution to the human suffering caused by institutional inadequacy and economic logic that produces inequality, I will now list the measures that the Namibian government has taken to tackle the health/economic crisis triggered by COVID-19.

1. Emergency Income Grant ¹¹ – one off payment of N$750 (USD 45) for people experiencing financial difficulties caused by COVID. The government allowance should cover 749 000 people in need and will cost the government N$562 million (USD 34 million).

Some concern regarding the stimulus: ¹²

the sum is insufficient to sustain an ongoing lockdown and future economic inactivity
the grant is conditional – employed persons and people who already receive social benefits do not qualify being supported by this policy
to obtain the one off payment citizens must own a mobile phone and an ID number

The EIG is a self-nomination process. Therefore applicants are required to have, or make use of an active cell phone number, and a valid Namibian ID number.

Applicants must SMS their name and ‘EIG’ to 141222 to start the registration process, or dial *141*222#. After the approval of the application by the ministry, applicants will receive a token from the bank they have selected in the application process. ¹²

there is a considerable distrust among the population about potential problems with the distribution system and application process
the policy is not universal, it does not cover every single Namibian which means it fails to act as an emergency safety net for all

2. Tax-related measures:¹³

repayment of overdue VAT to companies, N$3 billion (these are funds the government already owes to VAT paying enterprises)
payment of overdue invoices for goods and services provided to the government – N$800 million
Tax-back loan scheme for tax registered and tax paying (PAYE) employees and self-employed affected by the pandemic.
Extended deadline for filing taxes. Mandatory payment date remains the same.

These measures are very far from a policy supporting the business community given the implications of the crisis.

3. Employment-related measures ¹⁴

3.1. Subsidy for employers in the construction, tourism and aviation sectors. Workers will receive 17% of their wage for 3 months.

3.2. Employers who are benefiting from measures should not be firing any of their workers or reducing their salaries with more than 50%

3.3. The programme will benefit 7,900 employers employing 65,420 employees. The budget amounts to N$150 million (USD 8 million) which is approximately 25% of the total wage bill.

3.4. Grants for workers affected by COVID-19. These are conditional application based stimulus that has the potential to help 56,000 to 117,000 applicants.

3.5. Government and business owners will be allowed to negotiate a temporary 20% drop in salaries.

How these measures can be interpreted:

insufficient funding of affected workers
conditions and administrative obstacles for receiving help
potential to undermine workers income for a long period of time
the policy does not cover all workers in Namibia

4. The Economic stimulus measures which will be administered by banks consist in: ¹⁵

4.1. Tax-back loan scheme for businesses and individuals

4.2. Agricultural and non-agricultural and small business loan programmes

Here the government enables the banks to make businesses dependent on loans which creates more instability by increasing debt in society. Hardly an adequate solution for the needs of business owners, workers and their families.

5. Water subsidy equal to N$10 million. This will enable water points to be kept open without people needing to use water cards.

Probably the bare minimum a state can do to prevent riots and social breakdown.

There is a general concern about administration and distribution of emergency funds based on past and present experiences. In a report called COVID-19 Emergency Procurement ¹⁶ by Frederico Links the author outlines issues with transparency on spending by government institutions which raises doubts about how much of the already unsatisfactory help will reach people at the bottom of the income chain.

Another report Analysis – Namibia’s National Budget 2020/21 ¹⁷ comments on potential problems with the financial stability of Namibia and its economic future which has direct implications on the wellbeing of the Namibian people.

In conclusion, based on the information above:

Emergency spending to alleviate poverty and tackle social and economic inequalities was and is needed regardless of COVID-19.
The ongoing crisis requires working solutions based on unconditional, regular distribution of wealth for all Namibian people in order to sustain their individual sovereignty, dignity and human rights permanently.
The measures announced by the government are inadequate, insufficient and cruel as they don’t meet the needs of the population.
Basic Unconditional Income, proven by the BIG pilot project, is feasible and has the potential to create social cohesion, improve the local economy and bring back trust in existing institutions and political leadership.
To achieve the above the citizens of Namibia have the opportunity to unite and stand behind a clear demand for the implementation of Basic Unconditional Income for all.
All people have the right to determine their present and future. An unconditional basic income is what will enable them to fulfil their fundamental human rights.

Sources:

1 https://www.kimberleyprocess.com/en/namibia-0

2 https://assets.kpmg/content/dam/kpmg/pdf/2014/09/namibia-mining-guide.pdf

3 https://www.macrotrends.net/countries/NAM/namibia/poverty-rate

4 https://www.macrotrends.net/countries/NAM/namibia/hunger-statistics

5 https://tradingeconomics.com/namibia/unemployment-rate

6 https://www.cdc.gov/globalhealth/countries/namibia/pdf/namibia_factsheet.pdf

7 https://www.dol.gov/agencies/ilab/resources/reports/child-labor/namibia

8 https://evaw-global-database.unwomen.org/en/countries/africa/namibia

9 https://tradingeconomics.com/namibia/gdp

10 http://www.bignam.org/BIG_pilot.html

10 https://www.centreforpublicimpact.org/case-study/basic-income-grant-big-namibia/