Why Universal Basic Income is Important in Africa

Why Universal Basic Income is Important in Africa

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.

Sub-Saharan Africa: Cash transfers have a positive impact on social determinants of health

Sub-Saharan Africa: Cash transfers have a positive impact on social determinants of health

A systematic review has been published that looks at the effects of cash transfers on social determinants of health and health inequalities in sub-Saharan Africa.

 

Researchers considered both quantitative (both experimental and quasi-experimental) and qualitative studies to be included in the review. To be eligible for inclusion quantitative studies needed: to be conducted in a population of people in sub-Saharan Africa; to investigate the effect of conditional or unconditional cash transfers when compared with other cash transfers, or no cash transfers; report at least one of the prespecified socio-economic outcomes. Qualitative studies that looked at barriers and facilitators to a successful cash transfer intervention were included. Further details of the review methods can be found in the review protocol.

 

Fifty-three studies were included: 3 randomised controlled trials (RCTs), 22 cluster-RCTs, 8 quasi-experimental studies and 20 qualitative studies. The studies were conducted in 14 countries across sub-Saharan Africa. Due to the diversity of populations and outcomes reported, the researchers did not conduct meta-analysis, instead opting for a narrative synthesis following the approach recommended by Popay et al. (2006). For the qualitative studies, thematic synthesis was carried out to combine the data, following the Thomas and Harden (2008) approach.

 

The review found that cash transfers can be effective in tackling structural determinants of health such as poverty, education, household resilience, child labour, social capital, civic participation, and birth registration. The review further reported an impact on intermediate determinants including material circumstances (e.g. nutrition, savings), psychosocial circumstances (e.g. self-esteem, reduced stress and anxiety), sexual risk behaviours among adolescents and adolescent empowerment. For this analysis the researchers lumped together unconditional and conditional cash transfer interventions when compared to a control group who did not receive any cash transfers.

 

Little evidence was reported in the review that compared unconditional and conditional cash transfers. Three studies found that conditional cash transfers were more effective than unconditional cash transfers in increasing school attendance (Baird et al 2011, Robertson et al 2012, Akresh et al 2013, 2016). On the other hand, one study in Malawi found significantly reduced psychological distress among adolescent schoolgirls who received unconditional cash transfers compared to conditional cash transfers (Baird et al. 2013).

 

More information at:

The impact of cash transfers on social determinants of health and health inequalities in sub-Saharan Africa: a systematic review”, Health Policy and Planning, 2018

The Global Unification International think tank promotes basic income

The Global Unification International think tank promotes basic income

The Global Unification International (GUI) is a “sustainable development think tank”, striving for the integration of technologies and social policies between all stakeholders – corporate, government and third sector organizations – in emerging economies. Founded in 2006 and with headquarters in Queensland, Australia, it promotes “specialized programs focusing on justice, equality, peace, health, education, sustainable development, technology transfer and the eradication of poverty”. For that purpose, GUI is based on a Constitution, which sole purpose is to “advancing humanity for the continued evolution of co-operation”.

 

The GUI has a commitment to “design, implementation, monitoring and evaluation of the Universal Basic Income Project”, and its strong social media presence (a 79000 follower page on Facebook) regularly refers actual statements from people receiving basic income (e.g.: from GiveDirectly’s experiments in Kenya). The think-tank also produces research articles and other knowledge-based media, through its publications page, where basic income has also been featured. A wide variety of experts, mainly from but not limited to African countries, cover aspects such as health, social policy and IT/computer science.

 

More information at:

GUI website

GUI Facebook page

AFRICA: “An African Identity We All Aspire To,” Nkateko Chauke

AFRICA: “An African Identity We All Aspire To,” Nkateko Chauke

The Southern African Development Community (SADC) is a region rich in minerals and energy resources. At the same time, though, it is plagued by high rates of poverty and extreme income inequality; indeed, its member states include the three nations of highest income inequality in the world (Namibia, South Africa, and Botswana).

It is also becoming a setting of basic income experimentation and activism. Namibia was the setting of a successful basic income pilot study in 2008-09, and other countries in the region have also experimented with cash transfer programs, to positive results.

Nkateko Chauke of the Studies in Poverty and Inequality Institute, an independent think tank based in South Africa, is the campaign coordinator for SADC BIG — which promotes a “SADC-wide universal cash transfer to be funded by a tax on extractive industries.”

In honor of Africa Day (May 25th), Chauke wrote an op-ed for the Daily Maverick arguing that “a universal cash transfer, predominantly funded through extractive industries, will be a remarkable stride towards poverty eradication, reduced inequalities among Africans, equal economic participation and overall African unity.”

Through the realisation of a common vision and a consolidation of national interests – with more robust social protection programmes that will ensure the redistribution of of the proceeds of extractive industries to break the crippling levels of poverty and inequality – a unified culture of people will support a long-term agenda for transformation in Africa for the achievement of sustainable development and integration.

Read the article here:

Nkateko Chauke, “An African identity we all aspire to,” Daily Maverick, May 25, 2016.

Image: Copper mine in Zambia; BlueSalo via Wikimedia Commons

On why basic income has not yet been deployed: now it’s Namibia

On why basic income has not yet been deployed: now it’s Namibia

So the basic income implementation process in Namibia was halted1. Is that surprising?

After an amazing effort by minister Zephania Kameeta to get a basic income implementation program for Namibia up to the (minister) council, it was just swept away and replaced by a program intended to alleviate poverty through economic growth. The progressive approach was replaced by the traditional economic orthodoxy of endless growth and continued inequality. This program, named “Harambee Prosperity Plan”, also includes the creation of a food bank and grants for young people conditional on participation in this food bank and a few other community activities.

Let’s not forget that Namibia was one the few places on Earth where a basic income experiment was actually carried out (at Otjivero), and with excellent results. Among the positive results were better nutrition, clothing, and transportation, more savings and a rise in entrepreneurship. You could now be thinking: Ok, so they tried basic income in a pilot project with excellent results, and they had a minister who was a champion of the basic income who could take it on to national-level implementation. So what’s stopping them now? The answer seems simple, but it is also hard to deal with.

The answer is this:  big corporate interests need poverty. And it so happens that Namibia has plenty of poor people2. In a recent essay, a tentative connection was established between poverty (in economic terms) and the refusal/denial of the South African government to test for basic income, let alone implement it at the national level. Basically, the argument entails that government officials deny the proven advantages of basic income, delaying its development, to protect corporate interests. These interests profit massively from the cheap labour that a mass of helpless poor people can provide.

The economic structure of Namibia, as related to income, is not much different from the South African, as can be seen in Figures 1 and 2. The similarity is striking, hence the same unwillingness of the Namibian political elite to try out the implementation of basic income, despite all the theoretical and proven practical advantages it provides for the people.

safricahouseholdspread

Figure 1 – The spread of households within the income distribution in South Africa, 2008

 

namibiahouseholdincome

Figure 2 – The spread of households within the income distribution in Namibia, 2015

 

A clear image starts to appear. In these countries, poverty is an asset for big industry, which has, to a great extent, bought political power. So what can be done about it? Well, two things can happen: poverty-dependent corporations automate up to a great extent3, and/or Namibians put pressure on their elected officials – through democratic processes – to get basic income implemented, despite the corporate grip on regime politicians. The first one is highly probable, and so we will be watching a fading interest of corporations in financing political power, since with mechanical machines and Artificial Intelligence they can get their way even without resorting to poor human labour. The second one, less likely but entirely possible, may grow from the first one, when political leaders get less engaged with corporate power – and although remaining eager to please them, no longer have the same financial incentive, thus becoming more susceptible to democratic pressures.

Anyway, automation may actually not be a deterrent but rather a spark for some sort of basic income implementation. We seem to be facing a win-win situation for basic income: automation and/or democratic pressures will guarantee that basic income becomes a reality in the next few years in Namibia, and elsewhere. At this point, only ruthless autocratic power can dismiss it and keep it away for much longer. The time for change has come.

 

More information at:

Claudia and Dirk Haarnann, 2015. “Relief through cash: impact assessment of the emergency cash grant in Namibia”, July 2015

Claudia and Dirk Haarnann, 2015. “Piloting basic income in Namibia – critical reflections on the process and possible lessons”, Paper delivered at the 14th Congress of the Basic Income Earth Network (BIEN) Munich – 14-16 th September 2012

André Coelho, “On why basic income has not yet been deployed”, Basic Income News, 17th March 2016

 

Notes:

1 – At the beginning of April 2016, the Namibian president presented his state of the nation address as well as the “Harambee Prosperity Plan”, which focuses on combating poverty by the creation of jobs through economic growth, plus the introduction of a food bank.

2 – According to the Republic of Namibia National Planning Commission “Poverty and deprivation in Namibia 2015”, the account for poverty is that 26,9 % of the population lives under the official poverty line.

3 – According the report “Technology at work v2.0”, it is estimated that in countries like Ethiopia the risk of job automation covers 85% of all jobs in the coming decades (other examples like China and India rate at 77% and 69% of automation risk, respectively).