The universal grant is a necessity for millions — failure to implement it is the real risk

It has been shown time and again that the Social Relief of Distress grant payments to the poorest households are invested into productive activities as well as used for food and basic necessities. (Photo: Leila Dougan / Daily Maverick)

By Julia Eccles, Kelle Howson, Gabriel Mabitle, Esley Philander, Tlou Seopa and Christina van Straten

8 Feb 2022

Imagine a very near future in South Africa, where everyone’s basic needs are met which in turn enables our economy to thrive. It is a practical possibility within our reach.

In the lead-up to the president’s State of the Nation Address, the topic of a universal basic income guarantee (Ubig) has been front and centre in the media. Contested and conflicting views have been put forward with some voices proving louder than others.

Much of this debate has centred on arguments about economic modelling which are inaccessible to non-experts, and removed from the reality of peoples’ lives. At this critical time ahead of the president’s address and the upcoming Budget Speech, we wish to make the constitutional and moral case for the necessity of a Ubig. Furthermore, we would like to invite all people of South Africa to imagine a very near future where everyone’s basic needs are met, allowing our people and our economy to thrive. Far from being a pipe dream, that is a practical possibility within our reach.

Civil society partners have long championed a Ubig, and our organisations have undertaken rigorous policy work on its feasibility, design, and financing. This work is in the public domain and has been made available to decision-makers in government. We have shown that a Ubig can be sustainably implemented in South Africa. Contrary to recent fear-mongering, we have shown that there is fiscal space for a Ubig to be incrementally introduced with low risk — financed through progressive mechanisms such as a social security tax, a resource rent tax, a wealth tax, and a targeted VAT on luxury items.

These can be supplemented by a number of other measures like the removal of corporate tax breaks — the benefits of which are poorly modelled — and reducing wasteful and irregular expenditure. Implementing some or all of these mechanisms would transfer a small proportion of income from the highest earners to the many who are without income. In the most unequal country in the world, that is not a radical proposal.

Moreover, we maintain that comprehensive social protection is not a drain on public finances as some have claimed. Rather, it can be a valuable economic stimulus — with the potential to boost household consumption, productivity and job growth. Research has found, for instance, that the R350 Social Relief of Distress (SRD) grant enabled some recipients to increase their job-seeking activities by contributing to transport, internet and printing costs.

Moreover, the SRD has assisted many to stay afloat through investment into informal enterprises. We have seen time and again that payments to the poorest households are invested into productive activities as well as used for food and basic necessities. In addition, lower-income households spend a higher proportion of their income especially with local businesses, meaning a Ubig has significant potential to boost local economic activity in a virtuous cycle.

Some of the intergenerational benefits of this type of social protection are only beginning to be understood. It supports unpaid care work, for instance (work that falls disproportionately on women), thereby strengthening the fabric and resilience of our communities. A recent study in the US for the National Academy of Sciences produced the stunning finding that cash aid to poor mothers boosted babies’ brain activity in ways associated with stronger cognitive development.

As the virus relaxes its hold on our lives and the National Coronavirus Command Council considers ending the State of Disaster, we must remember that there is still a disaster unfolding. One that requires equally bold moral leadership to protect the most vulnerable. The SRD grant has been a lifeline to those households facing the real threat of going hungry. But the SRD is predicated on the framework of the State of Disaster. The pandemic may be subsiding, but the threat of hunger is more profound than ever, and we must consider how this vital protection can be preserved when the State of Disaster is lifted.

ubig social grant It has been shown time and again that the Social Relief of Distress grant payments to the poorest households are invested into productive activities as well as used for food and basic necessities. (Photo: Leila Dougan / Daily Maverick)

The SRD is also not without significant administrative challenges. The grant’s administrative and design flaws must be fixed and its value increased now to at least the Food Poverty Line while permanent income support is phased in.

We are optimistic that the SRD will be extended. We had a clear warning of what it might mean to withdraw it, last July. While there were complex factors underpinning the unrest, we can be left with no doubt as to the scale of legitimate frustration and alienation that exists within our communities.

That seismic event in South Africa’s history must be a turning point where we acknowledge that long-repeated neoliberal mantras simply aren’t working. That people who have been shut out of employment and alienated from civic participation in South Africa have the right to live free of the fear of starvation, and that those of us who enjoy comfort and security have a responsibility to show solidarity by contributing to social protection.

Beyond being periodically extended, we have proposed to the president that the SRD should become a permanent Ubig. Some conservative economists have claimed that the risk of addressing hunger and poverty in our country through a Ubig is too high. We say that continuing down the same path of reliance on trickle-down growth to end poverty presents a much less tolerable risk. A risk not only to our fiscus and economy at large, but to our social compact, the authority of our institutions and our democracy, and to peace in our society. The state must live up to its constitutional obligation, to progressively realise the right to social security and social assistance within available resources. The resources are available.

We have urged our leaders to use this moment, as we emerge from the pandemic and take stock of the social and economic damage, to take bold action — not only to make the SRD grant permanent, but to expand it into universal income support reaching the level of at least the upper bound poverty line (approaching R1,500) in the medium term.

We are encouraged that leaders have been receptive to our proposals and are very much cognisant of the need that exists in our communities. We note that the United Nations Committee on Economic, Social and Cultural Rights, which monitors implementation of the International Covenant on Economic, Social and Cultural Rights, has warned that government’s “policy work remains insufficient” for ensuring social assistance for adults between the ages of 18 to 59.

Ahead of Sona and the Budget Speech, we urge action by the Presidency to establish a high-level review to consider the abundant international and local evidence on the social and economic impacts of grants and how best to implement them. Civil society partners made proposals to the president when we met him last month on the form this could take, which include an international symposium, and an expert panel consideration of the evidence following the model of the National Minimum Wage Commission.

This need not take longer than three to six months. The urgency of the situation and manifold potential benefits of a Ubig call for rapid and decisive action. DM/MC

The views in this article are endorsed by Amandla.Mobi, Black Sash, Institute for Economic Justice, #PayTheGrants, and Studies in Poverty and Inequality Institute.

Julia Eccles, #PayTheGrants; Kelle Howson, Institute for Economic Justice; Gabriel Mabitle, #PayTheGrants; Esley Philander, Black Sash, Tlou Seopa, Amandla.Mobi; Christina van Straten, Studies in Poverty and Inequality Institute.

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