The idea of implementing a Basic Income Grant (BIG) in South Africa has been a topic of much discussion, especially after last week’s postponed 2025 Budget Speech.
This follows a legal case last year against the South African Social Security Agency (SASSA) over how it handled the Social Relief of Distress (SRD) grant.
The court ruled that the SRD should no longer be considered a temporary measure and must be expanded, improved, and made permanent in 2025.
However, just a few months earlier, the National Treasury dismissed the idea of a Basic Income Grant as “unreasonable” and raised concerns about the financial feasibility of such a program.
National Treasury’s Concerns Over Cost
The National Treasury, in its statement last October, expressed doubt over the viability of a Basic Income Grant for South Africa.
While they acknowledged the country’s 32% unemployment rate, they estimated that providing a universal grant to all unemployed citizens could cost up to R400 billion—an amount far beyond what the national budget could handle.
They also pointed out that, on a global scale, only two countries have successfully implemented such a program, but both have had to scale back due to economic pressure.
This raised the question: could South Africa really afford a Basic Income Grant, and would it be sustainable in the long run?
A Look at Global Examples of Basic Income Grants
While South Africa is still weighing the potential of a Basic Income Grant, it’s helpful to look at how other countries have approached the concept.
Interestingly, few nations have rolled out a full, universal Basic Income Grant program without first running pilot projects. Here’s a look at some of the notable global experiments.
Finland’s Basic Income Grant Experiment
Finland is one of the countries that ran a pilot program between 2017 and 2018.
The experiment provided 2,000 unemployed citizens with a monthly payment of $640 (about R11,950).
However, the program faced criticism due to its short duration and limited scope, making it difficult to evaluate its long-term effects.
Still, it remains one of the most talked-about Basic Income Grant trials globally, but it’s clear that more extensive, longer-term data would be needed to fully assess its impact.
Iran’s Cash Transfer Program
Iran’s quasi-universal cash transfer program, launched in 2011, is often mentioned as an example of large-scale income support.
While not strictly a Basic Income Grant, this program distributed about $40 (R750) per month to a significant portion of the population—around 95% of Iranian households.
It’s quite similar to South Africa’s current SRD grant but on a larger scale.
Despite being one of the world’s largest cash transfer programs, Iran’s initiative also faces criticism over its sustainability and potential long-term economic effects.
Kenya’s Experiment with Basic Income Grants
Kenya is currently home to one of the most well-known Basic Income Grant projects on the African continent.
Funded by a charitable organization, this program provides $22 (R405) per month to 20,000 people in 195 rural villages.
The program has been running for 12 years, with positive outcomes related to increased food security and improved psychological well-being among recipients.
However, the sustainability of the program remains a major question, especially as it’s funded by an outside charity and may face challenges if that funding is cut off.
Brazil’s Bolsa Familia and Other Emerging Countries
Brazil’s Bolsa Familia, or Auxilio Familia program, is another example worth noting.
The scheme offers around $70 (R1,290) per month to low-income families with children, with conditions attached, such as school attendance and vaccination requirements.
While this is not strictly a Basic Income Grant, it functions in a similar way, aiming to reduce poverty.
However, like many other similar programs, Brazil’s social welfare system faces ongoing administrative challenges and political instability, which have sometimes threatened its continuity.
The Common Challenges of Implementing a Basic Income Grant
From Kenya to Brazil to Finland, one thing is clear: Basic Income Grants face similar challenges everywhere.
Administrative issues, such as the need for effective identification and distribution systems, are a common concern. Corruption and bribery can undermine the effectiveness of these programs.
Fiscal sustainability is another significant issue, especially in developing economies, where the costs of such grants can become unsustainable over time.
Inflationary pressures and the risk of creating dependency are also challenges that many countries have had to contend with.
Furthermore, evaluating the true benefits of these programs remains a tricky task, with debates over the appropriate metrics for success.
Could South Africa Learn from These Examples?
For South Africa, there are valuable lessons to be learned from the global examples of Basic Income Grants.
While there is evidence that such a program could help reduce poverty, the question of implementation remains a significant hurdle.
The country’s current SRD grant scheme, while not perfect, provides a starting point, and the idea of expanding it into a full Basic Income Grant is not without merit.
However, careful planning will be necessary to avoid the mistakes made by other nations and to ensure the long-term sustainability of the program.
Looking Ahead: Will South Africa Move Toward a Basic Income Grant?
The future of a Basic Income Grant in South Africa may become clearer when the postponed 2025 Budget Speech takes place on March 12.
However, whether the country takes the leap into a universal income scheme or opts for a pilot project, the discussion is far from over.
It will require balancing the benefits of reducing poverty with the challenges of economic sustainability.
For now, it’s a matter of carefully weighing the pros and cons and looking closely at global experiences to make the most informed decision possible.
If you have thoughts on whether such a scheme could work in South Africa, feel free to leave a comment or reach out via WhatsApp.
Stay informed by subscribing to our newsletter for the latest updates.