A Basic Income Grant has been a topic of intense discussion in South Africa for quite some time, with recent debates surrounding its potential implementation.
The South African government’s decision to push forward with this idea was supposed to be at the forefront of last week’s delayed 2025 Budget Speech.
However, the conversation about the grant’s future has been anything but smooth, especially after the South African Social Security Agency (SASSA) was taken to court last year over its handling of the Social Relief of Distress (SRD) grant.
The ruling on that case deemed the SRD not as “temporary” anymore, urging for its expansion and permanence in 2025.
Yet, just months earlier, in October 2024, the National Treasury had rejected the concept of a Basic Income Grant, calling it an “unreasonable consideration” due to the challenges in calculating its cost.
They speculated that implementing a universal grant for the 32% of South Africa’s unemployed population could cost around R400 billion, a burden too great for the country’s finances to bear.
Global Examples of Basic Income Grants
Despite South Africa’s hesitancy, President Cyril Ramaphosa and others have long advocated for the Basic Income Grant to address the high unemployment rates in the country.
However, globally, only a handful of countries have attempted such schemes.
Intriguingly, the South African National Treasury pointed out that only two countries had successfully introduced a Basic Income Grant, though both have since scaled back due to economic pressure.
When we look internationally, the reality of implementing such a grant is more complex than it seems.
Basic Income Grants generally provide unconditional welfare payments to unemployed residents, typically from the government. In South Africa, that could mean about 17 million unemployed citizens between the ages of 18 and 60.
However, few countries have adopted a full, universal Basic Income Grant.
Instead, many have run smaller pilot programs to assess the viability of such an initiative.
Pilot Programs Around the World
Most countries that have experimented with Basic Income Grants have done so through pilot projects, and South Africa would need to study these examples closely to avoid pitfalls.
One of the most well-known experiments took place in Finland between 2017 and 2018.
Finland’s program involved 2,000 unemployed citizens who received $640 (about R11,950) a month.
However, the program was criticized for its limited scope and brief duration, making it difficult to assess its long-term effects.
Iran, in 2011, implemented a cash transfer program that paid significantly less—only $40 (R750) per month—but included 95% of households in the country.
While not a true Basic Income Grant, it shared similarities with South Africa’s current SRD scheme, and remains one of the largest cash transfer programs in the world.
Basic Income Projects in Emerging Countries
Emerging countries, especially in Africa, have taken varying approaches to implementing a Basic Income Grant.
In Kenya, a charity-funded experiment has provided a monthly stipend of $22 (R405) to 20,000 people across 195 rural villages for over a decade.
This program has resulted in improvements in food security and psychological well-being, but like many others, it faces challenges regarding long-term sustainability and the potential for creating dependency.
Brazil’s Bolsa/Auxilio Familia program is another example, offering around $70 (R1,290) monthly to low-income families with children, contingent on school attendance and vaccinations.
However, like South Africa’s SASSA system, Brazil’s program has been threatened by political instability and administrative inefficiencies.
Challenges Faced by Basic Income Grants Globally
The challenges faced by countries attempting to implement Basic Income Grants are not unique to South Africa. Across the globe, emerging economies have struggled with similar issues:
- Administrative Hurdles: Effective identification and distribution systems are essential, but are often vulnerable to bribery and corruption.
- Fiscal Sustainability: Ensuring long-term funding for such a program, especially in developing economies, is a significant concern.
- Inflation: Large-scale, ongoing cash transfers to the poor could exacerbate inflation, further challenging economic stability.
- Political Pressure: Social welfare programs are often criticized, reformed, or canceled during political transitions or election periods.
- Measuring Impact: Determining the true benefits of Basic Income Grants remains elusive, with ongoing debates about appropriate evaluation metrics.
What Could a Basic Income Grant Mean for South Africa?
While there is evidence suggesting that a Basic Income Grant could significantly reduce poverty in South Africa, questions about its implementation and potential economic effects remain unanswered.
Perhaps the postponed Budget Speech on March 12, 2025, will offer more clarity on this matter.
Alternatively, the government could consider testing the waters with a privately funded pilot program before taking any large-scale steps.
The debate about whether a Basic Income Grant could work in South Africa is ongoing, and it will likely remain a central issue for policymakers in the months to come.
What are your thoughts on whether South Africa should introduce such a grant? Feel free to share your opinion in the comments or reach out via WhatsApp.