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Opinion: BIG: Namibia cannot  afford not to

2021-08-09  Staff Reporter

Opinion: BIG: Namibia cannot  afford not to

Our forefathers dreamt of an independent Namibia. They envisioned a Namibia premised on the concept of democratic principles and propelled by the rule of law. However, this dream is being thrown into question, considering the socio-economic conditions of our country. 

The President of the Republic of Namibia, His Excellency Hage Geingob, recently questioned the effectiveness of a Universal Basic Income Grant. The President contended that it does not make sense for such a grant to cater for everyone, even if the country was able to afford it.

President Geingob’s question speaks directly to the heart of the Universal Basic Income Grant. 

What clearly distinguishes it from other social grants or other forms of social protection is its universality. It is a cash transfer, with no strings attached, for those in a specified age group. It is an unconditional and periodic cash transfer. 

The universal basic income grant rests on five main tenets. Firstly, by not establishing an eligibility criteria, with the exception of being over the age of 18 and of course a Namibian citizen, the universality of the grant avoids the inherent exclusionary nature of needs-based targeting grants.

Moreover, owing to the universality of the grant, it circumvents any stigma that beneficiaries may experience. Additionally, by moving away from potential beneficiaries to guaranteed recipients, there are fewer transaction costs in accessing benefits, such as that individuals do not have to spend time and money applying for the grant. Lastly, a universal cash transfer is considered more labour-compatible than most other programmes as it reduces the price effect of transfers.

The Basic Income Grant would not be foreign to Namibia. About 13 years ago, a BIG pilot project was launched in the Otjivero-Omitara area. The residents there all received N$100 per person, provided that they were under the age of 60, regardless of their social and economic class. According to reports from renowned individuals such as Rev. Dr.  Claudia, Rev. Dr. Dirk Haarman, Mr. Herbert Jauch and Ms. Hilma Shindondola-Mote, they all found that there was a considerable increase in the attendance of the number of school-going children. The report further noted that the percentage of people living below the poverty line in the area decreased from 73% to 37% within the one-year duration of the BIG rollout. Lastly, there was a notable decrease in the crime rates in the area, with an average decline of 35% being recorded in all theft-related cases.

The question posed by President Geingob highlights the skepticism surrounding the implementation of the Basic Income Grant. The first of two commonly heard arguments about the BIG is the alleged dependency syndrome that it fosters, as well as the affordability of the income grant. 

The first argument contends that the regular receipt of these cash transfers will make the beneficiaries lazy. This myth has been compendiously disproved by the Food and Agriculture Organisation of the United Nations’ publication ‘Confronting Six Common Perceptions About Unconditional Cash Transfers as a Poverty Reduction Strategy in Africa.’ This argument is of the view that poor people are lazy, and that they would rather live off of handouts from the State. However, this argument could not be farther from the truth. Frankly, Namibia is characterised by high structural unemployment; there are simply not enough jobs to absorb the job-seekers in the country. In essence, people who maintain this argument are saying that Namibians who cannot find non-existent jobs must be denied assistance from the State. 

While the second argument asserts that the BIG is unaffordable, that may not necessarily be the case. The report from Haarman et al states that the BIG would cost Namibia between N$1.2 billion and N$1.6 billion. Additionally, there are a number of options at the government’s disposal with regards to funding the BIG. Firstly, the government can reduce the wasteful spending and mismanagement of public funds. Cutting government expenditure by a mere 2% ought to be enough to finance the BIG. Secondly, the government can moderately increase the VAT, coupled with an increase in income tax. This is, however, the least popular option, and would likely present adverse effects to both lower-income earners as well as the well-off. 

The introduction of a special levy on natural resources can also be considered. Haarman et al further maintain: “An econometric analysis revealed that Namibia’s tax capacity exceeds 30% of the national income. The current collection rate is below 25%, and thus Namibia’s excess capacity to raise tax revenue significantly exceeds the net costs of a Basic Income Grant. This makes the BIG affordable in Namibia.” 

However, the threshold must be increased. Every beneficiary must receive at least N$500. This ought to be enough to eliminate food insecurity, reduce the high levels of poverty, and cushion the unemployed as well as those who have lost all hope in securing employment opportunities. 

The scope for redistribution is
great, and the inequality in this country is so extensive that redistribution is now socially and morally inescapable. The only way to achieve this is through the implementation of the Basic Income Grant. 

*Roberto Dirkse is the spokesperson of the PDM president. However, this piece was written in his personal capacity.

2021-08-09  Staff Reporter

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