In an unprecedented turn of events, South Africa is undergoing its most significant political transformation since the end of apartheid. The African National Congress (ANC), the country’s ruling party since 1994, lost its parliamentary majority in the general elections held on May 29, 2024. This landmark moment has ushered in a period of intricate negotiations as the ANC seeks to form a coalition government with its political adversaries.
The coming weeks are expected to be dominated by intense deliberations between various parties to establish a functional government. Despite differing political ideologies, a shared priority among most parties, including the ANC and its primary opposition, the Democratic Alliance (DA), is to sustain or expand income support programs. Notably, there is consensus on continuing the COVID-19 relief grants provided to low-income households.
Turning COVID-19 Relief into Universal Basic Income
In the lead-up to the elections, the ANC unveiled a bold plan to transform the COVID-19 Social Relief of Distress (SRD) grant into a Universal Basic Income (UBI) program. This initiative aims to provide regular, unconditional payments to all South Africans aged 18 to 59, regardless of their employment status. If implemented, South Africa would become the first nation to introduce such a comprehensive UBI program.
The ANC has committed to implementing this policy within two years should it secure a role in the new government. The South African Social Security Agency (SASSA) is expected to oversee the rollout, which has been framed as a solution to address the country’s deep-rooted inequality and poverty.
Current State of Social Relief
At present, the SRD grant is available only to individuals earning less than the food poverty line. However, critics argue that the means-testing criteria are outdated, as they rely on the 2021 poverty threshold, which no longer reflects the current cost of living. As a result, many impoverished South Africans are excluded from receiving assistance.
The ANC’s proposed UBI would eliminate the restrictive means-testing process, offering financial support to a broader population. This approach aims to reduce administrative hurdles and reach individuals who are currently underserved by the system.
Global Perspectives on Basic Income
The concept of Universal Basic Income has been debated for decades as a potential solution to inequality and poverty. Visionaries like Martin Luther King Jr. and Elon Musk have championed UBI for its ability to address systemic issues, such as poverty and job displacement due to automation.
The COVID-19 pandemic amplified global interest in UBI, as many governments introduced emergency cash transfers to support their citizens. For instance, Spain’s anti-poverty scheme provided €1,015 per month to low-income households, while the United States issued $1,200 stimulus checks under the CARES Act. These measures demonstrated the immediate economic and social benefits of direct financial aid.
Economic Benefits of UBI
Research underscores the economic advantages of providing direct cash support to low-income individuals. According to Kelle Howson, a senior researcher at the Institute for Economic Justice (IEJ) in Johannesburg, cash transfers stimulate economic activity by boosting spending among the poorest households.
The IEJ reports that approximately 93% of SRD grant recipients use the funds primarily to purchase food, highlighting the essential role these payments play in sustaining vulnerable communities. Extending this support through UBI could further enhance food security and overall well-being.
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International Success Stories
Several international trials have demonstrated the transformative potential of UBI. In Kenya, a large-scale experiment by GiveDirectly revealed that recipients used cash transfers to improve their living conditions, invest in small businesses, and enhance their diets.
Similar outcomes were observed in Spain and the United States during the pandemic. However, as emergency measures were rolled back, many nations reverted to austerity, exacerbating economic hardship for their most vulnerable citizens.
South Africa’s Unique Path
Unlike other countries, South Africa has resisted calls to cut its COVID-19 relief programs, even in the face of fiscal constraints. When the grants were temporarily suspended in April 2021, the resulting public unrest forced the government to reinstate them by August.
Despite this commitment, the current SRD grant system has significant flaws. The payments are insufficient to meet even half of the food poverty line, leaving recipients struggling to cover basic necessities. Additionally, millions of eligible individuals are excluded due to inefficiencies in the application and distribution processes.
Criticism and Call for Reform
Advocacy groups such as the IEJ and the #PayTheGrants campaign have been vocal about the shortcomings of the current system. Critics argue that the digital application process and automated means-testing disproportionately exclude vulnerable populations, particularly those without access to reliable internet.
Elizabeth Raiters, an unemployed South African activist, highlights the daily challenges faced by individuals denied assistance. The IEJ has even pursued legal action against the government, claiming that the current regulations unfairly marginalize millions in need of support.
Looking Ahead
As South Africa enters a new political era, the push for Universal Basic Income represents a pivotal moment in the country’s fight against poverty and inequality. While challenges remain, the potential adoption of UBI could set a global precedent, redefining how nations approach social welfare in the 21st century.