Can Basic Income Contribute to Inclusive Development in South Africa? A review of recent proposals. IEJ Working Paper Series: No. 8 | August 2023

Can Basic Income Contribute to Inclusive Development in South Africa? A review of recent proposals

Can Basic Income Contribute to Inclusive Development in South Africa? A review of recent proposals. IEJ Working Paper Series: No. 8 | August 2023

In South Africa, the issue of extreme inequality and the need for inclusive development have gained prominence. Basic income solutions are being explored to address these challenges. This Working Paper assesses the potential of basic income proposals in South Africa to contribute to inclusive development.

The urgent need for basic income

As South Africa grapples with severe inequality and worsening poverty and unemployment rates, exacerbated by global crises since 2020, basic income is at the forefront of national discussions as a potential solution to ensure inclusive development.

Criteria for progressive basic income

Ortiz et al. (2018) established criteria for progressive basic income proposals, including benefit adequacy, population coverage, and non-regressive financing. These criteria are essential for aligning with ILO standards.

Assessing South African proposals

This Working Paper builds upon Ortiz et al.’s framework to evaluate basic income proposals from South African government and civil society actors. The papers aims to determine how well these proposals meet the criteria for progressive basic income outlined.

The ongoing crisis

Despite a relatively extensive social protection system, South Africa grapples with persistent poverty and inequality. Recent data reveals that over half the population lives below the poverty line, with many in food poverty. These challenges have likely worsened due to the impact of Covid-19 and other global economic shocks.

Addressing unemployment

With an unemployment rate of 42.4% in the first quarter of 2023, a substantial portion of the population is without adequate income. A meager “temporary” grant exists, but policymakers have signaled their intention to introduce permanent basic income support.

Critical considerations for success

The success of this however depends on key factors, such as the value of the transfer, eligibility criteria, financing methods, and potential conditionalities. These elements will determine the initiative’s ability to alleviate poverty and promote inclusive growth.

Design matters

International experts have emphasised that the outcomes of basic income initiatives vary based on their political context, ideological foundation, and design specifics. In South Africa, various proposals with distinct features and rationales have been put forth by government, academia, and civil society.

Assessing proposals for inclusive development

Our goal is to highlight the contested dimensions of basic income in South Africa. We will explore the potential divergent outcomes of these competing visions, particularly concerning poverty alleviation and development.

Theoretical framework

Our approach builds on the premise that basic income can be either progressive or detrimental, depending on design. We set out specific criteria, referring to Ortiz et al. (2018), to assess the progressive potential of South African basic income proposals.

Overview of basic income debates

We provide a brief overview of South Africa’s basic income debates within the context of profound structural challenges, including unemployment, inequality, and poverty.

Key differentiators

We delve into the leading basic income proposals, highlighting key points of divergence, such as value, target population, eligibility verification methods, and financing approaches.

Evaluating progressiveness

Finally, we evaluate these proposals against our criteria to gauge their potential for inclusive development and poverty alleviation. Our review underscores the necessity of basic income in the South African context, emphasizing that the methods of implementation and financing will ultimately determine its success.