Basic income is an initiative that aims at providing universal and unconditional cash transfers to people. Universal Basic Income is not like a relief since people can use the money as they would wish. It is not tied to any specific needs like food, housing, or clothing. A Universal Basic Income is dire with the Covid-19 pandemic when most people have lost their jobs. People have been pushed into poverty and need a source of livelihood.
Just like other social amenities like free education, health and security, Universal Basic Income is equally important. UBI improves the economic and psychological well-being of the beneficiaries and helps them to lead a dignified life. It eliminates stress for the beneficiaries since they do not have to worry about their livelihoods, thereby allowing them to focus on other sources of income.
Characteristics of Universal Basic Income
- Basic. It is a minimum guaranteed income and may constitute other elements like insurance and social security.
- Unconditional. Every individual is entitled to it by right of birth, whether they are earning or not. It does not depend on their living conditions.
- Universal. It is meant to serve all the members of society.
Universal Basic Income Initiatives in Africa
Currently, there is no country in Africa with a Universal Basic Income, but there are schemes towards it. There have been trials in some countries like Kenya, Namibia, and Uganda.
Universal Basic Income trials were conducted in Otjivero – Omitara from January 2008 to December 2009. After the pilot phase, a monthly bridging-allowance (N$ 80) to all who participated in the pilot was paid regularly until March 2012. Incomes from some Germans and Namibians funded the initiative.
The Ministry of Poverty Eradication and Social Welfare said in October 2020 that the proposed universal Basic Income Grant (BIG) for unemployed Namibians between the ages of 18 and 59 is feasible.
GiveDirectly, a nonprofit organization operating in East Africa, launched a study on the Universal Basic Income in Kenya in 2017. The study will run for 12 years and is targeted at some Kenyan rural areas. The initiative aims at making cash transfers directly to individuals as opposed to making cash transfers through the government. The initiative is based on the fact that beneficiaries know their problems. Every adult gets 0.75 dollars per day for 12 years.
Eight, a Belgian non-profit organization, launched a study in a village in Uganda. The study provided a basic income for two years to 50 households. It gave an unconditional stipend of $18.52 monthly for adults, and $9.13 monthly for children.
Lessons and Impacts of Universal Basic Income Trials
The trials that were conducted in the three African countries showed the following results.
- Improved economic and psychological welfare. Since the beneficiaries were assured of a regular income, they had no stress about the source of income for their livelihoods. This is an indication that Universal Basic Income leads to a more dignified life for the beneficiaries.
- Universal Basic income showed positive results in that people continued working in their usual workplaces and the stipend was only a boost to their regular incomes. Therefore, cash transfers are a motivation to work more for beneficiaries to increase their incomes. This contrasts to critics who term UBI as a deterrent to working.
How Universal Basic Income Works
The Universal Basic Income aims at providing people with cash transfers which they can use for their needs. Funds channeled through Universal Basic Income are not meant for any purpose and hence people can use them to cater to their needs. Universal Basic Income eliminates the bureaucratic processes that come along when giving and receiving income.
Universal Basic Income is designed to benefit beneficiaries unconditionally. There is no criterion used to make cash transfers. That makes it to target everybody, giving room for substantial coverage. It solves critical issues like inclusion and exclusion error.
Universal Basic Income should be provided by all governments to help their citizens independent. When people have a regular income, they can take risks and venture into businesses. By providing a continuous income, governments can eliminate employment and help people to become more innovative and creative.
How to Fund the Universal Basic Income
There are many ways the Universal Basic Income can be funded in Africa. One of the ways to fund the initiative is from the governments through taxpayers’ money. Central banks can set aside some funds for the initiative. Local and International NGOs can also participate in funding the initiative as is the case with GiveDirectly and Eight in Kenya and Uganda respectively.
Other resources, like revenues from intellectual property rights and taxes from trade, can also be used. Increasing taxes for high-income earners is a great way to fund the initiative and ensure there are no huge gaps between the rich and the poor. This is a good move, especially for corporates that divert monies for shareholders and low ranked staff to the executives. Ultimately, there will be some standardization on incomes and also equitable sharing of organization resources.
Reducing government expenditures. In most African countries, there is a wastage of funds that are directed to loss making state corporations and other entities. Governments can reduce such expenditures by 3 percent to fund basic income initiative. Revenue generating corporations should fund their activities so that the government can spend more on basic income. Some of the enjoyments enjoyed by politicians can also be scrapped to contribute to citizen’s welfare.
BIG Coalition of Namibia proposes Universal Basic Grant of N$500 to unemployed Namibians between the ages of 18 and 59 from the national budget. This will amount to roughly 7.5% of the national budget, less than the 10% that the defence ministry takes without offering any tangible results.
Increase corporate tax. Corporation contribute a lot to the economy. Governments can increase corporations by 2 percent and direct the funds to basic income. Entities charged with the collection of revenues should ensure there are is no embezzlement of revenues collected. This will close many loopholes where most of the collected revenues are lost.
Increase income tax for high-income earners. The African continent has huge wealth disparities between the rich and the poor. For instance, many corporate leaders are paid huge salaries at the expense of shareholders and other corporate workers. People with huge salaries should be taxed high and funds directed to the basic income initiative. This would help to reduce income disparities.
Advantages of Universal Basic Income in African Countries
- Promote entrepreneurship. When people have access to regular income, they can take risk and start businesses. Lack of capital is a major deterrent to self-employment and when people have enough to spend, they can set aside more funds for investment. Also, when people have more to spend, they can buy goods and services leading to enhanced trade and commercial activities. Entrepreneurship will then lead to economic growth from taxes, goods, and services.
- Eliminates poverty. The main motive behind Universal Basic Income is to prevent people from sliding into poverty. Africa is the poorest continent in the world. UBI will help people afford a basic livelihood whether they are earning or not. With enough income, people can buy for the things they are in need of eliminating poverty.
- Reducing administrative overheads. Universal Basic Income has less administrative overhead since there is no need to follow up on how the funds are used. This minimizes costs and leaves enough funds that can be channeled to fund more incomes.
- Promotes mental health. There is a causal link between mental health and poverty. The lack of income and the ability to meet basic needs often lead to stress and depression. The lack of income deprives citizens of money to spend on food, shelter and housing and this can lead to depression. When people are assured of a regular basic income, they have peace of mind. With a sober mind, people become innovative and find other ways of earning a living.
- Spur economic growth. The Universal Basic Income will promote economic growth since the low-income earners will have money to spend. Low-income earners are likely to spend their money in the near term that will go a long way in growing the economy.
- Enables children to access education. In many African countries, children miss basic education when their parents have no regular income. These children are forced to help their parents to do casual jobs. This situation also leads to child trafficking and child labour. When children start working at a tender age, they are at risk of early marriages. Without education, it becomes difficult to secure quality jobs. However, when parents have a regular income, they can keep their children in school.
- Fair income distribution. Since Universal Basic Income can be funded from taxpayers’ money, there is a transfer of funds from the rich to the poor ensuring equitable income distribution.
- Sharing of resources. Since most African countries are endowed with resources, governments can tax companies utilizing those resources and using the proceeds to fund the universal basic income. This would lead to the equitable sharing of resources.
- Eliminating unemployment. Universal Basic Income will reduce unemployment through equitable distribution of labour. People can use the incomes to set up businesses and create more jobs. People have excellent business ideas, but the lack of startup capital is a hindrance.
The idea of Universal Basic Income is steadily gaining popularity around the world. The idea intends to support the poorest in society by offering unconditional cash to everyone. The idea is expected to have a positive impact on the quality of life of citizens in Africa. One in three Africans live below the global poverty line, representing more than 70 percent of the world’s poorest.