Basic Income Grant – We Can’t Afford It

The basic income grant has become a bone of contention among some economic experts and government in South Africa. The global economic crisis is having a toll on many people especially kids and youth who have lost their jobs.

Below is what Dr. Azar has to say:

Econometrix director and chief economist, Dr Azar Jammine said on Friday night that SA’s current social security net doesn’t reach everyone in need.

“It leaves a gap for those who are not employed, are not disabled, are not old and don’t receive child support grant. Now, the idea of a basic income grant is to plug that hole so that everyone receives a bit of money,” he said.

However, Jammine said he thought it would be a waste to implement universal basic income grant as it would likely mean everyone would get it, including those who are employed. On the other hand, a “special grant” to the “missing middle” would make better sense. The problem, however, is how to fund it. 

“Many of these things are unaffordable. As it is at the moment, every person earning over R1 million is subsidising the survival of 60 to 80 people through the tax that they pay.

“It shows that there’s a limit to the extent which you can extend this. Eventually you’ll have a society where only one in five people works,” said Jammine.

Economist Mike Schussler said given SA’s constrained fiscus the country simply cannot afford to implement a basic income grant even though this was a noble idea.”We are in deep financial trouble. Putting resources towards fighting Covid-19 makes sense. But for the basic income grant right now, we don’t have the money. It is going to drain the fiscus even more,” he said.

Schussler said if the ruling party pushes with this idea at any cost, it could mean further credit rating downgrades.

His worry is that when interest rates again rise in the developed economies, South Africa – which already spends around 20% of all its tax revenues towards debt interest payments – will struggle to keep its head above water. A new expense the size of a basic income grant programme will simply not be sustainable.

According to the World Bank, while interest in universal basic income is increasing, there are currently no countries that have a basic income grant in place, apart from small-scale pilots and trials. Mongolia and the Iran both a national UBI in place for a short period of time.

2 thoughts on “Basic Income Grant – We Can’t Afford It

    1. You can apply it at any nearest SASSA office on certain specific days ( I think Mondays and Tuesdays) or apply online using the link services.sassa.gov.za

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