BIG could be beautiful for the poor

Namibian churches and NGOs have launched a coalition to lobby for the introduction of a universal grant to provide a safety net for the country's poor. Borrowing the idea from neighbouring South Africa, they propose that a Basic Income Grant (BIG) be paid to every Namibian citizen from birth until the age of 60, when the national pension kicks in. BIG avoids the stigma of means testing, and puts cash directly into the hands of the poor. Although the rich would also receive the grant, its proponents argue that the tax system could be remodelled to ensure that the better off pay back the cost of the grant. The Council of Churches of Namibia, together with the National Union of Namibian Workers, the Namibian NGO Forum, the Namibia Network of AIDS Service Organisations, the Legal Assistance Centre, and the Labour Resource and Research Institute all signed a declaration on Wednesday, committing themselves to push the government to introduce BIG. "The Basic Income Grant is an unconditional grant for every Namibian," said the leader of the Evangelical Lutheran Church in the Republic of Namibia (ELCRN), Bishop Zephania Kameeta. "Whether you are working or not, you will receive this grant." Although a middle-income country, Namibia has one of the most unequal societies in the world with a Gini coefficient of 0.7, according to the UN Development Programme. The Gini coefficient measures income disparities with zero indicating perfect equality. In rich countries the figure is usually around 0.3. A survey conducted by Namibia's National Planning Commission estimates that 76 percent of the population lives below the poverty line. Given the skewed income distribution patterns, BIG promoters argue, it would take extremely high levels of economic growth before any meaningful benefits trickled down to the poor. Namibia's GDP growth rate has averaged about 3.4 percent over the past five years. The government has not been immune to the arguments for promoting a universal grant. Back in 2002 it quietly instructed the Namibian Tax Consortium (NAMTAX) to review the tax system, and the consortium proposed a basic grant. The ELCRN made the BIG plan public during its annual synod in November 2004, where a decision was taken to launch a coalition in 2005 to press for its introduction. The proposal calls for the government to pay a monthly cash grant of N$100 (US $16) to every Namibian, which would mean a basic income of N$600 ($100) for a family of six, for example. According to ELCRN Pastor Dirk Haarmann, who holds a PhD in social development, providing BIG to Namibia's roughly one million people below the age of 60 would cost $200 million a year. "NAMTAX proposed to finance this mainly by increasing the value added tax (VAT)," Haarmann said. "But ELRCN and our coalition partners say a combination of higher VAT and tax reforms will enable the government to finance the BIG." Several policy alternatives to tackling poverty exist, including public works programmes, a drive to create quality jobs and strengthening the existing grant schemes. "All these are important strategies that need to be pursued, but none can really claim to be serious alternatives to BIG in terms of denting mass poverty," concluded South African analyst Ravi Naidoo in a paper for the National Labour and Economic Development Institute. In reference to South Africa, Naidoo dismissed the argument that BIG would be too expensive. "Of course, with 'affordability' you also have to look at the cost of not acting. Delaying necessary spending to save money is false economy, because the cost gets higher once the damage is done." The introduction of BIG in Namibia, however, was not imminent, Prime Minister Nahas Angula told IRIN. "Cabinet has no objection - it was our initiative back in 2002," he noted. "But it is a matter of affordability, and it must be synchronised with other social grants, like for the disabled, orphans and workers' compensation."