To be a universal grant,
Cash based entitlement,
To provide some form of income security,
Built on redistributive justice.
Professor Nicoli Nattrass, Director of the AIDS and Society Research Unit and Professor in the School of Economics, University of Cape Town (UCT), South Africa
Professor Mike Samson, Director of the Economic Policy Research Unit (EPRI), South Africa; Professor at Williams College, USA
Professor Guy Standing, Professor for Economic Security, University of Bath, UK; Professor of Labour Economics, Monash University, Australia
Before the introduction of the BIG, Otjivero-Omitara was characterised by unemployment, hunger and poverty. Most residents had settled there because they had nowhere else to go, their lives were shaped by deprivation and they had little hope for the future.
The introduction of the BIG ignited hope and the community responded by establishing its own 18-member committee to mobilise the community and to advise resi-dents on how to spend the BIG money wisely. This suggests that the introduction of a BIG can effectively assist with community mobilisation and empowerment.
As the BIG was only introduced in one particular location, there was a significant migration towards Otjivero-Omitara. Impoverished family members moved into Otjivero, attracted by the BIG, even if migrants themselves did not receive the grant. This points to the need to introduce the BIG as a universal national grant in order to avoid migration to particular regions, towns or households.
The migration to Otjivero-Omitara affected the data obtained for this study. Per capita income from the BIG dropped from N$ 89 per month in January 2008 to N$ 67 in November 2008. We thus analysed the impact of the BIG, taking the influence of migration into consideration.
Since the introduction of the BIG, household poverty has dropped significantly. Using the food poverty line, 76% of residents fell below this line in November 2007. This was reduced to 37% within one year of the BIG. Amongst households that were not affected by in-migration, the rate dropped to 16%. This shows that a national BIG would have a dramatic impact on poverty levels in Namibia.
The introduction of the BIG has led to an increase in economic activity. The rate of those engaged in income-generating activities (above the age of 15) increased from 44% to 55%. Thus the BIG enabled recipients to increase their work both for pay, profit or family gain as well as self-employment. The grant enabled recipients to increase their productive income earned, particularly through starting their own small business, including brick-making, baking of bread and dress-making. The BIG contributed to the creation of a local market by increasing households' buying power. This finding contradicts critics' claims that the BIG would lead to laziness and dependency.
The BIG resulted in a huge reduction of child malnutrition. Using a WHO measurement technique, the data shows that children's weight-for-age has improved significantly in just six months from 42% of underweight children in November 2007 to 17% in June 2008 and 10% in November 2008.
HIV positive residents' access to ARVs was hampered by poverty and a lack of transport before the BIG was introduced. The BIG enabled them to afford nutritious food and gain access to the medication. This was further enhanced by government's decision to make ARVs available in Otjivero, freeing residents from the need to travel to Gobabis.
Before the introduction of the BIG, almost half of the school-going children did not attend school regularly. Pass rates stood at about 40% and drop-out rates were high. Many parents were unable to pay the school fee. After the introduction of the BIG, more than double the number of parents paid school fees (90%) and most of the children now have school uniforms. Non-attendance due to financial reasons dropped by 42% and this rate would have been even higher without the effects of migration towards Otjivero-Omitara. Drop-out rates at the school fell from almost 40% in November 2007 to 5% in June 2008 and further to almost 0% in November 2008.
The residents have been using the settlement's health clinic much more regularly since the introduction of the BIG. Residents now pay the N$4 payment for each visit and the income of the clinic has increased fivefold from N$ 250 per month to about N$ 1,300.
The BIG contributed to the reduction of household debt with the average debt falling from N$ 1,215 to N$ 772 between November 2007 and November 2008. Savings increased during that period, which was reflected in the increasing ownership of large livestock, small livestock and poultry.
The BIG has contributed to a significant reduction of crime. Overall crime rates - as reported to the local police station - fell by 42% while stock theft fell by 43% and other theft by nearly 20%.
The introduction of the Basic Income Grant has reduced the dependency of women on men for their survival. The BIG has given women a measure of control over their own sexuality, freeing them to some extent from the pressure to engage in transactional sex.
The criticism that the BIG is leading to increasing alcoholism is not supported by empirical evidence. The community committee is trying to curb alcoholism and has reached an agreement with local shebeen owners not to sell alcohol on the day of the pay-out of the grants.
The BIG is a form of social protection, which reduces poverty and supports pro-poor economic growth. As a national policy it would greatly assist Namibia in achieving the Millenium Development Goals to which the country has committed itself.
The costs of a national BIG in Namibia are substantial. The net costs will be between N$ 1,2 - 1,6 billion per year, equivalent to 2,2 - 3% of Namibia's GDP. There are various options to finance such a national grant. A moderate adjustment of VAT combined with an increase in income taxes is one option. This would benefit all middle and lower income households in terms of available incomes. Other financing options include a re-prioritisation of the national budget and the introduction of a special levy on natural resources.
An econometric analysis revealed that Namibia's tax capacity exceeds 30% of the national income. The current collection rate is below 25% and thus Namibia's excess capacity to raise tax revenue significantly exceeds the net costs of a Basic Income Grant. This makes the BIG affordable in Namibia.
A national BIG would have several medium to long-term benefits.