N$500 will make a BIG difference
The basic income grant (BIG) initiative, which was first piloted at the village of Otjivero, Omitara, in Omaheke region in 2008, where each inhabitant received a monthly cash grant of N$100, is back in the spotlight with a N$500 proposed this time around. New Era caught up with one of the proponents of the initiative, Rinaani Musutua, in a tell-all interview.
KT: You or the organisation you are heading recently ignited the call for a universal basic income grant (BIG) of N$500 to be paid to people aged 19 to 59 every month. How did you arrive at the amount?
RM: Calculations are based on the current national budget. What the BIG Coalition of Namibia proposes will take roughly 7.5% of the national budget – less than the 10% that the defence ministry takes without offering any tangible results.
As much as the cost of living in Namibia is extremely high due to our dependence on imports of basic goods – and therefore, the ideal amount being N$1 000 to help Namibians afford the basic cost of living and live decent human lives, we have to meet the government halfway by considering what it can afford at this current state of Namibia’s economy. Windhoek is regarded to be 34.7% more expensive than Cape Town, South Africa. KT: Many critics say the introduction of BIG would be an act of charity, rather than an economic right and method to break the shackles of poverty that has trapped so many Namibians.
RM: Universal BIG is not an act of charity. It is a human right. The government has a moral obligation towards protecting its citizens against poverty and inhumane living conditions as per Article 95 of the Namibian Constitution, which makes provision for the promotion of the welfare of the people and maintenance of a decent standard of living.
Tax collections represent a critical part of the social contract between citizens and the government. As a primary source of income for the government, it is morally right for citizens to demand social protection against poverty. KT: Also, others feel the universal grant would lead to laziness among Namibians, especially the youth. How would you respond to these critics?
RM: That BIG leads to laziness is an unproven claim. The intention behind the payment is to provide enough to cover the basic cost of living so people don’t have to worry about where their next meal will come from. (A monthly) N$500 will not deter people from looking for work, as it is very little money. Research shows that an increase in income also increases people’s capacity to look for work and also increases their chances of finding work. BIG would, therefore, not only be a safety net but it would be more like a springboard for people to find jobs and earn money.
The Otjivero BIG Pilot Project findings contradict critiques that claim BIG leads to irresponsibility, laziness and alcoholism. On the contrary, the study shows that most people make good use of opportunities presented to them and take initiative to improve their livelihood. Otjivero residents who received N$100 per person per month as part of the pilot study engaged in selfemployment activities, e.g. brickmaking, baking of bread and dressmaking, which increased economic activities at the settlement. BIG gives people an opportunity to contribute to society, as it helps them unleash their entrepreneurial potential.
The majority of Namibians are dependent on assistance from their relatives and friends who
usually have little income. BIG gives people income of their own, which lessens the burden on the working poor who have to support relatives and friends with their limited incomes.
In fact, BIG reduces dependency, freeing resources for personal economic investment. By providing a universal, stable, and continuous income source, BIG has the highest developmental potential as people can count on it and better plan their economic activities.
Political office bearers are the ones who are irresponsible due to their corrupt practices that divert money away from state coffers and rob future generations of resources to live decent human lives.
KT: Do you think the Namibian government can afford to pay N$500 every month, considering that almost a third of the Namibian populace is unemployed?
RM: Yes, the government can afford universal BIG. Affordability is a matter of political will and shifting of priorities. The proposed N$500 BIG cash payment is little asked in comparison to the extremely high cost of living in Namibia. The Namibian bureaucracy has over the years been expanded to accommodate an increased number of ministers. Likewise, the military spending ballooned without any tangible results, becoming the 13th highest shares of government spending in the world ahead of the United States of America. Namibia collects an abnormally large amount of taxes relative to GDP compared to other nations that could be used to finance BIG. While the world average is approximately 23% of GDP, Namibia is at 34%, meaning Namibia’s budget deficit of N$21.4 billion has more to do with mismanagement.
The government keeps pumping a large chunk of taxpayers’ money into maintaining politicians’ lavish lifestyles, unproductive state-owned enterprises and infrastructural projects such as the construction of costly government office blocks and the airport dual carriageway, which do not contribute to any human development. The government needs to shift its priorities. When the government stops spending taxpayers’ money on unproductive activities, there will be enough resources to finance BIG.
The costs of a universal BIG scheme can be accompanied by an income tax adjustment. This should be arranged progressively so that higherincome earners effectively subsidise the BIG paid to low-income earners and the unemployed.
KT: The BIG initiative was first piloted at the village of Otjivero, Omitara, in Omaheke region in 2008. What was the impact of this pilot project to the community of Otjivero? RM: To demonstrate the effects of universal BIG, the BIG Coalition carried out the first universal cash payment pilot project in the world. From that study that was conducted in Otjivero-Omitara (about 100 kilometres east of Windhoek) during 2008, whereby all residents below the age of 60 years received a BIG payment of N$100 per person per month, we learned of the positive effects of BIG which were scientifically evaluated by international scientists:
Families accessed health services more which increased the income of the local clinic; economic activities increased as residents who started their businesses or engaged self-employment activities e.g. brickmaking, baking of bread and dressmaking increase). BIG gives people an opportunity to contribute to society, as it helps them unleash their creative and entrepreneurial potential; households’ buying power increase; school attendance increased as families could afford to pay school fees and buy uniforms; the local police station recorded a significant reduction in overall crimes; gender equality improved, as BIG provides income security to homemakers whose unpaid care work is important to society. Women no longer had to engage in transaction sexual activities as they had their income.
These findings, among many others, contradict critiques that claim that BIG leads to irresponsibility, laziness and alcoholism. On the contrary, the study shows that most people make good use of opportunities presented to them and take initiative to improve their livelihood. KT: How do you expect government to fund the BIG initiative; where do you expect money to come from?
RM: It is time that Namibia’s mining and fishing industries that make billions of profits paid their due share of taxes. Corruption, tax evasion and illicit financial flows result in the loss of billions of much-needed income that the government could finance universal BIG with which is a crucial step towards tackling extreme poverty and inequality. Our government needs to put in place an effective tax regime to stop corruption, tax avoidance and illicit financial flows within those industries to mobilise funds that could finance BIG. If misuse of public funds and corruption that divert money from state coffers stop, the government will be able to afford a universal BIG scheme as a means of reducing poverty and inequality.
As a wealth redistribution measure, the government needs to ensure that we all benefit from the proceeds of our natural resources through investing those proceeds in a BIG scheme. It is our right that we all have access to and benefits from natural resources we find on this planet as a means to provide for our basic human necessities. Hence, no natural resources should be privatised for the benefit of a few individuals only.
The initial costs and the setting up of the delivery system are the main difficulties of BIG in the beginning. However, once the delivery system is set up, the costs will go down.
The costs of a universal BIG can be accompanied by an income tax adjustment so that higher income earners will immediately repay BIG through the tax system.
It should be arranged progressively so that higherincome earners effectively subsidise the BIG paid to low-income earners and the unemployed. This could be arranged fairly easily and thus become a redistributive intervention that will significantly contribute towards President Geingob’s promise of eradicating poverty.
In addition, the BIG stimulates economic growth as people have more money to spend and to invest within the Namibian economy. This will not only improve the living standard of people but also increase the tax revenue for the government and boost economic growth to continue investing in BIG.
KT: What do you envisage the domestic economic impact of a BIG to be, specifically with regards to Namibia’s Gross Domestic Product? RM: Universal BIG is an economic stimulus package, which increases labour force participation. It also increases buying power allowing people to become consumers of locally produced basic goods e.g. basic goods sold by informal traders. BIG is not a liability, but an investment in the local economy as it creates an opportunity for money to circulate within our economy, there through stimulating economic growth. The majority of BIG recipients will primarily spend their money on locally produced basic goods, unlike a well-off individual who imports luxury goods making money flow out of the economy. Local and especially rural markets will benefit greatly from BIG as they have the potential to kick-start the economy in the underdeveloped rural areas. KT: What do you think the impact of a BIG will be on Namibia’s balance of payments, its overall debt levels and the overall national budget deficit?
RM: At the rate proposed by the Coalition, the BIG scheme would roughly cost N$5.5 billion per year, which is about 7.5% of the national budget. The military, which was recently ranked as one of the weakest in the world, takes 10% of the national budget without offering any tangible results. BIG will pay for itself, and will not incur any debt for the government. Through adjustments in the tax system, the money that is invested in BIG will gradually be recuperated.
This can be arranged progressively so that higherincome earners effectively subsidise BIG paid to low-income earners and the unemployed. This could be arranged fairly easily and thus become a wealth redistributive initiative and inequality reduction measure.
In addition, the BIG stimulates economic growth as people have more money to spend and to invest within the Namibian economy. This will not only improve the living standard of people but also increase tax revenue for the government