Temporary basic income from concept to reality

Have you ever considered how many people around you live in multidimensional poverty? Perhaps Sophia*, your domestic worker? Jonas* the security guard at the ATM where you withdraw your cash? What about your gardener, Bobby? Or the young men on the side of the road at the traffic light, waiting for an opportunity to jump in a bakkie and do some hard labour? The men and women selling fruits, vegetables and other commodities on the side of the road? The aunty at the entrance of the school, selling sweets and chips to the children as they enter and exit daily? I could gather that you know at least five people, perhaps not their names. And today might be a good day to ask that person, hello… what’s your name? Because at least three of the five people, if not all, live within classified poverty indexes. And by the way, did you realise that some of them went out of sight during the high waves of Covid-19? They went under, they had lost a lifeline.

There has been an extensive dialogue on the need and feasibility of a Basic Income Grant in Namibia. The UNDP globally leads the socio-economic progress of the UN system on Covid-19 recovery, and is implementing social and economic recovery strategies in countries across the world. In Namibia, the UNDP has supported several interventions to establish the feasibility of a basic income grant, and provided various platforms for engagement on this critical topic.

The surge of Covid-19 has created a ripple-effect on economic insecurity across Namibia, negatively affecting vulnerable groups and slowly unveiling the cracks of the existing social protection systems. In response to the prevailing insecurity, the Government of the Republic of Namibia plans to roll out a modified, conditional basic income grant (BIG). The grant is intended to provide social safety through a cash transfer process to existing beneficiaries of the Food Bank programme and the Marginalised Special Feeding Programme. A commendable move, which has the potential to aid the already registered beneficiaries of the Food Bank programme, which is currently serving 9 967 households in 14 regions, and 29 004 households benefiting from the Marginalised Special Feeding Programme across 10 regions.

From concept to reality

Although Namibia is considered an upper-middle-income country, it is characterised by high income inequality. The social protection systeminNamibia isthegovernment’s most potentially effective direct mechanism of reducing poverty and inequality, which, however, holds several challenges in its equitable dispersion. Establishing a responsive and sustainable BIG in Namibia remains dependent on the attention to detail in administrative targeting, digitalisation, fiscal and funding challenges as well as political economy issues.

Administrative targeting Identifying the eligible citizens and resident non-citizens living below the vulnerability threshold who are currently invisible to existing administrative registry and payment systems requires extensive engagement and consulting across all 14 regions for a more pro-poor and inclusive BIG.

Digitalisation

This is an opportunity to identify those most eligible for a conditional BIG, and would require enhancing already existing social registry systems. With a specific emphasis on keeping the social registry systems periodically updated, further ensuring data protection and digital governance, including cyber security and data security to avoid duplications of grants as well as identifying gaps before they occur, is critical. Digital platforms can reduce administrative costs and increase transparency and efficiency in reporting the disbursement of cash transfers. The transaction costs could be reduced by leveraging the existing databases and systems, such as the National Foundational Registry and local payment service providers offering various electronic wallet platforms.

Fiscal space and sustainable funding

The Namibian fiscal space has become strained due to economic downturns resulting from the increased expenditure for supporting vulnerable sections of the population, as well as declines in revenue during the pandemic. Therefore, to ensure the sustainability of a conditional BIG, it is essential to extend the fiscal space for national development through expanding social security coverage and contributory revenues, eliminating illicit financial flows, lobbying for aid and transfers, and using fiscal and foreign exchange reserves and re-allocating public expenditures.

Political economy

Policymakers need to ensure the political feasibility of a conditional BIG, which needs to be assessed through political economy analysis tools that consider the perceptions, constituencies, coalitions and their dynamics regarding the implementation of a conditional BIG.

Whilst these elements form necessary considerations in a broader functional review for a more effective BIG mechanism, the need for unprecedented targeted, timebound, responsive BIG instruments in times of crisis to slow the devastation of shocks and provide people with a lifeline has never been more compelling than now.

The UNDP calls for consideration of a Temporary Basic Income (TBI)

The UNDP estimates that globally, social safety nets with financial security can provide over 613 million working-aged women living in poverty with much-needed income, as a result alleviating the economic pressures they face day-to-day. As the UNDP, we welcome the move towards a conditional modified BIG initiative to be introduced by the Namibian Government. However, we advocate for and propose the introduction of a Temporary Basic Income (TBI). A TBI can provide time-based cash assistance that is targeted towards people with livelihoods below a vulnerability to the poverty threshold. More so, a TBI is unconditional, does not impose behavioural conditions and is meant to be on an individual basis, regardless of household composition. Therefore, it mitigates assumptions of economies of scale and inadvertent household discrimination that could be harmful to women’s empowerment and control of economic resources. Moreover, a temporary basic income scheme could potentially lead to the protection and accumulation of productive assets, diversification of livelihoods and boost entry into entrepreneurship and security to meet essential consumption needs.

The Namibian Multidimensional Poverty Index report (NMPIR) launched in 2021 reveals that 43.3% of the population is classified as multidimensionally poor, highlighting the growing gap between the rich and poor in the country. Economic insecurity within Namibia is not only limited to individuals, but also trickles down to economic units, where 376 617 (51.9%) of the employed population make their living from the informal economy.

These economic units are characterised by a lack of opportunities in the formal economy and the absence of other means of livelihood. Reduced unemployment and income losses in both the formal and informal sectors have shrunk the purchasing power of several households, hence the need for an effective TBI to help respond to the needs of individuals like Sophia, Jonas and Bobby.

The need for a TBI arises from the urgency to deliver shockresistant transfers to a section of the population living below the poverty line, the likes of Sophia, Jonas and Bobby. The World Bank, in an overview of Namibia, highlights that the number of poor people measured under the upper-middleincome poverty line (U$5.50 a day) have increased by 200 000 in 2020, and now stand at a staggering 1.6 million Namibians of the population. Again, these populations are made up of people with names, and we know them. It is estimated that the poverty rate will remain near 65% in 2022 and mostly affect femaleheaded households, larger families, children, the elderly and labourers in subsistence farming.

In 2020, the UNDP undertook a simulation exercise to determine what a TBI for Namibia could look like. Several policy options of a TBI for Namibia were advanced for an eligible population according to the statistics before the pandemic, and derived from the country’s main household survey as harmonised in the World Bank’s PovcalNet dataset.

The results produced the following options:

• TBI transfers from a topup approach are based on Namibia’s average shortfall in income in relation to each of the four international poverty and vulnerability thresholds of $1.90 (N$28.92), $3.20 (N$48.70), $5.50 (N$83.71), and $13 (N$197.86) a day. These take into consideration the daily income per capita shortfalls of those living below the thresholds. The monetary amounts needed to lift the incomes of those below the threshold are $7.2 million ($1.90), $29.9 million ($3.20), N$103.2 million ($5.50) and $487.2million ($13) a month.

• TBI transfers according to the international poverty lines are classified by the thresholds of US$1.90, US$3.20 and US$5.50 a day. Considering these thresholds, the monthly monetary transfers are equivalent to $57.79 ($1.90), $97.33 ($3.20), and $167.29 ($5.50) a month.

• TBI transfers as a proportion of the typical standard of living highlight the monetary value of transfers according to the median per capita income in Namibia. When taking half of the median per income of Namibia, a TBI would yield a per capita amount of $78.94 a month. When taking the median per capita income in Namibia, a TBI would yield a per capita amount of $157.88 a month.

In conclusion, it is essential to pay close attention to the importance of a targeted crisis-sensitive BIG approach, which can only be achieved once specific criteria are defined. A comprehensive BIG offering TBI can provide greater access to social protection, which may also lead to an increase in vulnerable workers and formal/informal value chain actors’ resilience to future shocks. If well-designed and operationalised, considering the broader functional elements above, the TBI bailout can also improve the conditions of those who cannot live decent lives without an income during the crisis.