South Africa faces severe economic challenges, including high unemployment, poverty, and inequality, exacerbated by decades of ineffective neoliberal economic policies. In 2023, GDP per capita was lower than in 2007, and this trend is expected to continue until at least 2026. The country requires a comprehensive set of policies to address these issues, like the Marshall Plan that rebuilt Europe post-World War II. In The Economics of Implementing a Universal Basic Income in South Africa report authored by Duma Gqubule, the Social Policy Initiative (SPI) proposes a model for implementing a Universal Basic Income (UBI), aiming for a 96% self-financing scheme that tackles the country’s deep-seated economic issues. This strategic position paper argues that UBI should be viewed primarily as an economic stimulus rather than a poverty reduction program. By stimulating the economy, UBI can help achieve full employment and higher GDP growth.
UBI is proposed as a critical component of South Africa’s economic recovery strategy. It is intended to provide a substantial economic stimulus by increasing consumer spending, which in turn should boost GDP growth and job creation. This approach contrasts with policies focused solely on redistribution and reducing inequality, which often require higher taxes and austerity measures that can stifle economic growth.
The paper outlines a phased implementation of UBI over three years, indexed to national poverty lines, paid to adults aged 18-59, and children who receive the Child Support Grant (CSG). This large-scale rollout is justified by the scale of South Africa’s economic problems. The plan is not a panacea for all problems and emphasizes the need for long-term macroeconomic policy framework strategies that extend beyond the UBI. One that is driven by collaboration between civil society organisations, organised labour, all political parties, and progressive business by uniting the country for a better South Africa for all.
SPI calls for a UBI to the 2023 amount of R1500 (pegged to the upper bound poverty line) which will seek to not only meet basic needs but also contribute to a healthy and growing economy by correcting income and wealth distribution failures. In a country with extreme inequality, such as South Africa, the social protection multiplier further plays a crucial role in stabilizing the economy and fostering inclusive growth. More of this is detailed in SPIs Vision 2035: A Plan to Achieve Full Employments In South Africa which offers seven pillars as an alternate plan for mobilising the economy.
The SPI strategic position paper presents a compelling case for UBI as a transformative economic policy for South Africa. It argues that UBI can provide the necessary stimulus to break the cycle of economic stagnation and inequality. For successful implementation, political will and a united vision for economic growth and full employment are essential.
Author: Duma Gqubule
