South Africa's cash giveaway plan is not universal basic income, experts say

• A South African policy proposal is being hailed as the first national universal basic income plan.
• However, experts say it's promising but would pay too little to too few people to be a true UBI program.

South Africa's top political party has proposed a social safety net that's been called the first national universal basic income (UBI) program. Experts say that's a gross exaggeration.

The African National Congress, led by Nelson Mandela in the 1990s, recently outlined its plan to expand South Africa's Social Relief of Distress program. The temporary grants were rolled out during the pandemic to help struggling citizens meet basic needs.

The ANC, now in coalition talks after winning just 40% of the vote in recent national elections, said it would boost the value of payouts and expand the program to more vulnerable people including caregivers, the unemployed, and the precariously employed. It promised to finalize the policy within two years of being elected.

The party also suggested it could fund the program by introducing progressive taxes such as a social security tax, and emphasized it wouldn't replace existing welfare programs or public services. It also signaled it would increase payments and expand eligibility over time.

Cleo Goodman, the basic income lead at think tank Autonomy, told Business Insider that the ANC's proposal followed years of basic income advocates making their case through "pilots, research and widespread campaigning."

South Africa's civil society is also eager to expand the Social Relief of Distress grants to redistribute wealth, reduce poverty, stimulate the job market, and help people cover the costs of finding work, she said.

Goodman said that what began as an emergency pandemic response has "instigated a serious move towards providing genuine economic security, through an unconditional cash transfer system that approaches universality."

Too little money for too few people

Yet the ANC's plan doesn't truly qualify as a UBI program, which usually provides recurring cash payments to all adults in a population regardless of their wealth or employment status, and with no restrictions on how the money is spent.

"Despite the name, this proposal falls far short of a basic income," Karl Widerquist, a philosophy professor at Georgetown University-Qatar and the author of several books about UBI, told BI.

"The payments are too small; they are means-tested; and they are means-tested in a way that makes it hard for some of the neediest, eligible people to get the funds they are entitled to," he continued.

Widerquist also flagged the potential for a "poverty trap" where people could lose the entire grant once their income rises above a certain threshold, discouraging them from earning too much and knocking them back when their earnings improve.

The writer and academic said the ANC's plans to extend the program are promising, but the initial proposal is only a "small step in the right direction."

He added that the timing "could be good or bad," as the ANC's coalition partners could hold it accountable for passing the policy if they support it, but if they oppose it then it "could easily fall by the wayside over the next few years."

It's not surprising to see the ANC propose a targeted poverty-alleviation program instead of a full UBI scheme. The former is cheaper, less radical, and likely to be more palatable to voters than handing cash to the wealthy — even if new taxes would make them net contributors.

But UBI proponents say that giving too little money to too few people doesn't effectively combat poverty, and can stigmatize the grants as welfare checks. A compromise scheme also fails to provide a safety net that allows people to take time to find the right job if they get laid off, and may not fully recognize the value of domestic labor such as child and elderly care either.