Basic income grant ‘wishful thinking’ now
The universal grant, which could cost the country up to N$9 billion per annum, “might be too expensive at this point”, research analyst Dylan van Wyk said. He added, however, that it is not an impossible goal over a 10- to 20-year timeframe.
JANA-MARI SMITH
WINDHOEK
A monthly universal grant of N$500 to citizens aged 19 to 59 amidst a rickety economy and Covid-19’s economic carnage makes it an unrealistic wish at this stage.
This according to economists, who said while a basic income grant (BIG) is not a bad idea, Namibia simply can’t afford it right now.
“Although such a grant will go a long way to alleviate the hardship faced by many, and will also be a great economic stimulus, the time is not now,” Omu Kakujaha-Matundu said.
He pointed out that government finances are stretched to the limit, and the uncertainties around the duration of the pandemic and financial pressure to provide healthcare to citizens “make such a grant wishful thinking”.
“I think despite the economic hardships that the general population faces, we should put the basic income grant on the back-burner and concentrate on defeating the pandemic,” Kakujaha-Matundu noted.
‘Too expensive’
IJG Securities research analyst Dylan van Wyk agreed that “a basic income grant of N$500 per person might be too expensive for the country to afford at this point”.
He added that Namibia’s struggling economy and skewed spending focus has drained the coffers to the extent that increased social grants are not a possibility now.
“The annual budget should be viewed as the country’s list of priorities, and I feel that those priorities are not in order. The development budget is being neglected in favour of the public sector wage bill, which will impede economic growth in the long-term.”
Similarly, he said, VIP protection and defence procurement “also take priority over more pressing issues such as housing”.
Helping hand
An online petition regarding BIG - that has attracted close to 1 500 signatures - was launched five months ago and has drawn increasing support in recent weeks.
“The Covid-19 pandemic has made things worse for us. It has added to our burden of day-to-day struggle for survival. Many of us have lost our jobs due to the pandemic. Many Namibians are employed in the informal sector on which they desperately depend on as their only source of income,” the petition read.
The grant’s advocates argue that this scheme is affordable - if government shifts its current priorities and weeds out widespread corruption.
“It's 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 government could use to finance BIG.”
The petition further accuses government of failing to work on its promises to address poverty in Namibia.
Costly
Rough calculations by Van Wyk estimate that the total bill for a N$500 monthly grant could amount to roughly N$9 billion per annum, based on around 1.5 million eligible recipients. If limited to unemployed Namibians, he estimates that would cost taxpayers an estimated N$4 billion a year.
“In other words, this is quite a serious expense that will continue growing and, once implemented, would be difficult to roll back. A decision like this should be carefully considered.”
He emphasised that he supports a universal income grant, but cautioned that “for a country to afford these grants, it needs to be in a fiscal position to be able to afford it, which relies on an efficient and prosperous economy as well as relatively high income tax”.
Van Wyk added that while a monthly income grant is unrealistic for now, “it is not an impossible goal over a 10- to 20-year timeframe. This will require an immense amount of public pressure and political will to re-allocate resources”.
Game-changer
In January 2020, the United Nations’ Food and Agriculture Organisation reported that in Namibia, “an estimated 430 000 people - 18% of the total population - are currently experiencing severe acute food insecurity”.
The report noted that the most affected regions were Hardap, Kavango East, Khomas, Kunene, Ohangwena, Omaheke, Omusati, and Zambezi.
Meanwhile, a 2008 pilot BIG project in Otjivero and Omitaro, where residents were given N$100 per person per month, according to some findings, showed a significant drop in child malnutrition, and reduced household poverty from 76% to 37%. School attendance increased, and there was a reduction in crime.
The added income improved access to medical services, and economic activities increased as residents used the funds to start small businesses.
Melanie Gaoes of the Namibia Rural Women’s Assembly in January told the BIG coalition that if approved, such a grant could be “a big game-changer for Namibia at large”.
She pointed out that especially women would benefit, and, in turn, their children, which could stop the vicious cycle of poverty many are entrapped in now.
The BIG coalition website argues that a grant for all Namibians in the specific age bracket will not only reduce poverty and inequality, but would redistribute income from the rich to the poor, “and so would make Namibia a more just and equal society”.
The coalition added that such a grant would be possible through adjustments to income tax structures, a value-added tax increase, and a reprioritisation of the budget.
WINDHOEK
A monthly universal grant of N$500 to citizens aged 19 to 59 amidst a rickety economy and Covid-19’s economic carnage makes it an unrealistic wish at this stage.
This according to economists, who said while a basic income grant (BIG) is not a bad idea, Namibia simply can’t afford it right now.
“Although such a grant will go a long way to alleviate the hardship faced by many, and will also be a great economic stimulus, the time is not now,” Omu Kakujaha-Matundu said.
He pointed out that government finances are stretched to the limit, and the uncertainties around the duration of the pandemic and financial pressure to provide healthcare to citizens “make such a grant wishful thinking”.
“I think despite the economic hardships that the general population faces, we should put the basic income grant on the back-burner and concentrate on defeating the pandemic,” Kakujaha-Matundu noted.
‘Too expensive’
IJG Securities research analyst Dylan van Wyk agreed that “a basic income grant of N$500 per person might be too expensive for the country to afford at this point”.
He added that Namibia’s struggling economy and skewed spending focus has drained the coffers to the extent that increased social grants are not a possibility now.
“The annual budget should be viewed as the country’s list of priorities, and I feel that those priorities are not in order. The development budget is being neglected in favour of the public sector wage bill, which will impede economic growth in the long-term.”
Similarly, he said, VIP protection and defence procurement “also take priority over more pressing issues such as housing”.
Helping hand
An online petition regarding BIG - that has attracted close to 1 500 signatures - was launched five months ago and has drawn increasing support in recent weeks.
“The Covid-19 pandemic has made things worse for us. It has added to our burden of day-to-day struggle for survival. Many of us have lost our jobs due to the pandemic. Many Namibians are employed in the informal sector on which they desperately depend on as their only source of income,” the petition read.
The grant’s advocates argue that this scheme is affordable - if government shifts its current priorities and weeds out widespread corruption.
“It's 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 government could use to finance BIG.”
The petition further accuses government of failing to work on its promises to address poverty in Namibia.
Costly
Rough calculations by Van Wyk estimate that the total bill for a N$500 monthly grant could amount to roughly N$9 billion per annum, based on around 1.5 million eligible recipients. If limited to unemployed Namibians, he estimates that would cost taxpayers an estimated N$4 billion a year.
“In other words, this is quite a serious expense that will continue growing and, once implemented, would be difficult to roll back. A decision like this should be carefully considered.”
He emphasised that he supports a universal income grant, but cautioned that “for a country to afford these grants, it needs to be in a fiscal position to be able to afford it, which relies on an efficient and prosperous economy as well as relatively high income tax”.
Van Wyk added that while a monthly income grant is unrealistic for now, “it is not an impossible goal over a 10- to 20-year timeframe. This will require an immense amount of public pressure and political will to re-allocate resources”.
Game-changer
In January 2020, the United Nations’ Food and Agriculture Organisation reported that in Namibia, “an estimated 430 000 people - 18% of the total population - are currently experiencing severe acute food insecurity”.
The report noted that the most affected regions were Hardap, Kavango East, Khomas, Kunene, Ohangwena, Omaheke, Omusati, and Zambezi.
Meanwhile, a 2008 pilot BIG project in Otjivero and Omitaro, where residents were given N$100 per person per month, according to some findings, showed a significant drop in child malnutrition, and reduced household poverty from 76% to 37%. School attendance increased, and there was a reduction in crime.
The added income improved access to medical services, and economic activities increased as residents used the funds to start small businesses.
Melanie Gaoes of the Namibia Rural Women’s Assembly in January told the BIG coalition that if approved, such a grant could be “a big game-changer for Namibia at large”.
She pointed out that especially women would benefit, and, in turn, their children, which could stop the vicious cycle of poverty many are entrapped in now.
The BIG coalition website argues that a grant for all Namibians in the specific age bracket will not only reduce poverty and inequality, but would redistribute income from the rich to the poor, “and so would make Namibia a more just and equal society”.
The coalition added that such a grant would be possible through adjustments to income tax structures, a value-added tax increase, and a reprioritisation of the budget.
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