The concept of a basic income grant (BIG) has spurred major debate worldwide, and in Namibia, it has posited questions not only on economic policy, but also on research surrounding it. The Namibian Economic Policy Research Unit (Nepru) and the Labour Resource and Research Institute (LaRRI) have been at the centre of the debate.
The two institutions make up two of the three major policy units that focus on economic policy, with Nepru taking the angle of supporting Government in policy formulation and decision-making. LaRRI, which has a labour bias and works closely with the unions, is also a member of the BIG Coalition, along with the Council of Churches in Namibia, the National Union of Namibian Workers, the Namibia NGO Forum, and the Namibia Network of AIDS Service Organisations.
In recent weeks, a Nepru review of the BIG Coalition’s first six-month Assessment Report of its two-year pilot project in Otjivero in the Omitara District described the effects of the BIG as ‘not very dramatic’. This drew criticism from the BIG Coalition, which questioned the research ethics of Nepru, labelling it as ‘biased favouring the rich and powerful’, and ‘aligning itself with the vested interests of some white farmers in the area’.
Nepru has retaliated, describing these allegations as baseless.
BIG what?
The BIG is a cash grant (in this case of N$100) given to every Namibian citizen, excluding pensioners, without the ‘psychologically damaging stigma of means testing’.
The grant is intended to be universally awarded, going to everyone as a right. However, the rich don’t get the direct benefit, as adjustments in the tax system ensure that the better off actually pay back the cost of the grant.
Given Namibia’s relatively small population and excessively high unemployment rate and poverty ratio that have persisted for several years, the BIG has been viewed by social activists as an ideal means to deal with poverty.
The BIG Coalition’s Assessment Report does report dramatic initial findings, with child malnutrition dropping by 25 per cent. Income into the community rose more than the size of the grant. School dropout rates decreased from as high as 30 to 40 per cent to 5 per cent, and poverty-related crimes had falling by over 20 per cent.
The Nepru review said the cost of the BIG would amount to 9,6 per cent of planned government expenditure for 2008/09, but the BIG Coalition argues that this figure was arrived at incorrectly, stating that after tax adjustments, the total cost of a national BIG would only come to 2 to 3 per cent of national expenditure.
BIG Alternatives
Rigmar Osterkamp, former principal researcher and adviser to the management at Nepru who authored the review on the assessment report, cautions that the question of alternative uses of the money that would go to the BIG must be answered. ‘What public expenditures will (or could) be cancelled when a nationwide BIG is introduced?’ he asks.
‘It should be seen realistically that there is no way to have a nationwide BIG which is fully additional to the existing social and developmental expenditures. Considerable cuts would be unavoidable,’ Osterkamp states.
Alternatives to a BIG that have been proposed include public works programmes, creating quality jobs, redistribution of income-generating assets, and the use of existing grants. However, while all these strategies are important and worthy of being pursued, evidence and history points to these methods as having been unable to make a serious dent in mass poverty.
Herbert Jauch, senior researcher at LaRRI, says that while the BIG Coalition is focused on exploring BIG as an alternative to other methods, LaRRI, a member of the coalition, is also engaged in looking at two additional poverty-alleviation mechanisms. These include participation in a regional debate on ‘Alternatives to Neo-Liberalism’, which explores why African countries are stuck in poverty, and what needs to be done to get them unstuck; and the Venezuela example under President Hugo Chavez, whereby funds from state resources are channelled back to addressing the plight of the poor in that country.
‘We view BIG as a starting point though, and these others as complementary options, rather than alternatives to the basic income grant,’ says Jauch.
BIG Emotion
The BIG Coalition, formed in 2004 to quicken government’s pace in addressing poverty reduction, had a strong reaction to the review, charging Nepru with ‘publishing an ideologically driven piece of propaganda’.
Klaus Schade, acting director at Nepru, has described these allegations as unfounded, adding that ‘there is no prescription on how a review should be undertaken. If a report raises questions, these should be addressed.’
Osterkamp has described the coalition’s reaction as ‘exaggerated’, stating that ‘this little piece [the review] has made them erupt and explode. My characterisation is that I have poured a little water into their wine, not more.’
Jauch, however, states that Nepru is entitled to its opinion in labelling the response as exaggerated, ‘but given how poor the review was, I don’t think it was exaggerated’. This is not just an academic debate, he says. ‘We are trying to seriously look at ways to address poverty in this country,’ Jauch asserts.
Graham Hopwood, director of the Institute for Public Policy Research, says that there was no need for the hostility. ‘There is need for a debate that is open and tolerant.’
Hopwood states that his research unit has no official stand on the BIG, ‘but we are very interested in the pilot study in Omitara’.
Big Criticism
Nepru’s review drew strong criticism from the public, with many below-the-belt punches that sought to question the authenticity of the research.
Criticisms lodged by Nepru in the review are not so much of the BIG concept itself, as they are of the Assessment Report, which Osterkamp says should have followed the blueprint of the Namibia Household Income and Expenditure Survey. It was flawed in not asking about household assets, failed in answering the question of how the N$100 000 per month used on extending the grant to the residents of Otjivero could have alternatively been used, and was difficult to understand in comparing the Otjivero case with other villages, he says.
On BIG itself though, Osterkamp says his general view is that ‘the immediate effect will be a decrease in poverty, but the question is what will the long run effect be? Will an average poor family of today be better off in 20 years with the BIG? International experience is that cash grants to the poor are bad because people react to those grants.’ He says that he is open to every assessment and analysis. ‘I would never fight it. I would just ask where is the evidence that it is good.’
A Nepru press statement issued last week stated that the unit ‘recognises that the average expenditure figures provided in the Assessment Report are neither suitable for determining the income poverty level at the settlement, nor are they suitable for an analysis of changes in expenditure patterns, because of existing income disparities’, reverting blame to the BIG report rather than the review itself. It also, however, acknowledges that information reported on crime trends in the review were not checked against official information from the area.
Big Poverty
A recent report by the National Planning Commission that provides a review of poverty and inequality in Namibia indicates that 27,6 per cent of households live in poverty, with 13,8 per cent living in severe poverty.
The review sets a new poverty line that takes into consideration the Namibia Household Income and Expenditure Survey data for households with low consumption expenditure to determine a food basket, and looks at non-food requirements in addition to food needs. According to the NPC review, the poverty profile of Namibia shows that poverty status is closely correlated with a series of social, demographic, geographic and economic features of households. These include higher poverty levels among female-head
ed households, households with lower education levels, and households that rely on a pension as the main source of income, amongst others.
With this review of poverty in Namibia, it is clear that there is more to measuring poverty, than basic academic constructs – a point that LaRRI has argued in the current debate, and in its reaction to Nepru’s review labelling the people of Otjivero as being ‘far from poor.’
As Nambia moves ahead, it is hoped that the measures of poverty in general, and the new review on poverty and inequality in particular, frame the arguments lodged, in an open debating environment that places at heart the alleviation of the plight of Namibia’s poor.
