Parliamentary political parties have 14 days from the date of the final declaration of the 2024 election outcomes by the Electoral Commission to elect a president and a National Assembly Speaker. This will be the most brutal period of realpolitik since the negotiations for our transition to democracy.
It is clear that the ANC will need to enter some form of power-sharing agreement to continue to govern. Around-the-clock talks are happening among politicians, investors and ordinary folks alike about possible terms of coalition or co-operation. What is decided in these coming days will determine the principles by which the state will be governed for the next five years.
But these terms will without doubt chart the nation’s course well beyond the seventh administration. It has never been clearer that for the future to be better than today, negotiating leaders need to commit unequivocally to the introduction of a universal basic income (UBI) as one of the first priorities.
The first reason is to address poverty. Poverty is the reality for the majority of South Africans, despite South Africa being an upper-middle-income country. Using pre-Covid figures, 55% of South Africans lived below the upper bound poverty line of R1,558 a month (in 2023 values), while 25% fell below the extreme food poverty line of R760. Stunting in boy children under five is 30%, while a quarter of girl children under five are stunted physically and cognitively due to hunger.
The rule of law wil be most vulnerable and the 2029 elections will almost certainly provide the two-thirds majority required to set the constitution aside
One of the key drivers of poverty in South Africa is the lack of decent employment. More than 12-million adults (41.1%) are unemployed. More than 77% of the unemployed are in long-term unemployment. More than 3-million people are characterised as “discouraged workseekers”. They have given up looking for a job. The government does not include discouraged workseekers in its official statistics of unemployment. And yet they exist, they have hopes and dreams and aspirations. We are all entitled to the benefits of the constitutional rights to health care, food and water, shelter and income.
The general household survey (GHS) released last week reports that in 2023 salaries constituted the main source of income for only 55% of all South African households. In other words, work is not a main source of income for almost half of South Africans. In fact, social grants are the main source of income for just under a quarter (23%) of all households.
Where the private sector has failed to provide jobs to meet the needs of the country, the state has had to step up and provide grants. But despite the social democratic rhetoric, South Africa is a liberal state at heart. Grants are not meant to provide a living income for the poor. Grants keep the poor dependant and destitute, many argue. According to the GHS the percentage of households that experience inadequate and severely inadequate access to food exactly matches that of households counting grants as the main source of income.
The second reason a UBI needs to be a priority is constitutional. Section 27(1)(c) of the constitution guarantees to all the right to social security, and to the poor, the right to social grants. While this section doesn’t guarantee that grants should be decent in value, it could be argued that the fundamental right to dignity in section 10 of the constitution provides clear grounds to support this concept.
The distribution of social grants is governed by the Social Assistance Act, which lays out three permanently eligible categories of the poor (the grants are means-tested) who are outside the labour market — children, pensioners and the disabled. There is no permanent category for poor and unemployed people of working age, despite their constitutional right to a grant to meet their needs.
This was the case from 1994 until the outbreak of the Covid pandemic. In 2020, the government agreed to a means-tested grant for poor working age people of R350 a month.
The allocation of this grant has continued, with great reluctance, until today. The amount has recently been increased by R20 a month. At R370 it is well below the absolute poverty line, and it is cumbersome to apply for. In April more than 16-million applications were made but the South African Social Security Agency approved only 8.5-million of them.
Working with applicants who appeal their rejections brings deeply tragic stories of destitution and hopelessness, lives in which a R370 grant is actually seen as having the potential to bring some hope. And you see a system that is not designed for the realities of small people.
Someone was rejected because her bank account is shared by all three adults in a family to save on bank charges and her mother’s state pension was paid into the same account, and so this person’s R370 application was rejected because she was deemed to have too much money. Someone else found piece work for two days, for which they were paid into their bank account. They were determined to be ineligible for the R370 but found no more work for the rest of the month.
Constitutionally, more people need to have more and better access to grants.
Whatever horse-trading is currently taking place, it does seem that the case for a UBI has never been more compelling
And a third reason for a UBI is to fix the economy. South Africa’s annual population growth exceeds its economic growth. The economy is in desperate need of a stimulus to kick-start it.
In February 2024, the Social Policy Initiative published the results of economic modelling of the very positive impact that a UBI would have. The modelling demonstrated that an amount indexed to the R1,500 poverty line, paid to everybody but taxed back from those above a certain tax threshold, could bring about this change. Obviously a UBI would eradicate poverty overnight, but of equal significance is the fact that it could provide a stimulus large enough to correct the economy, leading to an annual growth rate of above 5.5%. And this would lead to the creation of at least 2-million proper jobs.
The model demonstrates that the UBI could be 96% self-financing within three years with no need for additional taxes or special levies. The only thing that it would require would be a change to the current macroeconomic framework, which has been followed for the past 30 years and has brought us a growth rate of 0.9% and an unemployment rate of 41.1%.
There is a new political party that promises in its manifesto to hold a referendum to seek to do away with the constitution and replace it with the supremacy of parliament if and when it gets a two-thirds majority. This would allow for rule by dictat. For many of supporters of this party, the constitution is synonymous not with protection of their rights, but with the protection of private property in section 25. This is the clause that the liberals fought so hard for during the negotiations leading to democracy.
There is real concern that if the ANC stays in power through a co-operation deal with the liberal DA, the current cuts to state spending on grants and public health, education and the other functions of government will rise, as tax cuts and concessions to the private sector continue. If this is the case, then the only face of the constitution that most people will see is the one that protects the wealth of the rich.
And then the rule of law wil be most vulnerable and the 2029 elections will almost certainly provide the two-thirds majority required to set the constitution aside.
Whatever horse-trading is currently taking place, it does seem that the case for a UBI has never been more compelling.
• Frye is director of the Studies in Poverty and Inequality Institute
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