Tuesday, August 4, 2009

Basic Minimum Income For All: A Missing Piece to Africa's Development Puzzle

Though they are abundant in mineral-resources, many African governments are notoriously corrupt, incapable of delivering vital social services or responding to domestic structural unemployment and poverty. New York Times recently reported that during the current economic recession more export-oriented African economies are having difficulty attracting foreign investment and private capital.

Kudos to the Times for including the commentary of Emira Woods, a native of Liberia and co-director of the progressive Foreign Policy in Focus, who rightly commented that foreign direct investment has not effectively "trickled-down" to the poor in African nations and therefore cannot be relied upon as "the way to solve the many problems facing African countries". Woods' perspective is unfortunately left out of many of the most important economic policy debates, despite overwhelming evidence to support her conclusion.

Yes, development theoreticians and practitioners should work toward a rebound in economic growth rates, but simultaneously they must also ensure that GDP wealth is distributed on a more equitable basis than in past years. In my opinion, one simple approach to doing so would be a guaranteed basic minimum income for citizens of mineral-resource exporting countries in Africa. Although there is a need to further analyze its feasibility, the strong conceptual grounds for a basic income grant should put it front-and-center in the African development debate.

A basic minimum income, is "an income unconditionally granted to all on an individual basis, without means test or work requirement." Unlike other general minimum income strategies, the minimum basic income is designed to give the recipient the cash directly rather than through indirect transfers like food vouchers, minimum wages or public housing. The cash would be given either to households or individuals without any restrictions on how the income could be spent by recipients. However, implementing a basic minimum income system does not abdicate the responsibility of African governments to deliver social services because the basic income "supplements, rather than substitutes, existing in-kind transfers such as free education or basic health insurance." According to the Basic Income Grant Coalition, characteristics of the ideal basic income grant would minimally,
  • provide everyone with a minimum level of income,
  • enable the nation's poorest households to better meet their basic needs,
  • stimulate equitable economic development,
  • promote family and community stability
  • affirm and support the inherent dignity of all
There have already been extensive discussions in post-apatheid South Africa about the benefits of a basic minimum income there as a solution to lingering poverty and inequality--- so far little progress has been made. Namibia attempted a small-scale guaranteed minimum income program that achieved mixed, but mostly positive results. This past February, news reports in oil-rich Libya claimed that the country's oil revenues were expected to be distributed directly to the Libyan population. President Muammar Al-Gaddafi called on the government to begin the direct transfer program as a strategy to root out political corruption and improve social development.

There is also new evidence from other developing regions that direct cash-transfers can be an effective means to tackle poverty and inequality. Duncan Green, Head of Research for Oxfam GB writes in his latest blog post, about the success of conditional-cash transfers in Latin American countries. Cash transfers in Brazil for example are responsible for helping lift 16.5 million Brazilians out of poverty between 2003 and 2007. Green is conscious to note that the success of cash transfers in some middle-income Latin American countries can not necessarily be transplanted in regions like Africa where the vast majority of the people are poor.
" transfer programmes may have to be adapted to low income countries, for example putting more emphasis on targeting poor regions rather than means testing, which is expensive and not much use when nearly everyone is poor. Insisting on conditioning cash payments on school attendance or health check-ups may not make sense when schools and clinics are either absent or of dismal quality. In that case, the government has to sort out supply of essential services rather than just focus on increasing demand."
Unlike the Latin American cash transfer model, a basic minimum income would provide unconditional cash transfers for the poor in African countries where poverty-stricken populations make-up the majority of citizens. In addition to pooling revenues from mineral resource exports, ideally official development assistance from the West could be diverted to help fund minimum income systems---a type of foreign assistance that can benefit African people directly. As we are witnessing in the current crisis, whenever the global economy suffers a recession Africa's growth shifts into reverse due to decreasing external demand. A basic minimum income could be a part of a long-term sustainable economic growth strategy of stimulating local demand in Africa. A guaranteed basic minimum income won't solve all of Africa's economic and social development problems, but it certainly would be a great starting point.

1 comment:

  1. sounds like a great idea. Who would guarantee this income? The individual governments with help from the mining companies?