The radical economic theory has crossed Tito Mboweni’s mind during lockdown: But a basic income grant would be an unprecedented move for South Africa
In desperate times, people in positions of power will consider all options on the table when it comes to lifting economic gloom. The current period of lockdown will decimate South Africa’s fiscus, and leave thousands, perhaps millions of us, in a financial black hole of our own. But could a ‘basic income grant’ ease the fear?
Tito Mboweni’s blunt economic forecast
Tito Mboweni has briefed the media via a video conference on Tuesday. He’s confronted some stark truths about the situation we face as a nation, and the situation this global health crisis has left us in:
- South Africa is likely to enter deeper into recession once more, with more than 6% being wiped off of GDP in this quarter.
- The repo rate was slashed to 4.25% on Tuesday – its lowest ever value
- A loan of $60 million – almost R1 billion – from the World Bank is also being considered to counteract lockdown measures.
Lockdown: Could South Africa get a basic income grant?
But what if… all of us were guaranteed a basic sum of money when we needed it? A basic income grant would work differently to unemployment schemes or existing SASSA payments. It would act as a safety net – starting from something like R1 000 a month, according to some experts – and it’s caught Tito’s eye already.
He has not laid out many details about how it could possibly work in Mzansi. At this stage, it is merely a suggestion. But the entire working-age population would be entitled to a government grant. Mboweni said:
“[A basic income grant] is certainly something that is in my mind. I think about it all the time. I read a lot about it. I study. I analyse it all the time. But as of now, there has been no decision to go along the route of a basic income grant. It is a serious question, which must be considered and not ‘dismissed offhand’.”
Basic income grant vs universal basic income
A basic income grant would likely be modeled on the concept of a “universal basic income” – this is a government guarantee that each citizen receives a minimum income. The intention behind the payment is to provide enough money to cover the basic cost of living and provide financial security.
Both Norway and Finland have experimented with the idea of universal basic income, and Tito Mboweni didn’t exactly slam the door shut when it was suggested he could bring the policy to South Africa. Although it wouldn’t be his first choice, the finance minister accepts that anything may be possible in these extraordinary times.