Home

>

Universal Basic Income: How the experience in developing countries can inform the discussion in South Africa

30 August 2022
Publication Type: Discussion Document
Economic Theme: Public Finance
JEL Code: D69, E62, I38
Discussion Document 01

This paper considers how the COVID-19 pandemic gave new traction to the discussion about Universal Basic Income (UBI), particularly in South Africa, where members of government and civil society have been advocating for transforming the special COVID-19 social relief of distress grant into a UBI scheme. The present report aims at contributing to the UBI discussion in South Africa by revising UBI experiences and the impacts of cash transfers in developing countries. It begins by highlighting how there are very few instances of government implemented UBI schemes. Most of the experience so far comes from pilot programs, where budgetary concerns are less of an issue. Notably, Iran and Mongolia are the only developing countries that implemented countrywide UBI policies. Secondly, it considers an extensive body of research on the impacts of cash transfers, mostly coming from target cash transfers but also stemming from the evidence on UBI produced so far. Cash transfers lead to significant poverty reduction and increased well-being, measured by different measures. Interestingly, there is no evidence that they lead to declines in labour force participation or increased consumption of alcohol or tobacco. Thirdly, the paper reveals that when comparing target cash transfers with UBI, one must consider an important trade-off. On the one hand, for any given budget, a UBI scheme will represent a smaller share of money going to the poor. On the other hand, target cash transfers suffer from exclusion errors where individuals who should receive cash transfers are excluded from the system, increasing poverty. Perhaps the most efficient design would be a policy in the middle of the target and universal basic income. The paper then closes with in depth discussion on policy recommendations and emphasises the importance of evidence-based policy setting by government.

Discussion Document 01
SHARE THIS Discussion Document PUBLICATION:

Related Basic Income Support in South Africa Content

Why SA isn’t getting the growth it needs
The Covid Project — a research project to assess SA’s economic pros...
Claire Bisseker
Business Live
COVID-19 and the South African Economy
Discussion Document 02 As South Africa looks to navigate itself out...
Matthew Stern, Christopher Loewald
Discussion Document
Part 4: Building back for a sustainable future
The discussion is based on two papers: “Building back fairer ...
Witness Simbanegavi, Matthew Simmonds, IFPRI, GIZ, ERSA, Channing Arndt
Dialogue
Part 3: International perspectives and South Africa’s trade policy
The discussion is based on two papers: Covid-19 and Lockdown Polici...
Sherman Robinson, Montford Mlachila, Matthew Simmonds, Marianne Matthee, Matthew Stern
Dialogue
Part 2: Recovery policies and labour utilization
The discussion is based on two research papers: Recovering from COV...
Matthew Simmonds, Witness Simbanegavi, Sherwin Gabriel, Romain A. Duval, Murray Leibbrandt, Andreas Wörgötter
Dialogue
Part 1: Monetary policy and Covid-19 in South Africa
The discussion is based on Sailing into the Wind: evaluating the (n...
Matthew Simmonds, Nicola Viegi, Mamokete Lijane, Konstantin Makrelov, Gina Schoeman
Dialogue
Building a competitive and dynamic green industrial sector in South Africa after COVID-19
Policy Paper 28 COVID-19 gave the world a glimpse of how devastatin...
Tendai Gwatidzo, Witness Simbanegavi
Policy Paper
Addressing low labour utilisation in South Africa
Policy Paper 27 South Africa’s stubbornly low labour utilisation ra...
Christopher Loewald, Konstantin Makrelov, Andreas Wörgötter
Policy Paper
Understanding South Africa’s trade policy and performance
Policy Paper 26 South Africa’s exports have lagged behind the rest ...
Matthew Stern, Yash Ramkolowan
Policy Paper
Sailing into the Wind: evaluating the (near) future of Monetary Policy in South Africa
Policy Paper 25 This paper evaluates the main challenges facing Sou...
Nicola Viegi, Tumisang Loate, Ekaterina Pirozhkova
Policy Paper
Financial Statecraft: Government Choice of Debt Instruments
We explore the diversity of means by which governments borrow ̵...
Layna Mosely, Eric Arias, B. Peter Rosendorff
Working Paper
Labour market and monetary policy in South Africa
Unemployment is the defining characteristic of the South African ec...
Vincent Dadam, Nicola Viegi
Policy Brief

Search Resources

Ground Floor Brookside Building
11 Imam Haron Road
Claremont, 7700
Cape Town

PostNet Suite # 109
Private Bag X1005
Claremont 7735
Cape Town

Get Social