A basic income grant for Namibia
Nowadays, many people involved in the development discourse agree that the overcoming of poverty is the most crucial factor of development and that the growth of a country's economy alone is not sufficient to increase the well-being of the poor - often it has even worsen their situation (Kingsbury et al., 2008, pp.27-28, 152). However, there is no consensus on how to address this multidimensional problem and create lasting change.
This essay focuses on the challenge of poverty, unemployment and income inequality in Namibia - the country with the most unequal distribution of income in the world. The two-year Basic Income Grant (BIG) pilot project in the Otjivero-Omitara area that has started in January 2008 aims to address these problems by redistributing money from the rich to the poor. It is based on the idea that everybody should unconditionally receive a monthly basic income. The goal of the BIG pilot project which is "the first universal cash-transfer pilot project in the world" (Haarmann et al., 2009, p.13) is to persuade the Namibian government to implement a BIG in whole Namibia.
Even if poverty is nowadays often seen as key factor which has to be addressed by development approaches and most would agree that development means "improving the living conditions of society", there has been and there are various opinions of how this improvement should look like and how it can be achieved (Melkote and Steeves, 2001, p.34). In scholarship and practice, one can identify three main streams of perspectives on development: modernisation or the dominant paradigm of development, critical perspectives, and liberation perspectives (ibid.). The different underlying ideas and concepts of development of these perspectives are explained in the following literature review of this essay. In the status report, the development situation in Namibia and the BIG idea together with the associated pilot project are described. The concept of empowerment that emerged in the scope of the critical approaches and liberation perspectives can be seen as the framework of the BIG project. The underlying ideas, the strengths in addressing poverty and lasting development as well as the challenges and criticism of the project are discussed in the discussion part. Concluding the analysis, actions for a successful implementation of the BIG in whole Namibia are recommended.
The paradigm of modernisation that emerged in the 1940s strongly determined the theory and practice of development until the 1960s (Melkote & Steeves, 2001, pp.71-72; Mowlana & Wilson, 1990, p.13). "Theories and concepts that recapitulated the development of West European and North American nations were used to generate models of development for the Third World" (Melkote & Steeves, 2001, p.100). Roger names four key elements of this so called dominant paradigm: economic growth via industrialisation, capital-intensive technology and associated the quantitative empirical scientific method, centralised planning as well as the belief that underdevelopment is caused by problems within developing nations (1976, p.49).
The paradigm is based on neo-classical economic theory but also on social evolutionary theory - Darwin's evolutionary concept applied to social change (Melkote & Steeves, 2001, pp.74-75). There were and are, for example, a variety of bipolar theories of modernisation that describe ideal-typical beginning and end points of development. The countries in the Third World were seen as traditional societies while Western nations were described as modern and therefore having already achieved the highest stage of development (Greig, Hulme & Turner, 2007, p.80; Melkote & Steeves, 2001, pp.81, 100). A prominent example of a unilinear modernisation model that emphasises evolutionary change is Rostow's five-stage model of economic growth (Melkote & Steeves, 2001, p.84; Servaes, 1999, p. 21). Modernisation theories that focused instead on evolutionary change at the micro level stated that is is essential for the modernisation process that individuals change their values and attitudes to meet the characteristics of people in the already modernised West (Melkote & Steeves, 2001, pp.86-88).
The processes and structures of development under the dominant paradigm reshaped "the reality of people in the Third World" (Melkote & Steeves, 2001, p.92). Melkote and Steeves note that "an examination of modernization discourse from the beginning reveals the goal of replacing non-Western ideological, cultural, and even language systems, with Western systems" (2001, p.92; see also Kingsbury et al., 2008, p.52). In addition, Western countries gained more and more control over the people in the Third World through their institutional interventions (Melkote & Steeves, 2001, p.93).
Since the 1960s the development concept within the scope of the dominant paradigm has been more and more challenged (Kingsbury et al., 2008, p.51). The critique refers to several facets and consequences of the paradigm - many of it challenges the focus on a country's economic growth (Melkote & Steeves, 2001, pp.19, 158). The various negative consequences of the dominant paradigm show that measures like the GDP of a country cannot tell a lot about the situation of the people. Even though many developing nations experienced impressive economic growth until the 1960s, the modernisation model lead to increased rates of unemployment, poverty and inequality - in political, social and economic respect as well as in regard to the distribution of power (Kingsbury et al., 2008, p.27-28; Melkote & Steeves, 2001, pp.158-162).
The observation of the failure of the dominant paradigm's trickle-down idea lead to the emergence of the basic needs approach in the early 1970s (Melkote & Steeves, 2001, p.166). The aim of this approach is "to eliminate some of the worst aspects of poverty" by paying attention to "the quality of life of individuals at the bottom of the socio-economic ladder" instead of emphasising economic indicators as within the dominant paradigm (ibid., pp.158, 166). There have been many efforts to define basic needs (Kingsbury et al., 2008, p.32). Paul Streeten (1979, p. 48, quoted in Melkote & Steeves, 2001, p.167) identified seven objectives of the basic needs approach that include basic human needs and rights: food and drinking water, shelter, education, security of livelihood, transport, participation in decision-making as well as dignity and self-respect.
After a decade of renunciation of the emphasis on basic needs, the attention to this approach returned in the 1990s. In this time, a nowadays still very influential measure of the well-being of people - the Human Development Index (HDI) of the UNDP - was introduced (Kingsbury et al., 2008, pp.32-33). Melkote and Steeves state that the basic needs approach has no chance to have a real effect on development as long as the power lies with the proponents of the neo-classical approach: "Considerations of national and global security and economics will always take priority" (2001, p.169). Critics have argued furthermore that the real aim of advocators of the basic needs approach was to keep people disempowered while only feeding them better (ibid., p.168). These concerns about global power imbalances are expressed, for example, by dependency theory and world-systems theory (ibid., p.158).
Melkote & Steeves summarise the new goals that alternative approaches to development address: equity in distribution of development benefits, participation of all community members, independence of communities or nations and integration of old and new ideas (2001, p.199).
The third stream of perspectives on development - the liberation perspectives - differs from the others since the focus is spiritual and not economic (Melkote & Steeves, 2001, pp.35). Spirituality and religion seldom play a role in mainstream development scholarship or practice and religions - especially others than Christianity - are rather seen as barriers to development (ibid., pp.273-274). However, within every major religion there can be found a type of theology "that supports development as a process of liberation from injustice, discrimination, and oppression" (ibid., p.275, 293). This liberation theology, the main basis for liberation perspectives, state that the aims of development - in this approach empowerment and self-reliance - can only be achieved through "personal and communal liberation from oppression" (ibid., p.35). The underlying assumptions are that all people pursue freedom and self-reliance and "have the internal capacity to develop themselves on their own terms" but "internal and external forms of oppression restrict their ability to do so" (ibid., p.35, 294). Crucial to liberation theology is that spiritual practice and social activism together with and on behalf of oppressed people belong together (ibid., p.294).
Although large Western governments and corporations are seen as a major oppression sources, proponents of liberation perspectives are not automatically opponents of modernisation. Instead, "the basic premise is that individuals must be free to choose" (Melkote & Steeves, 2001, p.35).
A bottom-up model that incorporates assumptions of the liberation perspectives is the participatory model for development. The idea behind this approach is the participation of people of all levels of society (Melkote & Steeves, 2001, p.327-338). People at the grassroots have to perceive their needs and problems themselves and then identify solutions - this happens through conscientization what includes collective action. Though the participatory model has been relatively popular in the last decades, many development projects have stayed far away from true participation by keeping the choice for the "right" solutions and other power issues at the level of national or international elites (Melkote & Steeves, 2001, p.338-339).
The three streams of perspectives within the development discourse that were discussed in the preceding paragraphs are not exhaustive and they also overlap. A concept of development that includes elements of the critical perspectives and liberation perspectives is empowerment (Melkote & Steeves, 2001, p.35-36). The World Bank defines empowerment as "the process of increasing the assets and capabilities of individuals or groups to make purposive choices and to transform those choices into desired actions and outcomes. Empowered people have freedom of choice and action. This in turn enables them to better influence the course of their lives and the decisions which affect them" (2009a). Melkote and Steeves also concentrate on the collective level of empowerment and argue for this concept of development because "sustainable change is not possible unless we deal with this crucial problem in human societies: lack of economic and social power among individuals at the grassroots" - the oppressive social, political, and economic structures in Third World nations are seen as the obstacles for development (2001, p.356). Though there are several caveats that are discussed in the discussion part of this essay, Melkote and Steeves see the empowerment concept as the only way for true development (2001, pp.364-365).
The Republic of Namibia lies in the south-west of the African continent. With 2.11 million residents in 2008 and a surface area of over 824,000 square kilometres, it is sparsely populated (The World Bank TWB], 2009b). The majority of the Namibians still live in rural areas while the urban population counts only for 36 per cent (TWB, 2008).
In 2008, the country had a GDP of US$ 8.56 billion (TWB, 2009b) and it has - compared to neighbour countries - a relatively high per capita income (International Monetary Fund [IMF], 2009, pp.5-6). The economy as a whole has shown a "solid growth performance in recent years" due to the flourishing mineral sector (IMF, 2009, pp.5-6). But the large share of unemployed residents - about 35 per cent - reveals the fundamental problem of inequality in Namibian society (ibid.). With a Gini value of 74.3, Namibia is regarded as the country with the most unequal distribution of income in the world. The absolute monthly income of the richest 20 percent of the population is 56.1 times higher than the income of the poorest 20 percent (UNDP, 2008b). According to the national poverty line, 13.8 per cent of the people are "severely poor" (Haarmann et al., 2009, pp.48-49).
With a HDI of 0.650, Namibia ranges in the bottom third (rank of 125th) of 177 countries when it comes to human well-being (UNDP, 2008a). Using the "weight for age" standard of the World Health Organization, 18 per cent of the children under age 5 were undernourished in 2007. Only 77 per cent of the children in the relevant age group completed primary school in 2007. Another challenge is that the HIV rate is high in Namibia: 15.3 per cent of the population ages 15-49 are infected by the virus (TWB, 2009b).
In 2004, the so called Namibian Basic Income Grant Coalition (BIG Coalition) was established to advocate the introduction of a nationwide monthly basic income grant (BIG) to address these problems (Haarmann et al., 2009, p.13). The Namibian Government's Tax Commission had recommended in 2002 a universal grant that should be financed "out of a progressive expenditure tax on the affluent" (ibid., p.18). Following this recommendation, the BIG Coalition developed a proposal for a BIG in Namibia: A monthly cash grant of not less than 100 Namibian dollars (what currently equals 15.64 Australian dollars) should be paid unconditionally to every Namibian citizen - women, men and children - as a citizen's right until she or he reaches the age of 60. When turning 60, Namibians become eligible for the already existing and considerably higher universal government pension (ibid., pp.18-19; Kameeta et al., 2007, p.23).
The BIG Coalition argues that the net costs of between N$ 1.2 and 1.6 billion per year - which are equivalent to 2.2 to 3 per cent of the current Namibian GDP - are affordable for the Namibian state as there is "excess capacity to raise tax revenue significantly". Options to finance a BIG include "a moderate adjustment of VAT combined with an increase in income taxes" and "a re-prioritisation of the national budget and the introduction of a special levy on natural resources" (Haarmann et al., 2009, p.16).
The key effect that is expected from the BIG is that it "promotes employment and decent work on a large scale in Namibia" (Kameeta et al., 2007, p.25). This would be achieved by the BIG by providing a certain level of income security that would curb abject mass poverty and break the "destructive circle of the survival economy". The second main feature is that financial resources would be redistributed to the majority of people "where they are most effective to foster both investment and demand" (ibid., pp.25-26). The proponents of the project note that several substantial governmental measures are additionally needed as the BIG alone cannot be the solution for the problem of mass unemployment (ibid., p.26).
The BIG Coalition decided in 2007 to implement a pilot project in the extremely poor Otjivero-Omitara area (Haarmann et al., 2009, p.49) to prove the positive consequences of a BIG and "move the policy debate forward" (ibid., p.19). After the registration of the 930 under-60-year-old residents of the area and the raising of funds for a project duration of two years, the pilot project has started in January 2008. The pay-out is managed by the Namibian Post Office where every resident of the project area has a savings account into which the grant is paid monthly (ibid., pp.19-23).
The proponents of the income grant state that "the introduction of the BIG will be a significant step towards poverty alleviation, employment creation and the reduction of inequality in Namibia" (Kameeta et al., 2007, p.26). In fact, according to the one-year-report of the pilot project, various developmental effects have been achieved since the implementation of the BIG in the project area: household poverty dropped significantly, economic activity increased especially through the starting of small businesses and the creation of a local market through the new "buying power" of the people, child malnutrition was reduced, regular school attendance and clinic visits increased mainly because of the ability to pay the fees, crime was significantly reduced and HIV positive residents could afford nutrious food that is essential to benefit fully from anti-retroviral treatment as well as pay for the transport to get the medication (Haarmann et al., 2009, p.14-16, 60).
The BIG Coalition sees the BIG not just as a basic needs approach but as a means of empowerment. The BIG helps the poor to satisfy basic needs like eating, drinking, having decent shelter and sending their children to school (Streeten, 1979, p.48, quoted in Melkote & Steeves, 2001, p.167) but it intends to achieve even more than that. The proponents state that the BIG "is not a welfare programme but an empowerment programme for economic activity" (Kameeta et al., 2007, p.23). Kameeta et al. argue in their BIG project presentation for the United Nations in line with the ideas of the empowerment concept of Melkote and Steeves that was explained earlier in this essay: Poverty is caused by an "unjust economic order that prevents them [the poor] from making a living in a dignified way. A solution must thus address the structural injustices, which perpetuate the ever-increasing unemployment and poverty rates" (2007, p.12). As the BIG would facilitate a redistribution of income from the rich to the poor, it would lead to more justice in the distribution of the rewards of economic growth that Namibia indeed experienced since independence (Kameeta et al., 2007, p.20).
That the struggle of many Namibians to meet basic needs prevents development is noted strikingly by Kameeta et al.: "The poor have to spend hours securing their survival for the next day by collecting water and firewood and trying to obtain some food. These daily survival struggles absorb time, labour and other resources, which otherwise could be used for productive economic purposes" (2007, p.8). In advanced nations the state usually guarantees some kind of social safety net but as this is lacking in many developing countries it is irrational for people "to engage in innovative, achievement-oriented and profit-maximizing behavior"(Melkote & Steeves, 2001, p.166). The abandoning of the survival economy furthers the opportunities of the poor to engage in work - either by starting an own business or seeking other employment.
Criticism of the BIG concept mainly takes place on an ideological level and reminds of the perspective of the dominant paradigm: The two core beliefs are that a cash transfer is bad for people because it gives them rights without responsibility and that poor people are not capable of spending the money wisely (Haarmann et al., 2009, p.39). Melkote and Steeves confirm that "while explicit theories of individual inferiority are no longer promoted, the discourse of development often reveals ethnocentric and patriarchal beliefs about the disempowered status of people in general or subgroups in developing countries" (2001, p.90).
The BIG Coalition states that the results of the pilot project prove that the ideological reservations which critics like many wealthy white farmers have (Krahe, 2009, pp.48-49) are unfounded. The people in the project area have in fact made "rational spending decisions to improve their lives" (Haarmann et al., 2009, p.40). Furthermore the BIG Coalition argues that the unconditional payments do not mean giving "something for nothing" but lead to immense individual and social benefits through giving people the opportunity to become self-reliant and act dignified and responsible (ibid., pp.39-42).
Simply the possession of little economic power helps people to regain their human dignity, for example because they do not have to beg for food any more (Haarmann et al., 2009, p.41). This process is furthered by the unconditional payment of the BIG. The receivers of the BIG have the choice to decide how to invest their money and are responsible for their actions, they have the power to do what seems reasonable for them. This would be not the case if food stamps would be provided or the school fees for their children would be paid from somebody else than themselves (ibid.). The argument that a BIG would create dependency is contrary to the basic assumption of liberation perspective which is crucial to the empowerment concept: "It is necessary to trust in the oppressed and in their ability to reason" (Freire, 1996, p.564). As the experience in the pilot project shows, the people use the BIG as a platform for own actions and do not rely on the regular payment alone. Krahe points out that the system of small loans in developing countries also shows that poor people often succeed in becoming financially independent - in this case through self-employment - if they only get access to money (2009, p.52).
The BIG has promoted in the pilot project community also empowerment through participation. The people themselves established an 18-member BIG committee to mobilise the community. The committee elected people who advise others "to make the best use of their BIG payments" (Haarmann et al., 2009, p.14). The members also addressed the problem of alcohol abuse and persuaded shebeen owners not to open on the BIG pay-out days (ibid., pp.38-39). This "suggests that the introduction of a BIG can effectively assist with community mobilisation and empowerment" (ibid., p.14). People know best the problems of their community and can create solutions - in Otjivero-Omitara, the BIG ignited hope and motivated people to participate in their own development (ibid., p.37). A participatory communication model is seen as key for empowerment (Cadiz, 2005; Melkote & Steeves, 2001, p.166).
It would go beyond the scope of this essay to analyse the BIG proposal in such details as discussing for example the appropriate hight of the monthly grant and the best way to finance it. As noted in the status report, the pilot project shows many positive results in addressing poverty, unemployment and other problems. The BIG is also a way to lessen the economic inequality in a country in which only a certain part of people used to benefit from economic growth. After analysing the underlying concept of empowerment, one can say that the BIG appears to be a very fruitful concept of development as it is a real means to empower people. However, it can only be one of various steps to gain full empowerment of the people. Melkote and Steeves emphasise furthermore that there are several caveats to empowerment: it is a long-term, labour-intensive process that evolves through practice in which development support professionals are only facilitators (2001, pp.364-365).
In any case, additional measures and processes are needed to accompany the implementation of a BIG in Namibia - it is understood that the introduction of a basic income "cannot stand alone" (Hornemann Moller & Lind, 1999, p.186). As the BIG Coalition itself states, governmental measures to address the mass employment are among others crucial to create perspectives and facilitate the long-term success of a basic income. Essential for further empowerment would be furthermore that people at the grassroots organise themselves to support other people in how to invest the BIG money, detect and address potentially upcoming difficulties and get involved with the improvement of life in their community beyond the basic income (Melkote & Steeves, 2001, p.166, 366). The establishment of a community committee within the BIG pilot project is a good example for participation. From the political side there should be efforts to listen to what the people at the grassroots have to say and what measures they consider as reasonable for their special community (Servaes, 1999, pp.277, 279). However, participatory communication faces many obstacles and its success depends on several conditions - it is nothing that can be established easily over night (Cadiz, 2005, pp. 156-158; Servaes, 1999, pp.196-204, 277).
At the current level of discussion, the debate about a BIG for Namibia is not yet concerned with such important details of the BIG introduction, it is still a general and mainly ideological one. Can you trust poor people? Can you let them decide what to do with the money they get? The empowerment concept approves that and goes even further by stating that to rely on the self-responsibility of the people, to empower them to let them create their own future is the only way to gain sustained development. Certainly, there will always be people who are not willing to participate in community development and abuse governmental payments but as the experience from the BIG pilot project shows, this is the minority. A basic income grant can be a first step towards the goal of overcoming poverty and increasing the well-being of people through empowerment.
The idea of a basic income already has a long history, "its roots stretch back to the late eighteenth century" (Fitzpatrick, 1999, p.40). The BIG pilot project in Namibia has gained large attention worldwide (Haarmann et al., 2009, p.XII) especially because other countries, including for example Germany, are also discussing the introduction of a basic income for some time already (Little, 1998, p.107). Maybe in this case a developing country will slip into the role of progress leadership and become the precursor of a successful development concept that will be implemented in Western countries subsequently.
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