Basic Income Grants Alleviate Poverty in Namibia

March 12, 2010

By Becky McCray (CC).

As the financial crisis deepened in 2008, countries around the world responded by pouring immense sums of money into their economies and financial markets, while doing relatively little in the way of poverty relief. Meanwhile in the Namibian village of Otjivero-Omitara, Church groups, AIDS NGOs, and labor unions quietly launched a small pilot program with big implications for the future of poverty policy: the Basic Income Grant Coalition. The idea was simple: Every resident of the village would receive a basic monthly income, regardless of income and work status.

Dogged by the shadow of apartheid left over from South African rule, Namibia today has the most unequal income distribution in the world. The village of Otjivero-Omitara was chosen for the pilot program because it was a typical Namibian village, beset by poverty, AIDS, alcoholism, and crime. The results [PDF] after one year of implementation have been remarkable. Before the pilot program, 42 percent of children in the village were malnourished. Now the proportion of malnourished children has dropped significantly, to 10 percent.

The village school reported higher attendance rates and that the children were better fed and more attentive. Police statistics showed a 36.5 percent drop in crime since the introduction of the grants. Poverty rates declined from 86 percent to 68 percent (97 percent to 43 percent when controlled for migration). Unemployment dropped as well, from 60 percent to 45 percent, and there was a 29 percent increase in average earned income, excluding the basic income grant. These results indicate that basic income grants can not only alleviate poverty in purely economic terms, but may also jolt the poor out of the poverty cycle, helping them find work, start their own businesses, and attend school.

The concept of a basic income grant goes back centuries, to Thomas More's Utopia and the ideas of the Marquis de Condorcet, to Thomas Paine and John Stuart Mill. In its various incarnations, basic income has essentially been defined as an income paid to all adult members of society, with no work requirement or means test, at a level sufficient for subsistence.

Because basic income grants have egalitarian as well as freedom-enhancing qualities, the concept has attracted advocates of all political stripes, from Milton Friedman to John Kenneth Galbraith. Friedman supported the idea on practical grounds, believing it would reduce poverty as well as the size of government. Indeed, supporters of the idea make strange bedfellows—libertarians, socialists, conservatives, liberals.

Basic income proposals provoke disagreement over the possible effects. One commonly voiced concern is that they provide a disincentive to work. Advocates argue the opposite: A basic income grant encourages work because it doesn't punish people for taking a job—at a loss of their welfare income—it only adds to their wealth. Some contend that basic income grants would compete with funding for public schools and healthcare. In response, basic income advocates argue that money would be saved on the costs of administering welfare, because the grants would work through the tax code.

The Namibia program fills a gap in basic income research by providing a real-world case study with preliminary results. If more countries launch pilot programs and incorporate basic income into their social policy, robust data could help settle these age-old arguments.