Tag Archives: Basic Income Grant

Cash transfers reduce dependency in Namibia

This example of how the pilot Basic Income Grant in Namibia helped reduce recipients’ dependency is taken from the RHVP Frontiers of Social Protection Brief no 5: Dependency and Graduation.

How cash transfers reduced dependency in Namibia

In Namibia, a Basic Income Grant (BIG) is being piloted in a severely impoverished rural community, where unemployment stood at 64% in November 2007 – much higher than the national unemployment rate of 37%.

From January 2008, every adult in Otjivero-Omitara was given N$100 (US$12) each month, unless they were already receiving a social pension. In July 2008, six months after the BIG was introduced, unemployment in Otjivero had fallen to 52%, while the proportion of those still unemployed who were looking for work had risen significantly. Much of the increased employment was in the informal sector, with women and men using the BIG cash as working capital to engage in income-generating activities.

One woman set up a home bakery. “After the introduction of the BIG I started my business. I bake traditional bread every day. I bake 100 rolls per day and sell each for N$1. … I make a profit of about N$400 per month.” Another woman started a dress-making business. “Since we get the BIG I bought materials and I am making 3 dresses that I will sell. When I fi nish … I will start with new ones. I sell a dress for N$ 150.

These small enterprises operate within the community, with other community members using their BIG cash to purchase the products. This illustrates how injections of cash can stimulate local economic growth. Average monthly per capita income in Otjivero rose from N$160 to N$303, an increase of 89% in just six months, of which N$100 (63%) is directly attributable to the BIG cash transfer, and N$43 (27%) is additional productive income leveraged by the BIG.

This evidence refutes the prejudicial belief that poor people who are given free cash or food will become lazy and choose to work less than before, thus becoming totally dependent on the cash transfers for their survival. In fact, the opposite is true.

Guaranteed social grants give poor people the means to invest in productive activities and improve their livelihoods.

The BIG is also giving people independence in other ways. The BIG has helped many young women to become less dependent on men for financial support. The rapid spread of AIDS in Namibia (which has one of the world’s highest HIV-prevalence rates) has been attributed partly to transactional sex, driven by poverty and economic stress. An assessment of the BIG after six months of implementation found that the cash transfers gave women more control over their sexuality and increased their economic independence.

One shopkeeper in Otjivero claimed that his domestic worker had resigned after receiving the BIG, because she no longer needed to work. But the worker refuted this interpretation, saying that she had been underpaid and badly treated by her employer.

“I complained many times about my low salary but there was no increment. I was not even getting something to eat during lunch hours. The way they talked to me was also not proper. I therefore decided to stop working. When I left them, they accused me that I left work because of the BIG, but this is not the case. I left them because of the low salary and bad treatment”.

These examples of cash transfer impacts can be interpreted as reduced dependency of women on men, and of employees on exploitative employers. They also indicate enhanced empowerment of poor and vulnerable Namibians in relation to those who are wealthier and more powerful.

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