UNIVERSAL BASIC INCOME (UBI) – a timely solution for Africa’s impoverished?

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Universal basic income (UBI) is when an entity, like an NGO, Government or other institution, provides a set amount of money to all of its beneficiaries irrespective of their wealth and taxpayer status. It’s based on the idea that every member of society must have access to basic resources, and further, these resources must be sufficient for the survival of an individual. So, the concept is based on social care and boosting the moral behavior of society as a whole (Peters, 2021).

This social support system aims to eliminate poverty, provide easy access to basic needs for everyone, helps to eliminate bureaucratic involvement in the social support system (such system can be time-consuming and subject to excessive delays), helps to control the crime rate, and provides a greater sense of financial security.

Further, the pandemic of COVID-19 has severely affected not only businesses but households around the world. Despite development of the vaccine, still a confusion remains regarding future looks of recovery (Lora Jones, 2021).

So, the need to financially support society is more prominent in today’s world. And UBI can be one of the suitable options.

The following defining characteristics of the UBI make it an attractive dimension for social support system.

  • Periodic – Regular payment is made from time to time.
  • Cash payment – Payment is made in cash, no vouchers and other forms of incentives.
  • Individual – Payment is made on an individual basis.
  • Universal – The payment is for all, irrespective of their wealth and other status.
  • Unconditional – the giving entity does not attach any condition for disbursement of the payment to the beneficiary.

Importance of universal basic income (UBI)

Universal basic income (UBI) is perceived as a great solution for the social security problem. Implementation of UBI in the United States and Iran has helped reduce poverty and improve the overall financial stability of the people.

But let’s bring our minds home to Ghana and other African countries. In today’s African society, millions are facing severe issues like increasing financial challenges, adverse economic conditions from lockdowns and business closures due to this pandemic, increasing inflation, decreasing opportunities for employment, food insecurity, and many more. Hence, UBI can play an important role in uplifting living standards and meeting the survival needs of the people (JRF, 2021).

Likewise, for UBI implementation, there is no need to assess individual background and other aspects. So, this system eliminates the chances of unfair rejection. This further showcases the importance of UBI in a present Africa where, in many cases, the threshold of the minimum wage is not sufficient.

Another important point to note is that most public assistance programs to financially support people are outdated or lack efficacy, not to even talk about efficient implementation. If the case were otherwise, Africa would be further than where it is now. Hence, UBI can provide a simple but excellent choice to bring an element of financial stability within society.

History of universal basic income  (UBI)

The idea of UBI has been multiple centuries-old, and different rulers have implemented the same to support financial aspects of the society at different times. However, it’s again gaining momentum due to significant automation and development of artificial intelligence leading to a great cut in traditional jobs (Heimer, 2021).

Political philosophers and economists have used this concept in the post-war economies; this was done to control the situation and rehabilitate the overall environment. Similarly, Europeans used the concept to achieve a producerist vision of society as a whole. These programs were directed to alleviate poverty and control inequality. So, the history of UBI can be linked to the colonial and post-colonial context. (Daniel Zamora Vargas, 2021)

Great Britain has used UBI in India to develop a system of food distribution to control hunger and enhance developing aspects of the country. Likewise, a disciplined system of Zakat (2.5% on net equity) under Islamic laws and guidance is mandatory and has been used by states around the world (Daniel Zamora Vargas, 2021). Hence, the notion of States  and capable entities utilising a disciplined system of income distribution to stabilize the financial conditions of their people is not new.

As the saying goes, there is nothing new under the sun.

The history of UBI is as old as the broader history of a global social policy where states have used the concept from time to time to alleviate poverty and ensure human survival.

Important facts and figures related to universal basic income

Currently, no country in the world has implemented UBI in full. However, there are experiments and discussions for the same around the globe. Here in Ghana, The RIO Corporation and The RIO Think Tank (TRTT) continue to push discussion on poverty alleviation avenues and other welfare programs, backed by proper implementation structures and evaluating & reporting criteria that meet world standards, both before and after program execution.

It is worth noting that the welfare system of Norway is close to UBI; the Government takes care of the citizen’s access to fundamental goods, health care, and social security income. However, that’s not truly UBI because Government has specified certain conditions to receive such benefits. The conditions include, be a law-abiding citizen, paying taxes, participating in an election, and citizen must try to find a job. All that is well and good in Norway’s eyes but as I stated above, Universal Basic Income (UBI) must be unconditional.

In the United States election of 2020, the presidential candidate Andrew Yang campaigned to implement UBI in the country. This basic income program was called “Freedom of Dividend” and directed to tackle adverse impacts of automation on society. The plan intended to help every American with $1,000 per month, which may not be enough but a supportive amount to meet operational expenses (Clifford, 2020).  Likewise, multiple states have introduced basic income programs; these states include New Jersey, California, Pennsylvania, and Alaska, etc.

Finland also conducted a UBI experiment in 2018; an experiment was conducted on 2,000 unemployed individuals. Each of them was given 560 euros per month, and a positive change was observed in their personality with respect to improved health and happier life (World population review, n.d.) . So, many nations of the world are inspired by the benefits of the UBI and are considering implementing it.

How to implement Universal basic income – UBI

Implementation of UBI is an expensive activity, and it needs massive funds to continuously support such a large base of beneficiaries.

Most of the UBI programs are funded by tax revenue and replace existing welfare programs. The Government’s revenue/tax is collected from the citizens in line with their income. So, collecting the higher amount of taxes from wealthy individuals and distributing them to the lower-income generating citizens help to create financial equality for the overall society.

Feasibility of UBI

No country in the world has been able to implement and sustain UBI at the national level. Although, cash transfer schemes have been introduced at different levels to support a specific group of citizens. So, the greatest challenge for the countries to implement UBI is setting a revenue model to fund the scheme (Give directly, n.d.).

After funding or within the funding, the most successful attempts at UBI have had a separate revenue model for the efficient implementation of it. This would include monitoring, evaluating and reporting on the efficacy of the program on-the-go. If this is done properly, ongoing discussions on evaluations and reports can quickly curb potentially malignant issues that arise as they arise, or even before they do.

Advantages of implementing universal basic income – UBI

The following are some of the advantages related to universal basic income (UBI).

  1. UBI encourages entrepreneurship in society. It’s because people do not need to worry about earning necessities, and hence, they can pursue their business passion and work on start-ups. Further, an increasing trend of entrepreneurship is expected to enhance overall economic stability and create jobs.
  2. UBI has great potential to control domestic violence. The woman with financial freedom is expected to leave her abusive partner and free her life from a toxic environment. So, a barrier of an abusive relationship is broken with the UBI.
  3. The administration of the UBI is simple and straightforward. However, this thing needs to remain transparent throughout the process. The use of blockchain in certain UBI programs addresses this.
  4. It has a great potential to reduce the crime rate in society as basic need fulfilment is one of the most prominent factors of criminal activities around the globe.
  5. Improvement in the health and well-being of society is expected from the implementation of UBI as it leads to the removal of stress and ensures survival needs are in safe hands.
  6. The Government’s expense on other welfare schemes is expected to decrease with the UBI. (Penguin.com, n.d.)

Disadvantages of implementing a universal basic income

The following may be some of the disadvantages of implementing universal basic income (UBI).

  1. A higher supply of money in an economic system can trigger inflation.
  2. The standard of society does not raise in the long run as the receipt is invested in the survival of life. Other welfare programs are often vital to making sure that this rise in standard is achieved.
  3. A free source of income might make people lazy, and they might choose to remain unemployed for the rest of their life. That is why with the best UBI programs come proper Implementation Partners to ensure efficient Information Dissemination on the UBI program and how it should affect the target beneficiaries.
  4. It might place rusting effects on the working ability of people. In simple words, if people are given money without any effort, they may not be willing to work hard. This again makes the case for proper Implementation Partners for the best UBI programs so the beneficiaries have the intended effect.

Conclusion

Universal basic income (UBI) is when an entity, like an NGO, Government or other institution, provides a set amount of money to all of its beneficiaries. Further, there are no specific conditions for the implementation of UBI. The goal of the UBI is to enhance financial stability, eliminate poverty, and provide a sense of financial security to the citizens. That is why it is effective in building community, fighting against inhuman working conditions, and favours liberty.

In recent times, the importance of the UBI has further increased. This is because of the adverse economic outlay, the COVID and the pandemic it brought with it, and increasing rate of crime in many countries.

Also, the concept of UBI is not new for the world; this idea can be traced back to the colonial and post-colonial eras. However, the concept is again gaining momentum due to industrial automation and development in artificial intelligence, which is expected to adversely impact people’s employability.

That said, a strong revenue model is required to fund such a scheme.

Currently, no country in the world has fully implemented the UBI. However, small-scale experiments have been conducted, even here in Ghana by the (former) Refugee Integration Organisation in conjunction with Impact Market. These experiments proved to enhance the level of health and overall life experience of the beneficiaries. Although there are some cons associated with the UBI – these include higher inflation due to the supply of money and disincentive labour to work as they have been getting free money without work – a strong Implementation Partner normally ensure the efficacy of the UBI scheme with good monitoring, evaluation and reporting measures.

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These are all facts. And this has been an opinion piece.

Have a blessed week!

By Maxwell Ampong

The writer is the CEO of Maxwell Investments Group, a trade and corporate finance boutique firm. He writes about trending and relevant economic topics, and general perspective pieces.

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