Namibia: Small town, BIG grant

News and Press Release
Originally published
OTJIVERO, 4 November 2008 (IRIN) - There are no roads, no major industry and no historical landmarks in Otjivero, a village about 150km east of Windhoek, the Namibian capital and previously known for little more than its poverty. But in January 2008 it became part of one of the world's first basic income grant (BIG) projects, and now stands the chance of setting an international precedent in the fight against poverty.

About 1,000 villagers have been receiving a BIG of N$100 (US$10) as part of a trial project funded by contributions from international donors and private citizens and administered by Namibia's BIG Coalition made up of four major umbrella nongovernmental organisations. Community members say the money has gone a long way towards providing better nutrition, housing and even seed money to small businesses; project implementers say it has disproved aid industry myths about the feasibility of such a grant.

The issue of a BIG - an initiative to provide every citizen irregardless of wealth with a grant to insure a minimum monthly income - has been championed by its supporters as a low-cost method of redistributing wealth in societies such as Namibia, which according to the United Nations development Programme, have extremely high levels of income inequality.

While the idea of a grant has gained new relevance in recent years with innovations in aid distribution such as cash transfers, opposition remains from many who have argued the grant will foster dependency, and that national budgets in developing countries are ill-equipped to finance such a large-scale intervention.

Despite a serious push for a BIG in Brazil, South Africa and Namibia, the project at Otjivero is the first time such a grant has been implemented.

From hand to mouth

With the nearest hospital 150km away, Bonita Nakanyala, the head nurse at Otjivero's two-roomed clinic, has delivered babies, HIV and TB test results and even meals to her clients too sick to care for themselves. She also leads the weekly support group for people living with HIV and AIDS.

She talked to IRIN/PlusNews about how the N$100 had helped improve food security among her HIV-positive patients on treatment and the broader community. "Due to the basic income grant, people have better access to food," she said.

"They are buying more of what they need than previously; what they mostly used to do is eat [maize] porridge and sugar. It was their dinner, their lunch, or if there was none, they would drink sugar water."

Patients are reporting eating more fruit, vegetables and meat with the new influx of cash, she said. Many are also investing part of their grants into improving their homes and starting small businesses.

Alfred Nuseb, the clinic's security guard, combined the grants of his wife and children to improve his home opposite the clinic, and now lives in a shack with walls of corrugated iron that have replaced the plastic sheeting his family previously used for shelter. His wife has opened a small shop and invests a portion of the family's grants in stock each month.

Larger families have been able to buy sinks, stoves and even toilets, relieving the pressure on village's communal toilets, which Nakanyala estimated serve up to 50 people each.

Hermanus Coetzee, an openly gay hairdresser and one of Nakanyala's closest friends, often stops by the nurses' quarters to cook them dinner. He said he has invested part of his grant in his growing business and hopes to open a salon one day, with or without the grant.

Universality key

The BIG in Namibia was first proposed in 2002 by the government-appointed Namibian Tax Consortium (NAMTAX), which reviewed the country's tax regime. It suggested the initiative be financed through higher income taxes on middle class and wealthy Namibians.

A national BIG is projected to cost about 4 percent of the country's gross domestic product (GDP), or about US$430 million based on 2007 GDP estimates, according to the coalition. Currently, the group advocates a combination of measures to fund a nationwide BIG, including increased income tax, higher taxes on luxury goods and a rise in value-added tax.

Hilma Shindondola-Mote, director of coalition partner and labour think-tank, the Labour Resource and Research Institute, said the BIG was the only form of what she called redistributive justice that could close the widening gap between rich and poor in Namibia, a middle-income country with highly skewed levels of wealth as a result of the country's apartheid past.

"We joined the coalition simply because there are so many people who are poor in this country and the government doesn't really have proper poverty reduction programmes in place," Shindondola-Mote said. The grant would provide a safety net for Namibians unable to access means-tested pensions or child and disability grants.

But opposition to BIG continues. The Namibian Economic Policy Research Unit (NEPRU), an independent research outfit, has criticised the project's findings that the grant contributed to economic growth, reduced crime levels and led to noticeable increases in the number of families able to pay their school fees, a fact to which Grade 5 teacher at Otjivero Primary School, Marcello Kaffer told IRIN/PlusNews he could personally attest to. However, as of 4 November, NEPRU had attempted to publicly pull the report due to errors.

According to BIG coalition project manager, Rev Dr Dirk Haarmann, concerns about efficiency, dependency and cost remain largely unwarranted as the small grants have created meaningful change in the lives of many in Otjivero. Meanwhile, the cost of implementing the project remains relatively small compared to other means-based grants already in place.

"Administering a means test would require an administration to decide who's poor and who's not," he said. "Administration is costly on one side and, on the other side, opens the way for corruption. With the basic income grant you don't need any of that because it's universal."

Recipients' details are stored electronically on smart cards, reducing the per client cost of handling the grant to N$11 (US$1.50) per recipient, just a fraction of what it costs some governments in the region to issue old-age pensions, according to Haarmann. Many beneficiaries have also joined the formal banking system.

The real test as to whether or not the grant has created dependency may come in December 2009 when the project concludes. Although government officials have welcomed it warmly, the coalition is uncertain as to whether a BIG will be rolled-out nationally. The Namibian Ministry of Finance was regrettably not available for comment.