South Africa can afford a basic income

SWISS residents will soon vote on an initiative that would guarantee a basic monthly income of 2,500 Swiss franks ($2,800 pm or $33,6k/yr) for all working adults in the country to combat income inequality across the nation. The initiative collected the 100,000 signatures needed for a referendum on the proposal, and to mark this historic initiative, a truck in the city of Bern unloaded 8 million five-cent coins, on Friday to represent Switzerland’s 8 million citizens. The parliamentary vote has not yet been scheduled, but it could take place before the end of the year.

This proposal is reigniting South Africa’s own Basic Income Grant (BIG) proposals. If you remember, opposition parties and civil society groups called for a BIG in a campaign that appears to have been put on the back burner because of concerns over the tax burden. With elections coming up in 2014 and calls by far-left groups to end private ownership of property, the time for resurrecting the BIG is now. As a stop-gap measure, medialternatives has suggested an annual or bi-annual benefit based upon a co-ownership model in which citizens take ownership of the sovereign wealth of the country, receiving dividends like any normal shareholder.

South Africa can definitely afford to pay its citizens an annual benefit, since it has 80% of the world’s platinum supply and 50% of the gold reserves, more mineral wealth than is sitting in the bank vaults of Switzerland. A guaranteed monthly income is not out of the bounds of possibility and would not necessarily impact on the tax burden, since it could be drawn from direct investment in the economy.

South Africa’s Public Investment Corporation (PIC) is one of the largest investment managers in Africa today, managing assets of over R1.4 trillion. The nation’s sovereign wealth can be seen actively invested in a number of  Johannesburg Stock Exchange listed companies,

Instead of allowing wealth to flow out of the country or into the pockets of the politically connected, South Africans can act to force our government to take a more active role in seeing to the needs of its people. Co-ownership benefits and a BIG could be the impetus needed, since the country is confronted with a similar dilemma as any oil-rich nation facing potential ruin when the oil runs dry.

Industry pundits have placed the actual working life of the countries gold mines at no more than another 10-15 years — the cost of getting the ore out of the ground is becoming too expensive, as these reserves are depleted forcing miners to dig deeper.  Diversification of the development of our country for the benefit of future generations — growing the sovereign wealth of the country so that all may benefit — could be the solution.

The country  has a  window of opportunity to reap rewards from its global investments over the past decade and to repatriate these profits in the form of a BIG or a Citizen Co-ownership Benefit.  With the JSE becoming a hub of international commerce, public investments are already showing sign of a pay off as our mineral wealth is diversified into global commerce, time to remind the politicians that these investments are meant to benefit all citizens not simply politicians.

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