Wednesday, July 28Inside Business Africa

Rising Mystery Index: Between NSIP and universal basic income

As the COVID-19 pandemic spread across the world last year, a group of activists seized the loophole in support responses, seeking the institution of universal basic income (UBI) and polled over 200,000 signatures to drive home their demand. The movement renewed the call for the establishment of basic income guarantee as an essential part of modern economies.

In the recent United States election, Andrew Yang, a Democratic Party presidential aspirant, shot to the international podium for his sermon on UBI and how he planned to pay the poor a monthly stipend of $1000 each, if he emerged the U.S president. But Yang is not the only advocate of UBI. Elon Musk of Tesla, Mark Zuckerberg of Facebook, Pope Francis, Jeff Bezos (the founder of Amazon), Bill Gates and Jeremy Corbyn (the former Labour Party leader) are among millions of global leaders who are currently calling for the adoption of UBI.

UBI, as an economic philosophy, dates back to hundreds of years ago and was central to the concept of utopian society. In recent years, some European governments had to test its popularity through referendums. But it has never been given more attention as a tool for building inclusive economic growth than it is now.

Making a case for guaranteed income for the poor, the United Nations Assistant Secretary-General and UNDP Regional Director for Asia and the Pacific, Kanni Wignaraja wrote: “It is time to add a new element to the policy packages that governments are introducing, one we know but have abandoned: UBI. It is needed as part of the package that will help us to get out of this yawning pit.

“The naysayers and there are plenty, will point out that it won’t work because no country can afford to regularly dole out money to every citizen. They will argue that we will run unsustainable deficits, which cannot be financed. This is a valid concern. But the alternative will result in a greater surge in inequality, increasing social tensions that would cost governments more and open countries to risks of societal conflict.”

In Africa, the idea is no longer foreign. South Africa is contemplating a set of Universal Basic Income Guarantee (UBIG) programmes that will take 5.7 million people out of food poverty. The possibility of extending UBIG to all adults, adult informal-sector workers, unemployed adults and others within 18 and 59 years is being explored. On the table are the food poverty line (R585), the lower-bound poverty line (R840) and the upper-bound poverty line (R1, 268) as components of the proposed scheme.

There have been pilot schemes in different African countries to test the feasibility of the concept and its ability to reduce poverty. In Kenya, it was adjudged to be easier to administer and monitor than the conditional cash transfer preferred by many developing countries, including Nigeria.

Nigeria’s closest semblance of UBI is the National Social Investment Programme (NSIP) launched in 2016. The scheme has four pillars – the Home-Grown School Feeding Programme (HGSF), the Conditional Cash Transfer (CCT), the N-power programme and Government Enterprise and Empowerment Programme (GEEP).

In his Democracy Day speech, President Muhammadu Buhari, rated the NSIP a success, noting that over 32.6 million “beneficiaries are taking part” in the scheme he described as one of the largest in the world.

“We now have a national social register of poor and vulnerable households, identified across 708 local government areas, 8,723 wards and 86,610 communities in the 36 states and the FCT. Our conditional cash transfer programme has benefited over 1.6 million poor and vulnerable households comprising more than eight million individuals. This provides a monthly stipend of N10,000 per household.

“I have also recently approved the National Poverty Reduction with Growth Strategy Plan that augments existing plans to further reduce poverty in Nigeria. As of the end of 2020, the Development Bank of Nigeria had disbursed N324 billion in loans to more than 136,000 MSMEs, through 40 participating financial institutions. I am to note that 57 per cent of these beneficiaries are women, while 27 per cent are the youth,” Buhari said at the weekend.

The President had only re-echoed the earlier positions of the Vice President, Yemi Osibanjo; Minister of Finance, Budget and National Planning, Ahmed Zainab and her colleague at the Ministry of Humanitarian Affairs, Disaster Management and Social Development, Sadiya Farouq.

Contrary to the pass mark the government has given to the programme, a professor of economics at the Olabisi Onabanjo University, Sheriffdeen Tella, said self-assessment was far from the truth. He said only a thorough impact assessment could show whether the programmes have achieved their desired results.

According to the professor, he had carried out a similar cash transfer scheme in his neighbourhood, which revealed that the amount involved could not transform any household as the President and his cabinet members claimed.

“Generally, you would say that they have not had any serious impacts. But you can only be certain after a survey. You would also notice that the programmes were active during the recent campaign. If they were intended to get votes, it means there is a sustainable issue. What will N10, 000 do for somebody who has pending financial challenges?” he queried.

Tella said the UBI option is an option that the country could consider to address the high rate of poverty but wondered how the country, with poor cash flow, could fund it. He noted that UBI is already envisaged in the concept of the international poverty line but expressed reservation at Nigeria’s capacity to ensure that the citizens do not fall below it.

According to a survey by National Bureau of Statistics (NBS), the rate of unemployment as of last quarter of last year (Q4 2020) stood at 33.3 per cent, increasing by 6.2 per cent points compared with the Q2 2020 rate (27.1 per cent). Perhaps, the bigger devil is in the temperament of unemployment. Youth unemployment (those aged between 15 and 34) jumped from 34.9 per cent to 42.5 per cent in six months, while underemployment among the demographic growth stood at 21 per cent. It so implies that only about four out of 10 youths that are able and willing to work are fully engaged.

Economic models have shown a strong positive correlation between crime and unemployment rates. The pattern and intensity of crimes in Nigeria seem to have also validated this relationship. For instance, Imo, with an unemployment rate of 57 per cent, tops the list of states with the highest proportion of residents who go about without jobs. Figures from Borno and Kaduna states are also reasonably above the national average. The three states have become the hotspot of Nigeria’s insecurity crisis.

With millions of youths roaming the streets without jobs, rising poverty rate, declining purchasing power, Prof. Akpan Ekpo said UBI was not out of the question. However, the former Director-General of the West African Institute for Financial and Economic Management (WAIFEM), said that unavailability of data was an albatross of an efficiently administered UBI.

Ekpo, who had earlier expressed concern about rising Nigeria’s misery index, noted that even a large number of those with jobs are barely surviving. This, he said, justified UBI, rather than conditional cash transfer. He, however, said the first port of call was developing full-proof data on employed and unemployed Nigerians, their income levels and dependency ratio.

Data is the death knell of Nigeria’s socio-economic planning. Some of the critics of the existing intervention programmes have dismissed them for lack of quality data to drive the executions. While the government relies majorly on estimations, the most basic data-sourcing exercise – national census – has not been conducted since 2006. Even the most recently-conducted ones were mired in controversy.

Now, Ekpo, an economic researcher, said no meaningful social intervention programme, including UBI, could be implemented with a quality data bank and that the government needs to pay urgent attention to generating relaying data on Nigeria across board.

But another researcher and professor of applied economics, Godwin Owoh, said placing poor Nigerians on guaranteed incomes could be likened to almsgiving, which stifles creativity, innovation and entrepreneurship. He said handouts, which have been the bane of Africa’s economic development, were not sustainable and would come at high costs.

“Sustainable survival means surviving within a competitive environment. The process of competitiveness carries with it a lot of organic processes that make it sustainable and permanent. It will be about a mechanical process but involves everything about an individual,” he said.

Owoh noted that UBI culture applied to oil-rich countries that have been able to accumulate sufficient surplus from which they draw to share among their citizens and that Nigeria could not afford it. He referenced late Muammar Gaddafi’s model and cautioned that it would fuel indolence.

In the same vein, Owoh condemned different socio-economic interventions of the government, saying they only created idle funds that fueled inflation, while adding no real value to the economy. The economist said what Nigerians, who he described as extremely enterprising, needed to contribute to the economic growth was a business environment “that incentivises hardwork and abhors idleness”.

He admitted that a huge number of unemployed youths roaming the streets were a time bomb but noted that handouts, in the name of UBI as currently being advocated, would end up killing productive engagements and worsen the inflation rate.

Yet, the campaign continues. And the promoters see unconditional basic income as a solution to the social tensions triggered by the unequal world, which the pandemic only aggravates.

Source: Guardian

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