SADC: Poverty alongside mineral wealth – the case for a universal basic income grant
Africa accounts for 60% of the world’s Platinum; 40% Gold; and 90% diamonds. Furthermore, 32 of the 54 African countries have discovered oil reserves and yet it remains the world’s poorest continent, with 47% of the population living on less than $1.25 per day. Sometimes dubbed ‘the curse of Africa’, many have decried the fact that the benefits of these natural resources do not appear to successfully be enjoyed by the poor in many of these countries.
In the Southern African Development Community (SADC), prevalence of poverty and inequality cannot be overemphasised. It is telling that the three countries of highest income inequality – Namibia, South Africa and Botswana – are located in this sub-region, which is characterized by:
– high levels of formal unemployment;
– food insecurity and basic survivalist livelihoods;
– subject to high levels of vulnerability to external shocks; and
– relatively low investment in human capabilities compared to other regions globally.
And yet the sub-region at the same time has no lack of valuable energy and mineral resources. Analysts lament the failure of these
nations to develop beyond the extractive phases and develop industries that can in turn produce decent form
al jobs that would in turn allow for the eradication of poverty.
According to a 2008 report by the Southern African Resource Watch:
“From east to west and north to south, Africa is blessed with abundant natural resources. In most cases, however, these resources have been badly exploited, and instead of contributing to growth, development and poverty eradication they have done the opposite”.
Instead what the report documents is the prevalence of the use of the proceeds of these activities to be looted, resulting in rent-seeking and political instability, and in many instances, an ‘unhealthy symbiotic relationship’ between the extractive companies and the political elites. This was found to hold true even in some countries that had adopted relatively progressive mining codes and legislation for instance; the gap between the regulations and practice was found to vary in a number of case studies. According to a UNECA report, mining, as an example, contributes a mere 5% of employment in the SADC region.
The debate around the world regarding the manner in which poverty and inequality must be addressed is overwhelming and has generated divergent views and positions. However, what is common ground in these discussions is the same philosophy: “nobody should be poor in a society that has resources for everyone.” As former South Africa President Nelson Mandela noted;
“Overcoming poverty is not a gesture of charity. It is an act of justice. It is the protection of a fundamental human right, the right to dignity and a decent life. While poverty persists, there is no true freedom. The steps that are needed from the developed nations are clear.”
It is clear that the sub-region needs to refine and develop a comprehensive and SADC focused industrial and manufacturing policy. This is necessary to shift the growth and accumulation paths of countries and the collective SADC area. Even more crucial for long term structural change would be the development and adoption of common minimum standards across the region in respect of the ‘management, exploitation and management’ of the natural resources to prevent the ability of multi-national companies to maximize opportunities for extractive exploitation by manipulating terms between countries.
Such a process could at best however see medium to long term benefits, and not address the immediate needs of people who are hungry and vulnerable today. It is against this background that we advance the case for a policy that would see an immediate improvement in the lot of the poor with the region by accessing some of this wealth. Given the increase in the interest around social protection programmes to address vulnerability in developing countries, we believe that it is an extremely opportune time to campaign for the introduction of SADC – wide universal cash transfer (Basic Income Grant – BIG) to be funded by a tax on extractive industries.
Over the past decade, debate on the desirability and feasibility of universal basic income has reached its peak, the timing for the call for such a campaign in SADC can never be better. This is simply because basic income is no longer perceived by a growing number of academics, social activists and public advocacy groups “shot in the wind idea” from the radical left.
This makes the case for a SADC BIG more compelling if it is to be financed by such a tax on extractives considering that US$62 billion leaves the continent annually through illicit flows and price manipulation by multinationals. Furthermore, the revenue stream created will counter the usual rhetoric that African countries cannot afford a social cash transfer scheme due to poor revenue reserves and lack of capacity.
Making the case for a SADC BIG is based on the principle of economic justice of broadening access to the proceeds of mining beyond the current narrow circle of national and international beneficiaries and shareholders of the mining companies, and aligned elites, to each and every resident of the SADC sub-region. Furthermore, the importance of a SADC BIG is accentuated by evidence from countries such as India and Brazil that has shown that social cash transfers have the ability to help alleviate the worst destitution currently faced by millions of poor people, and reducing the critical and unsustainable levels of inequality in a very short period of time. Furthermore, given the fact that extraction depletes the levels of natural resources, such a scheme would introduce an intergenerational justice between those who oversee the extraction and the development of future generations.
A universal scheme (payable to everybody in SADC, but recaptured from wealthier people through national tax systems) would ensure transparency and a greater even -handedness on the distribution of resources, reducing the risk of capture by politicians to win political support for their own gain. It would promote solidarity, and contribute to the regional integration and movement of people, and of social and economic policies as is provided for in SADC Treaties and Protocols. For such a scheme to work there is need for political will, a transparent accounting system of concessions and agreements concluded in the extractives sector.
In its on-going efforts, SPII has established a growing coalition of organisations that share a collective commitment to pursuing economic justice and the realization of human rights in the sub-region. Currently SPII co-ordinates a coalition of over 50 partner organisations from 12 SADC member countries covering issues around tax justice, extractive sector, social protection, cross-border migration and food security.
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 The Search for Responses to Resource Curse, SARW Resource Insight Issue 6, May 2008.
 Ibid, 7.
 SARW, 2008. 8.
 Mineral Exploitation, Environmental Sustainability and Sustainable Development in EAC, SADC and ECOWAS Regions, Work in Progress, no. 79. D.K. Twerefou, 2009.
 Sergio Pinto
 SARW, 2008, 16.