How to design a basic income grant for South Africa

Abstract

When it comes to the design of a basic income grant, authorities must decide, first and foremost, whether it should be universal or targeted. A universal basic income guarantee (UBIG) is a relatively simple instrument through which everyone in the population receives a grant of the same value. International evidence shows that universal grant programmes are effective in reaching the poor and the middle-income population, as it eliminates the exclusion errors associated with targeted or means-tested programmes. It might be more expensive but, if its design is right, it will produce much better results in terms of reducing poverty and inequality in the short term, and is also more favourable for the economy as well as social cohesion.