BIG Pilot Project - Assessment Report - BIG Coalition Namibia

The poor,however,tend tospend agreater proportionoftheir incomeon goodsproduced inNamibia—and goodsproduced ina relativelylabour-intensivemanner. Associal grantsshift spendingpower tothe poor,the demandfor goodsthat createjobs in Namibiaincreases.The BasicIncomeGrant is notan addedburden at atime of economiccrisis, butan appropriateintervention.Section 3: A national Basic Income Grantspending power from higher income groups to lower incomegroups, as taxes on the more affluent financegrants to the poorest in the country. Upper incomehouseholds spend a greater proportion of their incomeon imports and goods produced with capital-intensivetechnology. Neither of these spending patterns supportsjob creation in Namibia. The poor, however, tendto spend a greater proportion of their income on goodsproduced in Namibia—and goods produced in a relativelylabour-intensive manner. As social grants shiftspending power to the poor, the demand for goods thatcreate jobs in Namibia increases. A Basic Income Grantis also likely to increase social stability, which is a preconditionfor sustainable economic development.These economic effects increase the affordability of theBasic Income Grant over time. The improvements inhousehold well-being reinforce the poverty-reducing incomeeffects of the grant, improve labour productivityand support household human capital accumulation.In addition, the improvements in nutrition, educationand health reduce the direct expenditure obligations ofgovernment, further supporting the affordability of theBasic Income Grant. For instance, a child who attendsschool and has the resources for proper nutrition ismore likely to succeed, reducing the government’s expenditureon repeat rates. This child is more likely togrow into an adult who can find a job, contributingtaxes that further support the Basic Income Grant’s affordability.As adults, people are less likely to sufferfrom chronic and debilitating diseases if they had propernutrition as a child. Diseases that often increase theexpenditure liabilities of the government can be reducedsignificantly. In addition, the labour market andmacroeconomic impacts of the Basic Income Grant supportlong term sustainability.The Basic Income Grant is not an added burden at atime of economic crisis, but an appropriate intervention.The following section highlights some of the emergingglobal evidence on the impact of cash transfers on economicgrowth in developing countries88