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South Africa Weighs a Welfare State System of Payment for All Would Be Continent's First


By: Jon Jeter
Washington Post Foreign Service, July 9, 2002


SOWETO, South Africa -- Four generations get by on the $100 pension that Johannes Khanye collects each month. There are his two daughters, their seven children and their four children, the youngest born but six months ago. Counting the old man, that's 14 people in all: two households, no jobs, no prospects. Still, there are groceries to buy, electric bills to pay, schoolbooks and diapers and always, always, too much month left when the money runs out.

"There's never enough food," said Khanye, who is a widower and 88 but as lithe as a bantamweight. "And many of my friends are worse off. They ask to borrow money from me. Pensions were not intended for the young, only the old, but yet many, many people live as we do. The government should do more to help the people."

As this country struggles to both modernize its economy and combat a grave financial crisis, South Africans are debating whether to do what no African nation has ever done: create a welfare state.

Promoted by a broad coalition of labor unions, churches, children's advocates, the elderly, women, opposition politicians and even AIDS activists, a plan to provide each man, woman and child age 7 to 65 with a monthly welfare check of $10 has dominated the political debate here this year.

Nearly a century after Europe and the United States began cushioning their poorest citizens with cash and other benefits, South Africa is the first nation on this continent to earnestly weigh whether the dole can work for a population for which poverty is not the exception but the rule. A government task force report that strongly supports implementation of the plan -- known as the Basic Income Grant, or BIG -- sits on President Thabo Mbeki's desk and awaits the government's response.

Eight years after the repressive system of racial separation known as apartheid was dismantled, many South Africans have grown impatient with the new, black-led government's free-market reforms. Capitalism's sometimes glaring indifference to the poor has given birth to a new discussion of social policy, much as it did following the Industrial Revolution in Europe and the United States.

More than half of South Africa's 42 million people survive on less than $2 a day and the economy has shed nearly 1 million jobs since 1994. Virtually the only safety nets available to South Africans are a poorly administered child support grant, for single mothers with children under age 7, and the state-funded old-age pension created by the apartheid government nearly three decades ago, partly to defuse tensions among restless blacks in townships such as Soweto.

By the most conservative estimates, unemployment here has climbed to more than a quarter of the workforce, and many South African economists say they believe the figure is closer to 40 percent. As a result, one retiree's pension often must support jobless children and grandchildren, or in some cases extended families that exceed 20 members.

Of nearly 22 million South Africans who live in absolute poverty, approximately 13 million have no access to any regular income, whether from a relative's pension or otherwise.

"This is a crucial moment for Africa's development," said the Rev. Douglas Torr, an Anglican priest who chairs a group of activists lobbying the government to adopt BIG. "We're seeing an entire continent struggle to make the passage from authoritarian, Marxist-style government to a modern, market-driven democracy. Well, part of that transformation to a modern society -- and we find our examples for this in the West -- is to assume the responsibility of caring for the people whom the markets leave behind."

But while the sheer number of poor South Africans suggests a need for some sort of relief, the proposal also represents South Africa's principal challenge: With so many poor people, who will pay for the dole?

"It is obvious that the issue of poverty must be addressed," said Bheki Khumalo, Mbeki's spokesman. "But we are a small economy. We must deal with the situation in a way that is ultimately sustainable. We can only spend the money that we have."

Sipping coffee and gently rocking her infant son's carriage at a suburban shopping mall near Soweto, Anne Sussman said: "I don't think Africans are ready for the dole. I don't think we can afford it. And if you start giving money to people, you will rob them of all incentive to go out and work, and that's the last thing we need: another African begging bowl.

"We're not like Americans or the British, where just a few people here and there are poor. We're a nation of poor people."

South Africa would distribute the $10 monthly stipend to everyone. The dole could cost about $4.6 billion a year, but economists estimate half of that would be reclaimed through slightly higher taxes on the middle class and the affluent.

Making the BIG payments without an income test, said Torr, would do away with some of the most potentially costly and perilous aspects of welfare. "What we don't want to do is to create a welfare bureaucracy," he said. "Once you start . . . testing [for eligibility], you create new headaches for yourselves, like corruption and inefficiency."

The government's minister for social development, Zola Skweyiya, has expressed support for the plan. But Finance Minister Trevor Manuel denounced the proposal in his budget speech in February, calling it "economic populism" and saying it was unaffordable. Supporters of the plan speculate that while the plan has gained too much momentum for the ruling African National Congress to reject it outright, Mbeki and his cabinet ministers may delay its implementation. They say that is because BIG is incompatible with the government's fiscally conservative agenda, which seeks to lure foreign investment by keeping a lid on state spending, deficits and inflation.

While weak by Western standards, South Africa's economy is the most industrialized in sub-Saharan Africa, and though apartheid depressed the incomes and dreams of most blacks here, it greatly expanded the wealth held by the country's 8 million whites. Since 1994, a small black elite has emerged to join their ranks.

"So South Africa has the advantage of a middle class," said Guy Mhone, an economics professor at the University of the Witwatersrand in Johannesburg. "That creates the possibility of some cross-subsidization and makes the case for providing a minimum level of support to improve children's nutrition and health. Without that human development, there's no economic development."

Mhone and others acknowledge that $10 is a paltry sum, but here is where African culture provides a crucial advantage: Because many poor families band together to maximize scant resources, the relatively paltry sum is multiplied by the sheer numbers of people sharing space.

"We're just trying to meet people's basic needs so they can get through the day," said Aart Roukens de Lange, founder of the South African New Economics Foundation in Cape Town. "A modern society should do that. History shows us that if it is to thrive, it must do at least that."

That there are people in need is hardly debated. At issue is whether the dole will do more harm than good.

"I think it's a bad idea to say to people: Look, no matter what you do, we're going to give everyone in your household [$10] per month," said Greg Esterhuizen, a Johannesburg businessman. "What is ultimately going to get this country back on its feet is the same thing that gets people back on their feet: energy, motivation, innovation. If people give up, stop even trying to find work and just sit at home and wait on that [$10] every month, then what kind of society will we have?"

Advocates for the poor -- and the poor themselves -- contend that a monthly grant would help them find work by providing money for bus fare and clothes to wear to job interviews. AIDS activists are lobbying for the grant to help many of the estimated 4.2 million to 4.7 million HIV-infected South Africans buy the food they need to stay healthier longer. And the additional income can spur community development, liberal economists and analysts argue, by enabling poor consumers to spend at neighborhood stores and for taxis, which can ultimately lead local business people to expand their operations and hiring.

"It would help me feed my boys," said Lucy Dhlamini, a homeless mother of two who sells newspapers on a suburban street corner. "I would still be forced to sell my [newspaper] every day, but that's enough money to put food in our stomachs on days when we have nothing."

Lebohang Lijojo, Johannes Khanye's 20-year-old grandson, said he is proof of what a difference just a little money can make in someone's life.

"We might have only had one meal a day a lot of times, but just being able to get something in your stomach made it possible to study," he said, sitting next to his grandfather.

He enters college next year; his high school grades were just good enough to get him a scholarship.

"Without my grandfather's support, I don't know what would have happened to us," Lijojo said, his voice barely above a whisper. "I wouldn't even have dreamed of becoming somebody. My life's hope would have just disappeared."

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