Financing the Basic income support in South Africa under fiscal constraints

Margaret Chitiga-Mabugu, Martin Henseler, Helene Maisonnave and Ramos E. Mabugu

World Development Perspectives, 2025, vol. 37, issue C

Abstract: The lingering effects of the Covid-19 pandemic, exacerbated by the Russia-Ukraine war and climate change-induced disasters that have led to worldwide poverty increases, have re-ignited discussions about the urgency of pro-poor support programs. South Africa offers a current and topical example to this discourse with the government’s intention to introduce a basic income support covering everyone in the age group 18–59 years who is neither disabled nor employed. Expanding social protection to reach those currently receiving no support within a severely constrained fiscal environment raises affordability and developmental challenges relevant to many other developing countries grappling with similar issues. It raises questions such as whether the planned support grant effectively reduces inequality and poverty. How does the grant impact the entire economy? What are the best funding options to create fiscal space? Model-based assessments like the one implemented in this research provide information to contribute to these questions and, therefore to a policy discussion. This study develops a micro–macro modelling approach with alternative fiscal financing options to address these developmental and affordability issues simultaneously and systematically. The analysis suggests that the government could address growing poverty and inequality in the short term with benign impacts on macroeconomic and fiscal outcomes while the country looks for other initiatives to achieve higher growth and employment in the long run.

Keywords: Basic income support; Computable general equilibrium modelling; Fiscal constraint; South africa (search for similar items in EconPapers)
JEL-codes: C68 D31 E62 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S2452292925000025
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:wodepe:v:37:y:2025:i:c:s2452292925000025

DOI: 10.1016/j.wdp.2025.100657

Access Statistics for this article

World Development Perspectives is currently edited by Ashwini Chhatre

More articles in World Development Perspectives from Elsevier
Bibliographic data for series maintained by Catherine Liu ().