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Wednesday, 12 November 2008

Fighting poverty...the Namibian way...

IRIN on an interesting Namibian approach to fighting poverty, that if it works may further reinforce confidence in cash based transfers. Excerpt :

There are no roads, no major industry and no historical landmarks in Otjivero, a village about 150km east of Windhoek, the Namibian capital and previously known for little more than its poverty. But in January 2008 it became part of one of the world's first basic income grant (BIG) projects, and now stands the chance of setting an international precedent in the fight against poverty.

About 1,000 villagers have been receiving a BIG of N$100 (US$10) as part of a trial project funded by contributions from international donors and private citizens and administered by Namibia's BIG Coalition made up of four major umbrella nongovernmental organisations. Community members say the money has gone a long way towards providing better nutrition, housing and even seed money to small businesses; project implementers say it has disproved aid industry myths about the feasibility of such a grant.

The issue of a BIG - an initiative to provide every citizen irregardless of wealth with a grant to insure a minimum monthly income - has been championed by its supporters as a low-cost method of redistributing wealth in societies such as Namibia, which according to the United Nations development Programme, have extremely high levels of income inequality.

While the idea of a grant has gained new relevance in recent years with innovations in aid distribution, such as cash transfers, opposition remains from many who have argued the grant will foster dependency, and that national budgets in developing countries are ill-equipped to finance such a large-scale intervention.

Despite a serious push for a BIG in Brazil, South Africa and Namibia, the project at Otjivero is the first time such a grant has been implemented.


  1. There is an even better way to do this.

    Instead of handing out money, the state could use the same money to pay people to build roads and other infrastructure.

    People could be paid to build feeder roads for rural areas and farms, harvest rainfall to prevent flooding, and increase the amount of land under cultivation.

    For a historic perspective, check out this website on Louisiana governor, Huey Long:

  2. On roads projects by Louisiana Governor Huey Long:

    " It was a struggle for Louisiana’s 60 percent rural population to get anywhere, including to reach hospitals, schools, or a voting booth. Families had become accustomed to doing without.

    The Long administration implemented an ambitious road-building program that employed 10 percent of the nation’s highway workers. By 1932, the state had 5,000 miles of new paved and gravel roads. Four years later, there were 9,700 miles of new roads and 111 bridges, doubling the size of the state's highway system.

    The new roads not only lowered the cost of doing business, but they saved the average driver more than $118 per year ($1,400 in today's dollars) in gasoline and maintenance. Trips that had previously taken days were reduced to a few hours. Travelers could drive from Shreveport to New Orleans in a day, a trip that had previously cost eight dollars in ferry tolls and three nights in hotels. (See sidebar about Airline Highway.) "

  3. This is a really interesting website, and not only because it contradicts everything the neoliberal school of economics stands for. This should be the way out for Zambia.

    Economic Reform

    Huey Long transformed the economic reality in Louisiana from a system stacked against its rural poor citizens to a system that offered opportunity and tools for advancement. By 1936, Long’s programs and progressive policies saved the average Louisiana family more than $425 a year in daily living expenses (equivalent to $5,100 today). Coupled with free education and easier mobility, people on every step of the economic ladder received a chance to get ahead, especially the poor.
    Family of box factory worker, Roseland, La., 1938.

    Family of box factory worker, Roseland, La., 1938.
    Courtesy of LSU Libraries Special Collections, Baton Rouge

    Prior to Huey Long’s administration, the cost of living in Louisiana was high for everyone, especially Louisiana’s poor majority. Individuals were required to pay for everything the state did not provide – education for their children, tolls for ferry crossings where no bridges existed, annual fees required for the privilege of voting, and taxes on every form of personal property.

    The disenfranchised poor eked out a meager existence, doing without the necessities that would provide a better quality of life, and paying taxes every year for services they never received. To add insult to injury, unregulated utilities and businesses charged top dollar for basic goods and services. At the onset of the Great Depression, already desperate families risked losing what little they had.
    One dollar in 1930 is equivalent to about 12 dollars today

    Long shifted the public’s perception of what they should expect from their government. The state soon provided free education, roads, bridges, and infrastructure and reduced burdensome property taxes, fees, and utility rates. By 1936, the average family saved more than $425 a year in living expenses (or $5,100 today), which enabled hundreds of thousands of citizens to invest in a better future.

    With the state providing free schools, buses, and textbooks, the average family with three children saved $30 a year on books alone (or $360 today). Individual parishes no longer taxed residents to maintain the few public schools that previously existed, and higher education tuition was reduced as the state’s public universities tripled enrollment.

    The free hard-surfaced roads and bridges saved the average family $150 a year in tolls and ferries (or $1800 today). Reduced gas consumption and wear-and-tear saved car owners another $118 a year (or $1,416 today).

    Personal property taxes were reduced by the ‘Homestead Exemption’, which eliminated taxes on every household’s first $2,000 of property. In 1928, most homes were worth less than $2,000, saving the average family $65 annually (or $780 today). Eighty percent of all homeowners paid no personal property taxes under the new system. (The Homestead Exemption remains a popular tax exemption in Louisiana.)
    'This is Mrs. Berry Hall. For 10 years she worked at the factory in Roseland and made 10 cents an hour. Now she is married, unable to work, and supported by a husband who makes only a few cents more than she did.'

    'This is Mrs. Berry Hall. For 10 years she worked at the factory in Roseland and made 10 cents an hour. Now she is married, unable to work, and supported by a husband who makes only a few cents more than she did.' Courtesy of LSU Libraries Special Collections, Baton Rouge

    Automobile license fees were slashed. Rates on trucks were cut from $28 to $3, and rates on cars fell from $15 to $6. Personal property taxes on cars were eliminated. The average farmer saved $20 a year (or $240 today), and the average family saved $9 (or $108 today).

    The poll tax was eliminated, allowing individuals to vote without paying the required fee of $2 (or $24 today) over two years. This tax, which was due every Christmas, prevented a whole class of citizens from participating in the elective process. When the tax was repealed, 278,000 people registered to vote for the first time, nearly doubling the size of the electorate.

    Utility rates were reduced. Telephone rates fell 20 to 25 percent, saving the average family $12 a year (or $144 today). Electricity rates were also cut, saving the average family $27 a year (or $324 today).

    To protect families from losing their homes during the Great Depression, Long created the Debt Moratorium Act, which stopped foreclosures and gave families a grace period to pay mortgages and settle debts, saving thousands of Louisiana families from losing their homes and lifetime investments in their property. When the state seized property due to failure to pay property taxes, families were allowed to regain it without paying back-taxes.

    Long’s state banking policies and personal intervention prevented bank closures, saving thousands of Louisianians from financial losses. Of the nation’s 48,000 banks that collapsed between 1929 and 1932, only seven were in Louisiana.

    Box factory worker living in poverty as a result of low wages (1938). The average wage was about one dollar a day for the average Louisiana factory worker. Courtesy of LSU Libraries Special Collections, Baton Rouge
    A typical rural Louisiana home.


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