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Tuesday 29 January 2013
By Steven W[[#246]]ndu
January 28, 2013 - Direct cash transfers from the government to individual citizens or households aims at poverty alleviation and reduction of vulnerability to economic shocks like floods, drought, crop failure, and veterinary diseases. I am an ardent crusader of the ideology of equitable distribution of national income, care for vulnerable members of society, protection of the weak, and the empowerment of women. This is partly because I am a beneficiary of charity. Our nucleus family was destroyed by death when I was a little boy. The clan and the government gave me the support I needed to survive and grow. I would be the first person to support any policy that aims at providing South Sudanese access to means of survival and social security.
I have read and heard about cash transfer schemes in Middle Income Countries (MICs). Experiments are under way in selected Low Income Countries (LICs). There is no similarity between South Sudan and any of the countries mentioned in the ‘cash transfer’ literature except our common humanity. Given what we know about South Sudan’s demography, cultures and governance system, any attempt to introduce a cash transfer programme is not only a bad idea, it would be a disaster.
1. Who are the poor?
There is no clarity on the definition of poverty in this country. Who is rich and who is poor? Most of our wealth is not stored in monetary units. Our income does not necessarily flow in cash. In this economy, a family can have a square meal without making any exchange transaction with anybody. A family can build its home without buying any materials or hiring labour. We do not buy water. We do not pay for fire wood. So identifying who is rich and who is poor cannot be based on the parameters of a full fledged exchange economy. Which of these two fellows would qualify for cash subsidy, the uniformed police constable earning 100 dollars a month or the malnourished owner of 2000 heads of cattle?
Poverty or lack of it is often discussed in relations to happiness or welfare. The parameters in vogue are ‘Income per Capita’ and the ‘Human Development Index’ (HDI). Converting qualitative phenomena like happiness and welfare into numerical measurements was a malpractice smuggled into economics, a social subject, by scholars who felt inferior about not being scientists. They have recently introduced a happiness statistic.
Happiness is a subjective feeling. The assumption that a person dressed in a woolen suit and a neck tie is better off and happier than the one in his natural black suit may or may not be true depending on the environment, culture and values of the individual.
Most of the wealth of South Sudan is communally owned. Everyone is free to till the land, harvest the rocks, the pasture, the trees, the water and the fish so long as there is no infringement on the interests of another individual or group. It is important to bear this concept of common ownership in mind because it is a pointer to alternative interventions.
Most of the so-called poor persons in South Sudan are those who choose not to transform the resources around them into personal wealth. We do not use the muscle on our bones. We do not exploit the stuff in our heads called brain. We are lazy. Somebody should be thinking of driving us to work instead of encouraging us to continue sitting in the shade.
How do we select the beneficiaries? Our demographic data base is a far cry from one that can support a cash transfer proposition. We have just started issuing nationality certificates. Our first census has not been conducted yet. Birth and death certification has much to be desired. I can guarantee you that the moment you announce a cash transfer payment scheme, our population will shoot to one hundred million overnight. Every household will submit an incredibly long list of wives and children and the local authorities will authenticate the forgery. We have a system where one individual can singlehandedly sign food procurement contracts worth three times the GDP of the country. We have public administrators who can certify receipt of none existent goods worth millions of dollars. We allow infants to draw directors’ salaries in public payrolls.
No South Sudanese will accept to be left out of any cash transfer scheme and no official will dare exclude anyone.
Our borders are meaningless. We have relatives in Ethiopia, Sudan, Uganda, Congo and Kenya living below the poverty line. Announce a cash transfer plan in South Sudan and they will ‘return home’ en mass to receive the free cash. Why would they stay there while their kin in South Sudan are milking the cow without having to feed it?
If we decide to distribute cash to the poor in South Sudan, we can do that the way we know best. Pack the money in boxes and drive through the villages off-loading a box on each compound according to the approved list. The result will be war in every village in South Sudan. The country would go up in flames. In the mayhem, the distributers will head to the nearest border with the remaining boxes. That would be the end of our well intended rescue plan for the poor.
Since we can predict the danger of carrying boxes of cash, we can consider electronic transfers to beneficiaries’ accounts. South Sudan is at least fifty years away from being a country where each citizen can have a bank account. Not only are we an illiterate population, the banking sector is at its infancy. It cannot economically operate ten million small accounts. If the creation of a specialized state-owned bank is proposed, that again will be a source of conflict between officials and the account holders. The rudimental organizational rule of queuing is still alien. We are more familiar with stampeding. Moreover, the account holders would react violently if a clerk should dare inform them that there are ‘no sufficient funds’ in their accounts.
One merit of cash transfer is that it would increase the productive capacity of recipients. That happens where the beneficiaries invest the cash in the acquisition of better skills and the procurement of more productive assets. Our government did carry cash dollars for distribution to ‘students’ abroad during the interim period. No impact assessment has been conducted but three observations can be made. Few recipients were bona fide students. Fewer students used the money for education. National cohesion was compromised because the distribution was ethnically discriminatory. There is no empirical evidence that we have overcome ethnic favouritism in the conduct of public affairs.
We are doing a modified version of cash transfers through the Constituency Development Fund (CDF). Regardless of whether it has been well used or not, the CDF has become a serious source of acrimony and conflict between the legislators and the local administrators. A quarrel inevitably arises if the legislator is suspected of privatizing the money. An even fiercer quarrel can erupt if the legislator insists on a system that prevents the local administrators from swindling the money.
We are a minimalist society. The fundamental economics concept of ‘multiplicity of human needs’ does not apply in our society. For a typical South Sudanese, one shredded shirt and a pair of shorts are sufficient. No need for foot wear. A dwelling constructed from twigs and grass is good enough. The elaborate clothes and ‘big houses’ are for Europeans or their African puppets. The little that we have is usually enough for which we give thanks to God. That is why we have such a large dependency ratio. For every employed or self employed individual, there are many other relatives supported by that one income. The adult dependants do not use the cash transfer for improving their productivity. Conversely, they use it for increasing their redundancy. This explains the preponderance of able bodied men sitting under trees from morning to evening across South Sudan.
There are many conventional interventions to address poverty, social security, and equity. The most important is the provision of public goods which by definition are automatically available to all citizens. Technocrats know the best practices which can be quickly put in place if the political leadership so directs. The starting point is fiscal policy. If the political leadership has a poverty alleviation strategy, the budget structure would be skewed in favour of economic development. Let us walk through some of the obvious pro-poor interventions.
South Sudan has pronounced a free public education policy. But it puts no money into education. The little allocated to education is for the sustenance of officials. A little trickle down to some teachers and the rest is used to support the education sectors of the fraternal Republics of Uganda and Kenya. A serious engagement on the implementation of policy and administration of education is a matter of urgency. Both require budget support. For purposes of national identity, governments would want children to be raised and educated through local curricula, especially at the early stages. This should apply to all children regardless of the financial status of the parents. Free universal education is a tested strategy of social equity and poverty alleviation.
Instead of transferring cash to individuals to seek health services abroad, we should be investing in a health care system that can serve everyone. Those who can afford health tourism should do so at their personal expenses. So far, I have not heard of any foreign patient coming to South Sudan to seek medical care. That says much against our health care system. If we invest in the construction of health centers, training of paramedics and supply of basic inputs like anti-malarial, anti-diarrheal, antibiotics, analgesics, bandages and anesthetics, we would go a long way in increasing the welfare of our citizens. Invest meaningfully in the Universities while importing doctors for the time being. Free health care is superior to the proposition of cash transfer.
In 1973, one of President Abel Alier’s school mates turned up without his front upper teeth. Mr Alier asked another classmate of theirs Mr Hillary Logale, then finance minister, to assist their colleague restore his dental formula. A cash transfer was made. The gentleman evaluated the comparative utility of teeth at his age versus other needs. He preferred to continue enduring a toothless life in exchange for other needs.
One cannot talk about welfare and happiness in South Sudan without food. The agriculture sector is, in my opinion, the easiest to rejuvenate. Every member of our agricultural communities has access to land. They possess the basic knowledge in agronomy and crop husbandry. Food security must begin at the family level. The logical interventions by government are well known. Supply fuel, seeds, tools, fertilizers and pesticides at subsidized prices. Set up post harvest management and marketing cooperatives. Establish stores for surplus produce. The household earns its money this way not through cash handouts.
Many of our people are cattle keepers. Livestock is their wealth and source of food. We have been able to provide vaccination and other veterinary services. However, we need to exert greater efforts to commercialize the sector. I am sure there are methods that have been successfully applied elsewhere. We should find out how in Kenya and Tanzania the Masai commercialized their herd without abandoning their cultural practices. South Sudan should be exporting beef, mutton, hides and skins if the livestock marketing system was modernized. The cattle keepers would be earning their money through the sale of bulls and heifers, not through cash handouts.
Fishery is a potentially lucrative industry in South Sudan. Like crop farming and livestock keeping, fishing is part of life to some of our people. What is required is support to the mongers mainly in the areas of gears, preservation, processing and marketing.
Let it be pointed out that there is internal interdependency in these three subsectors. The cattle keepers and fishermen sell meat and fish to the crop producers in exchange for grain, pulses, fruits and tubers. This import substitution production saves foreign exchange, guarantees food security, strengthens intra-ethnic bonds and sustains human dignity.
We know that microfinance is a proven poverty alleviation mechanism. Bangladesh is the model. We need not reinvent this wheel. If government intends to address food security at the kitchen level, empower the women. Today, foreign NGO are monopolizing the sector. I know that the gross capital they have is barely enough to pay their emoluments and travelling expenses. In South Sudan, women are the hardest working entrepreneurs. They are also reliable debtors. More importantly, women’s hierarchy of needs strictly follows the Maslow Theory; food, clothing, shelter, esteem and self actualization. Men have a broader definition of ‘food’ and sometimes skip the sequence. Government can effectively defeat hunger through a well funded national microfinance network.
Without prejudice to the interventions enumerated above, the key to poverty alleviation, food security, welfare and a happy population is called infrastructure.
The public good in greatest and most urgent demand is a network of real roads. The Juba Nimule road is 192 kilometers long. It cost the government of the United States 200 million dollars. Ten similar roads would cost something like 2 billion dollars. If we exercised due diligence in the tendering process, we can achieve this in five years and change the landscape of this country unrecognizably. We have one ready natural ‘road’ called River Nile that runs through the entire length of our country. We need to improve the navigability of the river and restore the ports along it. If we did this the movement of people, goods and services would be faster and cheaper.
The other components of infrastructure can be achieved through a public-private-partnership arrangement.
Power generation and transmission is a must in the modern world. South Sudanese do not riot over lack of electricity because they have never had it before. But if we want to develop and live more productive, healthier, and happier lives, we need to generate and distribute electricity in the country. The potential is available and known. Feasibility studies have been repeatedly conducted. We lost time but can do damage control by embarking on multiple power generation plants now.
This debate is about the distribution of oil revenue. We have to receive it before planning the usage. That means moving speedily to embrace the opportunity to become co-owners of the Lamu pipeline project. This gives us a reliable conduit for the export of oil. In addition the project includes installation of broadband for electro-communications. The reliability of communications systems is a condition for foreign investors these days.
I am in agreement with the idea of addressing and redressing poverty. However, I believe that the method of direct cash transfer is not possible and is laden with potential dangers. It could, like our dura saga, threaten the integrity of this young country. Recently, an American professor suggested that to improve service delivery in South Sudan, the government should transfer the responsibility and the funds to NGOs. Our finance minister advised the professor not to test his new medicine on a baby.
The author is South Sudan General Auditor. This paper was presented to the Economic Policy WeekmPDF error: