For Cash Transfers

BY KAYODE KOMOLAFE

0805 500 1974

It is certainly a measure of the gross inequality that defines the unjust Nigerian system that some members of the elite cannot imagine what N8,000 could do in the life of an extremely vulnerable member of the society.

The mental gap between the poorest and the rest of us on the higher steps of the socio-economic ladder is visibly widening. Hence, there is an instinctive distaste for the idea of cash transfer in the public sphere. The idea is dismissed with so much contempt in Nigeria as if no one has ever thought deeply about it.

Yet the critics of cash transfer are dead wrong! If N8,000 cannot buy you a good lunch, it doesn’t mean that this little amount is meaningless in the life of each of the poorest people.

The subjective distance that exists between classes in the Nigerian society is manifest in the highly obfuscating debate on the plan of the administration of President Bola Tinubu to spend N500 billion on cash transfers.

Doubtless, the programme invariably raises the challenge of policy articulation and implementation on the part of government.

To be sure, cash transfers can only be a marginal component of a properly conceived poverty reduction policy. More structurally located components such as revitalising the economy, the institution of a decent national minimum wage, revamping infrastructure and boosting investment in the social sector (education, universal healthcare, social housing, mass transit etc.) are, of course, imperative before a government can seriously talk of poverty reduction.

Cash transfers could be conditional or unconditional. In some countries poor people in rural areas and urban slums have been mobilised by governments by making enrolment of children in primary schools or vaccination of infants a condition for access to cash transfer. On the contrary, the unconditional transfer is accessible to all those who have been methodically classified as the most vulnerable. The appropriate option for Nigeria in the present socio-economic situation is the unconditional transfer. By definition, it is not even all the poor people that would be qualified for unconditional transfers because of the obvious limited resources. It is the most materially vulnerable people who need cash transfers from the N500 billion. Here we are talking of those who do not even have N5,000 to spend in months, regardless of whatever the statisticians call the rate of inflation. In this socio-economic regime, a worker earning below the national minimum wage is not even qualified for cash transfer because he is at least earning “something” as they say in the streets. So anyone who is a member of a union affiliated to the NLC, much less, the TUC is not in the category of the most vulnerable persons envisaged as the beneficiaries of cash transfers. The Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC) should, therefore, examine the concept of cash transfers more carefully before joining the chorus of those who reject it on elitist grounds. The same criterion applies to a woman frying akara by the road side or an apprentice artisan. In fact, those who are established to be dependants of those who could at least pay the bills may not also be qualified for cash transfers. Cash transfers are for those already excluded by the system and are, therefore, not economic agents at all.

For some technocrats , cash transfer is an utterly senseless thing to do. The experts tell us that N500 billion could be used to buy buses to be distributed to all states or set up cottage industries for job creation. The economically sensible things that could be done with N500 billion are indeed legion. However, the irony of the Nigeria’s political economy is that at the micro level, those who are opposed to cash transfers receive calls and text messages from known and unknown persons asking them for “financial assistance.” More often than not, the humanity in the givers would compel them to give money to the people desperately in need. Those in need of money are not in the mood to receive lessons on “sensible economic programmes.” They want to receive cash. Now, the government programme of cash transfer is just an enlargement (in a structured manner) of what is being done daily on individual basis.

Nigeria is not inventing anything new by embarking on cash transfers to the poorest persons in the present dire economic circumstances. The programme has been evaluated favourably in countries such as Tanzania, Indonesia and Chile.

With a proper social register and structured mechanism for implementation cash transfers could be done successfully in Nigeria too. The debate about the usefulness of cash transfers is not new. It came up during the administration of President Muhammadu Buhari. About this time seven years ago, this reporter made a similar case on this page to the one being made today for cash transfers as a small element of poverty reduction. On that occasion the attention of government was drawn to the universally acclaimed success story of the cash transfer programme brilliantly executed by the government of President Lula da Silva in Brazil.

The suggestions made to the Buhari administration then could also be made to the Tinubu government today.

All you need to do is to mentally substitute the name Tinubu for Buhari as you read the piece.

Below are excerpts from the column entitled “What Buhari can Borrow from Lula” published on May 9, 2016:

“As the Buhari administration grapples with the challenges of economic management there is the urgent need to explode some myths surrounding policymaking. Policies do not serve all class interests equally; that is why there are trade-offs. President Muhammadu Buhari has to choose what should be the trade-offs of his policies. Given the import of his ascension to power, the President’s policies must be deliberately in favour of the poor who are in the majority. The rich can take care of themselves. But the poor, especially the most vulnerable, would require state intervention to survive in the present economic climate.

“Economic problems do not mean the same thing to all classes of people. For the very rich it may mean inability to acquire another private jet; but for the very poor it may mean uncertainty about their next meal today. If Buhari makes the choice of focusing on poverty reduction and tackling inequality he would be acting genuinely democratic. Here we are not talking of liberal democracy that the Nigerian elite is enamoured with, but social democracy, which legitimises socio-economic rights of the citizens.

“Policymakers are not saying anything new when they lecture us ad nauseam about diversification of the economy, revamping infrastructure, industrial development, shifting emphasis to agriculture for the purpose of food security and job-creation and other things in their worn-out rhetoric. There is hardly any fresh idea on the table anymore. “In at least the last 40 years, there has been no period that a government (with the technocrats influencing policies) has not fed the poor with this rhetorical diet.

“You would find the diet in the budget speeches, the Structural Adjustment Programme (SAP), the various programmes endorsed by the World Bank and the International Monetary Fund (IMF), Vision 2010, the National and Economic Empowerment Development Strategy (NEEDS) and several other documents. In fact, before the neo-liberals took over the centre stage of policy to the peril of Nigeria, the better structured Development Plans of the 1960s and early 1970s were more visionary and programmatic in articulating these policies.

“The only new thing that can happen is to implement the myriad policy prescriptions. “Buhari should ask his advisers to come up with a solid anti-poverty agenda. That is the only new menu that can come from the policy kitchen in Nigeria today.

“Globally, poverty and inequality are issues at the centre of policy discourse; but in Nigeria all you hear is about projects and award of contracts without relating them to how it solves the urgent question of poverty and inequality.

“For instance, the important magazine of the American Council on Foreign Relations, ‘Foreign Affairs,’ devoted its January/February 2016 edition to ‘Inequality: What Causes It; Why It Matters; What Can Be Done.’ In searching for what is to be done, the Managing Editor of the journal, Jonathan Tepperman, discussed ‘Brazil’s Anti-poverty Breakthrough’ in a very illuminating chapter.

“It is an analysis of the stupendous success story of conditional cash transfer called Bolsa Familia (Family Grant) in Brazil. The programme has moved over 55 million persons out poverty and has reduced inequality by honestly integrating the poor into the economy. This feat was performed by the administration of President Luiz Inácio Lula da Silva, a labour leader, who won election at the fourth attempt. During the campaign in the 2002 presidential election, Lula promised radical anti-poverty programmes.

“The experts at home and abroad became jittery and scoffed at the promised experiments. For instance, Goldman Sachs reportedly began to warn investors of risks in Brazil in a ‘Lulameter’ in case Lula won the election. Lula won. He experimented with the cash transfer, which has gone down in history as the biggest and most successful cash transfer among over 40 countries that have implemented the policy.

“Reflecting on the prospects and challenges of implementing the programme later, Lula reportedly said: ‘When millions can go to the supermarket to buy milk, to buy bread, the economy will work better. The miserable will become consumers.’ Our own experts and technocrats who scorn the idea of cash transfers cannot imagine that many families especially in remote rural areas are effectively outside the economy, while they are celebrating its credit rating and brandishing its size and jobless growth rates.

“The extremely poor are just incapable of effective demand. In fact, as reported by Tepperman in ‘Foreign Affairs,’ Lula put the matter more graphically like this: ‘It sometimes bothers my educated friends when I say this… but the number one teacher in my life was a woman who was born and died illiterate: my mother. With all due respect to experts and academics, they know very little about the poor. They know a lot about statistics, but that’s different, isn’t it? To an intellectual, putting $50 in the hands of a poor person is charity; an academic has no idea what a poor person can do with it. But that’s because at university, they don’t teach you how to care for the poor. And it’s because most experts have never experienced what the poor go through every day. They’ve never had to go to work without breakfast. They’ve never lived in a flooded house, or had to wait three hours at a bus stop. To experts, a social problem like inequality is only numbers.’

“Lula does not claim to be an expert or a technocrat, but the cash transfer programme he fought for politically has been described by a political scientist as ‘the single largest ten-year change to a country’s class structure since Japan after World War II.’ And at least 63 countries have reportedly sent their own experts to Brazil to see how Lula did it. So it is not enough to dismiss the programme as mere hand-outs to the poor. And by the way, the elite should learn to answer the pointed poverty question by at least respecting the dignity of the human person of the poor.

“The context might be different, but the Brazilian experiment is replete with useful lessons for Nigeria. Take a sample. Sceptics say cash transfer will be unworkable in Nigeria because of the lack of capacity for implementation, corruption and politicisation.

“Now, hear Lula’s reported answer to these legitimate worries in the Brazilian context: ‘Part of the reason Bolsa Família has been so successful is because the money is paid directly, with no intermediary. It is the beneficiary who goes to the bank with a plastic card to withdraw the money. So this person doesn’t owe any favours to the president, to their governor, to their congressman, or to their mayor.’

“So the challenges of lack of technical capacity, corruption and politicisation in implementing any anti-poverty programme are actually surmountable. That is the basic lesson from Brazil.”

All told, the purpose of governance in respect of this programme is to confront the legitimate issues raised by critics so as to remove the obstacles to successful implementation of a cash transfer programme. The way to go is not to dodge the programme because of the envisaged problems.