Samurdhi and Dependency Culture

by padraigcolman

This article appeared in Lakbima News on Sunday December 5 2010

Dr Muttukrishna Sarvananthan, lead researcher at Jaffna think-tank the Point Pedro Institute of Development told the UNHCR newsletter: “The Vanni will remain a perpetual basket case” if the people are not weaned away from “over 25 years of dependence on relief and welfare handouts from the government, NGOs, donors, et al”.

That is an unusual interpretation of the plight of people who suffered great hardship under LTTE dictatorship for so long.

When I first came to Sri Lanka, I was surprised to read references academic papers on poverty to a “dependency culture”. This is a phrase most often used in the west by the right wing. Many people have regarded the UK welfare state as an achievement to be proud of, rather than a cause for shame. However, Work and Pensions Secretary, Iain Duncan-Smith has just announced a radical shake-up of the British benefit system, asserting it was a “sin” that millions of jobs in this country were being done by foreigners because Britons were not “capable or able”. I was puzzled that Sri Lankans who were supposed to be advocates for the poor could toss around terms like dependency culture when there seemed to be little in the way of cash support for those who were not working.

The term dependency culture is usually defined as a system of social welfare that encourages people to stay on benefits rather than work. In the UK , there is a concept called the poverty trap. This means that technical deficiencies of the system mean that people can have less money if they do more work.

In another life, I worked for a long time in the poverty business. I worked as a hospital porter in a government hospital and then in Manchester my job was to visit benefit claimants in their homes to ensure they were getting their correct entitlement. I moved up to a more strategic position working for Sir Arthur Armitage at the Social Security Advisory Committee, mingling with the ministers and senior civil servants who set the policy and the pressure groups who tried to influence them.

There was much discussion of topics such as relative poverty and incentives. I was able to bring some enlightenment to the committee members with my experience of actually meeting benefit recipients. I recall one claimant whose house was lit by gas mantles because he had no electricity. Few people had cars. Many welfare recipients were without TVs. Today, someone in the UK would be regarded as deprived if they did not own a DVD, mobile phone and broadband connection.

Poverty experts use three definitions of poverty: absolute poverty, relative poverty and social exclusion. Absolute poverty is the lack of sufficient resources with which to keep body and soul together. Many people all over the world suffer this, but it must be rare in countries which have a safety net which ensures financial payments to people unable to work. Relative poverty means low resources in relation to the average, which causes an absence of the material needs to participate fully in accepted daily life. Sceptics are cynical about this – the UK is a successful capitalist country (or used to be), people’s incomes are high but very greatly varied. North Korea has equality, so the measure says no relative poverty (everyone earns the same), but plenty of starvation. Academic epidemiologists, Richard Wilkinson and Kate Pickett, in their book The Spirit Level , demonstrate that inequality in itself is detrimental to a nation’s well-being. Critics proclaimed their work a new kind of “evidence-based politics” and it has sold 36,000 copies in the UK, more than Barack Obama’s Change We Can Believe In. Unequal societies are more likely to suffer from a range of problems, including low life expectancy, illiteracy, stress, and a high crime rate. Even climate change is less of a challenge for a society with a narrow gap between rich and poor.

The main state support in Sri Lanka for the poor is provided by Samurdhi, eligibility for which is means-tested. In my days in social security in the UK, there was much debate about the relative merits of universal and means-tested benefits. The means test was remembered with humiliation by those who had lived through the Depression. The current UK government appears, in order to save public funds and to punish the feckless, to be moving away from the universal principle to targeting benefits on those it deems to be the most needy. However, It is well understood that administrative cost is an increasing function of the accuracy of targeting and that the goal of minimizing leakage might lead to stigma effects and under-coverage.

 

According to An Empirical Evaluation of Samurdhi Programme by Elena Glinskaya for the World Bank, Samurdhi, the poverty alleviation programme introduced in Sri Lanka in 1995, claims almost 1% of gross domestic product (US$139 million in 1999) or roughly half of all welfare expenditures, excluding expenditures on education and health.

 

Some anecdotal observations of my own about the way Samurdhi works in my village. One component of Samurdhi is a savings and credit programme operated through Samurdhi banks, and loans meant for entrepreneurial and business development. Our immediate neighbours are relatively prosperous: they have cattle, goats, poultry; they sell milk, meat (lorries come in the middle of the night, and one suspects that illegal slaughtering is taking place). They have steadily encroached on tea estate land and are growing many kinds of fruit and vegetables for sale. They regularly attend Samurdhi meetings and are aggressively proactive in claiming ‘entitlements’. They are building a new house for one of the daughters and receiving a Samurdhi loan because her husband is said to have abandoned her. A Samurdhi worker has also been doing the rounds collecting donations for the construction. The family has been collecting sand from the river, wood from the Crown Land, and boulders from our boundary wall to save on the building costs. The supposedly absconding husband waved to us the other day as he returned home with some shopping.

 

That same Samurdhi worker (programme administrators are considered among the beneficiaries of Samurdhi and 8% of the total budget is allocated for their salaries) has been pressing another neighbour to take out loans he cannot afford. The man only works in short bursts because he always fights with workmates or employers. He takes out a loan for some home improvement which he then botches by interfering with it. Somehow he manages to pay a loan off (mainly through his abused wife’s hard work) and the Samurdhi woman is immediately pressing him to take out a new one. He recently borrowed 50,000 rupees to start a business making and selling short-eats. He bought a small truck which immediately needed repair and then travelled great distances to find markets. The loan was quickly used up and he made no profit.

 

Amartya Sen has argued that a transfer programme might have less support from middle- and upper-income constituencies if it renders benefits to the poor only. Glinskaya demonstrated that that households from the lowest quintile were not accessing as many loans as the better-off and argues that subsidising nonpoor households has diminishing benefits to society. She also argued that the people who carry out the programme are not free of political influence, and no external checks and balances are present to prevent them from acting on the demands of politicians. The absence of strict rules for eligibility does not help the cause either. Politicization is embedded in the design and influences both the selection of Samurdhi administrators and the selection of beneficiaries. Party affiliation or voting preferences also influence allocation of Samurdhi consumption grants. These patterns indicate that targeting errors are not random, but rather reflect flaws in the design of the programme that allow for the deliberate omission of certain groups of vulnerable individuals.

 

 

The third component is rehabilitation and development of community infrastructure through workfare and social (or human) development programmes. The way this seems to work out in practice is that people we are paying a good wage take days off to go and fulfil commitments to Samurdhi for being granted loans.

 

Glinskaya demonstrated that households from the lowest quintile were not accessing as many loans as the better-off and argues that subsidising non-poor households has diminishing benefits to society. She argued that checks are not in place to prevent allocation of Samurdhi grants being influenced by political affiliations, which means some vulnerable people are deliberately excluded.

According to the Central Bank, the Samurdhi Social Protection scheme benefited 33% percent of the population in zoo8, but the number of people below the poverty line is 15.2%. Allowances under this scheme amounted to almost Rs ten billion in 2008; half of this was paid to those who did not need it. Glinskaya showed that in 1998, Samurdhi missed almost 40% of households ranked in the lowest expenditure quintile, while a substantial number of households with higher relative welfare received Samurdhi consumption grants and other forms of Samurdhi assistance. Poor provinces are less effective in reaching their poor than richer provinces.

Universal Cash Benefits

Although the west seems to be regressing away from universal cash benefits towards means-tested work-fare type of programmes, evidence from Sri Lanka seems to suggest such schemes are costly and do not reach the most needy people. The Keynesian theory, which UK governments of all persuasions tended to follow in the past, was that if you gave money even to the undeserving and feckless poor, there is a common good because they stimulated the economy and manufacturing by having money to spend, rather than staying at home and selfishly starving to death.

In Europe, since the days of Bismarck s Prussia, the welfare state has been developed as part the mechanisms named “repressive tolerance” by Marcuse. Workers were persuaded to accept the inequalities of capitalism and refrain from overturning the state by being provided with cash benefits. Sri Lanka has had more than its share of bloody rebellion by the disaffected. At present the Sri Lankan masses are quiescent in the face of poverty and rising prices. In the west today, Zizek says, the welfare state is being dismantled and “a kind of economic state of emergency is becoming permanent, turning into a constant, a way of life”. Austerity measures are hindering economic recovery while protecting the bankers who caused the crisis.

Might not a system of universal cash benefits in Sri Lanka be more effective in alleviating poverty and stimulating the economy than means-tested benefits in kind? Might this avert another bloody uprising?

 

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