Dear Editor,
As the national elections approaches, political parties have been broadly addressing key policy initiatives they believe would benefit Guyana in the coming decade, during which oil revenues are expected to give Government access to an additional source of wealth. Many questions about how Government should spend and reserve prospective funds have become pivotal to the national discourse, prompting debate among contending parties and public intellectuals. One rather contentious topic which has sparked a national debate over the past couple of years has been about the possibility of establishing a cash transfer system.
All the evidence derived from studies regarding cash transfer programmes indicate that it would be mostly beneficial and economically sound to a targeted group of vulnerable people living in extreme poverty conditions. So far, the Alliance For Change aligns with this general consensus given their public commentary on the matter. The Working People’s Alliance wants a universal cash transfer to some 250,000 people, but I think this is too farfetched. The ‘A Partnership for National Unity’, including several other political parties, have not expressed their full support for a cash transfer programme. However, I do think that cash transfer holds both merit and relevance for a country like Guyana for several reasons, which I shall elucidate.
First, we need to understand what the cash transfer initiative is. Cash transfer is just like any other state welfare programme, such as social security, school vouchers for books or clothing, and so on. As the terminology implies, cash transfer is the process of directly handing money over to people with the intention of ensuring their utmost basic needs are met. Cash transfer has been shown to encourage very poor people to become self-sustainable enough to be integrated into the local economy via employment, pursuing education, or even endeavouring into business. The fact that Guyana is one of the poorest nations in the western hemisphere, with an extreme poverty level at around 18%, a cash transfer could be transformational.
However, it is the direct-transfer of cash into the hands of citizens that worries some politicians and economists who are reacting overly paternalistically. These fears range from concerns regarding economic stability over time and the risk of inflation, to people’s spending habits. But economists in the diaspora have successfully piloted and studied cash transfer initiatives around the world to test these concerns, and it turns out that many of these fears are, for the most part, unwarranted.
The Overseas Development Institute studies cash transfer programmes around the world, and given the empirical results, they agree it can offer several benefits to those less fortunate. But the ODI advises, cautiously, that this should not be considered as a sustainable alternative to long-term initiatives in alleviating poverty and ensuring equality—for instance, improved education and health services are undoubtedly essential to a developing nation. Indeed, were cash transfers considered to appease the political call for it, it must be a project compatible with other national priorities that can directly contribute to the overall welfare of people. But what sort of cash transfer programme would work for Guyana?
I want to argue that a conditional cash transfer system, at least in pilot phase, offers a compatible approach between supporting and opposing sides of the welfare initiative. To be eligible under a conditional framework, an individual or household must meet a set income threshold, or can claim financial hardship that, based on their circumstances, makes them unable to work. Such a condition can also set educational and/or social requirements to meet over a set period to ensure that they become integrated into the social workforce, thereby negating any fear of the possibility of abusing the cash transfer system. Beneficiaries can also work toward milestones without worry of having to ensure there is bread and tea on the table because they can afford to have these basic goods. As a positive consequence, this places a responsibility on those benefitting from the programme to aim for self-sustenance through self-development.
Additionally, such a cash transfer initiative should include a monitoring and evaluation component to determine, among other things, when an individual or household has reached a point of self-sustainability, thereby rendering them ineligible to continue receiving cash benefits. The unit can also ensure transparency within the system. As one can imagine, it will take resources to invest in a cash transfer programme, and therefore the task shouldn’t be oversimplified. Because of the resource demand, giving cash transfers to some 250,000 people unconditionally would place a tremendous pressure on public institutions to manage and monitor.
Cash transfer can be a viable welfare programme targeting a very specific group of people who cannot make ends meet, though it must be considered as a short-term beneficiary programme to be effective. However, exploiting the disadvantaged because of their cash-strapped reality to support superficial and untenable proposals made by politicians, especially during election cycles, poses a real threat. For this reason, cash transfer must not be used as a bargaining tactic for political gains by offering people a mere promise of money in exchange for partisan support or votes. Nevertheless, cash transfer proposals must be met with fair scrutiny and not be entirely dismissed.
Yours faithfully,
Ferlin F. Pedro
