Introduction
Today’s column focuses on the third and fourth broad areas of coverage related to the Buxton Proposal, as indicated in my first column on this topic two weeks ago. That is, it covers in some detail: 1) the operationalizing, scheduling and execution of the Buxton Proposal going forward; and simultaneously 2) it starts my coverage of what I have termed earlier as the Whys and Wherefores of cash transfers. As the two monikers clearly suggest, the former treats with practical implementing details; and the latter, with the reasonings or rationales that support cash transfers as an effective and time-tested income poverty policy intervention tool.
Before addressing the first item indicated above, it is important for readers’ understanding of the facts that first I very briefly recall the three conditionalities, which are embedded in the Buxton Proposal as I have earlier indicated in two columns preceding todays. To recall, these were identified as firstly bringing all households [as recipients of cash transfers] under the formal tax net. And secondly, since the cash payments are likely to be executed as credits to citizens’ accounts through various financial intermediaries, it brings recipients under the formal financial system with an e-identity. And finally, since the transfers are made to every household, it is ethnically- and politically-neutral.
Operationalizing
To be clear and categoric, as the author of the Buxton Proposal, this Proposal remains as of now a policy proposal. To date it has been submitted only to the Working People’s Alliance, WPA, and through that political party to the APNU for the then Coalition Government to explore further, hopefully evaluate, and operationalize if it found it feasible. It was my hope, therefore, that the appropriate Government agency would have been directed to initiate, with urgency, a Feasibility Study and Pilot Project based on this Proposal.
In keeping with global experiences, with which we are familiar, five necessary groups need to be engaged in this recommended policy intervention study. These are: 1) the University of Guyana (to constitute the technical/research Secretariat for the Feasibility Study); 2) the Bureau of Statistics, in support; 3) the GRA for obvious reasons; 4) major global development agencies (all of whom have already positively evaluated cash transfer-based poverty interventions; and 5) the Governmental body/department/agency to which this task is assigned
From my perspective I do recognise that the recommended feasibility study is a truly high-stakes endeavour. Successful execution of the study and the subsequent national acceptance of its recommendations depend on a genuinely high-level multi-disciplinary team with skills in areas of IT, social engineering, management, finance/accounting and logistics.
Finally, when seeking to operationalize the Buxton Proposal, it is useful to bear in mind that, the Government of Guyana (GoG) is already giving massive cash transfers [in the form of tax breaks, tax write-offs, subsidies and other widely administered tax expenditures to the business/merchant class!] This Proposal is therefore, not novel.
Whys and Wherefores
In this Section, I summarily identify and repeat for the benefit of non-specialist readers, 11 main arguments I have advanced in favour of the widely supported thesis observed in poverty studies that to date, “cash transfers are the single most successful poverty policy intervention worldwide”. Presently, the data also suggest that, worldwide, over a billion persons are benefiting from cash transfers, and have thereupon escaped income poverty. In what follows the eleven arguments in support of this observation are serially addressed below. Due to space limitations this will be concluded next week.
It should be noted though, while the eleven “Whys and Wherefores” I repeat are listed serially below, to facilitate rapid comprehension, these are listed randomly and in no intended order of significance. Similar to the components or features of the Buxton Proposal addressed last week, these items also operate synergistically. That is, they reinforce each other so that their overall effect is greater than the sum of their individual effects.
11 Whys and Wherefores [Repeat]
1. The Bureau of Statistics (BoS) defines a Guyanese Household, HH, as persons “sharing a common pot and the same roof”. The BoS’ primary survey cluster unit is the enumeration district (ED). The ED comprises of between 100 and 120 HHs. Consequently, there are roughly 1,750 to 2,100 EDs in the country, based on the Population Census result of approximately 210,000 HHs. Cash Transfers to these are financed out of exports (oil) and earned foreign exchange. These transfers are not the product of Government’s money creation. Consequently, this constrains negative macroeconomic effects.
2. Based on Item 1 above, HH income + consumption are boosted, as each ED gets an additional annual income of between 105 million G$ and 126 million G$. Clearly, this substantially expands local (micro) economy income multiplier effects and capability. Recall, CTs are financed by exports (oil) and foreign exchange earnings, which constrain negative macroeconomic effects of spending.
3. As argued, CTs, as a poverty intervention policy tool, are rooted in empirics. They are certainly the most thoroughly researched, investigated, and studied development intervention, worldwide over the past two decades.
4. To quote the United Kingdom, UK, Department for International Development, DFID, 2011, from a decade ago: “During this millennium a quiet revolution has seen governments … invest in increasingly large-scale cash transfers programmes. These now reach between 0.75 and 1 billion people”.
Conclusion
Next week I shall continue the discussion of the Buxton Proposal. I start with introducing item 5 and completing coverage of the remaining items in the list of eleven Whys and Wherefores, I reference in support of cash transfers as a poverty intervention strategy following the emergence of Guyana’s oil and gas sector.
