Cash or work: What do people want?

Jun 11, 2009

The debate about how best to assist the poor is not going away.  Read some of our previous posts on this in issue in Tanzania , Sierra Leone and Kenya .

Are cash transfers more effective than government services in adressing poverty? If you do settle on cash transfers, should they cover a large part of the population in the form of a basic income grant? Or should such transfers be targeted at specifically vulnerable groups? And what conditions should be attached to such transfers  apart from a means test (every doesn’t even agree that means tests are a good ideas)? Should cash transfers be conditional on some ‘good behaviour’ such as sending your children to school (such as in Oportunidades in Mexico) or are such conditions unnecessary red tape separating cash from people that really need it? These and other similar questions continue to spice efforts to assist the poor and vulnerable.

The NREGA scheme in India is very much at the forefront of these debates. In a recent article Sowmya Kidambi and Aruna Roy of the MKSS argued that the complexities of conditional cash transfers make them more vulnerable to corruption than unconditional entitlements such as the NREGA. They also argue that there are important ideological difference between what they call a ‘cash dole’ and a scheme such as the NREGA that is based on the right to work. Read their article here.

8 comments:

  1. What the linked article overlooks is that many of the poorest families are labour-constrained i.e there may be no-one who is able to work, due to illness or death of one or more prents. So the most needy would not benefit from workfare.

    The other issue with work schemes is that they can undermine entrepreneurial activity by the poor that cash grants might support. No yime to do more with your land plot or stall if you are busy doing public works.

  2. I am not sure that the issue of corruption in CCTs is a valid reason to avoid them. You’re going to run into corruption risk with pretty much any anti-poverty intervention.

  3. I find cash transfers an issue we need to interrogate further especially considering the fact that a lot of resources/finances for addressing HIV and AIDS have hardly reached the intended target beneficiaries. I believe cash transfers directly to those affected and infected. For instance OVCs and child headed house holds should be considered a key target. Initially i was of the opinion that cash transfers would create dependency, but my view has changed. In light of some many bottlenecks, bureacracys, middle men and institutions (CBOs and NGOs), i think Cash transfers can improve the social protection and mitigation interventions.

    On the other hand, i dont think cash transfers should be used as an alternative to employment or as a disincentive to bad behaviour (as the Tanzania case study seeks to encourage).

  4. @Alanna – the risk of corruption is not a reason to avoid CCTs, just to make sure that they are well-designed, since more room for administrative discretion necessarily creates more room for corruption. But a program like Opportunidades that has a relatively straightforward indicator, and more importantly one that the parents also see as in their family’s self-interest, seems to be working pretty well.

  5. @ Brett Thanks. The study on the targetting of transfers in Zambia http://tinyurl.com/kms6l5 looks particularly interesting

    @ Ian These looks like important arguments against workfare programs. Any workfare disciples out there want to respond?

    @ Alana & Samot I still think that the added complexity & admin discretion involved in CCTs make them MORE prone to corruption.

    @ Rose Thanks for raising the targetting issue – an additional complexity in CCTs. There are some strong arguments out there claiming that targetting is, given the effort involved, not worth it.

  6. These replies have already touched upon three crucial issues, which are touted as strengths of public works programmes … but which are in fact serious weaknesses. Such schemes are pushed by their dwindling band of proponents as a “win-win-win” option because (i) they have an inbuilt targeting mechanism, (ii) they avoid “dependency” by providing transfers to “deserving” beneficiaries (not giving “something for nothing”), and (iii) they create community assets. But in fact they usually do all three things badly: (i) as pointed out by Ian, such self-targeting necessarily misses the weakest and most vulnerable members who cannot work; (ii) even if the concept of “dependency” is accepted (which many – like Rose – would debate), it is not clear why dependency on the state to provide poorly-paid employment is any less dangerous than a dependency on the state to provide direct transfers; and (iii) the assets created are often low-quality, poorly maintained and uncoordinated with broader development initiatives. Finally, as Ian points out, workfare schemes distract people from farming their own land or embarking on other entrepreneurial activities. Why make people work for something you could provide them for nothing?

  7. There are other dimensions to this discussion which have to be considered. First, with conditional cash transfers the recipients are not entitled to support because of their human rights; they are just beneficiaries of a program, the support of which they can lose if they don’t comply. I find this to be a serious shortcoming. Second, cash transfer programs put the responsibility of “earning” the family income on children, in the case of Oportunidades in Mexico. Once children leave school, the family goes back to no income, because employment opportunities are still not being developed. Building programs that develop a strong sense of entitlement is crucial to the reduction of poverty.

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