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17 September 2012

Cash Transfers, resilience and agriculture development – Comments from Dr. Tom Alberts

Some personal thoughts from SIANI member Dr. Tom Alberts on the seminar, 11 September 2012, organised by the Swedish Church, Sida and SIANI (Swedish International Agricultural Network Initiative)

In the past, the following idea circulated a lot: “If you give a man a fish he will live for a week if you teach him how to fish he will live his whole life”. This view has permeated a lot of international aid in agricultural and rural development. In the minds of the donors, how should this be accomplished? Agricultural research would provide the needed technology and the extension workers would transfer this new technology to the rural sector. And the end results would be a rapid agricultural growth and poverty would be erased among the peasants. In Sub-Saharan Africa (SSA) like in many Latin American countries this idea has utterly failed. (Some years ago DFID published an important book on the subject). So what to do to erase rural poverty?

Well, we did not need to do much. The problem tended to have its own solution. Already in the 70:s Michael Lipton pointed out that there was an urban bias in development. So the peasants were “voting with their feet” thus transferring rural poverty into urban poverty. As a result, on a global scale there are more people living in urban than rural areas. The globalisation and more liberalization of trade resulted in a very rapid economic growth. The economic growth has been sufficiently rapid to counteract the worsening of income- and wealth distributions. Global poverty has decreased on a large scale.

But there are reasons to be concerned. For many reasons global food prices tend to increase thus breaking the previous long run trend of decreasing prices. While in the past the rural poor could be forgotten, the urban poor are revolting and more will surely come. In Latin America the more well-to-do live behind well protected fences and this phenomenon is rapidly growing in SSA.

There has been a poverty trap. Many well intended donors did not understand this. A few examples will illustrate my point. Health programmes did produce positive effects. The focus on more education also produced positive effects. But much more could have been accomplished with the same amount of money. It was clear from the seminar that cash transfers to poor people generate a great number of positive effects. For example, people eat more and better. The health situation has improved and school attendance increased. Local trade increased as well as agricultural production. Well, I recommend you to have a look at the presentations when they become available.

Below follows a series of comments. The objective is to further improve on the system of cash transfers.

Target groups
Resources are scarce and we should analyze how the benefits can be maximized. Public pension schemes are growing in SSA. It makes much more economic sense to focus on children. They will live much longer and the benefits can be reaped over many more years than old people can generate. This view should not be interpreted that there is an either or choice. But the priorities should be clear.

In what form should purchasing power be transferred?
Frequently vouchers are used. The World Food Program (WFP) has finally realized that the distribution of food may not be the optimal way to alleviate hunger. Already in 1984 Amartya Sen wrote his famous book: “Poverty and Famines. An Essay on Entitlement and Deprivation”. He pointed out several instances where starvation in drought ridden regions occurred when there were no food shortages in the markets.

Often, or perhaps most of the times, a very large share of the food disappears and never reaches the starving people. Distributing food creates havoc with markets and tends to perpetuate dependency on food receipts. Agricultural recuperation is slowed down when food is distributed freely. The rich countries used the WFP to dump excess agricultural production to the detriment of agricultural growth in poor countries. Horror stories abound.

The idea of vouchers is definitely an improvement in the system. But such a system invites corruption, in a similar way as with food aid. Why not distribute money directly to starving people? Vouchers have an element of patronizing people. Would not poor people know how to spend the money?

Having said this, there will obviously be need for distributing food, water and providing medical help in emergency situations. My personal view is that the WFP has a long experience in this. That the WFP embarks on distributing money and vouchers on a large scale can hardly be their primary objective.

There are other means of increasing the “entitlements” of poor people such as public works. Much care should be exercised in the design of public works programmes. It is laudable to combat unemployment with such programmes. BUT in most rural areas unemployment is highly cyclical. In fact, in most poor countries there is a shortage of labour during certain periods of the agricultural year. So again, there are no easy fixes.

Who should receive the money
This issue was not directly addressed during the seminar. Informally we joked about men drinking beer instead of using the money for the benefit of the family. My strong view is that the money should be allocated through women. There is ample experience in SSA that women tend to cater more to the needs of their families than men do. This would also have the positive effect of empowering women which is an objective of many, if not most, donors.

Human rights – on ethics
One of the speakers emphasized that the poverty issue is but one part of a larger human rights issue. It sounds quite reasonable but is it really? Remember that our ethical norms developed in rural areas thousands of years ago. In such societies people interacted more directly with each other. Today these ethical norms have become inadequate and perhaps also obsolete. The global deforestation, the extinction of numerous animals and other forms of life affect us all. So I would like to call to your attention to the writings of Albert Schweitzer. He got Nobel’s Peace Prize in 1952 and his famous book “Civilization and Ethics” was published already in 1923. In summary, “Reverence for life” should guide us. A few months ago Birgitta Forsman published her book “Gudlös etik – en befrielse ur religionens tvångströja” (Godless ethics – a liberalisation from the straitjacket of religion). Unfortunately this important book has not been translated into English. Her conclusions are in many respects similar to those of Schweitzer. In her discussion she clearly states that our ethical values should not be confined only to people living close to you. And she argues that our ethical views should be extended to all life. She also advocates for rationality. So our environment should also play an important role and be a major concern for us as human beings. In other words, a Human rights approach is necessary but not sufficient in dealing with the problems of our Earth.

Focus on a child allowance scheme
Already in 1938 a child allowance scheme was introduced in Sweden. Originally it was designed only for poor people. However, soon it became a universal scheme. Most of the participants were convinced or became convinced that universal schemes are to be preferred. One major aspect of the Swedish scheme was that the money was transferred to the mothers to ensure that the money was well spent. There is a moving story from the first years of the child allowance scheme. One mother said that she would not use any of the money for herself and that priority would be given to her children’s education. And the money would never be used to buy luxuries such as bicycles.

There is now ample evidence from research and evaluations that channelling money through mothers would produce more benefits than giving the money to the men. And with an increase of the female income, there would be a positive empowerment effect on women.

How to distribute the money
There are many ways to distribute money. The use of mobile phones has spread very rapidly in SSA and they are increasingly used for financial transactions. The cost of distributing millions of mobile phones in SSA would be relatively small. We should also consider the important social effects of introducing mobile phones in rural areas. The child allowance scheme would result in more children going to school, not least girls. Imagine the social impact when the children can discover the world outside their villages through the phones. Is it not an exciting idea?

Corruption is widespread in SSA. By transferring the money directly to mothers it should be possible to reduce the risk of funds disappearing. A research component should be attached to the programme – what will be the impact on health, school attendance, nutrition etc.

Private public partnerships
The geographical coverage of mobile phones is usually limited to urban areas in SSA. Investments are needed to extend the system into the rural areas. Because of the significant benefits which can be obtained a public subsidy would be justified. Nokia, in Finland, and Ericsson, in Sweden, could play an important role in developing the mobile systems. After Independence in Mozambique in 1975, the Nordic countries, including Iceland, decided to jointly finance an agricultural programme, MONAP (Mozambique Nordic Agricultural Programme). For MONAP II the decided budget was USD 66 million in 1980. How about the Nordic countries committing themselves to a Child allowance scheme in SSA?

Sweden has supported Zambia, Tanzania and Mozambique for decades. These countries are all very corrupt and the poverty eradication strategies have remained mostly as nice objectives in the great number of documents produced. The hard facts can be found in the Human Development Index (HDI) published by the UN.

The origin of the idea
When I was engaged in co-ordinating the planning of MONAP II at the end of 1979. Little of the money of MONAP I had reached the poor. So why not charter South African helicopters and visit the villages throughout Mozambique and hand over South African Rands. Of course I never dared to put forward this idea.[i]

What is also needed
The income- and wealth distributions are becoming more unequal, both globally and within countries. Should we not think in terms of a global redistribution scheme? Here the debate from the 70:s on “Redistribution with growth” is very relevant. With the collapse of the socialist systems re-distribution issues were forgotten and they are only slowly emerging again.

Hopefully you had the time to read this and to send me your comments:
Solna, 17 September 2012

[i] During my year 1960-61 in the USA it was painful to see racism and to really discover world wide poverty. As a result my focus became to study social sciences to understand our societies better and left for Peru in 1968 to work for UNDP, then for FAO and subsequently as a permanent employee at the UN Economic Commission for Latin America (ECLA now ECLAC). Some months after the military coup on 11 September 1973 I was offered a post at UN in New York, but resigned and returned to Sweden to continue my PhD training in economics.
Given my practical experience in rural development and also my academic studies and research it was natural to identify myself with the ideas of socialist Mozambique. As a senior agricultural adviser there were many tasks. One was to co-ordinate the planning of the Mozambique Nordic Agricultural Programme. It was a very painful experience to witness the introduction of one stupid economic policy after another. And in the end the peasants were the loosers. As a result I did not renew my contract with SIDA and when the economic crisis in Mozambique deepened I decided to write an article. It was published in Dagens Nyheter in 1982. The title, translated into English is: “Our aid lacks knowledge and a long term perspective”. The head of SIDA then replied that this was when Alberts was working in Mozambique. Well the economic crisis became even deeper and the civil war spread.
During my time in Latin America (1968-74) a major part of my work dealt with agrarian reforms particularly those in Peru and Chile. My thesis “Agrarian Reform and Rural Poverty – A Case Study of Peru” taught me many lessons. It is sad to see how difficult and tragic the many land tenure issues are in SSA.
Then there were many years as an international consultant. It became increasingly evident that international aid did not produce desired results and was very costly in relation to benefits. So I returned to my thoughts in Mozambique 1979 when one idea was to contract South African helicopters to distribute money in rural Mozambique. The fundamental question always kept popping up. Why not transfer money directly to the poor? Further research not only on the experience of Sweden with child support but also more recent experiences in Brazil, Mexico and Chile all confirmed that a direct cash transfer through mothers would most likely have a strong impact in reducing poverty.


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