• Friday, July 19, 2024
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BusinessDay

Social security? Yes, but don’t throw good money after bad

olu_fasan

The mood music is now different, strikingly different! While the Jonathan government was blithe and defensive on the question of poverty in Nigeria, the Buhari administration is really gung-ho on the issue, giving the impression it’s determined to tackle the problem head-on. Indeed, both President Buhari and Vice President Yemi Osinbajo, who leads the government’s anti-poverty strategy as the coordinator of its social welfare intervention programme, have been doing their best in several speeches to assure Nigeria that this government has a human face, a social conscience, and cares deeply about the poor.

Of course, poverty alleviation is a centrepiece of the manifesto of the governing party, the All Progressives Congress (APC), but I believe the political commitment of the president and the vice president is also a matter of personal conviction. The vice president, after all, is a man of God, who is pastor-in-charge of a church that, though located in the affluent area of Lagos, Ikoyi, draws, I’m told, congregation from both the rich and the poor, some very poor! Thus, the issue of poverty is, I would say, for the president and the vice president not just a matter of political imperative, but also of faith and moral compass.

Now, I have introduced religion into this discussion deliberately to draw attention to the policy lessons that can be learnt from it in assessing the government’s social welfare policy. I am, of course, mindful of the refrain “don’t bring religion into politics”, but the truth is that, at a philosophical level, the relationship between government and religion is as old as democracy itself. Politics, after all, has its roots in moral philosophy, which itself drew heavily from religion. In his book, The Consolations of Philosophy, Alain de Botton points out that most of the great philosophers, such as Aristotle, Plato and Socrates, derived their insights from religious beliefs and teachings. So, then, what can religion teach us about tackling poverty? Well, I think there are two lessons.

The first, as we all know, is that all religions, particularly Christianity and Islam, enjoin the rich to look after the poor. Indeed, there are copious references in the Bible, and I believe in the Quran, to the damnation that awaits the rich who ignores the poor. This individual or societal approach to tackling poverty is what America largely embraces, with the state itself doing little but instead actively encouraging charities and other philanthropic organisations to take care of the weak and vulnerable. To this end, the US government gives huge tax allowances to charities andthose who give to charities. But some countries, particularly Europeans, can’t trust individuals or charities to look after the poor, so they tax their citizens heavily and spend the money on the poor in what is known as a welfare state.

The second lesson that religion, especially the Christian faith, teaches us is, however, different from the first. It’s about the relationship between work and poverty. Injunctions to work and warnings about the consequences of failing to work are common in the Bible. For instance, one interesting verse says: “Whatsoever your hand finds to do, do it with your might …” (Ecclesiastes 9.10). Another, for me the most fascinating, says: “If any would not work, neither should he eat” (2 Thessalonians 3:10). Tough, but it chimes with the theme of work that runs through the Bible as well as the Protestant work ethic, a Christian philosophy articulated by Max Weber.

So, what’s the point of this ‘theologising’, you might ask? Well, my point is this. If we try to reconcile the two lessons about caring for the poor and the imperative of work, it seems to me that the Bible and, I would say, the Quran distinguish between two categories of people: first, those who are so vulnerable that they cannot work under any circumstance and, second, those who can work and, therefore, should find a job, if necessary with some help, and work! Drawing a policy conclusion from the two lessons, I would then argue that the aim of any welfare system must, therefore, be two-fold: one, to support those who simply can’t work and will always need state support, and, two, to help those who can and should work to move from unemployment and state support into work.

The truth is that welfare, in the form of income transfers or what is known as the “pockets” approach, is only a palliative, it can never solve the poverty problem. Certainly, what’s more sustainable is the “prospect” approach that helps people to protect themselves against poverty through paid jobs or self-employment. Even in the UK, whose generous welfare system is known worldwide, the government’s focus is shifting away from welfare and benefits to promoting employment. The Work Programme, as the UK government puts it, is at the heart of that country’s welfare system, to the extent that even those who have a health condition or disability, but can still work, are required to move into work, if necessary with personalised support, and those on Jobseeker’s Allowance are sanctioned if they fail to take advantage of support systems, such as training and work placement, to make themselves either employable or self-employed.

My view is that Nigeria’s conditional cash transfer (CCT) system is not sufficiently geared towards incentivising people to move from receiving welfare benefits into sustainable jobs. Indeed, I have two concerns about the cash transfer programme. The first is methodological, and the second is about effectiveness. Let’s take the methodological or definitional challenge first. President Buhari said in his budget speech that “the compilation of registers of the poorest persons is ongoing”. Clearly, that’s a huge task that needs to factor in human behaviour, particularly how people would react to being branded “extremely poor” and added to a register! But, even ignoring that, the question is: who are the poorest people, anyway? According to the World Bank, the extreme poor are those living on less than $1.25 (about N250) per day, and in the World Bank’s most recent analysis, 54 percent of Nigerians are extremely poor.

Clearly, the government must accept the World Bank’s definition of the extreme poor if the CCT’s policy aim of helping themost vulnerable Nigerians is to have any credibility. But here is the policy conundrum. Even if the government accepts the World Bank’s definition, it doesn’t intend to give N5000 a month to 54 percent of Nigerians, which, even on a rough estimate of 60 million adult Nigerians, would cost more N300 billion a month. The annual budget for the entire social welfare intervention programme, which includes other elements, such the school feeding programme and the post-NYSC grant, is N500 billion. So, there is the question of inclusiveness, a key policy test. Surely, if the CCT is designed for unemployed youths, as the APC’s manifesto promised, then it can’t be aimed at “the extreme poor among us”. Youth poverty is rife, of course, but there is also widespread poverty among the adults. The government needs to explain who are the extreme poor it is targeting with the CCT and who are excluded from that category and why.

Then, there is the question of effectiveness. What precisely are the objectives of the CCT? Is it simply to put money in the pockets of “the extremely poor”, which, as I have said, is misleading because the scheme lacks that coverage? Or is it aimed at tackling youth poverty by giving them what looks like an unemployment benefit while helping them to move into jobs or self-employment? There is nothing in the CCT that tells us what its objectives are and how the conditions attached to the scheme would help achieve them. But, recently, the minister of labour and employment, Chris Ngige gave a clue. He said that “No country in the world would pay people to go home and sleep and collect cash”, adding, “Nigeria would not be an exception”.

The minister’s statement suggests that the CCT is intended to incentivise certain behaviour. But what behaviour? Of course, if the scheme is aimed at unemployed youths, one can assume that the objective is to help them move into jobs or self-employment. But if that’s the case, how then would the CCT’s two conditions of school enrolment and immunisation incentivise that? What have school enrolment and immunisation got to do with addressing the causes of joblessness and poverty among young people, assuming the target is youth unemployment? Surely, the conditions they need to meet are those that would give them the best prospects of securing employment or becoming self-employed. But, unfortunately, such opportunities are lacking in the whole social welfare intervention programme.

To be sure, the critical gap in the programme is the lack of a distinctive business role. It is a government-dominated scheme. For instance, government will employ 500,000 teachers. Even the training aspect of the scheme would be run by government agencies. There is hardly any mention of how the private sector would be involved in the scheme. Yet, as the UK experience shows, you can’t tackle poverty effectively or run a successful work programme without active business involvement, which is why apprenticeships, in which business is playing the leading role, is at the heart of the UK’s welfare-to-work programme. It’s common knowledge that the skills students acquire from government universities and training institutes fall well short of what industry and the wider job market need. And, thus, the CCT and post-NYSC grant would be meaningless if the recipients can’t acquire skills that would make them employable or successful entrepreneurs. The only way to fill those gaps is through apprenticeships, but they require close partnership between government and industry. In the UK, government even gives money to small firms to take on apprentices.

So, there are challenges for the social intervention programme. One is the mismatch between its objectives and incentives. Another, a major weakness, is the absence of a central role for business. Surely, the test of success is whether it moves people from welfare into jobs, private-sector jobs, or self-employment. Otherwise, running it as an ongoing scheme would amount to throwing good money after bad!

 

Olu Fasan