Although we have alleviated poverty by providing assistance to the hand-to-mouth segment, this is not going to help revive the agricultural sector
World economies are already handicapped. The impact of COVID-19 is greatly felt by the Sri Lankan economy as well. However, despite its massive debt burden, the Government of Sri Lanka (GoSL) recently announced multiple relief schemes for various beneficiaries. They include everybody from Samurdhi beneficiaries to those who have taken personal loans for various reasons, people involved in Small and Medium Enterprises (SMEs) and so forth. On the other hand the Government also launched its Saubhagya Home Gardening Programme to encourage people to grow from home. Opening debt moratoriums, giving away relief schemes at times of disaster have been a practice of successive regimes. But when it’s the people’s turn to cover the debts, flexibility is least thought of. Hence, the primary objectives of alleviating poverty in the short-run and transforming the nation into a self-sufficient one in the long-run are often not met, considering the practicality of these short-sighted approaches.
The ‘Samurdhi’ puzzle
Samurdhi was introduced in 1995 by the People’s Alliance Government as its main poverty alleviation programme. One of its components was the welfare grant that underwent several changes over the past two decades to improve the quality of benefits and improve the structure of the programme. In 2012 the Samurdhi welfare programme underwent certain reforms where changes were made to the categories of beneficiary, amount and nature of benefits. In the same year, food and cash stamps were replaced by a cash transfer and the total value of food and cash stamps was transferred directly to the beneficiary accounts at the Samurdhi banks. According to a study titled ‘Food-Based Social Assistance Programmes in Sri Lanka – Evolution and Transition to Cash Transfers’ in the fiscal year 2012/2013 16.4 per cent of households were receiving Samurdhi cash transfers with some households having multiple beneficiaries. This figure is about three times higher than the percentage households in the country. Another targeting error was that 14.4 per cent Samurdhi recipient households accounting for about 88 per cent beneficiary households were non-poor while only a small share of beneficiaries was from poor households as defined by the national poverty line.
The Official Poverty Line is defined as the real food and non-food consumption expenditure per person per month. The figure as at January 2020 is Rs. 5021. Therefore persons living in households whose real per capita monthly total consumption expenditure is below Rs. 5021 in the year 2020 are considered poor. Therefore, researchers observed that while 38 per cent of poor households received Samurdhi cash transfers, 60 per cent of poor households were excluded from the programme. Such inclusion and exclusion errors were observed in all districts.
The study further observes lack of clearly defined criteria for selecting beneficiaries and the lack of a systematic entry and exit mechanism are key reasons for the persistence in targeting errors. As at present there seems to be no entry / exit mechanism to identify the new poor or remove households that are no longer poor. A special audit report issued by the National Audit Office in 2018 states that the register of Samurdhi beneficiaries have been revised only in instances such as a demise of a member of a Samurdhi beneficiary family, a member leaving the family after marriage, a new birth and change of division.
However it has been observed that when formulating poverty reduction policies it is important that they are conducive to communities or beneficiaries becoming self-sustaining in the long run and that government hand-outs can induce a culture of dependency. A review of the Samurdhi beneficiary project by the World Bank concluded that Samurdhi does not emerge as an efficient transfer programme : “It is modestly successful in reaching the intended beneficiaries, but it transfers a large portion of its resources to the non-poor,” it said.
Amidst such discrepancies, the government decided to allocate Rs. 20 billion to make an advance payment benefiting 2 million Samurdhi beneficiary families at the onset of the COVID-19 outbreak. The decision to grant an interest-free advance of Rs. 10,000 was reached at a Presidential Task Force meeting on providing reliefs for needy people. The programme will be conducted in two phases where each family will receive Rs. 5000 at one time. Interest will not be charged on this amount and the first six months would be a grace period. Following this the families are given 18 months to repay the amount. However, many recipients who gathered at the respective Grama Niladhari offices at the onset of this announcement claimed that they were not entitled to receive the advance since they were not registered. In certain areas, Samurdhi recipients were given a relief package worth Rs. 1300 which would be deducted from Rs. 5000 that they receive.
“Nearly 1.8 million people are going to get the Samurdhi loan scheme,” said Prof. Charitha Herath, Head of Media Coordination for the Task Force. “According to the information we have, nearly 70-80% people have already received it and we hope to finish it off soon. There are people who have already registered to be entitled to this scheme and those in the waiting list. Those in the waiting list were never recognised due to their political backgrounds during the previous regime. But irrespective of their political background we are going to cover the waiting list as well. We will consider their economic backgrounds only. Other payments such as pensions too will be handed over to people who are entitled to it in the coming few days.” said Prof. Herath.
However during the past few weeks, many Samurdhi beneficiaries claimed that they hadn’t receive their loans. When asked about how beneficiaries are being selected for this loan scheme, Prof. Herath said that it is the responsibility of the Grama Niladhari in that respective division. “They will make a list of people whom they feel are the most eligible to receive the Samurdhi loan,” he said.
A sum of Rs. 3500 is given to a family of four members or more, while a family with three family members gets Rs. 2500 while a family with less than three members is entitled to a Samurdhi loan of Rs. 1500. Prof. Herath however reiterated the fact that these beneficiaries will get Rs. 5000 in addition to what they are already being entitled to.
Sri Lankan approach needed
The GoSL recognises Small and Medium Enterprises (SMEs) as the backbone of its economy as it accounts for more than 80% of the total number of enterprises. Circular No.4 of 2020 issued by the Central Bank of Sri Lanka requested financial institutions to implement a debt moratorium on capital and interest. One of its clauses includes offering a six-month debt moratorium for affected industries in the SME sector. Sanasa Development Bank is one of the local banks supporting the government in its economic recovery programme by giving relief to its customers. “We also have a disaster management committee with the Sanasa Insurance Company where we have joined hands with cooperative societies to give relief packages to people,” said Samadanie Kiriwandeniya, Chairman of Sanasa Development Bank PLC. “These are people who have been earning a daily income which has dried up due to the market closure. We have over 1000 cooperative societies and over the years that have taken leadership in their own areas, mobilising communities to get ready for the economic recovery process. We are requesting the cooperative societies to be on alert to ensure that none of our members are falling behind,” said Kiriwandeniya.
She further said that women-headed businesses, SMEs and the Agri sector have been the most affected due to the COVID-19 outbreak. “The rural sector is not yet linked with technology such as WhatsApp therefore it’s a challenge to coordinate programmes. We need to create a network with the neighbourhood and conduct training programmes. After getting mobility we are targeting young mothers and focusing on nutrition because we need to establish food security. Hence we need a Sri Lankan approach to development and we are focusing on women and farmers in this process,” added Kiriwandeniya.
Establishing food security
According to the Climate and Food Security Monitoring Bulleting for Maha Season 2019-2020 prepared by the United Nations World Food Programme the continuous spread of COVID-19 may create a high level of food insecurity and indebtedness for the vulnerable groups in the country. However, many people seem to have started small scale home gardening projects; some going to the extent of planting and rearing edible gardens. In order to lead by example as a self-sustaining nation, the government recently launched the Saubhagya Home Garden Project thereby planning to distribute seeds and plants island wide for a sum of Rs. 20. However, whether such projects would stabilise the country’s food security in the long run remains a question.
“In the truest sense, food security is nothing but guaranteeing to all the people living in the country availability of healthy and nutritious foods, freely and in a sustainable manner,” opined Prof. Buddhi Marambe, Senior Professor in Crop Science, Faculty of Agriculture at Peradeniya University. “No country could attain food security by solely relying on the local food production. What should be done is maximising the contribution of the local agricultural sector for the national food security. The contribution of the local food production should not be assessed merely on its cost efficiency against imported food items. Instead, it should have a focus on the possibilities of further improving the agricultural sector of the country, while keeping an eye on future economic progression of the nation. After all, the agriculture sector is the major source of livelihood to a large population of Sri Lanka,” said Prof. Marambe.
“State assistance provided to improve agriculture should definitely be separated from the programmes introduced for poverty alleviation. Although we have been successful to some extent in alleviating poverty by providing assistance to the hand-to-mouth segment of the society (those who do not have talent, skill or financial ability to invest in any enterprise) ever since we secured independence, this is not going to help reviving the agricultural sector as expected,” he added.
“What we have to do now is to prepare ourselves for the next leap forward. Subsequent to forming an Overarching Agricultural Policy (OAP) covering all the aspects related to agriculture, individual sectorial policies could be prepared by the subject Ministry in line with the OAP. This policy should not be created by persons who believe that national food security could be sustained by merely planting few crops in every homestead of the country, but by experts and professionals with foresights in the agricultural sector. This standpoint of mine should not be misread as a disdain for the home garden initiative, as I frankly think it is a useful effort. However, it has its limitations and home gardens by themselves will contribute, but not help the nation to sustain food security in the long run,” he added.
He further said that in the aftermath of the coronavirus, it is necessary to prioritise the high yield crop varieties as well as animal species (livestock, poultry and fisheries) that would fulfill the essential food requirement of the country by infusing the most modern technologies to the sector. “We need to plan for this from now onwards. We need to produce more with less input. We must make effective modern technologies affordable to the end-users; for example, by removing taxes imposed upon them at least in the short-run. Further, it is important to revive the agriculture exports and reposition Sri Lanka in the newly emerging global market. If we work with a focused objective and unwavering policies, Sri Lanka could achieve the long anticipated progression in the agriculture sector as well as recapture the export markets we have lost to many other regional countries, in which we were dominant in the past,” said Prof. Marambe.