Revisiting Cash Transfers to Guyanese as Cost of Living Rises

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In the midst of  rising cost of living, Sherwood Lowe has raised anew the issue of using the expected oil revenue to address the welfare of the poor and the powerless in Guyana. Some observers have lauded him for it. In his missive to the media, Mr. Lowe chided the WPA for not fighting for Cash Transfers to the poor in the post-2020 election period. In a recent appearance on my TV program, Politics 101, former Minister of Finance , Winston Jordan and WPA Co-Leader, Professor Clive Thomas, both agreed that some form of cash payment or transfer to the poor and needy is needed to help Guyanese survive the current economic woes. Three years ago, Thomas first proposed that the government uses revenues from oil and gas to give cash transfers to every household in Guyana. He was speaking at the Eusi Kwayana Emancipation Symposium in Buxton organized by the Buxton First of August Movement on the topic, “The Coming Oil and Gas economy: Prospects for Empowering the Poor and revitalizing the Village Economy.” Thus, he and the other panelists were responding to a specific question—how will poor people benefit from the imminent wealth?

Thomas’ answer was simple and straightforward– give people a small portion of the oil revenue in the form of direct money in their pockets. We know that poverty has plagued Guyana; it is at the heart of all our woes. Currently approximately 43% of Guyanese live below the poverty line—some economists think it is higher than that. Some of us, courtesy of the limited opportunities available, have been able to crawl our way above the poverty line. But most Guyanese are left behind—they stare at poverty daily. So, what Thomas and the WPA are saying is that with the coming oil revenue, we have the best chance to tackle this scourge that has been holding back our people and our country by guaranteeing them a direct income from the oil revenues. Of course, Cash transfer alone will not end poverty. It must go hand in hand with improvement of our social infrastructure– Government must invest more in education, in health care, in childcare. So, the frowning on cash transfers and instead relying on spending on social programs represent a minimalist approach. It should not be one or the other; it must be both. Poverty must be tackled from all angles. We need a maximalist approach.

Those who rule out cash transfers are ignoring current data, which show that these programs have been a resounding success across the world as far as poverty reduction is concerned. Many countries across the world–in Africa, Latin America, Asia, and even in Europe– have found that when cash is put into citizens’ hands it has helped in poverty alleviation. These programs originated in Latin America and the Caribbean in the 1990s. The data shows that cash transfers have had positive impacts on nutrition and school attendance, which in turn has helped to reduce poverty.

According to a 2016 IDB study of cash transfer programs in 17 Latin American and Caribbean countries over a 20-year period, “Multiple evaluations have proven that these programs have made a significant difference in the lives of the families living in poverty. They help families put more food on the table and enjoy a more varied diet, allow more children and youth (particularly girls) to attend school, and encourage families to regularly receive basic health services…”In 2013, approximately 137 million people in 17 Latin American countries received transfers that represented, on average, between 20% and 25% of their household income and an average of 0.3% to 0.4% of their respective country’s gross domestic product”

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The study went on to conclude that, “CCTs have been unquestionably effective at increasing the consumption of beneficiary households, as well as at reducing the incidence and, especially, the intensity of poverty and inequality. Not only have CCTs increased household consumption, but they have also improved its composition in terms of the quality and variety of food consumption. One very consistent finding is that CCTs have reduced child labor and boosted school enrollment and attendance in many countries…At the same time; these programs have also helped to improve school progression. In Mexico, after three to five years of exposure, years of schooling increased by six months to one year; similarly, in Nicaragua, after three years of exposure, beneficiary children progressed almost half a grade more than non-beneficiaries.“

It is simply amazing that with all this data available and with so many countries across the world using this mechanism, so many of our public leaders and commentators were quick to dismiss the Cash Transfer proposal as unwarranted  or at best express caution. They simply didn’t do their homework. The then president was reported as saying that he has not seen any precedent for it. The then  Opposition leader saw it as a political gimmick. Mr. Anil  Nandlall said it would  create a country of parasites. I challenge this gentleman to show me one country of parasites in Latin America or beyond that is using this mechanism. Many persons have parroted the Nandlall line that if you give people money, they will spend it on rum and dope, and that we would create a dependency syndrome. We now know the deep-seated social bigotry that exists just below the surface among many Guyanese. All these defenders of poor people, some of whom are happy to give personal handouts to poor people, now show us what they really think about the masses. When they argue for transfer of money to rich people, they never question their capacity to spend it wisely. But for them, poor people are inferior in this regard —”Don’t give them money, let us spend it for them; we know better than them. We ought to be ashamed of ourselves.”

The other piece of high-class ignorance we heard is that by giving two to four percent of our oil revenues as cash to people, we will be creating a Welfare State. I was forced to ask: What do they know of Welfare States? Here is the most used definition of a Welfare State—” The welfare state is a concept of government in which the state plays a key role in the protection and promotion of the social and economic well-being of its citizens. It is based on the principles of equality of opportunity, equitable distribution of wealth, and public responsibility for those unable to avail themselves of the minimal provisions for a good life….The welfare state involves a transfer of funds from the state to the services provided (i.e., healthcare, education, etc.) as well as directly to individuals “benefits;”

Almost all European countries are so-called Welfare states–Canada and China, and Russia are.

The Caribbean country that many Guyanese run to—Barbados—has been the most successful and enduring welfare state in our region. When the last government attempted to dismantle that welfare state, the Barbadians did not give them one seat at the last election. Many States in the USA have the actual word “welfare” in their constitutions. Now, we propose a little cheque for poor people in Guyana to supplement their earnings, and those of us who are well-to-do are searching in every corner to find ways why they should not get it. By the way, the word “welfare” as used in the USA and which we repeat in this discussion has racist connotations, yet we Guyanese use it as if its high science.

More of Dr. Hinds’ commentaries can be found on his website guyanacaribbeanpolitics.news and on his Facebook page Hinds’Sight. Catch him on Facebook on Tuesdays and Thursdays at 6:30 pm for Politics 101 with Dr. David Hinds.



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