Monday, 29 February 2016

Re: President Buhari’s N5,000 Social Welfare promise

By Dr. Ahmed Adamu

Dr. Ahmed Adamu
During the 2015 elections campaign, President Buhari and his party APC clearly promised to pay N5,000 stipend to 25 million unemployed and vulnerable citizens monthly, and this was highlighted during the last Presidential media chat. Considering the enormity of this undertaking, in November 2015, the wife of the President, Hajiya Aisha Buhari appealed to her husband to keep to this promise in her response to the prompt withdrawal of a startling motion proposing the payment of monthly N5000 to unemployed youth by the opposition party in the National Assembly, who have no obligation to such responsibility. Surprisingly, the APC Senators, whose party made the pledge rejected the proposal. Recently, while in Saudi Arabia, President Buhari himself declared his resolve to not implement this campaign promise.  No doubt, many young people were tempted by the N5,000 promise and will definitely be disappointed by Mr President’s recent proclamation. As such I decided to write this little piece to convince the disappointed young people on why Mr President is right on his position.

First, I would like to remind us that we are only human, and we can never be perfect. There is difference between expectation and reality, and experience make one adjust and do things better.  There is a popular saying that, it is better to teach people how to catch fish than to give them fish. Similarly, Sociologists argued that welfare programmes are responsible for encouraging and supporting claimants into welfare dependency, and I believe that systems that disburse money in ways that are not compatible with producing social utility can create pathological cultures of dependency. Welfare programmes lead to negative incentive to not work and thus sustains poverty.

All welfare programmes are meant to address poverty, but the question is how many people will really get out poverty by receiving N5,000 a month? Relying on the N5,000 a month will mean N166 expenditure a day, which still won’t take the beneficiary out of poverty, and the cost on the government will still be huge. And if 25 million beneficiaries are to be selected, the government will be spending N125 Billion every single month trying to fight poverty, but instead, it will be encouraging or sustaining the poverty.  In addition, how many months would a person needs to benefit from this package to get out of poverty? It is not likely for any individual to get out of poverty by collecting N5,000 a month in the wake of 8% inflation rate. Even government workers that receive N45, 000 remain poor. Without access to free or affordable housing scheme, and without access to education, healthcare, energy, transport systems, one has to provide for himself all these and yet feed himself and his family. Then, how will N5,000 make a difference?

If at all social welfare system is to be considered in this country (sooner or later), I will recommend to go for quality not quantity, instead of investing the N125 billion a month on 25 million people, it is better to spend the money on only 12,500 people, so that each individual will receive N10 million once and for all, and in one year, you will have around 150,000 people receiving N10 million each. This is the sure way of getting people out of poverty if at all social welfare programme is to be implemented in the country.

So, it is clear that N5,000 cannot improve the standard of living of the poor, and if the beneficiary will risk migrating artificially to a higher social class for collecting this package, then he/she risks poverty traps. It was observed that, especially young people engage in extra spending upon receipt of social welfare or poverty interventions funds, and thereby making them enlarge their expenditure basket, and once they stop receiving such intervention, they will go back to being poor. They can even engage in crime to enable them get the free money that they have been used to, in order to sustain their upgraded social classes. Another inadequacy of the social welfare is that many people who may not necessarily need it, will pretend to be poor so as to benefit from the programme and thereby denying others a chance.

Therefore, it is not about giving the money, but how do they use the money. Some scholars believe that, some poor people are poor in managing resources, and if you give them money they will mismanage it. So, investment shall be channeled toward educating people to be good managers of resources so that with little resources they can access, they can make it count. Giving out money without corresponding economic value or output is an economic leakage. Even though, it might trigger expenditure, but that is not the optimal option, as the value addition is lost.

Many people would have been rich if basic infrastructures and provisions are provided, but now they are poor, because large proportion of their income is spent on providing such basic requirements, and yet not sufficient. So, it is a clever move to channel resources toward improving infrastructures and provisions in the real sectors of the economy, so that with little earnings, people can attain the required standard of living. This will also facilitate other economic activity, and any serious individual will take the advantage of this and become productive. If any money is intended to be spent for this purpose, it should then be channeled toward subsidizing education and health, being the basic requirements to prepare the labour force of the country. Therefore, Mr President is right to redirect resources toward providing an enabling environment and provisions for the productive sectors, so that people can catch their own fish.

Ahmed Adamu, PhD, is a Petroleum Economist, Development Expert and Pioneer Global Chairperson of the Commonwealth Youth Council. He is a lecturer with Department of Economics, Umaru Musa Yar'adua University. 

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