State cash scheme for the poor under scrutiny

The rising urban inequality, according to analysts, is creating a huge underclass with serious consequences for the country’s security and social fabric as the struggle to survive has forced some of the most vulnerable people into crime and high-risk occupations such as prostitution.

The cash disbursement plan comes at a time when the global economic slowdown continues to make it difficult for families to afford basic necessities such as food and fares.

Economists say a combination of falling household income, rising prices and poor governance was making life miserable for the poor majority in Nairobi and other major towns and that this was creating a big pool of poor families and low class citizens.

But an economist, Dr Samuel Nyandemo, is also questioning the criteria to be used to identify the needy and the sustainability of the programme.

“We have not established the barometer for measuring the most vulnerable cases. How will the government establish who is poor or rich. The money allocated for this project could end up in the pockets of the undeserving,” says Dr Nyandemo who is also a lecturer at the University of Nairobi’s school of business.

“The people living in the slums are not necessarily poor. They could be rich back in their rural homes. The government is yet to carry out a comprehensive survey to identify poor pockets of the country,” says Dr Kiriti-Nga’ng’a.

There are also questions regarding the possibility of an increased budgetary expenditure and the tax burden that could be left on the working class.

“We are definitely likely to see an increase in the government budget,” says Dr Kiriti-Nganga “In any subsidy situation, it is always the working class that suffer as they will have to pay more taxes, the government would not want to borrow externally to fund this programme because it is intended to run for a long time”

Finance Minister Uhuru Kenyatta presented a Sh860 billion budget last June and analysts say this is likely to go up with the new government plans to give money directly to poor families.

Already Sh2 billion was allocated in the 2009/2010 budget for drought relief, out of which one billion shillings is to be used to develop a food subsidy scheme targeted at the vulnerable people.

The sustainability of the programme is also being questioned because it comes at a time when the Kenya Revenue Authority is reporting low tax collections.

KRA fell short of its July-September targets by Sh4 billion, having netted Sh128 billion.

This failure leaves the Government in a tighter financing position to fund the pilot project which requires Sh600 million for the next eight months.

“The MPs are not paying taxes, so you know very well that it is the common man who will fund this programme,” says Dr Kiriti-Nganga.

Plans for the country’s first ever cash based social welfare programme is modelled around successful schemes in Brazil, Chile, Ethiopia, Ghana and South Africa where the poor draw monthly subsistence allowances.