What the poor spend on when they get money
Mar 30, 2008
The National Plan for the Eradication of Poverty (PEAP) is to be reviewed, and I hope, reformed, so that we can achieve some part of Uganda’s Millennium Goals for 2015. The number of Ugandans living in poverty is about 34% of the population, that is, nine million people.
BY CRADDOCK WILLIAMS
The National Plan for the Eradication of Poverty (PEAP) is to be reviewed, and I hope, reformed, so that we can achieve some part of Uganda’s Millennium Goals for 2015. The number of Ugandans living in poverty is about 34% of the population, that is, nine million people.
The idea that the numbers can be reduced, if not halved, by giving them cash, is superficially attractive. This is proposed and funded by the British Government (through DfID) for eradicating poverty in Uganda.
When cash is offered, the numbers of poor people applying to receive it can only increase. The idea that the poor will at once invest in tools to produce saleable goods is also misconceived.
According to a survey last year (TDC/EPA, Sept 07), the items on which the poor spend money when they get it are:
- Transport to town, as part of Uganda’s continuing urban drift.
- School expenses, an expression of the deep desire for education and income-earning capacity.
- Mobile phones or the use of mobiles, to contact relations with cash.
The pattern of consumption varies with the depth of poverty in each income group, and with each location of varying resources. The lowest and poorest tenth of the population — the bottom decile numbering 1.5 million, mainly rural people — typically receive less than 9% of their total life support in cash. The rest is income in kind, their Own Produce Consumed (OPC).
Even here, there are key distinctions to be observed. The “poorest of the poor†— in DfID’s emotional phrase, will spend 100% of any increase in their cash income on food. Those with a ‘productive resource base’ — fertile gardens, healthy livestock — tend to spend any increase in their cash income on transport, school fees, mobiles and medicines.
Fewer than 2% of the poorest tenth we found in our survey spend cash increases on tools — and none at all on training courses or skills acquisition. The courses offered by Enterprise Uganda and UIRI are bought by the not-so-poor — those who have emerged or are emerging from subsistence poverty.
Those leaps in productive capacity through skills training are for the well-placed with lower-middle cash incomes in the 5-7th income groups.
Great variations exist within any one income group — all depending on particular household circumstances. The officials designing Government-funded interventions are obliged to establish statistical averages in order to target beneficiaries. The same applies to any independent survey of poverty and its prevailing characteristics.
Respondents were asked on what items they would spend extra cash. Their answers may have depended on the urgencies prevailing at the time of the survey. A household with a crop failure or loss of livestock would be urgently impelled to spend any current or extra cash income on food. Crises occur where there is neither OPC nor cash, in which case, cash transfers act as emergency or humanitarian aid.
Variation in spending preferences also depends on who is head of the household and speaking for it to interviewers. Women invariably have a greater preference than men for buying food, fuel, water and clothes.
Men have greater preferences than women for drink, transport and entertainment — the drink often being tonto, malwa or enguli.
“We get so little money, we might as well enjoy itâ€, was a common male response. In no case did farm inputs like seeds, hoes or pangas rate as priorities — even though many households needed them and suspected that any extra cash provided by the Government agencies should be spent on tools aimed at greater productive capacity.
Poverty in Africa means longer term aims are worthless against current urgencies. The future is discounted close to 100% by poor households.
Governments must address poverty eradication by methods that raise popular horizons to a future secured by production – not aid-funded cash transfers.
The writer works with Tricontinental Development Consultants
The National Plan for the Eradication of Poverty (PEAP) is to be reviewed, and I hope, reformed, so that we can achieve some part of Uganda’s Millennium Goals for 2015. The number of Ugandans living in poverty is about 34% of the population, that is, nine million people.
The idea that the numbers can be reduced, if not halved, by giving them cash, is superficially attractive. This is proposed and funded by the British Government (through DfID) for eradicating poverty in Uganda.
When cash is offered, the numbers of poor people applying to receive it can only increase. The idea that the poor will at once invest in tools to produce saleable goods is also misconceived.
According to a survey last year (TDC/EPA, Sept 07), the items on which the poor spend money when they get it are:
- Transport to town, as part of Uganda’s continuing urban drift.
- School expenses, an expression of the deep desire for education and income-earning capacity.
- Mobile phones or the use of mobiles, to contact relations with cash.
The pattern of consumption varies with the depth of poverty in each income group, and with each location of varying resources. The lowest and poorest tenth of the population — the bottom decile numbering 1.5 million, mainly rural people — typically receive less than 9% of their total life support in cash. The rest is income in kind, their Own Produce Consumed (OPC).
Even here, there are key distinctions to be observed. The “poorest of the poor†— in DfID’s emotional phrase, will spend 100% of any increase in their cash income on food. Those with a ‘productive resource base’ — fertile gardens, healthy livestock — tend to spend any increase in their cash income on transport, school fees, mobiles and medicines.
Fewer than 2% of the poorest tenth we found in our survey spend cash increases on tools — and none at all on training courses or skills acquisition. The courses offered by Enterprise Uganda and UIRI are bought by the not-so-poor — those who have emerged or are emerging from subsistence poverty.
Those leaps in productive capacity through skills training are for the well-placed with lower-middle cash incomes in the 5-7th income groups.
Great variations exist within any one income group — all depending on particular household circumstances. The officials designing Government-funded interventions are obliged to establish statistical averages in order to target beneficiaries. The same applies to any independent survey of poverty and its prevailing characteristics.
Respondents were asked on what items they would spend extra cash. Their answers may have depended on the urgencies prevailing at the time of the survey. A household with a crop failure or loss of livestock would be urgently impelled to spend any current or extra cash income on food. Crises occur where there is neither OPC nor cash, in which case, cash transfers act as emergency or humanitarian aid.
Variation in spending preferences also depends on who is head of the household and speaking for it to interviewers. Women invariably have a greater preference than men for buying food, fuel, water and clothes.
Men have greater preferences than women for drink, transport and entertainment — the drink often being tonto, malwa or enguli.
“We get so little money, we might as well enjoy itâ€, was a common male response. In no case did farm inputs like seeds, hoes or pangas rate as priorities — even though many households needed them and suspected that any extra cash provided by the Government agencies should be spent on tools aimed at greater productive capacity.
Poverty in Africa means longer term aims are worthless against current urgencies. The future is discounted close to 100% by poor households.
Governments must address poverty eradication by methods that raise popular horizons to a future secured by production – not aid-funded cash transfers.
The writer works with Tricontinental Development Consultants