Making sense of numbers

Poverty is a dreaded word for all humans. The Sri Lankan Government has aggressive statistics for dealing with the issue by targeting poverty to be reduced to 3% by 2016, with the 2010 data showing 8.9% and 2011 7.9%, but the numbers still remain bleak.

The ‘Samurdhi’ programme under the Economic Development Ministry says that 1.5 million families in Sri Lanka are recipients and another 100,000 will be added to this once people in the north and east are also covered. If one considers that there are around five million families in the country and 1.6 million of these are ‘Samurdhi’ recipients, then the numbers explain themselves much better. They also indicate that poverty levels are much higher than official statistics show.

Acting Economic Development Minister Lakshman Yapa Abeywardana’s explanation for this is that 4% of the recipients actually do not need ‘Samurdhi’ but continue to receive it as they have micro-finance loans that need to be paid off. If this is to be factored in, there are still a significant number of people who need handouts, which underscores a grave need to restructure and prune the overall programme.

The budgetary allocation for ‘Samurdhi’ this year is Rs. 12.3 billion, a rather insignificant amount when one considers that the Defence Ministry has received the lion’s share of Rs. 230 billion. Moreover, if the Minister’s statement is to be believed, then the ‘Samurdhi’ scheme needs to be restructured into two tiers – one where the microfinance schemes encourage self-employment and entrepreneurship and a second level that combats acute poverty.

Not only would such a structured effort clarify the mismatch between ‘Samurdhi’ numbers and poverty statistics, but it would ensure that public money is used more effectively for empowerment rather than mere handouts. Investing in its own citizens is a positive step, but wastage of money through multiple handout projects have reduced public trust in programmes such as ‘Samurdhi,’ although welfare is a necessary part of an economy to assure sustainability.    

While acute poverty is no longer an issue, poverty still remains widespread and continues to be a challenging problem in Sri Lanka. More worrying, however, is the fact that 90% of the poor live in rural areas, with over 80% of Sri Lanka’s population still living in rural areas.

This highlights a link between isolation from social and economic infrastructure, cities and markets and higher levels of poverty incidence. One explanation could be that it limits these people from earning income through off-farm activities. In addition, with more than 40% of the rural poor people being small farmers, their production systems may be hampered by the usual suspects of fragmented landholdings, poor economies of scale, low investment levels resulting from poor financial services as well as inappropriate or limited technology.

While it is identified that development in the rural areas is crucial for poverty alleviation, the Government cannot possibly channel unlimited funds into development plans without constraints, disregarding potential developments in urban areas, or more importantly, not considering the state of its overall economy. Therefore, the Sri Lankan Government faces a dilemma of pursuing growth that is equitable; trying to promote economic growth without leaving the poor in the rural area behind. Better management of ‘Samurdhi’ would be a place to start.