Cash transfers are prime targets for corruption and mismanagement- Economist

Oct 15, 2019 News

The conversation on cash transfers is still ongoing. More views are being expressed on the issue. Many still continue to argue its feasibility and the benefits it could prevail on the country.
“Even when necessary protections are in place, there is still room for corruption and mismanagement,” stated Economist and Executive Director of Guyana Budget Policy Institute, Dhanraj Singh.
In an interview with this publication yesterday, the Economist disclosed that corruption and mismanagement with cash transfers programme can originate from various aspects.
He theorised that cash transfers are more vulnerable to political manipulation and clientelism. He explained that this is as a result of using cash transfers as a means to “buy” votes or obtain political support.
“Further, when the process used for targeting beneficiaries are not transparent or are subjected to political interference (which in Guyana case is a real concern), politicians can also use their discretion to target selected communities for purely political reasons,” Singh stated.
He highlighted that this was revealed in many countries. He explained that in Peru, a cash transfer programme called JUNTOS was implemented in 2005 during a pre-election period to ‘drum up’ support for the government.
He added that a study of the 2006 Brazil elections also showed that poorer Brazilians were the most readily persuaded voters by the provision of income transfers from the Bosla Familia programme.
He noted that this aided Lula (former president of Brazil) to return to presidency despite widespread corruption and scandals implicated by his party and Government.
The economist disclosed that cash transfer programmes can impose administrative corruption and various forms of fraud. He elaborated that this can occur by targeting and selecting of beneficiaries and as a result of unclear targeting and registration processes.
He added that it is therefore prone to leave room for discretion and many opportunities for corruption can be created from the aforementioned processes where those in charge of conducting selection assessment can be bribed to favour a particular group.
Singh stated that there are shortcomings in processing the benefits where implementing ministries often lack the resources and capacity to monitor and supervise cash transfers programme.
He explained that in such an instance, there is increased vulnerability to leakage and corruption.
The economist explained that corruption can also arise from monitoring cash transfers programmes. He highlighted that studies explored the interaction between the monitoring committee and the beneficiaries of cash transfers.
The documented cases found that the beneficiaries were asked to pay bribes or kickbacks to local liaison officers in order avoid losing benefits.
He added that another study in Peru also found substantial evidence of local representatives asking for gifts from beneficiaries who failed to meet eligibility criteria or for not reporting failures to comply with the conditions.
Singh stated, “It is no surprise that this conversation is also happening in a pre-election year. Research shows that political benefits of cash transfers programmes are huge since voters with lower level of economic security are more likely to be persuaded and support politicians that promote such programmes.”
Singh said that there are major problems that are generally associated with cash transfers. He added that cash transfers are prone to corruption and mismanagement where there is a significant cost to administer such a programme.
He further explained that the funds will not be in the hands of who need it the most.
He said, “Even with targeted cash transfers, the potentials for corruption and leakage are enormous.”
Singh iterated that there are other critical services that can be invested, which will benefit all Guyanese.

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