The pitfalls of a one-time cash grant

Oct 13, 2024 Peeping Tom

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Peeping Tom…

Kaieteur News – In this the golden age of Guyana’s new oil economy, expectations run high. Among the most tantalizing fantasies has been the notion of a monthly cheque arriving in every citizen’s mailbox—a dividend for simply being Guyanese, sharing in the country’s newfound wealth.

Yet, as reality would have it, the idea remains a mirage. There are two glaring reasons why such visions are bound to remain elusive: first, the colossal needs of a society where essential services are fraying, and second, the rather modest sums that Guyana is receiving for its oil, sums which so far only allow for about 30% of the financing of the country’s budget.

But under pressure to ensure that citizens benefit directly from oil revenues, the government has unveiled a seemingly generous gesture: a one-off cash grant of $200,000 for every household. In comes one year before elections are due.

But as appealing as this may sound, it is not the vote-winning gambit the government might believe it to be. Instead, it risks generating a wave of controversy that could ultimately undermine any electoral gains it hopes to achieve.

It is worth noting that in the past, one prominent former official from the opposition Alliance For Change (APNU) took a different stance to cash transfers, advocating for the strategic use of oil revenues to fund long-term projects rather than short-term cash transfers. His view was simple and well-worn: “Give a man a fish, and you feed him for a day; teach him to fish, and you feed him for a lifetime.” This perspective, though perhaps unfashionable, has merit in the context of a nation burdened by infrastructural decay and innumerable social needs.

Consider these needs. Drive through almost any community, and you will encounter crumbling roads, clogged drains, and dilapidated schools—some still reliant on pit latrines. Health centers are in desperate need of refurbishment, public spaces lack maintenance, and garbage collection often falls short. Recreational facilities, where they exist, are in poor condition. These are not cosmetic concerns but pressing needs that directly affect the quality of life. The elderly need needs proper care and retirement homes; persons who have sick and at homes, need home-care assistance.

Addressing these and many other needs will require billions of dollars. A $200,000 cash grant may provide temporary relief for households it does little to solve these long-term issues.

Yet, here we are, with the government offering what is effectively an electoral éclair—a sugary, short-term delight that dissolves quickly, leaving behind an emptiness that belies the initial appeal. The one-off cash grant may seem like a political masterstroke, but it is likely to invite more trouble than it’s worth. For one thing, the allocation of such grants is rarely smooth. The process will almost certainly breed resentment. There will be those who believe themselves entitled but who find themselves excluded—whether through bureaucratic oversight, perceived favoritism, or the inevitable gaps in a hasty rollout.  Thousands are going to be left with pink slips and no cash grant. Conversely, there will be recipients deemed undeserving by others, fueling accusations of political bias and discrimination. It always happens.

These perceptions can be toxic in an election year. The PPP/C may believe that the distribution of cash will generate goodwill, but in reality, it is sowing the seeds of discontent. For every recipient who may feel grateful, there is likely to be another who feels slighted. If the government’s hope is to curry favor through this initiative, it risks achieving the opposite result. Instead of applause, it may well be met with a chorus of complaints about unfairness, incompetence, discrimination and favoritism—none of which are conducive to electoral gains.

The optics of the cash grant will likely come under scrutiny. Amid a national conversation on the rising cost of living, many argue that a more sustainable approach would have been to reduce the Value-Added Tax (VAT) to 10%, thereby offering relief to all citizens through lower prices on everyday goods.

True, the government may point out the wide range of zero-rated VAT items already in place. But this begs a question: if the VAT rate is truly reasonable, why then is there a need for so many exemptions? A more modest and universal reduction might have achieved the dual aim of offering relief and improving the perception of the government’s economic stewardship.

The decision to offer a blanket cash grant rather than targeted measures or long-term investments suggests a lack of strategic thinking. It is a reactive measure, driven by the desire to quell mounting pressure for cash transfers rather than a proactive vision for the country’s future. And as is often the case with such gestures, the immediate boost in popularity may be fleeting, while the negative fallout could be enduring.

Elections, after all, are won or lost not just on grand gestures but on the perceptions of fairness and competence that linger in voters’ minds. The controversy surrounding the cash grant distribution could easily overshadow the intended goodwill, transforming what might have been an electoral boon into a political headache. Stories of those who missed out, who received less than expected, or who saw their neighbors benefit unfairly will likely spread faster than any praise for the government’s largesse.

Sixty billion dollars is no small sum, and in the context of a nation with so many pressing needs, its use must be carefully considered. It could have been channeled into projects that create jobs, improve living conditions, and generate long-term value for citizens. It could have been channeled into better care homes and providing home-care services for those with very sick relatives. It could have more than provided free transportation for hinterland students to get to and from school.

Instead, the government has chosen a path that prioritizes short-term gain over long-term stability. It is a decision that may ultimately cost them more than the $200,000 they hope to spend on winning hearts.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.) 

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• condition, Government, Guyana, living, monthly cheque, transfers

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