Find us on Google+

Wednesday, 3 December 2014

The cost of inaction

The Electoral Commission of Zambia (ECZ) announced this week that it will spend around K344 million ($55m) in administrative costs to conduct the 2015 presidential elections. The administrative cost may increase because the actual cost of printing ballot papers will only be known once the size of the ballot paper has been agreed. That in turn depends on the number of contenders.

The last time the cost rose to $70m. This time we probably we will definitely get above $60m as a conservative estimate. Even if part of this cost is funded by aid from foreign governments, Zambia still bear a significant share. Also there are non-administrative costs like providing additional security, as well as indirect costs in form of lost productivity and diversion of public funds to less efficient areas.

Now in case you are wondering what $60m can do for Zambia, let us remind you. Zambia has many of our households living on less than $2 dollars a day (probably as many as 60%). Suppose we decided to give these families a helping hand - say by giving them just $50 bi-monthly (or $300 per year) to complement their income in 2015. We could support a minimum of 200,000 households with direct income.

At this stage you may be wondering, $300 for a year, would that make any difference? Yes. This is the exactly the amount Government is giving disabled households as part of the current Cash Transfer Scheme which is designed to support vulnerable households. Non-disabled families only get $150 for a year. In other words if we targeted our $60m only at current government support for non-disabled households we would have 400,000 families in 2015.

Giving money directly is the new way of tackling poverty with strong empirical support. Cash transfers are favoured over transfers in kind (e.g. food subsidies) because cash transfers have the advantage of permitting beneficiaries to use the money flexibly on their own priority needs unlike in-kind transfers that prescribe to the beneficiaries what to consume. Cash transfers also inject cash into local markets and the community, whereas handouts may even distort prices and disadvantage local markets. Not to mention they are cheap to run.

If we don’t like cash support, we can explore other ways in which the $60m can be spent to help the poor. For example, you could make it available as a social protection fund that gives a one off grant of $1000 to each family with viable business proposals. That would mean 60,000 vulnerable families benefiting with new cash to support a viable business venture. Not only would these grants help encourage poor families to consider new businesses, it may also lead poor families to widen the sort of business they engage in.

Simply put, the opportunity cost of having the presidential bye-election is actually using the money to fund initiatives that helps to lift people out of poverty in 2015 e.g. cash transfer scheme, social protection grants. The bottom line is that government has failed our poor people by failing to put forward a constitutional change that removes presidential bye-elections. Money is now about to be wasted when we are broke as a country.

Sadly, it is not just government that is failing the poorest people. All politicians are allowing this money to be wasted. What these politicians bent on securing power should be doing is pushing for a delay to the presidential by-election by parliament dissolving itself. This can then save money by resetting the electoral cycle i.e. elections would be held in 2015 and then 2020. Most importantly it would allow time for us to consider the possibility of combining the general election with the referendum on the draft constitution.

Our politicians will never rise above their selfish interests. The people must demand they do. This is a good place to start.

Copyright © Zambian Economist 2014

No comments:

Post a Comment

All contributors should follow the basic principles of a productive dialogue: communicate their perspective, ask, comment, respond,and share information and knowledge, but do all this with a positive approach.

This is a friendly website. However, if you feel compelled to comment 'anonymously', you are strongly encouraged to state your location / adopt a unique nick name so that other commentators/readers do not confuse your comments with other individuals also commenting anonymously.