It doesn’t make sense to allocate funds based on poverty
The Sunday Nation
Nairobi,
18 March 2012
“How dare you say that poverty is meaningless?” This is how Patrick Musembi opened his email in response to my last article. Many other readers have expressed similar sentiments but Patrick’s was the most straightforward. Consequently I feel the need to explain my position a little more.
Even though data on poverty levels is readily available, there is very little information on an empirical definition of its meaning. I did an internet search over two days but couldn’t find it. Admittedly, this was not a thorough review of academic publications – no one would do that for a 500-word newspaper article!
The common notion, however, is that a poor person is one who lives on
less than a dollar a day. Now in
And therein lies the first problem: does the poverty line shift up and down as the exchange rate oscillates? Secondly, that notion of one dollar per day defining the poverty line has been around for a few decades now. Surely, the escalation of the prices of essential commodities must have raised (or is it lowered?) the line.
My position is that whereas poverty elicits strong emotions, it remains a negative entity that cannot be determined empirically, and therefore it is meaningless. Instead, planners must only be guided by positive and measurable parameters like, for example the Gross Domestic Product (GDP), or the Human Development Index (HDI) Developed by UNDP.
Still, for the avoidance of doubt, I must state clearly that, I do not support the idea to allocating funds on the basis of poverty levels. Such a plan makes it desirable to be poor – after all, one get’s more money the poorer they are!
Instead, I would be happier with a criteria based on improvement of living conditions; that is the rate of reduction of poverty levels, or, better still, increase of GDP or HDI.
Counties that manage their resources better for the benefit of their people should be rewarded with greater funding. This way, we are likely to create a competitive environment where Governors try to outdo each other in improving the standards of life for their people in order to get higher allocations.
Patrick also asked me to comment on the claims made in Parliament that
the Central Bank of
Suppose further that each month you over draw your account by Sh900,000 but then return all of it as your customers pay your. If you continue doing this for a year, can the bank claim that it lent you over Sh10 million during the period?
The parliamentary committee would say yes. What about you?
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