Corruption and social protection
Sri Lanka’s social protection system has many different programmes including ‘Samurdhi’ and ‘Aswesuma,’ free medicines through the public health services, disability pensions, pensions, the Employees’ Provident Fund (EPF) and Employees’ Trust Fund (ETF), insurance schemes, and various subsidies such as the fertiliser subsidy. This discussion is limited to the cash transfer programme of ‘Samurdhi’ and its successor ‘Aswesuma’.
The ‘Samurdhi’ programme started in 1995 with the objective of eliminating poverty in Sri Lanka, mainly through the inclusion of low-income households and the provision of resources to support economic improvement.
The sub-objectives of the programme are: broadening opportunities for income enhancement and employment; organising youth, women, and other disadvantaged segments into small groups and encouraging them to participate in decision-making activities and developmental processes at the grassroots level; assisting persons to develop their talents and strengthening their asset bases through productive employment; and establishing and maintaining productive assets to create additional employment opportunities at the rural level.
The programme spent about Rs. 275.8 billion between 2004 and 2018 with an annual average of Rs. 17.2 billion. It supported 1.86 million families in 2004, even though the number had reduced to 1.38 million by 2008.
The ‘Samurdhi’ programme helped numerous families overcome poverty, which allowed for some wealth redistribution from the non-poor to the poor. However, amongst many, its main weakness was a large exclusion error and consequently a large inclusion error.
The World Bank (2012), Centre for Poverty Analysis (CEPA, 2007), and many other organisations have confirmed that about 50% of the ‘Samurdhi’ programme’s resources are given to the non-poor, making the programme inefficient. This exclusion error is not an unavoidable mistake. It is a purposive inclusion of politically loyal families in order to allow the ruling party to maintain its vote base. There is sufficient evidence to prove this point.
In essence, this is a form of corruption that misuses tax money for political campaigns. Between 2004 and 2018, about Rs. 137.9 billion of taxpayers’ money had been misused by the Government for party politics. Instead of bribing voters, this large sum of money could have been put to better use by supporting the excluded poor.
The successor of the ‘Samurdhi’ programme – ‘Aswesuma’ – was implemented in July 2023 to support the poor during the economic crisis. The poverty incidence increased from about 4% to 30% due to the impact of the Covid-19 pandemic and subsequent economic crisis.
‘Aswesuma’ is different from ‘Samurdhi’ as it is a consumption cash transfer. There are no poverty alleviation elements in ‘Aswesuma’ as in ‘Samurdhi’. The programme included two million families which were categorised as transitional, vulnerable, poor, and severely poor, while monthly allowances were provided.
The main reason for changing from ‘Samurdhi’ to ‘Aswesuma’ is the large number of exclusion errors in ‘Samurdhi’. This was seemingly a positive change and the Government’s efforts to generate funds for this programme at a crucial time should be appreciated. A 21-criterion system was developed for the systematic selection of eligible families. CEPA was hired by the World Bank to train the trainers for implementing the selection process.
In the meantime, the Government issued a gazette notification indicating that Government officials would be responsible for any errors in selection of eligible households. In response to this gazette notification, unions of Government officials threatened to go on strike. Finally, the training programmes did not take place and selection of households was carried out without following a transparent process.
As per official statistics of the Welfare Benefits Board, 3,744 million applications were received for 1.894 million eligible beneficiaries. The number of appeals was 1.028 million, together with 134,540 objections.
An International Labour Organization (ILO)-UN Women publication stated: “The hit-or-miss approach aided by the verification process via text messaging and QR codes ensured many vulnerable women were left out of the process of identification. It also led to a lack of accountability, as public officials claimed that they were not involved in the selection process.”
The first year of the ‘Aswesuma’ programme ended in July. The justification to introduce a new programme instead of ‘Samurdhi’ was violated by including 400,000 ‘Samurdhi’ recipients in the programme.
The preliminary findings of a CEPA household survey indicates that exclusion errors of ‘Aswesuma’ can be as high as 75%. Given the selection process followed and the outcome of possibly large exclusion errors, it is logical to ask the question whether changing from ‘Samurdhi’ to ‘Aswesuma’ was an attempt to change political loyalty from one political party to another.
Undertaking a proper post-evaluation and revisiting the selection criteria are of paramount importance in implementing the next phase of ‘Aswesuma’ if the borrowed scarce resources are to be used efficiently.
The way forward
Corruption, which could derail the entire development process, is a major challenge for Sri Lanka.
In a broader sense, corruption is a characteristic of underdevelopment and many types of corruption disappear when countries develop. Unfortunately, corruption can also be a major constraint for development.
As described in this article, corruption, among other factors, has contributed significantly to the current economic crisis in the country. Sri Lanka faces the urgent need to undertake reforms to curb corruption in order to place the country on a sustainable path of economic growth.
The International Monetary Fund (IMF) Governance Diagnostic Report offers a total of 89 recommendations to this end, with 16 being categorised as priority recommendations. Civil society organisations have proposed similar recommendations which include the following (as edited by the writer):
1. Improving the legal frameworks for anti-corruption
2. Asset declaration by political leaders and higher-ranking Government officials
3. Strengthening the role of the Auditor General
4. Investigation of corruption cases and money laundering
5. Improving budget formulation and transparency
6. Transparent and accountable public investment management
7. State-Owned Enterprise (SOE) reforms and management
8. Transparency and accountability in tax policy
9. Central Bank governance
10. Reformations to framework handling EPF
11. Financial sector oversight
12. Rule of law
13. Implementation and enhancement of the Right to Information (RTI) legal framework
While there is a need to take a vast array of measures to reduce corruption, which is well entrenched across all the layers of Sri Lankan society, some quick supplementary measures should be taken.
Firstly, ending the impunity enjoyed by political leaders and higher-ranking Government officials is an urgent and immediate action that is needed to curb corruption. Towards this end, electoral reforms to conduct Presidential, Parliamentary, and Provincial Council Elections on one day should be given due consideration. Such electoral reforms can reduce the demand for grand corruption by politicians substantially because one root cause of corruption is election campaign expenses.
Secondly, the old, irrelevant, and corruption-enabling permit systems and regulations should be removed to prevent petty corruption.
Thirdly, all public servants and politicians should be provided reasonable salaries to ensure decent living in the long run. In order to achieve this, an efficient public sector with a reasonable number of employees, commensurate with the size of the economy, should be maintained.
Fourthly, the positive steps of providing right incentives should be complemented with better law enforcement.
Fifthly, use of Information Technology (IT), which provides many more co-benefits, should be prioritised in order to curb corruption, particularly in tax collection.
Many of the changes required have been included in the Anti-Corruption Act of 2023. There is no paucity of legal and regulatory measures to curb corruption. What is lacking is the Government’s interest to implement the available legal provisions because the beneficiaries of corruption are political leaders and Government officials.
Given that widespread corruption is the main barrier to the development of the country, the political will of the next government to curb corruption will determine the fate of the nation.
(Part I of this article was published in The Sunday Morning last week and can be seen at https://www.themorning.lk/articles/fKQb3ZfDrsibA8hSxPpU)
