Voters don’t need boda boda hand outs, they need skin in the game

Imagine you are the president of a small poor country with a young population, most of them unemployed or unemployable, an export trade deficit leading to a depreciating currency, and rising public debt.
Assume also, that you had made investments in transport and energy infrastructure (hence the debt), but many of the roads upcountry remained empty and electricity was being generated without being consumed.
Assume also that you had a kitty, say of $20 million per year, available to you to do with as you please. If you had to put money in the pockets of voters to ensure that they re-elected you and your party representatives, what would you do? And if the money available to you wasn’t enough to fund your budget, what would you do?
The easy way is to divvy the cash up in small chunks, identify the various interest groups and opinion-shapers in the vote-rich areas, and give personal-to-holder gifts, making sure it is clear who the giver is. The gifts will depend on the needs, status and income of the beneficiaries.
The young men might get footballs and motorcycles, the young women sewing machines. If very poor, a bar of soap and a kilo of sugar might do the trick, plus the obligatory T-shirt with your name and picture across the chest. For the poorest, a fish or cow coin, pressed firmly in the palm before it closes and disappears into the hanging folds of cloth is usually sufficient.
There are at least three structural problems with this approach. The first is dependence: Having established a donor-client relationship, expectations are set for future aid or alms. This, for politicians, is rather desirable as long as the price remains low, the vote returns high.
The second is sustainability. Poor people tend to have a high marginal propensity to consume and such donations are often fought over and spent on consumption, rather than production. Even where capital goods like agro-processing equipment or in-calf heifers are given in lieu, it is not uncommon for these to be sold and the proceeds used to settle more pressing long-standing debts.
But the biggest problem, perhaps, is one of moral hazard: Unless the said money is raised by the disposal of or from the proceeds of the personal estates of the donor, those who watch their taxes being handed over in this manner are unlikely to turn up at the tax body at the end of the financial year bursting with enthusiasm; they are more likely to find ways of paying less or no tax.
There is, of course, another way. It is more difficult, the results less certain, but it is more sustainable; it is called giving voters skin in the game.
At the micro-level, it can take the form of giving more public than private goods, for the benefit of the wider community. Smarter MPs, particularly in urban areas, who couldn’t afford door-to-door bribes, might, for instance, donate ambulances, making sure to print their names in a prominent place.
The more sustainable ‘interventions’ are those that are structural. An abattoir or a milk cooler would add value to beef and dairy producers in an area and raise incomes without discriminating along partisan credentials. Heck, it would even make the government more popular!
So the problem of handing out boda boda motorcycles to young men in a village is not merely a moral question of whether it is a bribe to potential voters or not; it more fundamentally reflects a lack of imagination on the part of the donor.
As this column has argued over the last two weeks, it is not enough for an emerging market state to merely provide public goods like law and order or roads while other countries provide a lot more subsidies to their producers.
But handing out imported motorcycles to party cadres is not the solution. A State that wants to transfer economic and social control to its citizens cannot do it along partisan party lines. There must be free market mechanisms to sort out winners and punish losers: Bank risk managers are trained to spot Saccos from Rukungiri; State House mandarins are not.
Putting that $20m in low-cost mortgages or micro-loans managed by competent banks gets more mileage and more sustainability. Even putting the cash back into taxpayers’ pockets by cutting tax rates would spur consumption; sometimes the best thing to do is to do nothing.
Handouts disempower and discriminate; if you really want to free citizens from poverty, you must give them all an equal chance to compete, and skin in the game.

Mr Kalinaki is a journalist and a poor man’s freedom fighter.

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Twitter: @Kalinaki.