Revamp needed for Samurdhi welfare scheme

Half the population gets Samurdhi even though only 23 % should get it

By Dilshani Samaraweera

Samurdhi, the country’s largest and most expensive welfare scheme, is so full of holes that billions of rupees of public money is pouring into no-return, no-benefit oblivion, in the latest assessment of Sri Lanka’s social protection schemes.

This year Rs 22 billion is allocated for Samurdhi but an assessment of the scheme shows that poor targeting and political influence is stopping Samurdhi from helping the poor.

“One of the main issues with Samurdhi is that it is not well targeted. Persons who should be receiving Samurdhi assistance are not receiving it and people who should not receive it are receiving it,” explained Senior Social Protection Economist, Milan Vodopivec from the World Bank, at a recent press briefing on Sri Lanka’s social protection systems. This is mainly because the scheme does not have clear criteria to select recipients. At this point nearly half the country gets Samurdhi money, although the official poverty level is 23% of the population - indicating that half the money is going where it should not. “In 2006, nearly 46% of families in Sri Lanka received Samurdhi but the poverty estimate is only 23%,” said Vodopivec.

The extent of Samurdhi coverage should not be a concern, if it was effective. But the scheme is spread too thin to be of any real use.

Samurdhi grants range from Rs 155 to 1,500 per month in 113 divisions and from Rs 140 to Rs 1,000 in about 199 divisions. But beneficiaries actually get only a small share of the grant as most of the money is cut off for various sub schemes. For instance, from the Rs 1,000 grant, Rs 400 is cut off for commodities stamps, Rs 200 for compulsory savings, Rs 30 for social security and Rs 10 is cut off for the housing lottery fund. Only Rs 360 is given as encashment stamps.

This is about Rs 90 per person, per month - which is not enough even to cover the minimum bus fare for one month.

Furthermore the commodities stamps give limited choices as they can only be used at government cooperatives. The compulsory savings are stuck in banks as they can’t be used as collateral and also can’t be withdrawn. The Samurdhi Ministry says the savings are used to give loans but are not sure how effective these loans are.

Another waste is the extremely high administration costs that eat up a large share of the money that should go to the poor. “Around one third of the overall cost of Samurdhi, is administration costs,” said Vodopivec.

These findings indicate that although Samurdhi gives out billions of rupees, too many people get too little for it to be of any real use. The World Bank says the scheme needs to be realigned and adjusted for the rate of inflation.

“If existing transfers were targeted better 60% of the people below the poverty line could have been taken out of poverty. At this point a large share of the benefits is mis-targeted. Also the amounts are eroded by inflation, so it would make sense to increase the amounts, but with better targeting,” said Vodopivec. Reducing the number of recipients to those that really need Samurdhi help would allow larger, more useful payments and may even help to cut down administration costs.