Speaking of pro-poor services, free access to education, free meals at school, free health care, free food rations and other social benefits often come to mind. Indeed, it sounds logical that poor people, already made disadvantaged by their financial constrains and social status, should be entitled to some “safety nets” which they can fall back to when they cannot feed themselves or maintain decent standards of living.
But from the point of view of practitioners, pro-poor programmes should not always deliver “free lunches.”
I know a few people in Phnom Penh operating dormitories (cum student centres) for young students from the provinces. More than roofed shelters, these dormitories offer a peer support network for the students. In the morning, they eat breakfast together. In the afternoon, they go to school together. In the evening, they chat with each other. In the night, they study together. Before they sleep, they say goodnight to each other. For many young Cambodians who travelled alone to the city for their education, the dormitories are where they find their first friends.
Students also have to pay a fee – the rent (most probably inclusive of an “activity fee”) – and to support their own daily expenditures on food, electricity, water and transportation. These sums may become a financial burden for those from poor rural villages.
Practitioners say, nonetheless, that there is greater utility, for both the facility and the students, when the centre charges rent and requires students to pay for basic necessities out of their own pockets.
Years ago, when the “dormitory business” first started, electricity was offered for free. Paul, my friend, recalled receiving the first electricity bill for the dormitory run by his NGO. It was more than $300 for the 30 students there. Surprised by the huge sum, he went to check each of the rooms. He tallied 15 rice-cookers, 10 fans and a couple of desk lamps. Many of the students also confessed that they would sometimes forget to turn the fan off when they left for school. Other times, they would forget to switch off the corridor or bathroom lights in the night.
During the following year, the dormitory lacked funding to continue. A few months after the students had moved out, Paul went to visit them around the city. Casually, he asked about their electricity bills. It was just $2 per person each month. They shared only one desk lamp and woke up early to take advantage of the morning sunlight. They cooked together and avoided turning on the fan unless it was above 33 degrees Celsius. The lesson then is that even poor Cambodian students, like any others, have a tendency to be “free riders.” When electricity and water are given for free, there is little incentive to conserve.
Food costs are also not paid for in the dormitories. Dormitories which used to provide food found that the per person food cost can be $10 each week. However, students can bring in rice from their own villages at a much cheaper price. Also, for each meal, students can buy cooked food to be shared among three or four people. From roadside vendors, such freshly fried meat and vegetables cost only 4,000 riels (one dollar). In other words, without compensating the students’ health, the facility and the centre can save $7 for each person altogether.
Hence, in economic terms, it is more socially desirable to leave students with their utility and food bills. At the same time, to make sure that these expenses do not exclude the poorest qualified students from education, subsidized rent can be offered for students with special needs.
This system of subsidized rent can also come in several tiers. In one case, I heard that dormitory managers would charge $6 for students with a motorbike, $4 for those with bicycles and $2 for those who has no means of transportation. Physical property is a good proxy for wealth. In rural areas, in particular, transactions are more likely conducted through a barter system than through fiat money. Possessions, such as acres of land, motorbikes, houses, cows, chickens and coconut trees, are the best “currency” for exchange. It is based on these assumptions that those with motorbikes are judged to be “wealthier” and should be able to afford a higher rent.
Dormitories, surely, are not the only type of non-free pro-poor services. In the rural areas, pilot programmes with self-help groups, community lending schemes and social insurance have tremendously boosted communal wealth. With a community fund, villagers who have contributed money can also draw out sums for starting businesses. Hence the “community lending scheme.” Including repayments and interest, some community funds in Cambodia have already saved thousands of dollars for their community!
This surplus of money then serves to provide public goods and social services to the villagers. When their family members get sick, for instance, they can withdraw money for medicines. This mechanism is referred to as “social insurance.” Surplus funds can also be used for promoting children’s education and for hiring trainers to upgrade the entrepreneurship and agricultural skills of the adults. In these cases, the fund has facilitated “self-help groups” in support of income generation.
These stories remind me of the debate on whether to hand poor people fish or to teach them to fish. Sometimes the government and the donor community must give out fish, in such cases as providing free access to primary education and affordable maternal health care. However, in other circumstances, it is more important to be innovative than to offer everything for free.
One of my colleagues, when speaking of poor people obtaining vocational and technical training, commented, “Even for poor people, they get what they have paid for. If they value training at zero, then they learn nothing. But when they invest a bit on their education, the benefits are far beyond what they have initially struggled to pay for.” This statement may sound counterintuitive, but its truth resonates in the cases of dormitories and community funds and possibly more examples in the developing world.
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