Multidimensional poverty and ‘Aswesuma’ programme

A father and son share a meal at their shanty dwelling in Colombo (PIC AND CAPTION COURTESY WORLD SOCIALIST WEB SITE)

The economic crisis of Sri Lanka has resulted in a sharp increase in the country’s poverty. According to the World Bank press release on April 2, 2024, people living below the international poverty line of US $ 3.65 a day, have increased to 25.9 percent of the population in 2023 from 14.3 percent in 2019. 

The poverty increase could be attributed to “livelihood vulnerability”, which is defined as the extent to which households are exposed to sudden and significant changes in natural, social, political and economic factors and the challenges they face in coping with these changes.

Multiple dimensions of poverty

The core principle of the ‘Aswesuma’ programme, the latest poverty alleviation programme of the Sri Lankan government, is to identify all eligible beneficiaries and provide targeted and time-bound financial assistance. It claims to have tripled the assistance given to the beneficiaries compared to the previous ‘Samurdhi’ programme. 
The International Monetary Fund anticipates that the government budgetary allocation for the social safety net programme would amount to 0.6-0.7 percent of gross domestic product. As of April 13, 2024, 1.854 million households, including 182,140 families, following the revision of appeals and objections, received the Aswesuma cash transfer. The government intends to expand the coverage to 2.4 million families by May 2024.

Aswesuma has been designed to address the unique challenges of poverty implications of the economic crisis, aiming to alleviate the suffering of the poor while stimulating grassroots economic growth. This required distinguishing between the ‘general poor’ and the ‘vulnerable poor’, each needing customised intervention strategies. 

A significant change introduced by the Aswesuma programme was the adoption of the Multidimensional Poverty Indicator (MPI) to classify poor households into four groups: severely poor, poor, vulnerable and transitional. The MPI considers deprivation across three dimensions, health, education and living standards, measured using a set of 22 indicators with assigned weights for each based on their relative importance. 

Identifying poor

Each household is assigned a deprivation score based on whether it is deprived according to the selected indicators. It should be noted that the MPI provides a more nuanced understanding of poverty as it takes into account multiple dimensions and deprivations of poverty, compared to the traditional measurement of poverty based solely on income or consumption expenditure. 

However, the Aswesuma programme’s targeting of the poor has its own set of weaknesses. To address these, the Centre for Poverty Analysis offers several recommendations through its research: firstly, to improve the indicators used to define poverty, secondly to conduct more studies on the cutoffs of these indicators and finally to calculate the importance of each indicator from within the data itself and calculate weights based on actual data collected from households reflecting their real-world significance. These improvements aim to make the identification of the poor more objective, transparent and scientific. 

In an application of the methodology for household data for 2019 from the Kilinochchi district, which is a region known for its high poverty rates, it was found that only three variables were deemed the most appropriate to measure poverty. These three are the years of schooling, housing condition and type of fuel used. However, all the variable representing the MPI were used to predict the poverty score for each of 379 households in the district. Interestingly, the percentage of poor households in Kilinochchi using the poverty score was estimated to be 36.4 percent, compared to the 23.0 percent estimated as monetarily poor by the Census and Statistics Department (2019).

Accuracy and transparency

By incorporating clear, data-driven criteria for poverty measures can improve the process in identifying the right beneficiaries. It could be suggested that an empirical analysis should be carried out to decide on indicator cutoffs. 
These enhancements are crucial for ensuring that the Aswesuma welfare benefit provision could effectively target the most vulnerable populations that are likely to fall into poverty by any external shock. Accordingly, the Aswesuma programme can improve its poverty alleviation objective by ensuring allocation of resources more effectively.

The indicator of multidimensional poverty captures, in essence, the long-term repercussions of poverty on households. It does not, however, capture the immediate poverty implications that could arise due to economic changes. Here are some of the indicators that are more dynamic and respond quickly to economic changes: pawning jewellery, cutting protein from the diet, reducing meals per day and reducing the meal portion intake. There are indicators that are easier to monitor such as reducing the electricity cost. These indicators provide a more comprehensive view of deprivation.

Reaching targeted

There are practical difficulties to determine poverty thresholds for the four categories of poverty – severely poor, poor, vulnerable and transitional. During the post-selection time period for the Aswesuma cash transfers, the authorities have received a high number of grievances, indicating the difficulty of using objective criteria to distinguish among these categories in general and between severely poor and poor categories in particular.
The above problem points to the importance of re-evaluating the measurement of poverty and identifying those in need as imperative to streamline the social safety net programme. Distinguishing between poverty and poverty vulnerability or the risk of falling into poverty due to external shocks requires a robust, intellectual, research-driven and stakeholder consultation-based information process. While the evidence-based programme improvement is a constant or frequent activity, the identification of the target groups may be established and administered at provincial or local levels rather than at central level. 

A report published by Human Rights Watch on Jordan’s Bank-financed programme, which is commonly referred to as ‘Takaful’, a unified cash transfer programme, highlights that poverty-targeted programmes are susceptible to error, mismanagement and corruption. Accordingly, in many cases the poverty alleviation programmes do not reach many of the people they aim to cover. The report noted that the asset-based vulnerability methods force people into difficult decisions between exercising their right to social security and their right to a decent living, health and food. 

Furthermore, it required households to adjust their hardships to align with the calculations of need which compromised the programme’s targeting accuracy. A similar issue was observed in Sri Lanka too; on April 30, 2024, the Finance Ministry announced that Sri Lanka’s Welfare Benefits Board had begun an investigation into the recipients who obtained benefits through false information. Here the beneficiaries had adjusted their status to fit the calculations.

Excluding totality

A focus on a single dimension of the MPI does not capture the full extent of deprivation. While technically it may indicate improvement but it may not reflect the quality of that improvement. For example, even though the percentage of children under 16, with no schooling, may be quite small in Sri Lanka, the MPI does not account for the reduction in households’ education spending due to an economic crisis. Nevertheless, the crisis may have resulted in fewer tuition classes, limited access to books and inadequate school uniforms, which would provide a more comprehensive view of the levels of deprivation in education. 

Additionally, the significance of poverty indicators derived from consumption expenditure should not be underestimated. They provide an estimate of changes in household purchasing power and can highlight the immediate short-term impact of macroeconomic trends on households. These indicators reflect how households prioritise expenditures, manage monetary shortages through debt to meet immediate consumption needs and allocate financial resources within the household.

Given the poverty implications of the economic crisis, a significant increase in cash disbursements for each household under the Aswesuma programme compared to its predecessor, the Samurdhi programme, is an important achievement. However, it is noteworthy that the real value of incomes has also deteriorated substantially due to the crisis impact. While the emphasis on the multidimensional character of poverty in deciding the welfare benefits is important, its targeting accuracy and transparency need to be evaluated and monitored constantly. The effectiveness and structure of social protection programmes of this nature are well-founded and necessitate a comprehensive and multifaceted approach.

(Varangana Ratwatte is a Junior Research Professional serving under the thematic area of basic services and social protection at the Centre for Poverty Analysis (CEPA), Colombo. She is a graduate of the University of Peradeniya, while currently reading for an MPhil degree in Economics at the same university)