EBanking for the Elimination of Poverty Universal Income Support System UISS

1
E-Banking for the Elimination of Poverty
Universal Income Support System - UISS

• By Alex Weir, Bsc (Mech Eng) Manchester, Mphil
  Edinburgh

2
Introduction

• E-banking can greatly assist and facilitate the
  implementation of pro-poor measures in 3rd world
  countries. But without the international
  political will then as usual nothing will happen.
• Alex Weir is a 59-year old Scot based since 1992
  in Harare, Zimbabwe. He was a mechanical and
  agricultural engineer, appropriate technologist,
  management consultant, and since the last 20
  years a software developer. He has worked in 19
  countries throughout Europe, Africa, Middle East,
  South Asia, and South America. His current
  major Project is something he invented in 2006 -
  a voting system which cannot be cheated. That
  project is for some strange reason massively
  unpopular with the International Community.
• He is not a white farmer

3
Ways whereby low-cost e-banking can facilitate
poverty eradication

• Income redistribution in resource-rich countries
• ODA (overseas development assistance) to
  resource-poor countries
• Direct charitable donation from citizens of rich
  countries and from international middle class
• WFP/PAM World Food Program-type activities
  delivering money instead of food, and utilising
  commercial food distribution channels
• As an alternative strategy to food subsidies
  (e.g. as in Gaza, Egypt, Iraq etc..)

4
Additional possible uses for UISS-type systems

• Troop or insurgent demobilisation
• Economic stimulation of remote areas if no UISS
  exists in the country concerned, then establish
  one only for the remote area. If UISS exists
  already then set a higher payment rate for that
  remote area for a specified time period to
  encourage immigration

5
Direct charitable donation from citizens of rich
countries

• Existing donations through Oxfam, SCF, Christian
  Aid, Plan etc are extremely inefficient and
  largely do not reach the necessary recipients
• Better to funnel funds directly
  individual-to-individual
• E-banking can enable, assist and facilitate such
  transfers

6
ODA (overseas development assistance) to
resource-poor countries

• Most of Donor-given ODA is ineffective
• Most of that money is recycled as payments to
  overpaid and under-competent consultants from the
  donor country
• Most Donor-designed projects are badly designed
  and have only a very small chance of succeeding
  in real terms
• Better to spend donor funds on direct donations
  to individuals in resource-poor 3rd world
  countries

7
Income redistribution in resource-rich countries

• Negative income tax is sometimes proposed as a
  means of income redistribution in such
  resource-rich countries (e.g. Zambia)
• But this redistributes only income to those
  already in formal employment and completely
  ignores and bypasses the unemployed and those in
  the informal sector. Formal employment can
  easily be less than 20 of total workforce in
  many 3rd world countries.
• Only a universal distribution system to every
  person with a national ID card, regardless of
  income, can be effective
• Even that misses children, unless the country
  concerned issues IDs also to children

8
Problems of resource-rich countries

• Revenue is undercharged due to massive corruption
  between Presidents, International Companies,
  Foreign Governments and Local Elite
• With recent commodity boom, all royalty payments
  should be tied to formulae based on commodity
  price (less a factor times the oil price for
  non-oil royalties) few royalty contracts are
  done in this way
• There is further corruption inside Ministry of
  Finance where resource revenues disappear and are
  not used for pro-poor purposes (e.g. education,
  health etc)
• The result is a nominally rich country where
  (almost) everyone is desperately and unjustly
  poor Nigeria, Angola, Guinea and DRC/RDC are
  just a few examples of this syndrome

9
Solutions for Resource-Rich Governments

• Renegotiate royalty deals based on formulae
  linked to commodity price this gives a good
  deal for both country and extraction companies
  and also lowers risk
• Eliminate or downsize role of Ministry Finance
  (MinFin) and establish a Payments Agency, which
  may even be run by an international accounting or
  auditing company
• Resource revenue flows directly into Payments
  Agency
• Ministries allocate priorities and give monthly
  payment list to Payment Agency
• Payment Agency examines payment list and effects
  all payments including salaries. Illegal payments
  are refused and contested payments are
  adjudicated
• E-banking can greatly facilitate the operation of
  this Payments Agency

10
Solutions for Resource-Rich Governments Part II

• After some time, as Payments Agency concept is
  proven, tax-paying individuals and companies may
  opt to channel their tax payments also through
  the Payments Agency and not through MinFin
• Minimize or eliminate Presidential corruption by
  utilising tamper-proof voting system for
  presidential and parliamentary elections
  (www.cd3wd.com/SEEV/)
• Implement a Universal Income Support System
  based on low-cost Electronic Banking

11
Universal Income Support System

• Every man, woman (and perhaps child) receives a
  small daily payment through electronic banking
• Payment amount is in the range of US 0.50 US
  2.00 per day
• Payments takes place during time period 0600
  1600 hrs to discourage spending on alcohol and
  sex, and to encourage spending on food
• E-accounts are linked/monitored against National
  ID Card to prevent multiple payments

12
Potential Disadvantages with UISS, and possible
solutions

• May encourage laziness and de-incentivize
  initiative and enterprise
• May encourage drunkenness
• Fine-tuning the amount paid could be important
  above a certain level then laziness and
  drunkenness could become problematic government
  must be able and willing to raise and to lower
  the daily payment
• There will be discrepancies between urban and
  rural costs. It is even possible that UISS could
  promote some urban-gtrural migration

13
UISS E-banking requirements

• Incoming UISS payments are US 0.5 2 per day
• Therefore transaction costs for the underlying
  e-banking system must be under US 0.05 per
  transaction
• Normal existing e-banking transaction charges are
  in the region of US 0.30 per transaction
• Either these charges must be reduced to US 0.05
  or less per transaction, or different technology
  must be used
• Technology used must also permit e-banking by
  non-mobile-phone-owners
• Such a system exists on paper at
  www.cd3wd.com/SPS/

14
UISS and Regulation

• SPS e-banking system depends on sms/text messages
  typically 3 per transaction
• As long as MPPs set high sms prices, then SPS
  cannot deliver US 0.05/transaction
• Government must require MPPs through regulation
  to provide sms/text messages specifically for
  e-banking at low prices (e.g. US 0.01 or less
  per sms)
• Private or non-profit organisations can then
  implement e-banking systems which can operate
  with charges of less than US 0.05/transaction

15
UISS and the middle-classes

• UISS will have a mechanism whereby middle- and
  upper-income recipients can recycle their
  incoming payments back into UISS
• This will be transparent and will appear on a
  public website
• The monies recycled should go into funding for
  health and education, or else into raising
  marginally the payment received by everyone else

16
UISS will it happen?

• World Bank and USA are against socialistic types
  of initiatives
• International Community are anti-poor while
  pretending to be pro-poor
• Donors and NGOs are anti-poor and/or are
  deliberately ineffective they do not support
  programs which promise to be effective
• Most 3rd world Governments are anti-poor and
  pro-rich
• MPPs are too close to and too cosy with
  Presidents and politicians regulation which may
  reduce MPP profits is difficult to realize
• Conventional banks are afraid of low-cost or
  zero-cost e-banking solutions they prefer
  existing high-cost, high-profit solutions