Social cash transfers
Welfare payments are no longer taboo
“Helping people help themselves” is the motto of official development assistance (ODA). But the poorest of the poor often have very little or no potential for self-help. They are too sick, too old or too young to engage in productive work. This plain truth was long ignored. Most development projects aim to reduce poverty directly or indirectly, but serial evaluations have shown that they do not benefit the most disadvantaged people.
The conventional instruments of development policy – like issuing microcredit, bolstering the informal sector or supporting employment programmes – are labour based. They aim to increase the labour productivity of poor households, so they fail to reach households with no or limited labour capacity. The technical reason for such failure is that the diversity of the target group is not taken into account.
Though poverty is a multi-facetted phenomenon, most projects claim to help “the poor” as if they were a homogeneous group. This approach is linked to the World Bank’s definition of poverty. People are thus considered poor if they earn less than the purchasing power of $ 1.90 a day. No differentiation is made below that level. It is obvious, however, that people who have $ 0.50 a day and are chronically malnourished face very different problems than those whose income falls just below the $ 1.90 cut-off.
Distinctions must also be made concerning the primary causes of poverty and hunger. Household composition matters very much. If a poor or even very poor household includes members who are fit to work, its chances of escaping poverty are better than those of a household with no employable persons.
Nuanced poverty profile
In 2003, a new approach was taken as part of a pilot project in Zambia’s Kalomo District. Germany contributed funding. Part of the approach was to research and draft a poverty profile taking into account the aforementioned criteria. At the time, half of Zambia’s 2 million households suffered poverty and hunger. To distinguish between them, our graph (p. 38) uses the categories “moderate poverty” and “critical poverty”. It also distinguishes households with enough employable members to give them the option of helping themselves (in the category “low dependency ratio”) from those that have too few or no employable members – for instance because they are too young, old, sick or disabled – and thus need outside assistance (“high dependency ratio”).
The 300,000 poor households in Category A were in a comparatively favourable situation. Their poverty was real and painful, but not life-threatening. Moreover, they could tap labour reserves if they got some support – for instance microcredit, advice or at least a job as agricultural workers or as part of a public employment programme.
The 200,000 households in Category D were in the least favourable position. They were suffering life-threatening hunger and unable to engage in productive work. They offered no starting point for funding programmes aiming to help people help themselves. They were welfare cases and needed regular subsidies to cover their cost of living and ensure their survival. For this kind of setting, development policy-makers introduced the notion of “social cash transfers”.
Based on this analysis, a pilot project was carried out in Kalomo. It provided cash transfers to all critically poor and labour-constrained households. The goal was to reduce these households’ extreme poverty and hunger, improve their health and make it possible for children to go to school. The project also aimed to gather knowledge about the feasibility, costs and effects of social cash transfers for households in Category D.
Three years after its start, the pilot project showed that it was possible to run this kind of welfare programme. In cooperation with village committees, local officers working for the Ministry of Community Development and Social Services were up to the job. The annual cost was about $ 100 per household. The beneficiaries spent the extra funds reasonably: they chose to improve the health and nutrition of household members, make small income-generating investments and send children to school. They invested in physical, human and social capital. At the same time their increased purchasing power had positive secondary effects. Growing demand for products and services stimulated and strengthened the local economy’s production and sales.
Based on this data, it was estimated that comprehensive social assistance for the 200,000 Zambian households in Category D (the neediest 10 % of all households) would cost an annual $ 20 million. In 2006, that figure corresponded to 0.5 % of the country’s gross domestic product. It also corresponded to five percent of the ODA (official development assistance) that Zambia received from all donors. Evidently, such funding would have significantly improved the nutrition of hundreds of thousands of people and served other basic needs, ensuring, for instance, that children could be educated. At the time, 60 % of the people living in Category D households are children.
The results of the Kalomo pilot project were presented at the Livingstone Conference in 2006. The African Union convened it with the explicit purpose of evaluating the Kalomo experience. One hundred and thirty leaders from 13 African countries, along with representatives from international organisations, studied the project approach. They visited villages in Kalomo and met with staff of Zambia’s Ministry of Community Development and Social Services. To learn about the programme first-hand, they also met with village committees and beneficiaries.
The results of the field visits were discussed during the remainder of the conference, which culminated in the Livingstone Call for Action. This resolution demanded that all African governments improve social protection in their countries through cash transfer programmes and other measures.
Ten years after the starting pistol was fired at the conference in Livingstone, almost all African countries have cash transfer programmes. In Zambia, the social cash transfer programme has been gradually extended in recent years. According to the government, it benefited 150,000 households in 2014 and was set to reach 20 % of Zambia’s people in 2016. Welfare payments are no longer taboo in developing countries. Social protection, including support for social assistance programmes, has become a legitimate sphere of activity for international development agencies. Kalomo played a large role in making that happen.
Bernd Schubert is the former director of the Centre for Rural Development of Humboldt University Berlin. He was involved in the planning and implementation of the Kalomo Social Cash Transfer Pilot Programme from 2003 to 2006 as a short-term consultant for GIZ. He has since been advising other African governments on social protection.
Schubert, B., 2005: Social cash transfers – reaching the poorest. A contribution to the international debate based on experience in Zambia. GTZ, Eschborn.
Schubert, B., and Beales, S., 2006: Social transfers for Africa. Intergovernmental regional conference report. Livingstone, Zambia, 20-23 March 2006. Helpage International, London.
Cirillo, C., and Tebaldi, R., 2016: Social protection in Africa. Inventory of non-contributory programmes. IPC/UNICEF, New York.