Social Cash Transfers in Africa: Welfare or Development?

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1 Social Cash Transfers in Africa: Welfare or Development? Ashu Handa Department of Public Policy UNC Chapel Hill October 2012

2 Social Cash Transfers: The Quiet Storm ~26 programs worldwide, 3 in Sub-Saharan Africa (SSA)

3 ~16 in SSA, 12 since 2005

4 Conditional versus Social Cash Transfers First wave of programs started in Latin America (Brazil, Mexico, Colombia) in mid 90s Conditional on children s school attendance, health check ups Condition made programs politically acceptable Attempt to break the inter generational transmission of poverty Parallels U.S. welfare reform in 1996; Mexican program copied my Mayor Bloomberg in NYC SSA wave tend to be unconditional or social

5 Targeting of Social Cash Transfers Cash payments targeted to poor and vulnerable families Orphans & vulnerable children (OVC), laborconstrained, high dependency Mitigation for HIV/AIDS affected families In Malawi, 80 percent of recipients considered AIDS affected AIDS sensitive but not AIDS exclusive Stigma, perverse incentives

6 Poverty and Vulnerability: Kenya SCT reaches smaller households with older heads, fewer very young children and more orphans

7 How do SCTs work? Ministry of Social Welfare/Social Development Community based targeting (CBT) Varying degrees of checks at central level Cash delivered through postal system or under tree Transfer level usually varies with family US$10 US$25 per household per month Typically unconditional ( social )

8 Why sudden expansion in SSA? Article 25 of the UDHR: right to security in the event of unemployment, sickness, disability, widowhood, old age, or other lack of livelihood in circumstances beyond his control. Response to triple threat in SSA Weak institutions, food insecurity, HIV/AIDS Donor driven agenda with distinct African flavor (CBT, vulnerability and poverty)

9 Malawi SCT Payment Mchinji District

10 Kenya CT OVC Beneficiary Migori District, Nyanza Province

11 Ghana LEAP Cash Transfer Program ransfer

12 Local Public School in LEAP Community - Ghana

13 Local Public School in LEAP Community - Ghana

14 Zambia Child Grant Program Family Kalabo District, Western Province

15 Measuring kids in Zambia

16 Ashu s Posse in Kalabo District DSC04040

17 Transfer share of recipient consumption Transfer Share

18 Can poor countries afford SCTS? An example for Kenya Average consumption of target population is 60 US cents per day. Transfer should cover at least 20 percent of that, so 12 cents per day Kenyan population is 41m.Say program targets poorest 15 percent ~6.2m people 12 cents per day*6.2m * 365 days=~$272m per year Kenyan GDP (2010) is $31.4b. So annual budget is ~.86% of GDP Assume budget is 25 percent of GDP, then program would cost ~4 percent of national budget! Not a budget breaker

19 What do we know so far on impacts? Secondary school enrollment Kenya (8pp), RSA (7pp), Zambia (9pp), Malawi (4pp), Ghana (6pp) On age entry into school Kenya (12pp), Zambia (20pp) Food security and diet diversity Food intake (Kenya, Malawi, Zambia) Reduction in self reported hunger (RSA, Ghana) Diet diversity (Kenya, Malawi)

20 What do we know so far on impacts? Some evidence of productive impacts too! Increase fertilizer use (Zambia) Purchases of small farm tools (Malawi) More hired labor (Malawi) Increased savings (Ghana) No evidence of increase in alcohol or tobacco Some evidence of decline in rural wage work Worst form of labor, not a bad thing Increase in own farm work

21 HIV prevention evidence from Kenya CT OVC 8pp reduction in sexual debut among young people in 2011 (4 year follow up) 8pp reduction in 2+ partners in L12 months among females only 11pp reduction in 3+ unprotected sex acts L3 months No impacts on transactional sex, condom use or age of partner

22 Impact of Kenya CT OVC on other development outcomes 15pp less likely to show signs of clinical depression among young people Driven by males 19 pp more likely to score above cut off in Hope Scale (also driven by males) Young women (12 24) 5pp less likely to have ever been pregnant Due to higher grade attainment

23 Conclusions SCTs now a major poverty instrument in SSA Essential features include Community based targeting; selection on poverty and vulnerability; unconditional Programs are affordable Rationale includes rights based arguments and economic arguments

24 Conclusions Impacts at household level are compelling Human development, food security, productive activity No evidence of perverse outcomes Suggestive evidence on HIV prevention and adolescent transition to adulthood Thank you!