HelpAge International How cash transfers can support the poorest older people and children Sylvia...

HelpAge International

How cash transfers can support the poorest older people and children

Sylvia Beales

June 2005


The case for cash transfers and social protection

Social protection is a right; regular cash supports access to health, education and nutrition

Cash transfers reduce absolute poverty and hunger and support MDG achievement

Evidence shows:

Cash transfers helps poor households manage risk, including that of HIV/AIDS

Cash transfers enhance assets and more secure livelihoods

Regular cash supports family cohesion and life chances of children

Poor (older) people prefer regular transfers of cash to other interventions


Development policy, social protection and cash transfers

Call for better and more effective aid – as well as increased aid – to reach the billions still trapped in poverty

Recognition that targeting the poorest is required for MDGs

Greater emphasis is needed on frameworks for equity & redistribution to reach the poorest

More equitable and rights based poverty programmes deliver better development outcomes

Outcomes of the Commission for Africa report; all African countries to have social protection strategies for 2007, a rights and inclusion framework to support them and predictable funding streams


Targeting the poorest

The poorest include both children & older people (CPRC, World Bank)

Estimates of poverty rates by age groups generally conclude that poverty is higher among the young & the old

Later life poverty is increasingly difficult to escape with increasing age

Older people tend to live in households with less potential for economies of scale

Older women and men are often children’s primary carers

Approx 100 million older people live on less than US$1.00 a day


Rationale for cash to support HIV/AIDS affected households Across SSA an average of 30% of households are headed by a person aged 55+

Over 65% of older-headed households have at least one child under the age of 15

In southern Africa 59% of double orphans live in an older-headed household, compared with 30% of non-orphaned children

Although a growing concern, numbers of orphan-headed households remain very low, with less than 1% of orphans being a household head

Households headed by older women are twice as likely to include orphans as households headed by older men

80% of older people who are primary carers do not receive a regular income (Source: UNICEF/HAI 2004)


Intergenerational approaches to poverty reduction

Recognise and support existing interdependence, contributions and reciprocity; and help us recognise issues of difference, the dynamics of power relations and how decisions are made

in households between carers and dependants within and between age groups within & between formal & informal support networks

They foster mutual support and accountability at community and government level.


Intergenerational approaches to poverty reduction: examples

Brazil and South Africa – established pension schemes

Poverty headcount would be 5.3% larger in Brazil, 1.9% larger in South Africa

Poverty gap would be one-third larger in Brazil, two-thirds larger in South Africa without the non-contributory pension

A non-contributory pension recipient reduces the probability of household poverty by 21% in Brazil, 11% in South Africa

(Source: Barrientos et al/HAI 2003)

Zambia; Pilot scheme, Kalomo District, monthly cash transfers of US$6-8 to 1,000 households

Improved school attendance, clothing and appearance

Positive changes in self esteem, social status, assessment of livelihood security and hope for the children

Disabled, sick and children benefit over the average(Source: Bernd Schubert, advisor to Kalomo scheme. Email: [email protected])


Lessons from Kalomo on identifying and targeting the poorest Absolute poverty in Zambia already estimated at 73%

Pilot scheme is attempt to reach the chronically poor – lowest 10% – affected by HIV/AIDS

Conventional poverty measurements did not suffice for targeting poorest 10% of households

Food poverty line chosen – this was determined at 1800kcal

Extreme poverty line (hunger) calculated at 1400 kcal and under – illustrated by one meal a day, begging, destitution

Typical households under this line have children and older people with no ‘able bodied adult fit for productive work’

Typical households also have older people caring for orphans (HIV) and other vulnerable children; the children also support sick and disabled older people

(Source: B Schubert the Pilot Social cash transfer scheme Kalomo District CPRC Working Paper 52)


Reflections from Kalomo: ‘The poor are not irresponsible, and grannies are excellent economists’

Use of transfers: US$6 a month without children, US$8 a month with children

Food (maize) Soap, blankets, clothing, school items, transport to health facilities Investments in animals seed and labour Support to others – ‘chilimba’ Children and sick and disabled benefit more than others

Beneficiary household composition

84% of households headed by older persons and females 50% of households are HIV/AIDS affected 60% of household members are children 71% of the children are orphans(Source: B. Schubert, presentation to DFID 3.6.05)


HAI/DI Survey of attitudes to social protection and cash transfers in Africa

Social transfers -in the form of child and foster care grants, school support programs and social pensions for older carers - are already recognised as effective mechanisms to support households dealing with increasing poverty and the impact of HIV/AIDS

Regional institutions and national governments described enhanced social protection - and cash transfers - as components of a strategy to combat social exclusion and deliver rights, which they are profiling as important in overall poverty reduction

National governments are concerned that social protection and cash transfers lack donor profile and funding

Greater support, financing, capacity building and recognition is needed for Social Welfare Ministries

A number of African countries are introducing and developing social protection strategies


The case for a universal cash transfer paid to those 65 and above

Is transparent

Simplifies administration

Removes stigma

Reduces opportunities for corruption

Minimises work disincentives

Is gender-neutral

Is affordable (2-4% of GDP – ILO 2005 estimates)

Protects against risk

Is a right


Old age and disability pensions at US$0.50 per day are affordable within a social protection package of education, health and child benefit

Basic social protection expenditure in percent of GDP

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2005 2009 2013 2017 2021 2025 2029 2033

Universal pensions Child benefit Basic education

Basic health care Administrative expenditure

Source: Pal, K., Behrendt, C., Léger, F., Cichon, M. and Hagemejer, K. 2005. Can low income countries afford basic social protection? First results of a modelling exercise, SOC/FAS Discussion Paper, Geneva: International Labour Office.

Tanzania: Base case


Basic social protection is affordable if countries and donors commit to social protection as an essential tool of poverty reduction

Source: Pal, K., Behrendt, C., Léger, F., Cichon, M. and Hagemejer, K. 2005. Can low income countries afford basic social protection? First results of a modelling exercise, SOC/FAS Discussion Paper, Geneva: International Labour Office.

Tanzania: Base case

Option 1 (based on 2003 fixed proportion of projected govt. expenditure)

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2005 2009 2013 2017 2021 2025 2029 2033

Required External financing in % of GDPGovernment financing in % of GDP


What is needed

Greater Political Will; enhanced social protection and cash transfers are possible and affordable

Donors and national and international NGOs can

Support developing country governments to explore options, and support national political debate and expenditure to target the poorest

Support the scaling up of pilots such as Kalomo, Zambia and new pilots (Tanzania) to build experience

National governments can

Identify Social Protection and cash transfers in policy and funding mechanisms, including PRSPs and donor budget support

Explore impact of SP through social budgets and PSIAs


Questions for discussion

How to measure social protection benefits as well as the costs?

Should we be measuring the costs of not extending social protection and cash transfers?

How do universal cash transfer schemes fit with existing provision (e.g. contributory schemes) and informal savings schemes?

How can administration – delivery, records - be supported?

How to target effectively and minimise corruption?

How to secure community engagement including monitoring?

How to secure donor policy and funding engagement to support national social protection schemes?

Conditional as opposed to universal transfers?

Are the poor to be trusted?

HelpAge International How cash transfers can support the poorest older people and children Sylvia...

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