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Can low income countries effectively deliver cash transfers which impact on child poverty?

Time (GMT +01) 12:00 13:00


Armando Barrientos, CPRC

Sylvia Beales, HelpAge Intl

Sonya Sultan, DFID

Tamsyn Barton, Plan UK trustee

1. Sylvia Beales argued that the right to social protection is enshrined in international instruments and outlined the role of cash transfers in effectively reducing poverty for the poorest. Helpage International research showed cash transfers had helped poor households better manage risk, offered the possibility of saving and improved life chances of children.

2. She asserted that the poorest of the poor were being missed by development programmes, illustrated by the UNDPs Human Development Report 2004 that indicated the MDGs were a long way off being achieved for the poorest in many countries (http://hdr.undp.org/mdg/default.cfm). This had particular implications for older people and the very young, evidenced by disaggregated data on poverty.

3. She argued for policies that recognised the importance of older people in providing surrogate care for disadvantaged children and responded to the intergenerational transmission of poverty within households, but recognised the power dynamics, as well as the reciprocity within households.

4. Examples were drawn from Zambia, South Africa, Brazil and Tanzania to support her case that universal cash transfers were paid to those aged over 65 as part of national poverty reduction strategies. She concluded universality was important for simple administration, reduced stigma, and increased household risk protection.

5. Sylvia Beales referred to work done by the ILO that demonstrated the affordability of old age and disability pensions, as well as child benefits, to low income countries. External stakeholders were important to assist country governments explore options and scale-up pilot programmes. Support was needed over time to enable affordability, integration of cash transfers in national PRSPs, and social budgets held potential for impact assessment.

6. She concluded with a number of key questions on how to measure the costs and benefits of providing (and of not providing) social protection; how schemes fitted within existing forms of provision; on effective targeting; minimised corruption; how administrations were supported; and how longer-term donor policy and funding were secured?

7. Armando Barrientos focused on 3 points. First, cash transfers were underused in poverty reduction. They were not the only solution but could be used more, alongside in-kind benefits, services and rights. He compared the use of cash transfers and public expenditure on health and education as a proportion of GDP in different counties, using IMF statistics. In North America this amounted to about 10%, it was 14% in East, Central and Western Europe, but this compared to less than 2% in Sub-Saharan Africa, and less than 3 % in Latin America.

8. Second, cash transfers were flexible, and allowed households to deploy them flexibly to address a range of deficits. Research in South Africa has shown that pensions were spent on: the Church, which was then redistributed to other members of the community; television, to keep up to date with the news; children, to pay school fees or medical costs; food and supplies, resulting in improved nutrition; transport, to enable access to medical care and on funeral funds. Thus cash transfers were important because of the range of spending they allowed. Additionally a steady flow of cash provided households access to credit.

9. Third, the case of the Progresa/Oportunidades programme in Mexico demonstrated that transfers supported household investment. Targeted conditional transfers were paid to mothers, dependent on the grade and sex of the child, along with consumption support, on the condition of an 85% attendance rate at school and the whole household attended health services. Although it was too early to evaluate educational attainments, health service utilisation had increased, there was an improvement in health status, and increased enrolments in school were evident.

10. Sonya Sultan noted that DFID's Reaching the Poorest team almost exclusively worked on the issue of cash transfers, in response to DFIDs concern that the realisation of the MDGs was off-track. DFID was committed through their aid strategy to work on child issues, and worked on social transfers as a public action strategy to transfer resources to deprived groups. She argued that cash made sense in some contexts, but other forms of transfer such as employment guarantee schemes and fee waivers were also options.

11. She argued that there was a new willingness by donors and developing country governments to consider transfers as a poverty reduction option, where previously they were seen only as a form of welfare. The MDG review had allowed opportunities for stocktaking, and led to increased recognition of the urgent need to address severe poverty, for interventions with longer lasting impacts and a focus on cost-effectiveness. These factors combined with the increasing evidence that cash transfers worked, not only in middle income countries such as Mexico and Brazil, but also in low income countries such as Bangladesh. Some programmes directly targeted children, but even those which did not also impacted on children.

12. Sultan argued that cash transfers work best when complemented by other interventions and suggested that countries follow the Zambian model of starting with a simple design and scaling up. She warned that building political support was key. The people who benefited most from cash transfers were those without voice and governments were often wary of making long-term commitments. She concluded that donors needed to be encouraged to put in place long-term funding so that governments had confidence money was predictable and secure.

13. The discussion centred on targeted schemes for the poorest versus universality. There was some agreement that universality was easier to administer, ensured better coverage, and reduced costs. Political commitment to universal coverage was not easy to gain, and some argued that aid funds needed to be increased. Community targeting held potential, as witnessed in Zambia.

14. The issue of costs was complex. Not only were there programmatic costs - transfer fees, implementation and monitoring cots, there were also costs to households that responded to conditions such as transport and opportunity costs of children taken to health clinics and schools.

15. There was some feeling that conditions on transfers displayed a considerable lack of trust in poor people's ability to manage their household economies. Yet, it was also acknowledged that intra-household power relations may inhibit the benefits children felt from household transfers.

16. Trade offs between funding transfers and funding public expenditure were debated. It was argued that no inherent trade-off was evident but that a need for rebalance and more attention paid to demand for services was necessary.

17. Challenges for NGOs were identified and the need for organisations to get out of their niches. For child-focused NGOs this meant they needed to get involved in non-child focused debates where they can add value. Scaled up support to national level activities is a clear challenge to the NGO sector.


State funded financial support to poor people in low income countries was previously dismissed as too expensive to be viable, however new research conducted by the ILO has shown that a package of basic social protection measures, including a child care payment, social pension and disability allowance, is affordable even for low income countries. This session examined some of the key issues surrounding cash transfers including: How do they impact on child poverty? Which are the most effective and efficient ways to ensure they reach the poorest people: universal, targeted or conditional measures? Are countries with weak infrastructures able to deliver them? Are they sustainable, and how can they empower rather than stigmatise those who receive them?