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«DIREC TIONS IN DE VELOPMENT Human Development Public Disclosure Authorized The Cash Dividend The Rise of Cash Transfer Programs in Sub-Saharan Africa ...»

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The vulnerability of Africans to this myriad of challenges has increased as traditional support systems have struggled to protect individuals faced with idiosyncratic and covariate shocks. Increasing migration, urbanization, the HIV/AIDS epidemic, and the evolution of traditional family structures have weakened informal safety nets. Certain groups, such as orphans and vulnerable children (OVC), have been especially vulnerable to these changes.

These issues, along with recent economic crises and downturns, have increasingly led governments and donors in Africa to examine whether social protection in general—and cash transfer (CT) programs in particular—can address some of the region’s challenges.

2 The Cash Dividend

The Growing Use of Cash Transfer Programs in Sub-Saharan Africa Traditional responses to disasters in Sub-Saharan Africa, such as emergency food aid in times of food shortages, have increasingly been seen as inadequate. Emergency food aid responds to famines but has failed to clearly contribute to food security. Many households receiving food aid are in a state of chronic, rather than temporary, food insecurity. Governments and groups that recognized these issues were some of the first to begin experimenting with transferring cash instead of food. Major CT programs in Ethiopia (the Productive Safety Net Programme’s Direct Support component, or PSNP-DS) and Kenya (the Hunger Safety Net Programme, or HSNP) were developed to address this ongoing food insecurity. It is hoped that regular emergency aid eventually will not be needed if mechanisms are in place to help households manage risk in good times and cope with it in downturns.

Using regular cash transfers to decrease the need for emergency food aid is only one way that CT programs are being used to protect the region’s poor and vulnerable population. The success of CT programs around the world has led Africans and the donor community to examine whether cash transfers can be used to address additional challenges in the region.

Support for CT programs—and for social protection in general—is growing within the region. Since late 2004, the African Union has provided encouragement to countries to develop their own social policy frameworks, and a Plan of Action supported by governments commits member states to expanding and empowering social protection programs. Individual governments are also taking the initiative in their own countries.

The Review of Cash Transfers, an Emerging Safety Net in Africa In 2009, growing interest in the use of CT programs in Sub-Saharan Africa led the World Bank to initiate a comprehensive desk review of the CT programs that had been used recently in the region. This book presents the results of the review.

The review was conducted with assistance from, and in order to benefit, those working in social protection—especially CT programs— within Sub-Saharan Africa. Its intended audience is those in the development community with an interest in the region’s experience with cash transfers.

Overview 3 Programs included in the review provided noncontributory transfers of cash from formal institutions to targeted individuals or households, usually to satisfy minimum consumption needs. The transfers could be conditional or unconditional and could be provided for emergency or development purposes. The review excluded public works programs, in-kind transfer programs, and voucher-based programs unless they also had a CT component.

The review consisted of several activities. Public documentation related to CT programs that existed in Sub-Saharan Africa since 2000, as well as related information on social protection, was reviewed. It is believed that almost all of the major relevant public documentation available at that time was considered. More than 200 individuals working in the identified cash transfer programs or related organizations were asked to provide additional information, with approximately half of these individuals providing more details on the programs and political economy issues.

This book summarizes the results of the review by examining how cash transfers have been used in Sub-Saharan Africa, analyzing and discussing program components, and highlighting lessons learned. Although useful in itself, the book cannot take the place of more in-depth assessments generated by those intimately familiar with the dynamics of each program’s unique environment.

Results of the Review A total of 1231 cash transfer programs were identified in the review, although only a subset of these programs is described in detail in this book. The programs are diverse, ranging from emergency one-time transfers, to unconditional noncontributory social pensions, to conditional cash transfer programs (CCTs) with human capital development objectives similar to the vanguard Latin American CCTs.

Middle-Income and Low-Income Cash Transfers Two distinct types of CT programs clearly emerge in the region. In general, upper-middle-income countries in Sub-Saharan Africa have implemented similar CT programs (known here as middle-income CT programs), while low-income countries and fragile states have operated programs that share many common characteristics (known here as lowincome or fragile CT programs). Cash transfers in lower-middle-income countries fall into both categories: CT programs of lower-middle-income 4 The Cash Dividend countries in Southern Africa are more similar to those of their uppermiddle-income neighbors, whereas CT programs of lower-middle-income countries in the region are more similar to those of other low-income countries.

The middle-income CTs, often referred to as cash grants, are established programs expected to continue indefinitely. They are typically part of rights-based social assistance systems, sometimes stemming from systems established in the colonial era. They are usually based in government institutions and are domestically funded. These CT programs often focus on assisting individuals in poverty, and their stable nature allows them to proactively focus on the ex ante preventive and promotive roles of social protection. They typically cover a wide range of vulnerable groups and a significant portion of the population through coordinated registration and information systems. Their widespread coverage is often achieved through near-universal targeting of vulnerable groups (that is, categorical targeting), such as the elderly.

Conversely, low-income and fragile CTs are often short-term projects, or they aim to graduate beneficiaries from the program within a relatively short time frame. They are typically seated outside of the government and are partially or fully funded by donors. They often focus on combating food insecurity or building human capital. Another large group of these CT programs simply addresses emergencies—whether natural disasters or events caused by humans—once they have occurred.

These projects often target a very limited portion of the population or a certain vulnerable group, which is often influenced by donor preferences.

Since these CT programs are not seated in a central organization, their management information systems are usually ad hoc, are not linked to other programs, and are often of poor quality. The fragmented nature and patchy coverage of these CT programs reflect their lack of domestic ownership and coordination.

Despite the major differences across the two groups, some low-income countries are headed down a path similar to that followed by the wealthier countries in the region. There is a growing trend in low-income countries toward institutionalization of some major CT programs. Many pilot programs hope to become large-scale, permanent programs, and they are working toward this end. Government ownership of these programs is relatively strong, and key investments are being made to establish the core systems (targeting, payments, monitoring, and so on) necessary for their success.

Overview 5 Distinguishing Characteristics of Sub-Saharan Africa’s Cash Transfer Programs Sub-Saharan Africa’s CT programs share many characteristics with CT programs around the world. However, they clearly stand out as unique in certain areas. Some of these features effectively address the unique context of Sub-Saharan Africa, others are not inherently positive or negative, and still others have arisen as CTs are used to confront challenges of greater frequency or depth than those seen in other regions.

They are an attempt at a best response, given the current challenges of the specific context.

Programs are responding to Sub-Saharan Africa’s unique challenges.

Although many CT programs—especially conditional cash transfer programs—often address households’ lack of human capital, programs in Sub-Saharan Africa recognize that even more basic issues, such as food security and survival, must first be addressed in their beneficiary populations. Therefore, their objectives often focus more directly on households’ immediate needs.

Some programs in Sub-Saharan Africa also focus on sexual activities and outcomes, such as early marriage and sexually transmitted infection (STI) status. These types of objectives, though similar in part to those of some other CT programs, are relatively unique, and they reflect a programmatic variation that can address Sub-Saharan Africa’s challenges in these areas. Programs that focus on supporting OVC also help to systematically deal with the OVC crisis affecting many countries in the region.

Most cash transfer programs have a high level of community involvement.

Although many CT programs around the world require communities to support program activities, the programs in Sub-Saharan Africa often rely on communities in ways beyond those found in other regions.

Communities are involved in identifying and selecting potential beneficiaries, collecting data, verifying information about beneficiaries, distributing cash, monitoring beneficiaries’ use of cash (even in unconditional transfers), and addressing grievances. This extensive community involvement often is driven by capacity limitations in the programs’ implementing bodies.

Although community involvement can raise new concerns about the management of cash transfers, it has been indispensable to the programs in Sub-Saharan Africa. When correctly managed, community 6 The Cash Dividend involvement can lower costs, improve implementation, and help sustain traditional support systems that have been weakened by constant pressure and a changing environment. Because communities can sometimes be a source of exclusion and discrimination to individuals not favored by traditional authorities or powers, community involvement needs to be appropriately monitored to ensure that abuses do not occur.

Programs often do not require cash payment recipients to be females.

In contrast to many other CT programs around the world, many programs in Sub-Saharan Africa do not specify that a woman should be the recipient of the cash. This trend is partially driven by the number of programs that transfer cash to individuals rather than households (for example, social pensions). Even so, this explanation does not fully explain this tendency, and it is not clear that this programmatic variation is a first-best approach.

Empirical work and anecdotal evidence have pointed to the benefits that can accrue to children as women’s control of household resources increases. For instance, Duflo (2003) has found such beneficial impacts in South Africa, and Quisumbing and Maluccio (2000) have found qualified evidence of such benefits in Ethiopia and South Africa. However, assuming that women should automatically receive all CTs in the region also could be naive. Fortunately, programs are testing how results differ when transfers are distributed to males rather than females in Burkina Faso and, outside of the region, in Morocco and the Republic of Yemen, which share some gender dynamics similar to parts of Sub-Saharan Africa.

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