«DIREC TIONS IN DE VELOPMENT Human Development Public Disclosure Authorized The Cash Dividend The Rise of Cash Transfer Programs in Sub-Saharan Africa ...»
Holmes, Rebecca, and Nicola Jones. 2009. “Child-Sensitive Social Protection in West and Central Africa: Opportunities and Challenges.” Synthesis Report for the Study on Social Protection in West and Central Africa, Overseas Development Institute, London.
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Cash Transfers 29 Samson, Michael. 2009. “Social Cash Transfers and Pro-Poor Growth.” In Promoting Pro-Poor Growth: Social Protection, 43–55. Paris: Organisation for Economic Co-operation and Development.
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The Rise of Cash Transfer Programsin Sub-Saharan Africa
This chapter describes some of the factors motivating the growth of cash transfers (CTs) throughout Sub-Saharan Africa, as well as a general framework that can be used to classify and understand CTs in the region.
Before examining the growth and use of CTs in Sub-Saharan Africa, the chapter describes the extent of formal social protection in the region.
Although illustrative, the following brief discussion on social protection in Sub-Saharan Africa simplifies very complex situations, and it is intended purely to sketch general tendencies in the region, rather than to characterize the state of social protection in every country.
Social Protection in Sub-Saharan Africa Historically, social protection in Africa has been implemented in a piecemeal manner. Many countries traditionally had no social protection strategy, or the strategy was not strongly supported by the government.
Ministries in charge of social protection in Sub-Saharan Africa have usually been weak, both politically and technically. Such weakness is evident in governments’ budget allocations: spending on social protection has typically been about 0.1 percent of gross domestic product (GDP) in
32 The Cash Dividend
Sub-Saharan African countries, whereas this number is approximately
5.7 percent of GDP for North Africa and the Middle East (Coudouel and others 2002).
The traditional focus of social protection in Sub-Saharan Africa has been on infrastructure, such as social funds, or on social protection as a means of coping with emergencies. Consistent with this historical tendency, both CTs and other social protection programs have been implemented in an ad hoc manner in many countries reviewed in the current study. However, both governments and development partners have expressed increasing interest in improving social protection and safety nets.
Growing recognition that social protection is important, both for the well-being of vulnerable groups and for a country’s overall economic health, has led to increased attention to how programs can protect the vulnerable and encourage their inclusion in the economy. The trend toward establishing national social protection strategies and policies may provide a needed framework to facilitate institutionalization and scaling up of work on CTs in the region.
Catalysts for the Growth of CT Programs in Sub-Saharan Africa Interest in Social Protection Spurred by Global Economic Crises The increase in social protection and CT programs in Sub-Saharan Africa has occurred partly in response to intense pressures faced by the continent’s poor and vulnerable populations. For instance, from 2007 through early 2009, threats of financial collapse and global recession, food shortages, and rising food and fuel prices drew donors’ attention to the need to mitigate the effects of these crises on vulnerable groups.
Global leaders and individuals on the ground called for increased social protection for groups affected by the crises to help them cope with current and potential future adverse shocks. Better social protection measures were seen as a means to achieve pro-poor growth and the Millennium Development Goals (European University Institute 2010).
Concerns over Persistent Poverty, Low Human Capital, and Food Insecurity Although many individuals and households around the world were hit hard by recent downturns, the African continent fared relatively well considering the potential effect of the crises. However, the negative effects of the economic downturn and crises in Sub-Saharan Africa have The Rise of Cash Transfer Programs in Sub-Saharan Africa 33 been compounded by poor human development outcomes and persistent poverty in many countries in the region.
It is widely recognized that, overall, the gains from economic development have been slower to arrive in Africa than in other regions. The share of people living on less than US$1.25 purchasing power parity per day in Sub-Saharan Africa is consistently higher than in all other regions of the world (see figure 2.1). In 22 of the 42 Sub-Saharan African countries examined, more than half the population lives on less than US$1.25 per day (World Bank 2009c).
These poverty indicators are accompanied by poor human development outcomes in many countries. Despite making significant achievements in primary education, child mortality, and access to clean water, among other indicators, most countries in Sub-Saharan Africa are not expected to achieve many of the Millennium Development Goals (World Bank 2010).
Recurrent famines exacerbate vulnerability in Sub-Saharan Africa.
Drought and famine increase susceptibility to malnutrition, which remains a major concern for children under five in many countries in the region.
Nutrition deficits are a major concern for young children, for whom food crises can have irreversible consequences in cognitive ability and future productivity and wages. Despite receiving significant amounts of
51% 44% 44% 40% 40 36% 28%
Source: World Bank 2009c.
Note: US$1.25 is 2005 purchasing power parity value.
34 The Cash Dividend food aid to combat the effects of food crises, many countries have seen persistently high malnutrition levels (see figure 2.2).
Even in countries not specifically affected by recurrent famines, food security is a concern. Some factors contributing to food insecurity include ethnic and political conflicts, low agricultural productivity and environmental degradation, a changing climate, and poor or changing terms of trade (Niño-Zarazúa and others 2010). Limited diversity in livelihoods increases households’ reliance on subsistence agriculture for their survival and leaves them exposed to serious food security risks.
Another major factor in food insecurity is food price increases and volatility. This problem has taken a toll on vulnerable groups and has led to the creation of several CT programs. For instance, Senegal’s Child-Focused Social Cash Transfer was created as a temporary response to sharp increases in food staple prices that resulted, in part, from rising world prices. Food prices remain structurally higher than in the past, and a cash transfer is now seen as an appropriate instrument to address these changes. Other Sub-Saharan African countries are also using CTs in an attempt to cushion vulnerable populations from continuing food price volatility.
From Food Aid to Cash Transfers Changes in the provision of transfers in Sub-Saharan Africa have occurred in two distinct areas: from emergency food aid to emergency CTs, and from emergency food or cash transfers to regular, predictable transfers (Niño-Zarazúa and others 2010).
The transition from food aid to emergency CTs has occurred as the limitations of emergency food aid have been recognized. Food aid was expensive, and logistic challenges meant that it often arrived after households had sold or depleted productive assets to obtain food. Governments and groups that recognized these issues were some of the first to begin experimenting with transferring cash instead of in-kind goods. Early CT pilots by nongovernmental organizations (NGOs) in Malawi and Ethiopia established that CTs were a viable alternative to in-kind support.1 These transfers, though made in cash, were often given in emergency situations.
The transition from emergency short-term transfers to predictable long-term transfers has also occurred in part because of dissatisfaction with emergency food aid. Countries, development partners, and civil society organizations have increasingly recognized that many households receiving food aid are in a state of chronic, rather than temporary, food insecurity. Major CT programs in Ethiopia (the Productive Safety Net The Rise of Cash Transfer Programs in Sub-Saharan Africa 35 Figure 2.2 Malnutrition and Food Aid in Africa, 1990–2004
Sources: FAO 2007, 2008.
Note: Undernourishment data are reported for a three-year period. Saharan Africa comprises Chad, Mali, Mauritania, Niger, and Sudan. East Africa comprises the Comoros, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Mozambique, the Seychelles, Somalia, Tanzania, and Uganda. Southern Africa comprises Botswana, Lesotho, Namibia, South Africa, Swaziland, and Zimbabwe.
36 The Cash Dividend Programme’s Direct Support component, or PSNP-DS2) and Kenya (the Hunger Safety Net Programme, or HSNP) have been developed to address this ongoing food insecurity. Notably, the transition from food to cash is not total; the PSNP-DS, for example, still provides some transfers in food rather than cash.
Kenya’s HSNP helps illustrate the issue. In areas later targeted by Kenya’s HSNP, 60 percent of the population had relied on emergency food aid for their survival for more than 10 years, and acute malnutrition was consistently as high as 30 percent. Although aid was emergency based, the hunger was predictable, and many believed that it could be addressed using regular CTs (HSNP n.d.).
This paradigm shift in the provision of aid to Sub-Saharan Africa was epitomized by the mantra of “predictable funding for predictable needs” (Ellis, Devereux, and White 2009, 16). Underlying this philosophy is the belief that regular emergency aid to Sub-Saharan Africa will not be needed if mechanisms are in place to help households manage risk in good times and cope with it in downturns. The programs most favored to replace emergency transfers have included predictable cash transfers.
Other Catalysts for the Growing Use of Cash Transfers in Sub-Saharan Africa Several other factors have also influenced the use of CTs in Sub-Saharan Africa.
The HIV/AIDS crisis and orphans and vulnerable children. An additional challenge for many countries in Sub-Saharan Africa is the HIV/ AIDS crisis, with estimated prevalence rates reaching over 20 percent in the hardest-hit countries (UNAIDS and WHO 2008; see also table 2.1).