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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 AIDS crisis is one factor driving an increase in the number of orphans and vulnerable children (OVC) in countries with major generalized epidemics (figure 2.3). School attendance by orphans is often lower than that of nonorphans, a source of concern for the economic development of future generations.

One response by African countries to the HIV/AIDS crisis has been to begin CT programs. For instance, Kenya’s Cash Transfer for Orphans and Vulnerable Children Project was created to systematically support Kenya’s OVC and to prevent their institutionalization (World Bank 2009b).

Zambia’s social cash transfers were started to help poor households, The Rise of Cash Transfer Programs in Sub-Saharan Africa 37

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including those affected by AIDS (for example, households without adult members capable of participating in the labor force as a result of disease or death), that were not receiving help from other labor-based or microcredit programs (Schüring 2010).

Concerns that informal safety nets do not adequately protect individuals.

Although family, clan, and other mutual support systems have traditionally played an important role in protecting individuals faced with adverse shocks, these support systems cannot necessarily deal with large, multiple covariate shocks. Furthermore, traditional systems can exclude marginalized groups or individuals, who are left with incomplete risk-coping mechanisms (European University Institute 2010).

The deterioration of informal safety nets is felt acutely within families, where skipped-generation households have become more common. The effects of HIV/AIDS, various ethnic and political conflicts, and high migration levels have induced a demographic shift in Sub-Saharan Africa not experienced in other parts of the world. Although infant and elderly mortality rates have slowly declined, deaths of prime-age adults have rapidly increased. The number of elderly household members caring for children has grown quickly, either because children have been orphaned or because their parents have migrated in search of job opportunities (Kakwani and Subbarao 2005). This shift of responsibilities to the elderly is one source of the weakening of traditional mutual support arrangements in the region.

In Namibia, a combination of multiple shocks has weakened traditional emergency responses and generated greater reliance on existing CTs. In 2002 and 2003, an increasing number of OVC were affected by the drought and food security crisis that hit Southern Africa, overwhelming the capacity of already-taxed informal safety net systems. In response to that crisis, 110,000 OVC residing in areas with high HIV seroprevalence levels received emergency food aid through a joint program of the World Food Programme (WFP) and the Food and Agriculture Organization of the United Nations, which was later extended to deal with chronic hunger. The government soon determined that consistent, longer-term assistance through cash grants was warranted, and Namibia’s Ministry of Gender, Equality, and Child Welfare set out to transition children from WFP food aid to government-funded cash grants (Levine, van der Berg, and Yu 2009).

The deterioration of informal safety nets has also led some countries to begin CTs. For example, Swaziland began its Old Age Grant to address the growing vulnerability of poor elderly Swazis, particularly in light of 40 The Cash Dividend the damaging effect of HIV/AIDS on informal support systems (Dlamini 2007). Mozambique initially targeted its Food Subsidy Program (Programa de Subsidio de Alimentos) to urban dwellers, whom they believed lacked the informal community and family-level safety nets available to rural Mozambicans (Devereux and Pelham 2005). The program has since expanded to rural areas, reflecting the recognition that traditional safety nets are also lacking in those areas for certain individuals.

Potential growth in financing for social protection. Although weak macroeconomic conditions in Sub-Saharan Africa have often discouraged leaders from trying to address the plight of the vulnerable, there are signs that increased funds will be available for countries to implement CT programs. Sub-Saharan Africa’s economic growth before the recent downturn—combined with stable macroeconomic policies, increased revenue collection, foreign investment, and potential natural resource revenues (if managed correctly)—suggest that many countries may be able to fund CTs in the medium to long term. Improvements in governance help make these goals increasingly feasible. Funding from donors in the form of debt relief, increased sector support, and longer-term financing mechanisms may allow countries to more easily provide predictable, long-term CTs that fit within domestic strategies.

Increased Focus on Social Protection and Cash Transfers within Sub-Saharan Africa The change of approach to social protection and CTs is accepted within the continent. Since late 2004, the African Union has encouraged countries to develop their own social policy frameworks. In 2006, meetings in Livingstone, Zambia, led to the Livingstone Call for Action. In 2007 came the Yaoundé Declaration, in which governments were encouraged to fit plans for social protection into their national budgets and development plans (Taylor 2010). In Windhoek, Namibia, in 2008, meetings for African ministers in charge of social development led to the creation of the Social Policy Framework for Africa. The recommendations generated in these meetings, including the Social Policy Framework, were endorsed in early 2009 by the 14th African Union Executive Council (African Union 2009). A plan of action supported by governments commits member states to increasing and empowering social protection programs and increasing coverage to excluded households. See box 2.1 for additional details on the African Union’s support for social protection and CTs.

The Rise of Cash Transfer Programs in Sub-Saharan Africa 41

Box 2.1

The African Union’s Social Policy Framework The Social Policy Framework, created by the First Session of the African Union Conference of Ministers in Charge of Social Development at Windhoek, Namibia, in 2008, recognizes the important role that social development plays as a complement to economic growth in Africa. Its recommendations are to be used to guide member states as they prioritize and strengthen national social policies related to issues including, but not limited to, social protection, labor, population, infectious diseases, education, health and nutrition, agriculture, migration, gender equality, environmental issues, conflicts and civil unrest, foreign debt, crime, and life-cycle and disability-related vulnerabilities.

The framework asserts that social policy should be implemented by the state, and it recognizes the importance of social policy for improving living standards as a key goal of development. It encourages member states to recognize the importance of social protection in contributing to economic growth and human capital accumulation, breaking intergenerational cycles of poverty, and reducing inequality.

Important principles of the Social Policy Framework include its rights-based motivation; its focus on long-term development goals; its emphasis on the coordination of social, economic, and political policy; and its endorsement of grassroots-led approaches to ensure ownership of policies at the local level (African Union 2008).

Plans for social protection throughout the continent are to allow for incremental increases in programs and can include “introducing and extending public-financed, non-contributory cash transfers” (African Union 2008, 17).

Although countries have been encouraged to develop strategies that best fit their unique context, a minimum package of assistance has also been outlined, which the countries have agreed is affordable when financed with assistance from development partners (Taylor 2010). Countries endorsing the Social Policy Framework for Africa have agreed to create, implement, and determine costs for national plans in accordance with this minimal package, which includes health care and targeted assistance for children, workers in the informal sector, the elderly, people living with disabilities, and the unemployed. Countries have been encouraged to include social protection in their Poverty Reduction Strategy Papers and National Development Plans, to reform and support existing programs, to determine costs for a minimum social package, and to use social protection to protect impoverished peoples from adverse systemic shocks (African Union 2008; Schubert and Beales 2006).

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Box 2.1 (continued) An Implementation Strategy Proposal, created by the second session of the African Union Conference of Ministers in Charge of Social Development, goes beyond the recommendations of the Social Policy Framework to provide assistance in prioritizing, sequencing, and implementing social policies. Regarding social protection, the proposal encourages member states to create their own “social protection floors,” which define basic service and income thresholds, and to place these floors within the context of national social protection strategies and relevant programs (African Union 2010).

Individual governments are also taking the initiative in their own countries. For example, Rwanda’s government examined its existing social protection programs and concluded they were fragmented, often worked outside of the national budget, and did not reach their full potential (World Bank 2009a). The Rwandan cabinet officially approved and began to implement the Vision 2020 Umurenge Programme (VUP), in 2007, in an effort to speed up poverty reduction, spark growth in rural areas, and strengthen social protection (Republic of Rwanda 2009).

In Ghana, the government realized that its economic growth alone was not enough to bring the extremely poor out of poverty or to protect other vulnerable groups from falling into it. More needed to be done to address the challenges these groups faced (Sultan and Schrofer 2008), and the government determined that a CT program was a potential solution to these issues.

Opinions among Africans have reflected increased recognition of vulnerabilities to shocks. Data from the World Values Survey Association (2009) show Africans’ responses to a question regarding whether they believe hard work can help them achieve a better life. In 2007, respondents were less convinced that hard work could bring them a better life, compared with responses prior to 2007, perhaps reflecting individuals’ growing recognition of their vulnerability to forces beyond their control (see figure 2.4). What is more, a majority of Africans believe their government’s most important national priority is improving the economic lives of the poor (see figure 2.5).

Some of the reasons for the increase in CTs throughout Sub-Saharan Africa, as laid out in the preceding sections, illustrate that the changing The Rise of Cash Transfer Programs in Sub-Saharan Africa 43 Figure 2.4 African Attitudes Regarding Connection between Hard Work and a Better Life

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Source: World Values Survey Association 2009.

Note: Figure shows the extent to which survey respondents agree with the two statements. Standard deviations are represented by error bars. The sample prior to 2007 comprised 8,561 respondents; the sample for 2007 comprised 11,808 respondents. Respondents were from Burkina Faso, Ethiopia, Ghana, Mali, Nigeria, Rwanda, South Africa, and Zambia.

focus and modality are embraced within the continent. The next sections turn to the specifics of the programs identified in the review.

Interest of Sub-Saharan Countries in Cash Transfer Programs and Limited Implementation of Programs The map in figure 2.6 illustrates the extent to which CTs have received recent attention in Sub-Saharan Africa, as uncovered in the desk review.

Of 47 countries reviewed, 39 had engaged in some sort of formal dialogue surrounding CTs, whether it was initiated by the government or by development partners. Although the extent of programming throughout the region is less extensive, the map reveals the definite interest of many countries to learn what role CTs may play in their country’s social protection programs.

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