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Key Text Social Protection: The Role of Cash Transfers

Author: D Ehrenpreis
Date: 2006
Size: 19 pages (331 KB)

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Summary

Can social protection policies – including cash transfer schemes – promote pro-poor growth and reduce vulnerability? This issue of Poverty Focus, published by the UNDP International Poverty Centre (IPC), provides a snapshot of innovative social protection programmes and donor-led efforts to harness social protection as a means of reducing the risks for poor people engaging in markets. It also calls for a broader conceptualisation of social protection to address the complex dynamics of poverty and the range of factors that keep people in poverty.

Social protection is often equated with short-term responses to shocks and crises. However, this restrictive interpretation creates a policy bifurcation in so far as the factors that lead to transitory poverty are viewed as distinct from those leading to chronic or extreme poverty. A broader conception of social protection focuses on both chronic and transitory poverty. Social protection should minimise the risks that lead to poverty traps and reduce vulnerability through livelihood promotion and asset redistribution. Specific interventions should help to overcome the threats to well-being arising from the hazards, risks and stresses (such as unemployment, ill-health or low-wages) that are associated with poverty generation processes.

A range of innovative social protection projects and programmes are currently being implemented worldwide.

In South Africa, there is intense public debate over proposals for a universal basic income grant (BIG) that would reduce poverty by more than half. However, the scheme may not be economically viable due to the huge costs involved.
The pilot Kalomo District Cash Transfer programme in Zambia involves regular cash transfers to vulnerable households to improve food security. Beneficiaries are identified through community decision-making and preliminary evaluations are largely positive.
In India, employment legislation guarantees 100 days employment per year for one member of a poor household, which is estimated to bring two-thirds of India’s above the poverty line.
An IPC ex ante evaluation of cash transfers in 15 African countries reveals that affordable programmes would only have a limited impact on poverty alleviation. More costly initiatives would significantly reduce poverty but would have little effect on school enrolment.

Poor people’s contribution to economic growth is constrained by their inability to manage the risks and vulnerabilities of engaging in markets. The OECD Poverty Network (POVNET) is currently drafting guidelines on social protection to enable more effective and coordinated donor interventions, which aim to:

Ensure that social protection policies go beyond short-term social safety nets by reducing vulnerability to risk and facilitating the engagement of poor people in more productive enterprises.
Promote investment in reliable social protection instruments to increase productivity and stimulate faster economic growth by encouraging young people to engage in higher risk and higher yield activities.
Confront inequalities of opportunities and assets, which affect poor people’s participation in development, through a mix of policies that balance growth and distributional objectives, empower people and tackle gender biases.
Use different types of cash transfers that are complementary to each other, as well as to other forms of transfers and to wider public investment.
Guarantee effective cash transfer schemes through long-term funding, transparent targeting criteria and robust delivery mechanisms.

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Source: Ehrenpreis, D., (ed.), 2006, 'Social Protection: the Role of Cash Transfers', Poverty in Focus, United Nations Development, International Poverty Centre, Brazil
Author: UNDP International Poverty Centre, http://www.undp-povertycentre.org/