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Africa: Social Transfers
Apr 2, 2006 (060402)
(Reposted from sources cited below)
According to a new research report from the UK Department for
International Development says social transfers - that is, regular
and predictable grants to households - can have significant
positive effects on human development for the poor, and
particularly on health and education, even when the grants are not
specifically targeted to those sectors. In other words, one of the
most immediate and effective remedies for poverty is money.
This AfricaFocus Bulletin includes excerpts from "using Social
Transfers to Improve Human Development." This and other background
papers on the issue are available from the DFID website at
http://www.dfid.gov.uk/pubs (explore the topics listed or search for
Another AfricaFocus Bulletin sent out today includes a press
release from Oxfam International on Zambia's decision to remove
user fees for primary health care in rural areas, and excerpts from
an earlier DFID report on user fees.
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Using social transfers to improve human development
Social Protection Briefing Note Series, Number 3
[This e-mail version is slightly condensed and excludes references;
for full text.
For other papers on this subject go to http://www.dfid.gov.uk/pubs
and search for "social transfers" ]
The world's poorest and socially excluded people are not benefiting
from the pursuit of the health and education Millennium Development
Goals (MDGs). Without adequate health and education, children are
facing long-term and irreparable damage. Enabling chronically poor
families to invest in children's health and education will help
prevent transmission of poverty from one generation to the next.
Scaling up investment in service provision and quality is of course
necessary, but is not sufficient to achieve universal access to
health and education services. ...
Social transfers provide a promising solution to both of these
policy challenges. They are attracting growing interest from
national governments and multilateral and bilateral donors for
their role in improving human development, as well as in reducing
hunger and tackling extreme poverty and vulnerability. They are
also increasingly recognised as an important element of an overall
care package for children affected by AIDS. Increasing and more
predictable aid flows provide an unprecedented opportunity to
support low-income countries to invest in social transfers
alongside health, AIDS and education, in the pursuit of the MDGs
This note provides an introduction to how social transfers
particularly cash transfers and vouchers can improve human
development, especially for the extreme poor and socially excluded.
Drawing on social protection and demand-side financing literature,
- Evidence that investment in social transfers can make scaled up
investments in education and health more effective and equitable
- The need to balance demand-side and supply-side action
- Key considerations in choosing social transfer instruments for
- Where the evidence base needs strengthening
This briefing seeks to encourage policy coherence and programme
complementarity between education and health sectors, and social
protection. It is written primarily for programme managers and
advisers leading on DFID's engagement with education and health
sectors, AIDS and social protection. This note complements the DFID
practice paper (2005) Social Transfers and Chronic Poverty. A
background paper provides further information.
How social transfers can improve human development outcomes
Social transfers are non-contributory, regular and predictable
grants to households or individuals, in cash or in-kind. Cash
transfers can take the form of income support, child grants,
disability benefits, scholarships and stipends, or non-contributory
pensions. They can be targeted at specific vulnerable groups, or
distributed universally. Demand-side vouchers are near-cash
transfers that can be redeemed for specific products or services,
although they are not always received on a regular basis.
Boosting demand for services
Social transfers can be an effective way of targeting resources to
the poorest and socially excluded, to help get and keep children in
schools and to use health services. Even where services are
provided free, or fee-waivers operate well, the poor and socially
excluded still face other barriers to access such as the costs of
transport, medicines, uniforms and textbooks; discrimination
against girls and other socially excluded groups; the loss of
income from children attending school rather than working; and lack
of knowledge of the value of education and preventive healthcare.
Social transfers can address all of these demand-side barriers,
especially if school attendance and/or use of preventive health
services are conditions of payment. The situations in which
conditional or unconditional transfers are appropriate are outlined
under the 'How to' section below.
Tackling underlying causes of health and education inequalities
Cash transfers also address some of the underlying causes of
inequalities in health and education outcomes, such as poverty,
social exclusion and malnutrition. A regular source of income
whether conditional or not allows extremely poor households to
eat better food more regularly, leading to improved nutritional
status. Improved nutrition in young children will in turn benefit
their health, and is important for children's cognitive development
and ability to benefit meaningfully from school.1 Education in turn
will lead to healthier children and these benefits will be passed
on to the next generation. Adults with enough to eat are less
likely to be ill, and good nutrition is essential for effective
treatment with anti-retrovirals.
Evidence of the impact of social transfers on access to services
and human development outcomes
The most robust evaluations come from the conditional cash transfer
programmes in middle-income countries. This evidence has encouraged
several low-income countries to pilot and in some cases scale up
social transfer programmes.
Impact of social transfers tied to service use
Many of the large cash transfer programmes are conditional, with
payment dependent on regular school attendance, or use of
preventive health services or other specified conditions. Vouchers
are the least flexible form of transfer, with recipients tied to
using specified service providers.
Education. Brazil's Bolsa Escola now merged into Bolsa Familia
is a national programme with strong political support that
transfers $6-19 a month to an estimated 5 million families, at a
cost of 0.15 percent of gross domestic product. It targets cash
transfers - paid directly to mothers - to poor families with
school-age children on condition that each child attends school at
least 90% of the time. Studies show a sharp fall in school drop-out
rates and higher enrolments in post-primary education. Targeted
scholarships and stipends to overcome financial and, through the
direct empowerment of girls, also cultural barriers to girls'
school attendance have been successful in Bangladesh, India and
Mexico. The Bangladesh Female Secondary School (FSS) Stipend
Programme paid school fees and transferred an incentive payment
direct into girls' bank accounts on condition of at least 85%
school attendance, remaining unmarried until at least 18 years old,
and passing exams. This has increased enrolment rates by 12
percentage points per year in rural areas. Drop-out rates fell for
some time, but are now rising due to the introduction of conditions
based on performance. This national programme adopted a universal
approach. There is ongoing debate about whether to move to a more
targeted approach now that social norms and behaviour in relation
to girls' education have changed.
Health. The PROGRESA (renamed Oportunidades in 2002) conditional
cash transfer scheme in Mexico boosted demand by women for
antenatal care by 8 percent, and contributed to a 25 percent drop
in the incidence of illness in newborns and 12 percent lower
incidence of ill-health among under five-year-olds compared with
non-PROGRESA children. In Nicaragua's Red de Protecci¢n Social
(RPS) programme, immunisation levels among recipient 12-23 month
old children increased by 18 percent. Both schemes are
well-targeted to the poorest, using a combination of geographical
and proxy means test targeting approaches. Also in Nicaragua,
vouchers provided to sex workers and their partners and clients for
the treatment of sexually transmitted infections led to large
declines in reported rates of syphilis and gonorrhoea.
Nutrition. In Mexico, 70 percent of households participating in
PROGRESA have shown improved nutritional status. Most markedly,
stunting has been reduced, with the growth rate among 12-36 month
old children increasing by one centimetre per child, per year.
Impact of unconditional social transfers
Evidence indicates that even when cash transfers are not tied to
service use, the additional income is often used for health,
nutrition and education priorities. The benefits enjoyed by the
direct recipients of the transfers are often shared by other
household members across generations. Choosing the recipient of
transfers must be based on an understanding of local beliefs and
targeted to where the money is most likely to be fairly
distributed. Experience shows this is most likely when the transfer
is given to women.
Education. In rural Brazil, social (non-contributory) pensions to
over 5 million elderly poor are strongly associated with increased
school enrolment, particularly of girls aged 12-14 years. Social
transfers in the form of foster care grants are often an integral
element of an overall care package for children affected by AIDS.
Early findings from the pilot Kenya Cash Transfer for Orphans and
Vulnerable Children show how the unconditional transfer of Ksh. 500
(œ3.80) per month has increased school attendance. Similarly,
overall absenteeism from school has declined by 16 percent over the
first nine months of the Kalomo cash transfer pilot scheme in
Zambia - where transfers are made to the most vulnerable
households, often grandparents caring for children affected by
Health. In Namibia, pensioners spend 13.8 percent of the cash they
receive on health care and medicines. A study in South Africa found
that older people who received social pensions had a significantly
better health status than other family members, when the household
did not pool their resources. Where they did pool income, the
health status of all family members was higher than in households
that did not contain a pensioner.
Nutrition. A study of the unconditional Child Support Grant in
KwaZulu-Natal, South Africa, suggests that it has an impact on
child height for children who started receiving the grant in their
first 20 months of life. Early findings from the Kalomo cash
transfer pilot scheme in Zambia indicate that a payment of US$6 per
month to the poorest 10 per cent of households has a marked impact
on households reporting an increase in daily food consumption and
an 8 percent decrease in the proportion of underweight children.
Balancing investment in demand and supply
Social transfers work best alongside investments in service
The very success of social transfers in rapidly expanding access
can undermine service quality unless there is also increased
investment in service provision. This has been experienced with
declining test scores and pupil retention in the Bangladesh FSS
stipend programme. Quality and capacity issues must be addressed in
order to sustain benefits.
Clearly, social transfers are not a panacea to compensate for lack
of investment in inclusive, equitable education and health systems.
Even in a middle-income country such as Mexico, Oportunidades
(formerly PROGRESA) only operates in those areas where there are
adequate schools and clinics, and supplements government capacity
with additional NGO service provision. It also allocates resources
towards the costs of additional supplies of equipment, medicines
and materials. ...
Efforts to abolish user fees for health and education services, or
to put in place fee waivers, are an important complement to social
transfers, provided adequate measures are put in place to meet
costs. This will increase the impact of both the social transfer
and the fee waiver or free service policy.
... but still have a role in areas of weak service provision
Even when service delivery systems are weak, for examples in
fragile states, social transfers can still play an important role
in reducing vulnerability and improving health outcomes. A recent
evaluation of the impact of an emergency unconditional cash
transfer scheme in Somalia, for example, showed that the provision
of cash grants to women not only helped the poor repay debts and
improve their food intake, but also empowered them to invest in
healthcare. If the core policy objective is to increase access to
education and health services, then some combination of
accreditation of non-state providers (possibly through franchising)
with demand side voucher schemes may be possible. Further research
is needed on the combination of social transfers and supply side
interventions that is most effective in different types of fragile
How to decide which type of social transfers to use
Decisions about the type and value of social transfers or
combination of social transfers are extremely context-specific.
... The Background Paper sets out key considerations
for choice of social transfer instruments:
- Policy objectives: Is improving human development an explicit
policy objective or an indirect objective of a programme focused on
reducing hunger and poverty?
- Understanding demand: What types of financial and non-financial
barriers to access need to be addressed? What is the optimal value
of transfer required to overcome barriers for vulnerable groups?
Who in the household should receive transfers to maximise impact?
- Cash or restricted spending choice: do vulnerable people have
sufficient information to make informed choices; what political
pressures do governments and donors face to restrict spending
choice through conditions or vouchers; what capacity to monitor
compliance with conditions; is there adequate provision of quality
services to tie transfers to service use?
- Targeted and universal approaches: What are the trade-offs
between accuracy of targeting and the politics and cost of
targeting? Are there existing programmes that use effective
approaches to targeting (geographical, community-based, proxy means
test, etc) that a social transfer scheme can also use?
- Cost-effectiveness: will the benefits of social transfers - in
terms of human development outcomes, and also in terms of reducing
hunger and income poverty, increasing women's empowerment, and
promoting growth - exceed the costs of administering them?
- Political feasibility: what is the constituency for social
transfer programmes; will financing be sufficiently predictable and
long-term to sustain social transfer programmes?
- Institutional capacity, governance and accountability: what are
the options for delivering cash and vouchers directly to people
(eg. banks, post offices, health posts); which different
institutions and levels of government administration need to
cooperate to implement social transfers effectively and in
coordination with education and health service provision?
Conditional transfers are most likely to be effective in increasing
equitable access to services, where demand for child labour
(opportunity cost) is high or discrimination against girls or
disabled children leads to low school attendance. Where main
barriers to service use are direct costs, a scholarship or stipend
(covering fees) with lower administrative demands may be
sufficient. It could also be complemented with a fee waiver scheme
or, where appropriate, entitlement to free service provision. The
transaction costs of alternative policy options will need to be
Vouchers work best when the main cost involved is paying for the
service, and there are no additional out of pocket expenses
involved, or people are not giving up work time to access services.
Vouchers tend to be more successful when targeted to easily defined
vulnerable groups, and where there is a choice of accredited
service providers (public, private or NGO). ...
Unconditional cash transfers are more likely to impact on human
development where vulnerable groups also have sufficient access to
information to make informed choices about health and education.
Such transfers may also have indirect benefits such as empowerment
of women and socially excluded groups through increased control of
household finances. Unconditional cash transfers are more
appropriate where service coverage is poor. The unconditional
transfers should at least improve nutrition and the physical and
cognitive development of children thereby leading to better health.
This would create a positive cycle with healthier and more
cognitively developed young children, better able to take advantage
of educational opportunities in the future if service provision
improves. Further, evidence shows that people will often prioritise
spending on health and education even when it is not a condition.
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