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Africa’s experience with safety net programs

Africa’s experience with safety net programs. Cash transfers, food transfers and workfare programs K. Subbarao. Cash transfers. Rare in Africa Region ….and for obvious reasons: Information requirements prohibitive, Fiscally unsustainable, administratively difficult to implement.

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Africa’s experience with safety net programs

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  1. Africa’s experience with safety net programs Cash transfers, food transfers and workfare programs K. Subbarao

  2. Cash transfers • Rare in Africa Region ….and for obvious reasons: • Information requirements prohibitive, • Fiscally unsustainable, administratively difficult to implement. • Only two countries have one significant cash transfers: social pension in South Africa and Namibia.

  3. Namibia’s social pension.. • Social pension program and the disability grant touch the lives of the poor more than other programs, • Both formal, publicly funded safety nets with significant poverty-reducing impacts, • Every individual after the age 60 gets a social pension of N$160/month; administration decentralized;

  4. Namibia social pension... • SP main source of income for 14% of rural and 7% urban households; most recipients are very poor; amount barely sufficient to keep a family above the poverty line. • Problems: • undercoverage (only half of eligible persons actually receive it; serious in the poorer North), • most elderly urban non-poor also receive it

  5. Social pension…. • Fraud; poor monitoring, • inefficient administration and transaction costs to recipients (no Bank accounts, problem of carrying cash, complex registration procedures and documentation-intensive) • Yet the program is cost-effective; 90% of total budget goes exclusively to pensions. • Similar problems in disability pension, though i more serious form.

  6. Food transfer programs.. • Food subsidies and rations • administered through marketing boards, ration shops (Niger, Mali, Tanzania, Kenya, Zambia) • Food stamps (Botswana, Zambia) • Food for Works Program • Feeding Programs

  7. Food subsidies and rations • Zambia until 1991: objective provide cheap food (maize). Problems: • high cost (2% of GDP), urban bias, quite regressive in impact. • Price of maize liberalized in 1991. • Food stamps introduced in 1991. • Did not resolve the main issues:

  8. Food transfers... • Incidence continued to be regressive • real value eroded with inflation (transfer as a percent of poverty line declined from 23% in 1989 to 9% in 1991), • High transaction costs (registration and coupon distribution, etc), • High administrative costs.

  9. Food rations in Mozambique • Household received rations (maize and maize flour (38%), rice (31%) at subsidized prices set by the government. • Proved high expensive (9% of GDP in 1987), • Poorest (mainly refugees) did not have access, • High transaction costs,

  10. Mozambique….and Sudan • Prices in parallel (illegal) markets far exceed official markets; during periods of inadequate official supply, the poor end up paying more. • Sudan’s experience is similar: high cost, poor targeting (73% of benefits went to non-poor in Khartoum)

  11. Food for works... • Kenya: Designed to utilize 800 workers per month to build assets and distribute food without diverting labor from farm activities. Program financed by WFP, GOK and WB. • Unfortunately program wage as % of market wage unavailable; difficult to evaluate outcomes and targeting effectiveness.

  12. FFW: Zimbabwe • Food Wage was set at a low level; • Main the poor participated; highly successful in ensuring food security during drought years; the poorest received 33% of income from FFW; average cost per person employed was $0.91 per day. • Converted to emergency relief employment program during massive drought of 1992 and expanded five-fold; quality suffered.

  13. FFW: Niger.. • Initiated in 1973-74 and continued for some years; Extremely low food wage; poorest poor (women 60-80%) participated; operated through NGOs; poorest derived 20% income from FFW

  14. School feeding programs... • Mauritania: milk/porridge to pupils in primary schools; supported by WFP; Low coverage (13%) and regional disparities; enrollments increased from 49% to 71% though it is difficult to attribute the increase entirely to the program; program included nutrition and hygiene education. Stigma may have prevented some the poorest from participation.

  15. School feeding... • Niger: introduced in geographically selected schools to encourage children of nomads to attend schools; government began the program in 1960; WFP began supporting it since 1982; significant transfer benefits were noted for the extremely poor (level of benefit 86% of extreme poverty line in 94) • No stigma was noted

  16. School feeding.. • Gambia: Began by CRF in 1964; WFP took over in 1971; all primary school children receive a meal; since every parent receives benefit, no significant distributional gains; value of ratio corresponds to 30% of poverty threshold; school enrollment increased from 17% in 1960 to 64% in 1990. Program has strong education thrust.

  17. Lessons from food transfers... • Food subsidies and rations generally regressive; urban biased; high transaction costs; • FFW and feeding programs relatively more progressive and fared better, but • poor asset quality; very little evaluation; • school feeding reached very small population, • concerns with substitution of food at home.

  18. Public works…. • Largely donor-driven; largely in response to droughts; hence short-lived; • Program benefits depend on the level of program wage relative to market wage; share of labor to total cost; duration and timing of employment; • Experience varied with respect to all of these parameters.

  19. Table 1 Public Works: Scale of Operations and Cost for Selected Countries

  20. Table 2. Public Works: Program Wage (PW), Minimum Wage (MNW), and Market Wage (MW) in Selected Countries

  21. Public works... • In Tanzania, Botswana and Kenya, program was higher than market wage for comparable unskilled activities; so jobs had to be rationed and self-selection suffered. • In Kenya and Tanzania, the timing of public works was synchronized with the busy agricultural season, significantly reducing stabilization benefits to the poor.

  22. Cost of public works... • Few studies examined the cost per dollar of income transferred through public works, • Available studies outside Africa Region place the cost to range between $3 to $5 per one dollar of income transferred; so it is an expensive intervention as a pure transfer; • So important to pay attention to assets created, quality and maintenance.

  23. Beyond food and workfare…new and emerging challenges…. • Drought and food security have been major sources for poverty and vulnerability in Africa, but new sources of vulnerability have emerged.. • AIDS orphans, persons displaced from civil wars and conflicts, aged and the handicapped (victims of land mines) have emerged as new vulnerable groups

  24. Few programs to address new challenges…. • Governments should seriously consider cost-effective safety net options for orphans, handicapped, and the aged. • Community-based interventions seem to hold promise, but…... • Old as well as new programs and initiatives need to be evaluated, and lessons learnt.

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