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Poverty reduction through transfers in cash and in kind: Contrasts and complementarity

Poverty reduction through transfers in cash and in kind: Contrasts and complementarity.

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Poverty reduction through transfers in cash and in kind: Contrasts and complementarity

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  1. Poverty reduction through transfers in cash and in kind: Contrasts and complementarity Seminar “How can the abolition of user fees and the provision of in-kind support impact on child poverty?”,Lecture Series “Social Protection: Making Child Poverty History?” London, 15 June 2005Christina Behrendt Social Security DepartmentInternational Labour Office, Geneva

  2. Outline • Introduction • Transfers in cash and in kind • Affordability • Effects on child poverty • Conclusions ILO SOCFAS

  3. 1. Introduction • Social protection is increasingly recognized as an effective way of reducing poverty • Children as a particularly vulnerable group • Right to social security • Form of provision: cash or in-kind? ILO SOCFAS

  4. 2. Cash vs. in-kind transfers • Mode of provision dependent on benefit to be provided • What is the role for for cash and in-kind benefits in low-income countries? • Encouraging examples ILO SOCFAS

  5. 2.1 Arguments in favour of in-kind transfers • Targeting • Control over use of transfer • Less inflationary risks • Less security risks • Less prone to corruption and diversion ILO SOCFAS

  6. 2.2 Arguments in favour of cash transfers • Choice (recipients’ priorities) • Cost-efficient (both administration costs and for recipients) • Stimulation of local markets • Multiplier effects • Less prone to corruption if regular and transparent benefits ILO SOCFAS

  7. 3. Affordability • Could low income countries afford a minimum social protection package? • To what extent could such a package be financed out of domestic resources? • How much international assistance would be needed over the next years? ILO SOCFAS

  8. 3.1 Minimum Social Protection Priority basic social protection package: • Universal access to essential health care • Basic education (primary education) • Minimum income security • Basic old age and invalidity pensions • Cash benefits to children (notably orphans) ILO SOCFAS

  9. Preliminary Results for Tanzania: Scenario I – Expenditure ILO SOCFAS

  10. Preliminary Results for Tanzania: Scenario I – Financing ILO SOCFAS

  11. Poverty reducing effects of a universal old-age pension ILO SOCFAS

  12. Poverty reducing effects of a child benefit to school-age children ILO SOCFAS

  13. Poverty reducing effects of an old age pension and a child benefit ILO SOCFAS

  14. Poverty reducing effects of a targeted cash transfer to the most vulnerable ILO SOCFAS

  15. Conclusions • Both in-kind and cash transfers can play a strong role in broader social protection strategies • Basic level of social protection is affordable to some extent also in low income countries, yet some transitional extrernal support might be necessary • Pronounced direct effect on poverty reduction for children and expected positive long-term effects on social development ILO SOCFAS

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