Michael Samson msamson@epri.org.za

1. UN Department of Economic and Social AffairsUniversal Benefits: Delivering rights and reducing poverty8 February 2007, 1.15 – 3.00 pm United Nations Building, Conference Room D The social and economic impact of benefits to children and older people in Southern Africa Michael Samson msamson@epri.org.za

2. Overview • THE PROBLEM: Poverty in Southern Africa disproportionately affects children and older people • THE INSTRUMENT: Social transfers provide regular cash payments to poor households • THE OUTCOMES: • MDGs: poverty, hunger, education, health, equality • Decent work: jobs and empowerment • break the inter-generational cycle of disadvantage • Macroeconomic benefits

3. Households with older people and children are on average poorer than other household types in most African countries Older people & children Only older people No older people SOURCE: Kakwani and Subbarao (2005)

4. South Africa’s cash transfers produce remarkable social outcomes while supporting economic growth and broad developmental impacts • Sub-Saharan Africa’s oldest social transfer program • Costs 3% of GDP • Substantial impact on poverty reduction • Extensive studies of growth outcomes • Human capital • Labor markets • Development South Africa

5. South Africa’s social grants reduce poverty and destitution substantially 48% reduction 67% reduction

6. The universal social pension in Lesotho mainly protects children and promotes human capital accumulation • The world’s newest universal social pension, started in 2004 • Costs 1.4% of GDP • 65% of the cash is spent on children cared for by older people • Supports human capital investment, particularly for OVCs Lesotho

7. Impact of South Africa’s Social Pension on adult labor force participation SOURCE: Statistics South Africa Labor Force Surveys and EPRI calculations

8. Impact of South Africa’s Social Pension on adult labor force participation SOURCE: Statistics South Africa Labor Force Surveys and EPRI calculations

9. Impact of South Africa’s Child Support Grant on adult labor force participation SOURCE: Statistics South Africa Labor Force Surveys and EPRI calculations

10. Impact of South Africa’s Child Support Grant on adult labor force participation SOURCE: Statistics South Africa Labor Force Surveys and EPRI calculations

11. Impact of South Africa’s Child Support Grant on women’s labor force participation SOURCE: Statistics South Africa Labor Force Surveys and EPRI calculations

12. Impact of South Africa’s Child Support Grant on women’s labor force participation SOURCE: Statistics South Africa Labor Force Surveys and EPRI calculations

13. Social transfers in Namibia protect children and older people, support labour market participation and promote local economic activity • A transformed pension system since democracy in 1990 • Near-universal take-up (85%) • Costs 0.7% of GDP • Supports labour market participation, particularly for women • Stimulates local markets Namibia

14. Spending shares vary by income group—and social transfers redistribute income and restructure the composition of spending An illustration from South Africa Source: Statistics South Africa Income and Expenditure Survey 2000

15. Conclusions • For countries in Africa, social transfers have demonstrated considerable success in helping to achieve MDGs in areas of poverty reduction, nutrition, education, health, equality. • In many countries they are the most effective government program for reducing poverty. • They help to break the cycle of inter-generational transmission of disadvantage. • Social transfers do not create dependency—they often break dependency traps, particularly by nurturing productive high-return risk-taking and promoting decent work. • Social transfers are developmental.