Social transfers reduce poverty

Southern African countries have some of the world's worst income distribution, but can often afford social transfers, which have proved an efficient means of reducing the number of poor, regional experts said at a two-day meeting in Pretoria, South Africa.
 
"Money can always be found – where there is political will there is always a way," said Nicholas Freeland, director of the Johannesburg-based Regional Hunger and Vulnerability Programme (RHVP) funded by the UK and Australian governments, and one of the co-hosts of the meeting.
 
Social transfers cover the various forms of social assistance for low-income or no-income individuals and households, and can include child support grants, non-contributory pensions, school feeding schemes, and agricultural or other inputs.

Six countries in Southern Africa – Botswana, Lesotho, Mauritius, Namibia, South Africa and Swaziland – provide non-contributory social pensions modelled on European social welfare policies. Mozambique, Malawi and Zambia, among others, are experimenting with some cash transfer programmes. 

Poor countries show the way
 
Poor revenue reserves and lack of capacity often stand in the way of cash social transfers. Experts at the meeting lauded the political will of poor countries like Lesotho and Swaziland, whose successful pension programmes make the most of their limited resources.
 
Lesotho provides a large pension of US$25, but has a high eligibility age of 70 years to make it affordable, noted one of a series of papers produced by the RHVP, in collaboration with the South Africa-based Economic Policy Research Institute (EPRI) and the IDS. "Swaziland, on the other hand, decided on a low eligibility age (60 years) to widen access, but set the pension level much lower ($10)." 
  
Evidence has shown that more money in people's hands means they spend more on basic needs such as food, health and education, which has helped both countries to advance towards meeting the Millennium Development Goal (MDG) of halving poverty by 2015.
 
Policy-makers at the meeting, which ended on 17 September, reviewed the role of social transfers in reducing poverty, ahead of the UN summit on MDGs in New York. The Universal Declaration on Human Rights includes the right to social security. 

Lagging behind
 

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Southern Africa is lagging behind on most MDGs: about 45 percent of its people live on less than one US dollar a day, and life expectancy in countries with high HIV prevalence rates has dropped to below 40 years, said Agostinho Zacarias, the UN resident coordinator in South Africa.
 
Social transfers generally fall into two categories: long-term transfers, which target people who face life-cycle risks, such as orphaned children; and short-term transfers, which include social insurance for those who face livelihood risks, such as farmers who have had a particularly bad harvest, said Stephen Devereux, of the Institute of Development Studies (IDS) at the UK-based University of Sussex.
 
In South Africa, social transfers like old-age pensions, and the child support grants introduced in the early 1990s, have managed to improve the lot of at least 47 percent of people living on less than two dollars a day, said another papers in the series.
 
Lovemore Moyo, Speaker of the Zimbabwean parliament, commented: "A country like ours does not have the funds and the resources to put such social transfer programmes in place." 

Domestic savings
 
Zacarias said countries like Zimbabwe needed to work on building the confidence of the people in government policies to improve their domestic savings, "So you know that the money will be spent where it should, and not diverted elsewhere." He made the point that countries needed to spend on social transfers because "we are social beings", and to show that we care about other human beings.
 
RHVP's Freeland pointed out that at the time when developed countries like the UK and Sweden introduced social transfers such as old-age pensions, they had not been not particularly well-off but had gone ahead because of the "huge inequalities" that existed. Devereux noted that Lesotho went ahead with its social transfers programme without the support of donors.
 
The papers released at the meeting cited a recent study by the International Labour Organisation (ILO) of 12 low-income countries – six in sub-Saharan Africa and six in Asia – which put the cost of providing social pensions at less than one percent of the gross domestic product in each country.
 
RHVP's Freeland said donors could help out with start-up costs, which were often formidable. "They could pay for smart cards, registration of beneficiaries, and monitoring and evaluation of the transfers, but the actual transfers must come out of the country's budget."
 
Sylvia Masebo, a Zambian parliamentarian, highlighted the need for political commitment to social transfers. Many countries, including Zambia, depend on donor support, but "The government allocates the money according to its own priorities and hardly any of it goes towards social protection."

Beyond pilots

Zambia is piloting a cash transfer programme in some of its districts. "The government says we do not have the money to roll out the pilot programme, we need to exploit our domestic revenue base such as the mining sector to raise the money," Masebo commented.
 
Experts said countries needed to move beyond pilot programmes. "Studies have shown that the administrative costs of running pilots are far greater than running a national social transfer programme," said Isobel Frye, director of the South Africa-based Studies in Poverty and Inequality Institute (SPII)
 
Well-known South African activist Mark Heywood, of Section 27, a local civil rights organization, cited the long campaign to roll out treatment for people with HIV/AIDS as the one to emulate to get governments to provide social transfers. "We found that if you get the people who need it the most to campaign for it, it works."

The event was co-hosted by RHVP, the Southern Africa Development Community Parliamentary Forum and the SPII.
 
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