Furthering National Action to Furthering National Action to Realise Commitments to Realise Commitments to Social Transfers in AfricaSocial Transfers in Africa

44thth October 2006 October 2006

LisbonLisbon

IntroductionIntroduction

• South Africa has a long history with cash South Africa has a long history with cash transfers starting from 1928 with the transfers starting from 1928 with the implementation of the social old age implementation of the social old age pension and is, probably implementing the pension and is, probably implementing the largest social assistance programme in the largest social assistance programme in the world. It developed incrementally taking world. It developed incrementally taking on a range of dimensions from selective on a range of dimensions from selective targeting based on race and discretion, to targeting based on race and discretion, to conditionality and discretion, to currently conditionality and discretion, to currently a social rights and an unconditional a social rights and an unconditional approach to vulnerability. The right to approach to vulnerability. The right to social security ad social assistance is a social security ad social assistance is a Constitutional mandate.Constitutional mandate.

Nature of the ProgrammeNature of the Programme

• Contributory: Employee BenefitsContributory: Employee Benefits• 1. Unemployment insurance fund, for those in the 1. Unemployment insurance fund, for those in the

formal sector.formal sector.• 2. Disability Benefits for the injuries on duty.2. Disability Benefits for the injuries on duty.• 3. Pension Benefits for retirement in the formal sector.3. Pension Benefits for retirement in the formal sector.• 4. Maternity Benefits for women.4. Maternity Benefits for women.• 5. Paid leave for family responsibility (minimal).5. Paid leave for family responsibility (minimal).• Almost 80% of all workers in the formal sector are Almost 80% of all workers in the formal sector are

covered by these benefits and there are initiatives to covered by these benefits and there are initiatives to expand the scope.expand the scope.

• Non Contributory: Social Assistance (means)Non Contributory: Social Assistance (means)

• 1. Social old age pension – covers 70% of 1. Social old age pension – covers 70% of the older population.the older population.

• 2. Disability – covers approximately 20% of 2. Disability – covers approximately 20% of the population with disabilities.the population with disabilities.

• 3. Children benefits (3 types) - covers 40% 3. Children benefits (3 types) - covers 40% of all children and 60% of the targeted of all children and 60% of the targeted group of children, namely poor children group of children, namely poor children from 0-14 years.from 0-14 years.

• Services (Targeted)Services (Targeted)

• 1. Free quota of municipal services to 1. Free quota of municipal services to the poor.the poor.

• 2. Access to low cost housing.2. Access to low cost housing.

• 3. Free school meals for poor children 3. Free school meals for poor children under the age of 7 years. under the age of 7 years.

• 4. Free health care for pregnant women, 4. Free health care for pregnant women, children under 6 years and the poor.children under 6 years and the poor.

• 5. Short term employment and skills 5. Short term employment and skills development through the expanded public development through the expanded public works programme.works programme.

• 6. Free fee schools for the very poor.6. Free fee schools for the very poor.

• 7. Tax exemption threshold of R3200 per 7. Tax exemption threshold of R3200 per month for individuals earning less than this month for individuals earning less than this amount.amount.

• South Africa has a mix of social rights based South Africa has a mix of social rights based provisions in terms of cash transfers and provisions in terms of cash transfers and services.services.

A. Perceived Barriers to Successful A. Perceived Barriers to Successful Implementation of Cash TransfersImplementation of Cash Transfers

• Primary Barriers:Primary Barriers:

• Resource Limitations.Resource Limitations.

• Poor Planning.Poor Planning.

• Inappropriate Institutional Arrangements.Inappropriate Institutional Arrangements.

• Negative Values.Negative Values.

• Discontinuous Monitoring and Evaluation.Discontinuous Monitoring and Evaluation.

• Poor Governance.Poor Governance.

• Competing priorities.Competing priorities.

• Unfunded mandates.Unfunded mandates.

Advantages to Social Advantages to Social TransfersTransfers

• 1. Cash transfers helps individuals, families 1. Cash transfers helps individuals, families and households and households to pool resourcesto pool resources, to , to collectively invest and rise above poverty.collectively invest and rise above poverty.

• 2. It addresses at least the 2. It addresses at least the most basic most basic needsneeds in terms of food, shelter and in terms of food, shelter and clothing, giving individuals the freedom to clothing, giving individuals the freedom to explore other opportunities.explore other opportunities.

• 3. It provides individuals, families and 3. It provides individuals, families and households not only households not only with opportunitieswith opportunities, , but most importantly but most importantly choice.choice.

• 4. It promotes some savings despite the dire 4. It promotes some savings despite the dire needs. There is more opportunity to use needs. There is more opportunity to use water sparingly with an allowance for water water sparingly with an allowance for water consumption, than to be provided with a consumption, than to be provided with a quota of water per day to use, irrespective quota of water per day to use, irrespective of whether you need to use it or not.of whether you need to use it or not.

• 5. It gives families the power to exercise 5. It gives families the power to exercise discretion and to priorities their discretion and to priorities their vulnerabilities within the resource vulnerabilities within the resource limitations.limitations.

• 6. It restores dignity and self-respect 6. It restores dignity and self-respect especially amongst older persons and people especially amongst older persons and people with disabilities, who are not considered a with disabilities, who are not considered a burden but a resource to the families.burden but a resource to the families.

• 7. It empowers individuals to exercise 7. It empowers individuals to exercise independence because of self-reliance eg. independence because of self-reliance eg. orphan siblings wanting to live on their own. orphan siblings wanting to live on their own.

• 8. It unites families and promotes 8. It unites families and promotes functionality, especially with youth or young functionality, especially with youth or young adult headed families.adult headed families.

• 9. The old age pension is not only used to 9. The old age pension is not only used to address family or household needs but is address family or household needs but is also extended to assist unrelated destitute also extended to assist unrelated destitute children in the community.children in the community.

• 10. The retrenchment impact of cash 10. The retrenchment impact of cash transfer is more obvious and overt than transfer is more obvious and overt than with service provision.with service provision.

• 11. It is the most cost effective to 11. It is the most cost effective to administer.administer.

• 12. It has a direct effect and impact on 12. It has a direct effect and impact on beneficiaries with 100% of the funds going beneficiaries with 100% of the funds going directly to those for whom it is intended.directly to those for whom it is intended.

• 13. It is most often responsibly administered 13. It is most often responsibly administered for the wellbeing of individuals, especially for for the wellbeing of individuals, especially for the most vulnerable, namely children.the most vulnerable, namely children.

• 14. It is an effective intervention with the 14. It is an effective intervention with the highest returns on the investment. For every 1 highest returns on the investment. For every 1 cents invested in cash transfers for a poor cents invested in cash transfers for a poor child in South Africa, the returns in terms of child in South Africa, the returns in terms of improved health is 4 cents.improved health is 4 cents.

How to Mobilise Political Will and How to Mobilise Political Will and Popular Support for TransfersPopular Support for Transfers

• 1. Educate and inform people about 1. Educate and inform people about the advantages of cash transfers. It is the advantages of cash transfers. It is easy to develop misconceptions about easy to develop misconceptions about cash transfers amongst taxpayers and cash transfers amongst taxpayers and politicians alike that it creates politicians alike that it creates dependency, cause people not to want dependency, cause people not to want to work, want to have more children in to work, want to have more children in order to get access to more income.order to get access to more income.

• 2. The impact of cash transfers must be 2. The impact of cash transfers must be communicated to taxpayers so that they are communicated to taxpayers so that they are reassured of the value of their contributions.reassured of the value of their contributions.

• 3. Educate politicians about the impact of 3. Educate politicians about the impact of cash transfers on solidarity and political cash transfers on solidarity and political stability. stability.

• 4. Give recognition to countries and 4. Give recognition to countries and politicians who attempt to make a difference politicians who attempt to make a difference in people lives, and for best practice models in people lives, and for best practice models which promote human development. which promote human development.

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• 6. Acknowledging that there are 6. Acknowledging that there are more responsible people who will use more responsible people who will use cash transfers productively, and than cash transfers productively, and than those who will not, and that the those who will not, and that the good of the majority should not be good of the majority should not be sacrificed because of the sacrificed because of the irresponsibility of a few.irresponsibility of a few.

• 7. Providing politicians and administrators 7. Providing politicians and administrators with tools and information on how to with tools and information on how to effectively implement cash transfers so effectively implement cash transfers so that fraud, losses and leakages in the that fraud, losses and leakages in the system are minimized and efficiency is system are minimized and efficiency is optimised. optimised.

• 8. Providing a vehicle for people to 8. Providing a vehicle for people to express their preferences for programmes express their preferences for programmes on human development.on human development.

• 9. Supporting civil society especially 9. Supporting civil society especially social rights watchdogs who social rights watchdogs who contribute meaningfully to ensure contribute meaningfully to ensure that good governance in the that good governance in the administration of cash transfers is administration of cash transfers is achieved.achieved.

How Have Political Choices Been How Have Political Choices Been

• 1. The cash transfer programme in South 1. The cash transfer programme in South Africa was inherited from the previous Africa was inherited from the previous dispensation with changes being made dispensation with changes being made incrementally. The children´s benefit was incrementally. The children´s benefit was redesigned to maximize impact within redesigned to maximize impact within existing resources through the process of existing resources through the process of redistribution based on vulnerability. More redistribution based on vulnerability. More vulnerable children were given access to the vulnerable children were given access to the grant, by reducing its per capita allocation, grant, by reducing its per capita allocation, excluding a caregiver allowance and limiting excluding a caregiver allowance and limiting the access to children of certain ages only. the access to children of certain ages only.

• 2. Political choices to introduce a 2. Political choices to introduce a new programme, extend an existing new programme, extend an existing programme is based on proving that programme is based on proving that the programme is cost effective, will the programme is cost effective, will not demand additional resources or if not demand additional resources or if additional resources are required it is additional resources are required it is reasonable, would maximize benefits reasonable, would maximize benefits and reduce opportunity cost.and reduce opportunity cost.

• 3. The rights based approach has 3. The rights based approach has pressurised the state to take pressurised the state to take appropriate action and introduce appropriate action and introduce measures to alleviate vulnerability. It measures to alleviate vulnerability. It gives vulnerable individuals and civil gives vulnerable individuals and civil society who act on their behalf, a society who act on their behalf, a recourse to the courts to pressurise recourse to the courts to pressurise government to act in people´s best government to act in people´s best interest, when all other efforts fail.interest, when all other efforts fail.

Benefits and ImpactBenefits and Impact

• 1. Cash transfers reduce poverty both in 1. Cash transfers reduce poverty both in extent and depth and studies show extent and depth and studies show conclusively that it is cost effective. conclusively that it is cost effective.

• 2. In most societies, observed in South 2. In most societies, observed in South Africa and in the rural areas of Zambia, Africa and in the rural areas of Zambia, families prioritise food, education and then families prioritise food, education and then other needs in that order, exercising their other needs in that order, exercising their discretion and power to maximize the value discretion and power to maximize the value of cash transfers for longer term returns. of cash transfers for longer term returns.

• 3. It sustains rural economies in South 3. It sustains rural economies in South Africa.Africa.

• 4. It fosters solidarity, promotes social 4. It fosters solidarity, promotes social cohesion and preserve families.cohesion and preserve families.

• 5. It enables redistribution of income in a 5. It enables redistribution of income in a society with large income inequality, and society with large income inequality, and when people cannot gain access to formal when people cannot gain access to formal employment.employment.

• 6. It protects the most vulnerable and 6. It protects the most vulnerable and enables their inclusion for continued enables their inclusion for continued contribution to development.contribution to development.

Recommendations Recommendations

• It is recommended that:It is recommended that:• 1. Developing societies have a minimum living 1. Developing societies have a minimum living

standards measure so that programmes like cash standards measure so that programmes like cash transfers can be appropriately designed to have transfers can be appropriately designed to have the maximum impact on human development.the maximum impact on human development.

• 2. That a social rights based approach be 2. That a social rights based approach be advocated for the implementation of cash advocated for the implementation of cash transfers especially in developing countries transfers especially in developing countries where discretion can be abused, causing people where discretion can be abused, causing people to lose confidence in the system and learn to be to lose confidence in the system and learn to be helpless over time.helpless over time.

• 3. There is room for both conditional and 3. There is room for both conditional and unconditional cash transfers. Conditional cash unconditional cash transfers. Conditional cash transfers work best if all contingences are transfers work best if all contingences are sufficiently addressed. It is not cost effective sufficiently addressed. It is not cost effective to impose conditions on cash transfers if they to impose conditions on cash transfers if they are not adequate to address all needs. The are not adequate to address all needs. The beneficiaries become disempowered from beneficiaries become disempowered from using the cash in terms of their discretion and using the cash in terms of their discretion and with the freedom to prioritise their needs, with the freedom to prioritise their needs, maximize their investment and ensure maximize their investment and ensure savings for desperate times. savings for desperate times.

• People in poverty are most burdened by borrowing People in poverty are most burdened by borrowing because of the lack of opportunities for savings and because of the lack of opportunities for savings and conditions to cash transfers help perpetuate this crisis conditions to cash transfers help perpetuate this crisis because they are restrained from using the cash in because they are restrained from using the cash in their best interest so they borrow to address unmet their best interest so they borrow to address unmet needs. Conditionality requires rigorous monitoring and needs. Conditionality requires rigorous monitoring and this can prove to be expensive, using resources that this can prove to be expensive, using resources that should be directed to the wellbeing of individuals.should be directed to the wellbeing of individuals.

• Cash transfers must be augmented with strategies to Cash transfers must be augmented with strategies to address asset poverty to make poverty alleviation address asset poverty to make poverty alleviation sustainable in the long sustainable in the long

• term. Thank you.term. Thank you.