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Furthering National Action to Realise Commitments to Social Transfers in Africa. 4 th October 2006 Lisbon. Introduction.
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Furthering National Action to Realise Commitments to Social Transfers in Africa 4th October 2006 Lisbon
Introduction • South Africa has a long history with cash transfers starting from 1928 with the implementation of the social old age pension and is, probably implementing the largest social assistance programme in the world. It developed incrementally taking on a range of dimensions from selective targeting based on race and discretion, to conditionality and discretion, to currently a social rights and an unconditional approach to vulnerability. The right to social security ad social assistance is a Constitutional mandate.
Nature of the Programme • Contributory: Employee Benefits • 1. Unemployment insurance fund, for those in the formal sector. • 2. Disability Benefits for the injuries on duty. • 3. Pension Benefits for retirement in the formal sector. • 4. Maternity Benefits for women. • 5. Paid leave for family responsibility (minimal). • Almost 80% of all workers in the formal sector are covered by these benefits and there are initiatives to expand the scope.
Non Contributory: Social Assistance (means) • 1. Social old age pension – covers 70% of the older population. • 2. Disability – covers approximately 20% of the population with disabilities. • 3. Children benefits (3 types) - covers 40% of all children and 60% of the targeted group of children, namely poor children from 0-14 years.
Services (Targeted) • 1. Free quota of municipal services to the poor. • 2. Access to low cost housing. • 3. Free school meals for poor children under the age of 7 years. • 4. Free health care for pregnant women, children under 6 years and the poor.
5. Short term employment and skills development through the expanded public works programme. • 6. Free fee schools for the very poor. • 7. Tax exemption threshold of R3200 per month for individuals earning less than this amount. • South Africa has a mix of social rights based provisions in terms of cash transfers and services.
A. Perceived Barriers to Successful Implementation of Cash Transfers • Primary Barriers: • Resource Limitations. • Poor Planning. • Inappropriate Institutional Arrangements. • Negative Values. • Discontinuous Monitoring and Evaluation. • Poor Governance. • Competing priorities. • Unfunded mandates.
Advantages to Social Transfers • 1. Cash transfers helps individuals, families and households to pool resources, to collectively invest and rise above poverty. • 2. It addresses at least the most basic needs in terms of food, shelter and clothing, giving individuals the freedom to explore other opportunities. • 3. It provides individuals, families and households not only with opportunities, but most importantly choice.
4. It promotes some savings despite the dire needs. There is more opportunity to use water sparingly with an allowance for water consumption, than to be provided with a quota of water per day to use, irrespective of whether you need to use it or not. • 5. It gives families the power to exercise discretion and to priorities their vulnerabilities within the resource limitations.
6. It restores dignity and self-respect especially amongst older persons and people with disabilities, who are not considered a burden but a resource to the families. • 7. It empowers individuals to exercise independence because of self-reliance eg. orphan siblings wanting to live on their own. • 8. It unites families and promotes functionality, especially with youth or young adult headed families.
9. The old age pension is not only used to address family or household needs but is also extended to assist unrelated destitute children in the community. • 10. The retrenchment impact of cash transfer is more obvious and overt than with service provision. • 11. It is the most cost effective to administer.
12. It has a direct effect and impact on beneficiaries with 100% of the funds going directly to those for whom it is intended. • 13. It is most often responsibly administered for the wellbeing of individuals, especially for the most vulnerable, namely children. • 14. It is an effective intervention with the highest returns on the investment. For every 1 cents invested in cash transfers for a poor child in South Africa, the returns in terms of improved health is 4 cents.
How to Mobilise Political Will and Popular Support for Transfers • 1. Educate and inform people about the advantages of cash transfers. It is easy to develop misconceptions about cash transfers amongst taxpayers and politicians alike that it creates dependency, cause people not to want to work, want to have more children in order to get access to more income.
2. The impact of cash transfers must be communicated to taxpayers so that they are reassured of the value of their contributions. • 3. Educate politicians about the impact of cash transfers on solidarity and political stability. • 4. Give recognition to countries and politicians who attempt to make a difference in people lives, and for best practice models which promote human development.
6. Acknowledging that there are more responsible people who will use cash transfers productively, and than those who will not, and that the good of the majority should not be sacrificed because of the irresponsibility of a few.
7. Providing politicians and administrators with tools and information on how to effectively implement cash transfers so that fraud, losses and leakages in the system are minimized and efficiency is optimised. • 8. Providing a vehicle for people to express their preferences for programmes on human development.
9. Supporting civil society especially social rights watchdogs who contribute meaningfully to ensure that good governance in the administration of cash transfers is achieved.
How Have Political Choices Been • 1. The cash transfer programme in South Africa was inherited from the previous dispensation with changes being made incrementally. The children´s benefit was redesigned to maximize impact within existing resources through the process of redistribution based on vulnerability. More vulnerable children were given access to the grant, by reducing its per capita allocation, excluding a caregiver allowance and limiting the access to children of certain ages only.
2. Political choices to introduce a new programme, extend an existing programme is based on proving that the programme is cost effective, will not demand additional resources or if additional resources are required it is reasonable, would maximize benefits and reduce opportunity cost.
3. The rights based approach has pressurised the state to take appropriate action and introduce measures to alleviate vulnerability. It gives vulnerable individuals and civil society who act on their behalf, a recourse to the courts to pressurise government to act in people´s best interest, when all other efforts fail.
Benefits and Impact • 1. Cash transfers reduce poverty both in extent and depth and studies show conclusively that it is cost effective. • 2. In most societies, observed in South Africa and in the rural areas of Zambia, families prioritise food, education and then other needs in that order, exercising their discretion and power to maximize the value of cash transfers for longer term returns.
3. It sustains rural economies in South Africa. • 4. It fosters solidarity, promotes social cohesion and preserve families. • 5. It enables redistribution of income in a society with large income inequality, and when people cannot gain access to formal employment. • 6. It protects the most vulnerable and enables their inclusion for continued contribution to development.
Recommendations • It is recommended that: • 1. Developing societies have a minimum living standards measure so that programmes like cash transfers can be appropriately designed to have the maximum impact on human development. • 2. That a social rights based approach be advocated for the implementation of cash transfers especially in developing countries where discretion can be abused, causing people to lose confidence in the system and learn to be helpless over time.
3. There is room for both conditional and unconditional cash transfers. Conditional cash transfers work best if all contingences are sufficiently addressed. It is not cost effective to impose conditions on cash transfers if they are not adequate to address all needs. The beneficiaries become disempowered from using the cash in terms of their discretion and with the freedom to prioritise their needs, maximize their investment and ensure savings for desperate times.
People in poverty are most burdened by borrowing because of the lack of opportunities for savings and conditions to cash transfers help perpetuate this crisis because they are restrained from using the cash in their best interest so they borrow to address unmet needs. Conditionality requires rigorous monitoring and this can prove to be expensive, using resources that should be directed to the wellbeing of individuals. • Cash transfers must be augmented with strategies to address asset poverty to make poverty alleviation sustainable in the long • term. Thank you.
