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United Nations Development Programme (UNDP)

Conditional cash transfers in African countries

Nanak Kakwani, FР±bio Veras Soares and Hyun H. Son

International Poverty Centre, United Nations Development Programme (UNDP)

Working Paper number 9

November 2005

SARPN acknowledges the International Poverty Centre as the source of this document - www.undp.org/povertycentre
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Executive summary

Aims

Poverty affects a large proportion of the population in Sub-Saharan Africa and, far from decreasing, the proportion and numbers of poor people in Sub-Saharan Africa have actually increased over the last ten years. Policies to reduce poverty in Sub-Saharan Africa (SSA) and elsewhere are defying conventional wisdom. Single-focus solutions have proved ineffective. There is an urgent need to learn from both successful and failed experiences that have been tried elsewhere.

This study provides an ex-ante assessment of the implementation of a cash transfer programme conditional on school attendance in 15 Sub-Saharan African countries. Conditional cash transfer (CCT) programmes have been tried in other regions, notably Latin America, with relative success. The two key characteristics of CCT programmes are that they simultaneously act upon the short and long term dimensions of poverty. Therefore we investigate here both the impact of a cash transfer on current poverty and the impact of conditioning the transfer upon school attendance.

The study has two major limitations. A policy to increase school attendance needs to set in place effective incentives to induce decisions favouring school attendance, that is it needs to influence demand factors, but schools need to be there within a reasonable distance and with an acceptable quality, otherwise, enhancing incentives might be a futile exercise. The scope and time frame of this study, as well as the lack of readily available information on the supply of schools in the countries selected prevents us from analysing the crucial supply factors. The second limitation also refers to lack of information. Given that available data sets did not include sufficient and reliable information on income from child labour, we were not able to simulate the effect of conditioning cash transfers upon school attendance and we have to limit ourselves to simulating the effect of increasing income upon school attendance.

Bearing these limitations in mind, three major solid recommendations emerge from the study. First, to be successful in significantly reducing poverty any cash transfer programme will need to be sizeable, in the order of 2 to 8 percent of GDP of the country in question. Second, an increase in income, by itself, would not suffice to significantly increase school attendance, which means that school or any other human capability- enhancing conditionality should be part of any cash transfer programme aiming at a sustained reduction in poverty. Third, given the pervasiveness of poverty in the countries analysed, a broad targeting design might suffice, such as a geographical one, enabling programmes to avoid incurring the high administrative costs that plague heavy targeting schemes.



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