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Cash transfers and social protection

Paper prepared for the regional workshop on “Cash transfer activities in southern Africa”, co-hosted by the Southern African Regional Poverty Network (SARPN), Regional Hunger and Vulnerability Programme (RHVP) and Oxfam GB

Stephen Devereux

Centre for Social Protection, Institute of Development Studies, University of Sussex, UK

9-10 October 2006

SARPN Regional Workshop on Cash Transfer Activities in southern Africa.
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Introduction

Social protection has risen rapidly to the top of the policy agenda for many donors, governments and NGOs in southern Africa, where cash transfers have simultaneously emerged as a preferred mechanism for delivering social protection to poor and vulnerable people. The policy debates are moving so fast, and the evidence is accumulating so rapidly, that there never seems to be an appropriate time to take stock. Nonetheless, although much more is known now than 2-3 years ago, many significant knowledge gaps still remain. Some of these unresolved issues are explored in this paper: Are cash transfers inflationary? Are cash transfers empowering or disempowering for women? Do beneficiaries prefer food aid or cash?

The first part of this paper defines social protection as a set of responses to vulnerability, and considers whether cash transfers are an appropriate response to various sources of vulnerability. Not surprisingly, cash transfers are found to be an appropriate and effective means of mitigating some vulnerabilities, but are less effective and wholly inappropriate for addressing others. The second part of this paper asks whether cash transfers are the most appropriate response, in particular by comparing cash transfers with food transfers. We find that cash transfers have many advantages over food aid, but that there are circumstances and contexts in which food aid might be the more effective and appropriate intervention. This division separates out the nature of vulnerability from the nature of the social protection response, which is important because many interventions are designed and implemented without asking these two questions: (1) what specific source of vulnerability are we trying to mitigate? (2) what is the most appropriate social protection response to this source of vulnerability?

Social protection is a set of responses to vulnerability, but it needs to be tailored to the specific sources of vulnerability and forms that vulnerability takes. A fundamental distinction can be drawn, for instance, between ‘demographic vulnerability’ and ‘economic vulnerability’. Demographic vulnerability is idiosyncratic, and can be related to physical characteristics (e.g. disability that prevents someone from working for a living) demographic factors (e.g. households with high dependency ratios, such as ‘skip generation’ households comprising only older people caring for young children) and life cycle changes (e.g. retiring from the workforce, or needing to take maternity leave). Economic vulnerability relates to conditions in the production system (e.g. a drought that triggers harvest failure), markets (e.g. seasonal food price rises, or unaffordable fertiliser prices), and the policy environment (e.g. constraints on local or cross-border trade) that undermine the efforts of working people to achieve and sustain a viable livelihood. While many forms of economic vulnerability can be mitigated with short-term safety nets or social insurance mechanisms, demographic vulnerabilities might require permanent social welfare transfers.

Two general conclusions follow from this analysis. Firstly, the design of any social protection programme should neither be ideological (e.g. a decision to introduce cash transfer programmes as a reaction against food aid) nor driven by the availability of resources (e.g. “surplus dumping” of food aid), but by an assessment of the nature of vulnerability and an understanding of the economic environment (specifically a market analysis) and the socio-cultural context (especially a gender analysis) into which the social protection programme is to be introduced. Secondly, vulnerability can only be sustainably reduced if social protection measures are institutionalised within national governments, where citizens have enforceable claims, rather than implemented and financed at the whim of donors and international NGOs. Cash transfer pilot projects must become part of nationally owned social protection programmes. This requires citizens to mobilise to claim these rights, and it requires accountable and responsive governments.



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