Anti-poverty transfers in the South

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Antipoverty transfers in the South

Armando Barrientos, Brooks World Poverty Institute, the University of Manchester, UK

[email protected]

Sidney Ideas, The University of Sydney and the Sydney Social Justice Network, 13th March 2014

mailto:[email protected]

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Growth of large scale programmes providing income transfers to households

in poverty in the South

Globally ~ 0.75 to 1 billion people reached

by transfers

Diversity in design

In middle income countries transfers

programmes reach a significant fraction of the population

0.5

0.25

0.25

0.1

South Africa

Brazil

Mexico

Ethiopia

Fraction of households reached by social assistance

Fraction of households reached by social assistance

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What explains the growth in antipoverty transfers?

Crises and adjustment in the 1980s and 1990s led to structural deficits in

wellbeing and protection in developing countries

Democratisation and an expanding fiscal space have created favourable

conditions in which governments can address these structural deficits

Poverty research has developed knowledge and tools for innovative and

effective antipoverty transfer programmes

In Latin America: an epistemic change around poverty and exclusion

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The post-2015 development agenda

1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2010 2015 2020 2025 2030

US$1.25 %exc.China

40.5 39.1 38.1 37.2 36.6 34.3 33.6 31.5 27.8 25.5

0

10

20

30

40

50

Po

vert

y h

ead

cou

nt

rate

(%

)Global Poverty at US$1.25 (%)

0.4% per year excluding China

1% per year excluding China

World Bank data

pessimistic

optimistic

ambitious

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In international development and in the South, antipoverty transfers are

described with a variety of terms: safety nets; social protection, social

transfers

Social Policy

Basic service provision Social protection

Education, health,

housing, social services

Social insurance:

contributory

programmes

addressing life cycle

and employment

contingencies

Social assistance:

tax financed

programmes

addressing poverty

and vulnerability

Labour market

policy:

‘active’ and

‘passive’

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The presentation:

What do we know about current practice?

Programme design, scope, and impact

Is the recent growth sustainable?

Institutionalisation

Financing and Politics

What are the implications for social justice and social contracts in the South?

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Diversity in design and objectives

pure income transfers Social pensions, child grant, family allowances [South Africa’s Child

Support Grant and Older Person Grant]

income transfers and asset accumulation Human development [Mexico’s Oportunidades, Brazil’ Bolsa Família]

Infrastructure and asset protection [India’s National Rural Employment

Guarantee, Ethiopia’s Productive Safety Net Programme]

integrated poverty eradication programmes [Chile’s Chile Solidario, BRAC’s CFPR-Targeting the Ultra Poor]

Resource: Social Assistance in Developing Countries Database version 5 – available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1672090

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1672090

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Innovations from poverty research

Programme design and implementation informed by poverty research:

Depth and severity of poverty, not just headcount

...ranking of the poor (extreme - moderate poverty)

Poverty is multidimensional,

...duration matters (intergenerational persistence)

Focus on households (agency and productive capacity)

Information and incentives (conditions and co-responsibility)

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Implementation capacity gap between low and middle income countries

Village committee in Kalomo District in Zambia responsible for the implementation of the Social Transfer Pilot Programme -2006

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Pension day in Lesotho

Katherine Vincent/2007

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Ensuring services provision for poor households in Uruguay

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Impact – short run effect on poverty

17.36

36.13

45.63

0

5

10

15

20

25

30

35

40

45

50

Poverty headcount Poverty gap Poverty gap squared

Difference in difference estimates of the poverty reduction effectiveness of Progresa/Oportunidades in Mexico two years after its introduction

Poverty reduction (%) 1997-1999

Data source: Skoufias, E. 2005. Progresa and Its Impacts on the Welfare of Rural Households in Mexico, Washington: International Food Policy Research Institute

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Impact – medium run effect on human development (nutrition)

1

0.65

height for age after 2 years height for age after 6 years

Difference in height for age between OPORTUNIDADES treatment (joined 1998) and control (joined 2000) groups in 2000 and 2003 for 2-6 year olds

difference (cm)

Gertler and Fernald [2006] Vol III ch. 2 Impacto de mediano plazo del programa Oportunidades sobre el desarrollo infantil en areas rurales

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Child labour outcomes from selected child-focused programmes

Bono desarrollo Humano (Ecuador)

CSG (S. Africa)

RPS (Nicaragua)

PRAF (Honduras)

Familias Accion (Colombia)

Oportunidades (Mexico)

PATH (Jamaica)

SCT (Malawi)

Tekopora (Paraguay)

0

2

4

6

8

10

12

14

16

18

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Re

du

ctio

n in

ch

ild la

bo

ur

(pe

rce

nta

ge p

oin

ts)

Value of transfers as percentage of total household income

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Poverty reduction effectiveness improves with growth and basic service

provision

Brazil: Sources of income growth among households in the bottom quintile

2003 2009

Increase in work-related income per adult R$87 R$123

Increase in non-work related income per adult R$25 R$49

Increase in the number of adults per household 55% 58%

Data Source: (Barros, Mendonça and Tsukada 2011)

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Sustainability



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Transition from ‘development projects’ to ‘institution building’

Legal status – budget, operations, entitlements

Strengthening implementation capacity

Institutional coordination within government

Domestic financing

Ministries of Social Development – social protection networks

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Most countries spend between 1 and 2 % of GDP in social assistance

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

Au

stra

lia(O

ECD

)

Djib

ou

ti(S

SN)

Mal

awi(

SSN

)

New

Zea

lan

d(O

ECD

)

Ukr

ain

e(SS

N)

Un

ited

Kin

gdo

m(O

ECD

)

Bo

tsw

ana(

SSN

)

Irel

and

(OEC

D)

Ko

sovo

(SSN

)

St. V

ince

nt

and

th

e G

ren

adin

es(

SSN

)

Arm

en

ia(S

SN)

St. L

uci

a(SS

N)

Uzb

ekis

tan

(SSN

)

Mo

rocc

o(S

SN)

Cro

atia

(SSN

)

Nam

ibia

(SSI

)

Do

min

ican

Rep

ub

lic(S

SN)

Mo

ldo

va(S

SN)

Cze

ch R

epu

blic

(OEC

D)

Gre

nad

a(SS

N)

Bu

rkin

a Fa

so(S

SI)

Ger

man

y(O

ECD

)

Arg

enti

na(

SSN

)

Geo

rgia

(SSN

)

Bra

zil(

SSN

)

Serb

ia(S

SN)

Latv

ia(S

SN)

Gre

ece

(OEC

D)

Un

ited

Sta

tes(

OEC

D)

Bu

lgar

ia(S

SN)

Tan

zan

ia(S

SI)

Ban

glad

esh

(AD

B)

Net

her

lan

ds(

OEC

D)

Po

lan

d(O

ECD

)

Ecu

ado

r(SS

N)

Nic

arag

ua(

SSN

)

Vie

tnam

(SSN

)

Den

mar

k(O

ECD

)

El S

alva

do

r(SS

N)

St. K

itts

an

d N

evis

(SSN

)

Ben

in(S

SI)

Bel

giu

m(O

ECD

)

Cô

te d

'Ivo

ire(

SSI)

Mau

rita

nia

(SSI

)

Jam

aica

(SSN

)

Pe

ru(S

SN)

Ko

rea(

OEC

D)

Kyr

gyz

Rep

ub

lic(S

SN)

Ven

ezu

ela,

RB

(SSN

)

Hu

nga

ry(O

ECD

)

Swed

en(O

ECD

)

Co

ok

Isla

nd

s(A

DB

)

Luxe

mb

ou

rg(O

ECD

)

Uru

guay

(SSN

)

Nig

er(S

SI)

Par

agu

ay(S

SN)

Ind

on

esia

(AD

B)

Mal

div

es(A

DB

)

Zim

bab

we(

SSI)

Ph

ilip

pin

es(S

SN)

Cam

bo

dia

(AD

B)

Lao

(AD

B)

Mal

aysi

a(A

DB

)

Van

uat

u(A

DB

)

Ch

ad(S

SI)

Ton

ga(A

DB

)

Bh

uta

n(A

DB

)

Soscial assistance expenditure as % of GDP

SA/GDP(%)

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For many middle income countries, the challenge is not to secure larger budgets but

instead to consolidate into fewer and more effective programmes (Bangladesh has over

95 social protection programmes; while Chile had 143 in 2002)

For low income countries, low revenue collection capacity limits fiscal space

International assistance can help overcome the large initial costs of new

programmes

The challenge is to improve revenue collection

Domestic financing of social assistance in low and middle income countries depends

mainly on consumption taxes and natural resource revenues

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‘Narratives’ of social assistance financing in the South

Chile’s return to democracy in 1990 after seventeen years of dictatorship was led by a centre-left

coalition of parties. The expansion of poverty reduction programmes was financed by a rise of two percent

in the tax burden, distributed across corporate taxes and VAT.

In 1994, Bolivia was poised to privatise state-owned enterprises, especially in the energy sector. To

facilitate public consent, the government proposed to maintain one-half of the shares in the privatised

enterprises in a Special Fund to support regular income transfers to the adult cohort (aged twenty-one or

over in 1995). The transfer became a non-contributory pension, the Bono de Solidaridad, payable from the

age of sixty-five. The government of Evo Morales extended entitlement to the transfer to all Bolivians on

reaching sixty years of age.

Non-contributory pension programmes introduced in Lesotho (2004) and Swaziland (2006) are

linked to revenues from the Southern African Customs Union (SACU).

Antipoverty transfer programmes in Zambia, Uganda and Ethiopia are financed by bilateral aid,

through a Memorandum of Understanding between donors and the government. In Ghana, the initial

financing of the LEAP (Livelihood Empowerment Against Poverty) Programme was linked to HIPC debt

cancellation, but bilateral donors also contributed.

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Social Justice

What are the implications for social justice and social contracts in the South?

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Rawls ‘political conception of justice’ and the social minimum

Societies with a ‘plurality of world views’, dependent on economic cooperation,

but where the basic institutions are inequality-generating

…need an overlapping consensus – political notion of justice

A political notion of justice, to be sustainable, requires commitment to the basic institutions;

but inequalities and disadvantage can place considerable strain on this commitment.

A social minimum is needed to prevent the strains of commitment from becoming

excessive

In the 1971 ‘A Theory of Justice’, the social minimum is underdeveloped

A social minimum is guaranteed by the government “either by family allowances and

special payments for sickness and employment, or more systematically by such devices as a

graded income supplement (a so-called negative income tax)” (Rawls, 1971: 243)

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Jeremy Waldron’s critique:

Social minimum must be ‘needs-based’, grounded on the recognition that “a certain

minimum is necessary for people to lead decent and tolerable lives” (Waldron, 1986: 21).

Deprivation, “in the despair that characterises it, the defiance it excites, and the single

minded violence it may occasion, … poses a simmering threat to the viability of the societies

it afflicts. There is therefore a prima facie reason why any society should avoid the situation

in which significant numbers of people are in need” (Waldron, 1986: 30).

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Rawls’ response was to spell out the social minimum in more detail:

In line with the difference principle, “the minimum is to be set at that point which, taking wages into

account, maximises the expectations of the least advantaged group. By adjusting the amount of

transfers, … , it is possible to increase or decrease the prospects of the more disadvantaged, their index

of primary goods…” (Rawls, 1971: 252).

“The idea is not simply to assist those who lose out through accident or misfortune (although this must

be done), but instead to put all citizen in a position to manage their own affairs and to take part in

social cooperation on a footing of mutual respect under appropriately equal conditions” (Rawls, 1971:

xv).

The social minimum is intended to ensure that “the least advantaged feel they are a part of political

society” (Rawls, 2001: 129)

While “a social minimum covering only those essential needs may suit the requirements of a capitalist

welfare state, it is not sufficient for what …I call a property-owning democracy in which the principles

of justice as fairness are realized” (Rawls, 2001: 130).

The social minimum is developmental not compensatory; about inclusion not just welfare; involves

asset redistribution; social assistance not social insurance; priority not just sufficiency

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Conclusions

Rapid growth of social assistance in low and middle income countries

Diversity in programme design – path dependence and poverty perspectives

Programme design and objectives of transfer programmes informed by poverty research

Programmes show variation in effectiveness, but well designed and implemented antipoverty

programmes have the potential to reduce poverty and inequality

Sustainability depends on:


Shift to domestic financing

Current trends suggest welfare institutions in the South will be based on social assistance and

a citizenship principle, as opposed to social insurance and a contributory principle

Embedding antipoverty transfer programmes signals inclusion of low income and informal

groups, and a renewal of social contracts

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Social Assistance in Developing Countries

Cambridge University Press

September 2013

ISBN 9781107039025

Publisher: Kumarian Press

Anti-poverty transfers in the South

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