As touched upon briefly already in Chapter 1, social transfers occupy quite a different policy
space from input subsidies. Social transfers are a branch of social policy, and are concerned
with ensuring the minimum welfare of the weakest and most disadvantaged members of
society, while input subsidies are an agricultural growth policy. The two policy spheres are
therefore distinguished at a basic level by social transfers being focused on consumption,
while input subsidies are focused on production. In recent development policy discussion in
Africa, these distinctions have tended to be elided, causing considerable confusion for donors,
advocacy organisations and governments. In particular, the advocacy of ‘social protection’
has tended to cast a wide net, drawing in a broad range of instances in which government in
some way ‘subsidises’ the lives of its citizens, and input subsidies have tended to get caught
in this net too.
This section reaches its own conclusion about the advisability of conflating input subsidies
and welfare payments, but in the meantime ground needs to be covered concerning a number
of critical past and current features of social transfers. All societies must grapple with the
human and ethical problem of those members of society who for one reason or another are
unable to support themselves through their own efforts. In traditional societies, the extended
family and the community were the site at which such social support occurred; however, in
the modern world the state also carries obligations to ensure that none of its citizens are
wilfully left to perish, and this is enshrined in the 1948 Universal Declaration of Human
Rights (United Nations 1948). The developed industrial countries experienced their own past
political struggles to achieve social transfers to disadvantaged or excluded social groups;
however, the scope, coverage and generosity of such transfers remain debated issues, never
fully resolved in any country.
Social transfers can be divided into various different categories, distinguished according to
differences in their financing, coverage and nature of beneficiaries’ eligibility to receive them
(Tabor 2002). A first such distinction is between transfers that do not rely on past
contributions for their funding, from those that are mainly funded through contributions paid
by their intended beneficiaries. Non-contributory transfers represent obligations taken on by
the state to support different categories of people in need, without prior payments made by
recipients. Such transfers tend to be referred to in the literature as ‘social assistance’ (Norton
et al. 2001). An example would be disability grants paid to all registered disabled people, or
an old age pension made to all citizens above a certain age without prior contributions.
Botswana, for example, has a non-contributory social pension, introduced in 1996 (Casey and
McKinnon 2009).
Contributory transfers are transfers to which people become entitled due to having made prior
payments into a scheme. Such transfers are referred to as ‘social insurance’, since they obey
the insurance principle that payments or ‘premiums’ are paid in order to secure a payout when
certain conditions occur. Contributory transfers are especially associated with employment
and the formal economy. For example, occupational pension schemes (including civil service
pension schemes) are contributory transfers of this type. It is obvious that in a country like
Malawi, only a small proportion of the population are covered by contributory transfers, since
the formal sector of the economy is small compared to the informal sector, including
customary small farmers. Since most poor and vulnerable people in an economy like Malawi
are not in the formal sector, most of the discussion about social transfers refers to non-
contributory transfers (ILO 2005, Samson 2009). Collectively, social assistance and social
insurance taken together are termed ‘social security’. This is the established term for social
transfers overall, superseded in the literature of the past decade by term ‘social protection’, to
which discussion returns shortly (Barrientos and Hulme 2008, Grosh et al. 2008).
A second important distinction regarding social transfers is whether their recipients are
required to conform to any activities or obligations in order to receive the transfer. For
example, in food-for-work schemes, it is a requirement of the receipt of a food transfer that
physical work is performed in a designated public works project, such as repairing a rural
road. In some countries, it is a requirement of receipt of benefits that children attend school or
infants and young children turn up for regular checks at health clinics. Transfers that require
activities or obligations on the part of their beneficiaries are called ‘conditional transfers’.
Those who require no such obligations are ‘unconditional transfers’.
In contemporary developing countries, conditional cash transfers (CCTs) are the norm for
social assistance in the Latin American region. Indeed, two of the best known contemporary
social protection programmes in developing countries are Bolsa Familia in Brazil and
Oportunidades in Mexico, both of which are CCTs that impose quite strict obligations on their
recipients in terms of school and clinic attendance (Fiszbein et al. 2009). In sub-Saharan
Africa, the work condition is clearly present in food-for-work or cash-for-work schemes, but
in other respects the balance of argument to date has tended to be in the direction of non-
conditionality for social transfers. The reason for this is that school and clinic provision in
rural areas of poor African countries is not considered robust enough (in quantity and quality)
for imposition of Latin American type conditions to be a worthwhile option (Schubert and
Slater 2006). Nevertheless, Ghana has a poverty targeted social assistance scheme called
Livelihoods Empowerment Against Poverty (LEAP), described in more detail shortly, which
imposes such conditions on scheme beneficiaries (Samson 2009).
A third factor that distinguishes different social transfer approaches is the way eligibility for
receipt of payments is determined. This is called the targeting dimension. Targeting is a
potentially costly component of the overall operation of delivering social transfers. For
example, means-testing, which seeks to measure the income or wealth of individuals in order
to decide whether they should receive transfers is particularly difficult to carry out in a non-
formal economy with no record of people’s earnings or savings. Means-testing is one amongst
an array of devices for separating eligible from non-eligible potential recipients of a social
transfer. One particular category of social transfers – those organised in the form of food-for-
work or cash-for-work – relies on the preparedness of individuals to turn up for manual labour
at a wage rate (or food equivalent) below the market wage in order to select beneficiaries.
These are ‘self-targeted’ social transfers, which avoid the administrative cost of beneficiary
selection by individuals themselves deciding whether or not to participate (Coady et al. 2004).
However, in conditions of unexpectedly widespread hunger, such as might occur in a country
like Malawi due to a shortage of maize in the market and unusually high lean season prices,
there may be more people turning up for food-for-work or cash-for-work schemes than the
amount of work available. In this case, work must be rationed and other targeting methods
such as selection by community leaders, or by village welfare committees, are used to
supplement self-selection (Chirwa 2007).
Social transfers that do not require a targeting method (other than the basic designation of a
type of beneficiary) are often referred to as ‘universal’ transfers. For example, social pensions
where all people above a threshold age (such as 60 or 65) are entitled to receipt of the transfer
are a universal benefit. However, in the recent literature, this use of the word ‘universal’ tends
to be considered unsatisfactory since it perhaps wrongly conveys the idea that everyone in
society is eligible for the benefit. For this reason, the term ‘categorical’ transfers is preferred,
since the transfers are actually to a category of society such as older people or young children,
or disabled people (Kakwani and Subbarao 2005, Ellis 2011). In southern Africa, there are
several countries that have categorical social assistance programmes. For example, South
Africa, Lesotho, Swaziland, Botswana and Namibia all have social pensions; while Namibia
and South Africa also have child support grants. The pension in South Africa is means-tested
(Casey and McKinnon 2009, Ellis et al. 2009, Klasen and Woolard 2009).
As already introduced in Chapter 1, much of the discussion about social transfers in southern
Africa in the 2000s, including in Malawi, has been about targeting them to the poorest and
most vulnerable members of society. The specifics of the Malawi case are traced in Chapters
3 and 6 of the thesis; however, some of the general issues that arise are worth exploring in a
preliminary way here. The notion of providing social transfers to the extreme poor in sub-
Saharan African countries seems to have arisen from several different directions. One such
direction has undoubtedly been the desire of international agencies, bilateral donors and
governments to make progress towards the Millennium Development Goal of halving
countries’ poverty rates by 2015 (Barrientos and Hulme 2008, Grosh et al. 2008). In parts of
the world (principally sub-Saharan Africa) where progress towards this goal was barely
discernable in the early 2000s, all stakeholders have cast around for policy levers that might
provoke some greater forward momentum to occur. Social transfers to the poorest represent
one such, previously relatively unexplored, option.
Another impetus towards poverty targeted transfers has already been outlined in Chapter 1,
and this was the increasing reliance of certain countries in eastern and southern Africa on
emergency food transfers, not just on an intermittent basis, but almost every year in the late-
1990s and early 2000s. It began to occur to those involved in implementing these emergency
operations, as well as the donors funding them, that a significant proportion of such transfers
were to the same populations and social groups year-after-year, implying a chronic rather than
temporary proneness to food security failure. It was then quite a short step to argue that
chronically food insecure people should be supported by routine and predictable transfers
rather than emergency operations. This thinking also coincided with a growing disaffection
with the readiness with which donors funded, and countries were prepared to receive, food
aid. While an earlier literature criticised food aid as a form of dumping of unwanted food
surpluses by the US and Europe, as well as for its negative effect on local food markets
(Maxwell and Singer 1979, Singer 1987), the more recent literature focuses on its costs and
effectiveness at dealing with repeated and predictable food security crises (Barrett and
Maxwell 2005). In particular, emergency food operations incur significant delays between the
decision to go ahead and the arrival of the food in communities needing help, with the result
that significant mortality especially amongst the physically weakest members of society
occurs before the food arrives. In addition, the cost of delivering food from international
markets (or storage warehouses) to remote rural areas in poor countries is very considerable,
making food aid one of the most expensive ways of delivering a benefit (representing a
particular level of calorie consumption) to recipient families (Dearden and Ackroyd 1989,
Clay et al. 1998, Maxwell et al. 2008).
Yet another factor provoking interest in poverty targeted transfers in the past ten to fifteen
years has been the rise of families lacking able-bodied labour to generate sufficient
livelihoods, or burdened with high ratio of dependents relative to the number of active adults
in the household. The chief cause of such circumstances in southern Africa has been the
growing prevalence of HIV infection, resulting eventually in AIDS-related illnesses and
mortality, as well as a steep rise in the number of orphans in society. The HIV prevalence rate
and other pertinent data for southern Africa, including in Malawi, is summarised in Table 2.1
below. This reveals HIV infection rates in the adult population varying between 11.9 per cent
in Malawi and 26.1 per cent in Swaziland, and orphan numbers reaching 4.2 million in the
region as a whole by 2007 (UNAIDS 2008).
The rising incidence of AIDS-related deaths in southern African countries by the early 2000s
led to the proposition that this might be a crucial factor reducing the capability of populations
to cope with external shocks. This proposition has been termed ‘new variant famine’ due to
certain features that distinguish it from ‘old famines’, principally associated with the onset of
droughts (de Waal and Whiteside 2003). The comparison is summarised in Table 2.2 below.
The starting point is risk management, and it is proposed that whereas drought risks are
anticipated in the custom and design of farming systems in Africa, HIV/AIDS risks most
decidedly are not so, because the risk is new in historical terms, and less than a generation has
had the chance to learn from the experience of living with HIV/AIDS.
Table 2.1: Major HIV indicators in selected countries in Southern Africa
Country
People living
with HIV
(‘000)
HIV prevalence
15-49 years
(%)
Life
expectancy
(Years)
AIDS-
orphans
0-17 years
(‘000)
1990
2007
1990
2007
1990
2007
2007
Lesotho
5.9
270
0.8
23.2
59.2
44.7
160
Malawi
90
930
2.1
11.9
49.2
52.3
550
Mozambique
94
1500
1.4
12.5
43.3
47.8
400
South Africa
160
5700
0.8
18.1
61.4
51.4
1,400
Swaziland
3.9
190
0.9
26.1
60.4
45.3
56
Zambia
360
1100
8.9
15.2
51.1
44.5
600
Zimbabwe
710
1300
14.2
15.3
60.8
43.1
1,000
Source: compiled from statistics contained in UNAIDS (2008), UNICEF (2010)
Both old and new food security crises possess some coping strategies in common, but others
differ markedly. In particular, adults consuming less food is a viable strategy if they are
healthy but is not an option for adults made ill by AIDS; asset sales for coping leaves labour
and its skills intact after a shock, while AIDS depletes labour and its skills; labour- intensive
livelihood activities continue up to moment that hunger strikes in previous crises, but are
increasingly neglected in AIDs households, reducing resilience. Once hunger seriously takes
hold, additional differences can be observed. In previous food security crises, mortality occurs
mainly amongst children and the elderly; the dependency ratio falls; and more men die than
women. In AIDS crises, mortality mainly strikes working age adults, the dependency ratio
rises, and more women die than men. Finally, agrarian livelihoods in the past recovered from
droughts and other weather-induced crises, and social networks that were drawn upon in order
to cope were rebuilt. However, the prevalence of AIDS may make agrarian livelihoods as
currently structured unsustainable and social networks become overburdened by caring for
orphans.
Table 2.2: The New Variant Famine Hypothesis
‘Old Famines’
(or previous effects of shocks)
‘New Variant Famine’
(or new effects of shocks)
risk of drought is built into farming
systems
risk of HIV/AIDS is not built into
farming systems
food rationing as coping strategy
widespread
food rationing not possible for people ill
as a result of AIDS
asset sales for coping leaves labour and
its skills intact
the labour asset is depleted, and skills and
knowledge lost
labour-intensive operations continue
before the crisis and can be resumed
afterwards
labour-intensive operations are neglected
before the crisis, reducing resilience
mortality mainly young and old
mortality mainly economically active
adults
more men die than women
more women die than men
dependency ratio falls
dependency ratio rises
social networks can be rebuilt
social networks overstretched by orphans
agrarian livelihoods recover
agrarian livelihoods are unsustainable
Source: adapted from Ellis (2003)
A detailed picture of the AIDS pandemic and its economy-wide impacts in Malawi in the
early 2000s is provided in Conroy et al. (2006). In this edited collection a particular argument
about the impact of HIV/AIDS on agriculture and livelihoods is made by Whiteside and
Conroy (Chapter 4) including an estimate that the pandemic adversely affects the lives of 85
per cent of the population who draw their livelihoods from agriculture. In particular, labour
scarcity resulting from the pandemic means that critical farm activities cannot be conducted
on time and fully. Also, since seasonal food availability depends on availability of labour to
undertake ganyu (casual labour) as a coping strategy, HIV/AIDS undermines this household
capability and increases vulnerability. Vulnerability to hunger and AIDS in Malawi also
presents gender dimensions as women resort to prostitution as a coping mechanism (Conroy
2005).
The discussion of the deleterious effects of HIV/AIDS on household demography and food
security leads into consideration of the eligibility criteria for poverty targeted social transfers.
The impossibility in practice of means-testing very poor people in rural low income country
settings has meant that aid agencies and government have tended to develop proxy criteria for
the extreme poverty that they wish social transfers to address. These proxy criteria tend to
focus on household demography; for example, the headship of the household (households
headed by elderly, widows, orphans, or children); the number of orphans cared for by the
household; and the dependency ratio of the household (number of dependents divided by
active adults aged 18-64). In addition to demographic factors two additional indicators are
common in poverty targeting. One of these is lack of land for farming, and a second is direct
observation of food insecurity stress as shown by the family reducing meal size or only
having one meal per day (Maxwell et al. 1999).
Having developed proxy criteria for extreme poverty and deprivation, the question remains
how best to conduct the selection of beneficiaries in communities (Ellis et al. 2009, Ch.3).
Unfortunately, beneficiary selection is prone to ‘moral hazard’. For example, village leaders
may fill up beneficiary lists with their own relatives (an occurrence termed ‘elite capture’), or
households may modify their composition in order to fulfil the criteria that have been
publicised (suddenly an unexpectedly high number of households turn up filled with orphans,
or elderly widows etc.). In order to overcome elite capture, aid agencies have tended to
gravitate towards community selection methods for targeting those most in need (Conning
and Kevane 2002). This entails first creating a village or community welfare committee (if
one does not already exist), then charging this committee with the task of drawing up a
beneficiary list, according to a chosen set of criteria. Ideally, this list is then taken back to a
general village meeting for verification. However, even with these checks and balances,
transfers can create contrary behaviours in communities. For example, beneficiaries may be
put in the position of having to ‘share’ their benefits with the committee members who put
them on the list. The complexity, cost, and ambiguous outcomes of poverty targeting
processes contribute to a set of arguments in favour of universal or categorical targeting, the
additional costs incurred by complete coverage being considered preferable to the
inaccuracies of attempts to narrow down unduly the number of beneficiaries (Coady et al.
2004).
The foregoing distinctions suggest a typology that groups social transfers according to some
of the key features that they do or do not share. One such type comprises ‘safety nets’ (see
below) that do not impose on government any future or long term obligations regarding their
provision, and which are mainly funded by donors or multilateral agencies like the World
Bank. Another type is categorical transfers that involve routine monthly payments to their
beneficiaries, and are usually legislated by the governments that provide them, and are
therefore entitlements on the part of the citizens who qualify to receive them (pensions and
child support payments are this type). A third type are poverty targeted transfers which
hitherto have mainly comprised pilot programmes funded by donors, and where the chief
difficulty as seen from the donor perspective is persuading governments to scale them up and
institutionalise them as long term budgetary commitments.
In document
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