Social assistance refers to a state or private transfer of resources to people whose vulnerability warrant some form of entitlement (Howell 2001). They consist of programs and all forms of public action, government and private, that are designed to transfer resources, either cash or in-kind such as food transfers to eligible vulnerable and deprived persons. These groups could be vulnerable individuals or households with no other means of adequate support, including single parents, the homeless, the physically or mentally challenged, victims of natural disasters or civil conflict, the destitute poor, households and communities that meet a social floor and need to improve living standards.
Social assistance offers hope for the poor in the informal sector as it is non-contributory in nature. Examples include cash transfers and fee waivers for education and health, and school meals (Skofias 2005). According to Barrientos (2010), social assistance aims at addressing the current needs for those in poverty and forms the largest component of social protection in most developing countries. For example, in
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South Africa, 25% of the population receives social assistance; in Mexico, it is 20%
of the population while interventions in China, Brazil and India target millions of households. All these figures show that social protection programs for the poor in many developing countries mainly come under the umbrella of social assistance, as poor people cannot afford contributory schemes because besides being poor, they are largely in the informal sector (Coady et al. 2002; Piron 2004).
The Department for International Development points out that social assistance is an opportunity for providing an increased and more predictable aid flows (DFID 2006).
In 2009, for example, the G-20 countries made a commitment to provide US$50 billion to support social protection, boost trade and safeguard development in low-income countries while in 2008, the World Bank pledged US$2 billion Global Food Crisis Response Program to support social protection interventions such as food or cash-for-work and school feeding programs (Devereux 2009). This means that developing countries have this window of opportunity for social protection support but we are yet to see how these commitments translate into action.
The call for more resources for protecting the poor rises from the argument that transferring cash to the poor requires an urgent attention as development aid is not making enough difference in the lives of the poor. It is thus predicted that the number of people living below US$1 per day is predicted to rise to US$366 million by 2015 if no urgent action is taken (HelpAge International 2006; DFID 2005). In addition, it is also observed that in many developing countries, the current growth rates are not enough to translate into meaningful poverty reduction impacts (Coady 2004). High income inequality between the poor and the rich means that high
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economic growth rates are required, which is a huge challenge for most developing countries. The problem is that high income inequalities means that the poor cannot access basic services such as education and health. Therefore regular cash transfers aim at filling this gap.
2.5.3.1 Cash transfers
Cash transfers are the dominant component of social assistance that have provided a body of growing evidence on the impact of social protection on poverty, to the extent that it is now becoming a common scenario to see an introduction or the adoption of social protection policy as part of development and poverty reduction agenda. For example, countries like Ethiopia, South Africa, Botswana, Swaziland, Namibia, Zambia, Kenya, Mozambique and Malawi have some variants of social protection on a large scale (Hammer et al. 1998; Devereux and Sabates-Wheeler 2007).
Cash transfers are proving to be a versatile tool for addressing various poverty related challenges. It is not surprising that others like Hanlon (2004) have proposed the idea of just giving money to the poor with hindsight that the poor are able to prioritise their choices. Much of the evidence comes from a wave of success stories of conditional cash transfers which have been in place in Latin America and the Caribbean countries since the 1990s (see Brieri and Rawlings 2006; Haddinott 2009;
UNICEF 2007a; HelpAge International 2006; Appendix 4). In fact, the use of cash transfers in these countries has demonstrated that there is an opportunity of accelerating poverty reduction and consequently contribute to the achievement of some of the Millennium Development Goals (DFID 2005; World Bank 2007). As observed by Gabel (2014), directly providing social protection in the form of income support to households in the wake of major natural disasters proves to be very
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effective. Gable also observes that this income support complements other relief and reconstruction efforts and has a positive impact on short-term food security and long-term recovery.
The international community also considers that cash transfers are an important tool for reducing poverty. In 2006, for example, the United Nations Economic Commission for Africa promised a resource envelope of up to US$2 billion a year, in recognition of the value of cash transfers to deal with extreme poverty in Sub-Saharan Africa and expected to rise to US$6 billion a year by 2015. In addition to the support from the international community, Bonilla and Gruat (2003) suggest that a basic package of social protection is possible in some low-income countries.
Some studies have also shown that cash transfers in general can contribute to economic growth. A study by Davies and Davey found that cash transfers had wide spread benefits for the local economy in Malawi with multiplier estimates of 2.02 to 2.45 (Davies and Davey 2008). This happens because cash transfers have the potential of addressing some of the demand side constraints and thereby boost demand for goods and services (Farrington et al. 2005). Thus, cash transfers encourage capital accumulation and investment; they also help in the management of risk and eventually contribute to the economy through the multiplier effect as noted above.
These findings demonstrate that social protection has the potential to promote both general and pro-poor economic growth through these transfers. As observed by Barrientos (2010), countries with strong protection systems show low levels of
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poverty and vulnerability. Thus cash transfers have the potential to reduce poverty directly by raising the incomes of the poor and smooth consumption (Devereux and Sabates-Wheeler 2004). Cash can help the poor to benefit from investments in other social services, (HelpAge International 2006). As the poor gain extra income, they are able to access health, education and other services. Therefore, regular cash transfers targeted to vulnerable groups can offer a cost-effective means of reducing poverty and helping the poor meet their basic needs.
Cash transfers can also help the poor in diversifying their livelihood strategies.
Diversification of livelihood strategies is an important aspect of poverty reduction because it enables the poor to expand their sources of livelihoods. For example, Davies and Davey (2008) found that cash transfers in Malawi made recipients less dependent on piecework and they used their labour to work on their own small farms or remain unemployed.
The other advantage is that cash transfers can also help in dealing with inequality, social exclusion and can enhance social cohesion and empowerment, thereby enabling the poor to participate in growth enhancing activities (HelpAge International 2006). In this way, the poor can benefit by participating in the economy while being supported through transfers (Farrington et al. 2005). Gao (2014) argues that such safety net programs not only reduce inequality but also enable low-income families to invest in educating their children and manage risks.
According to Garfinkel et al. (2010) quoted in Gao (2014), social safety net programs are also important for maintaining political stability, increasing human
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security and social cohesion, and ultimately promoting productivity and growth at the society level.
Cash transfers have also positive impact on health outcomes as well. Luseno et al.
(2013) found that the Malawi Social Cash Transfer Pilot Scheme improved the health outcomes of children between the ages of 6 and 17. In their study, they also found that gender, the status of the children whether orphans or not did not have influence of the health outcomes signifying that conditionality does not matter.
However, while there is a general agreement on normative values of what cash transfers can achieve as discussed above, there are still many challenges in terms of achieving the ideals of cash transfers. These challenges are regional and national differences, politics at both national and international level, focus of government policy, availability of resources, programmatic issues and institutional capacity limitations for expanding social protection. I discuss these issues in more detail