Download Christina Behrendt

Poverty reduction through
transfers in cash and in kind:
Contrasts and complementarity
Seminar “How can the abolition of user fees and the provision of
in-kind support impact on child poverty?”,
Lecture Series “Social Protection: Making Child Poverty History?”
London, 15 June 2005
Christina Behrendt
Social Security Department
International Labour Office, Geneva
Outline
1.
2.
3.
4.
5.
15 June 2005
Introduction
Transfers in cash and in kind
Affordability
Effects on child poverty
Conclusions
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1. Introduction
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15 June 2005
Social protection is increasingly
recognized as an effective way of
reducing poverty
Children as a particularly vulnerable
group
Right to social security
Form of provision: cash or in-kind?
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2. Cash vs. in-kind transfers
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15 June 2005
Mode of provision dependent on
benefit to be provided
What is the role for for cash and inkind benefits in low-income countries?
Encouraging examples
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2.1 Arguments in favour of inkind transfers
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15 June 2005
Targeting
Control over use of transfer
Less inflationary risks
Less security risks
Less prone to corruption and diversion
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2.2 Arguments in favour of
cash transfers
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15 June 2005
Choice (recipients’ priorities)
Cost-efficient (both administration costs and
for recipients)
Stimulation of local markets
Multiplier effects
Less prone to corruption if regular and
transparent benefits
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3. Affordability
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15 June 2005
Could low income countries afford a
minimum social protection package?
To what extent could such a package be
financed out of domestic resources?
How much international assistance would
be needed over the next years?
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3.1 Minimum Social Protection
Priority basic social protection package:
 Universal access to essential health care
 Basic education (primary education)
 Minimum income security
• Basic old age and invalidity pensions
• Cash benefits to children (notably orphans)
15 June 2005
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Preliminary Results for Tanzania:
Scenario I – Expenditure
Basic social protection expenditure in percent of GDP
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
2005
15 June 2005
2009
2013
2017
2021
Universal pensions
Child benefit
Basic health care
Administrative expenditure
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2025
2029
2033
Basic education
9
Preliminary Results for Tanzania:
Scenario I – Financing
Option 1 (based on 2003 fixed proportion of projected govt. expenditure)
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
2005
2009
2013
2017
2021
2025
2029
2033
Required External financing in % of GDP
Government financing in % of GDP
15 June 2005
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Poverty reducing effects of a
universal old-age pension
Poverty rate (head-count)
Simulated impact of a universal old age pension of half the $1/day poverty line in
Tanzania (based on basic needs poverty line)
70
58.1
60
50
40
40.8 38.6
44.1 42.3
46.6
40.2
24.7
30
20
10
3.5
0
All individuals
Children (0-14)
Elderly (65+)
Actual poverty rate
Simulated poverty rate
15 June 2005
47.6
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Individuals living Individuals living
in threein missinggeneration
generation
households
households
11
Poverty reducing effects of a child
benefit to school-age children
Poverty rate (head-count)
Simulated impact of a benefit to school age children of one quarter of the $1/day
poverty line in Tanzania (based on basic needs poverty line)
70
58.1
60
50
40
48.5
44.1
40.8
40.2
32.0
31.9
30.8
30
20
8.0
10
0
All individuals
Children (0-14)
Elderly (65+)
Actual poverty rate
Simulated poverty rate
15 June 2005
47.6
ILO SOCFAS
Individuals living Individuals living
in threein missinggeneration
generation
households
households
12
Poverty reducing effects of an old age
pension and a child benefit
Poverty rate (head-count)
Simulated impact of a universal old age pension and a benefit to school age
children in Tanzania (based on basic needs poverty line)
70
58.1
60
50
40
30
47.6
44.1
40.8
40.2
30.4
28.9
19.8
20
10
0.5
0
All individuals
Children (0-14)
Actual poverty rate
Simulated poverty rate
15 June 2005
38.2
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Elderly (65+)
Individuals living Individuals living
in threein missinggeneration
generation
households
households
13
Poverty reducing effects of a targeted cash
transfer to the most vulnerable
Poverty rate (head-count)
Simulated impact of a targeted cash transfer to the most vulnerable of $6 per
month in Tanzania (based on basic needs poverty line)
70
58.1 56.4
60
50
40
40.8 38.8
47.6
44.1 42
40.2
33.4
30
20
5.4
10
0
All individuals
Children (0-14)
Elderly (65+)
Actual poverty rate
Simulated poverty rate
15 June 2005
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Individuals living Individuals living
in threein missinggeneration
generation
households
households
14
Conclusions
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15 June 2005
Both in-kind and cash transfers can play a
strong role in broader social protection
strategies
Basic level of social protection is affordable
to some extent also in low income countries,
yet some transitional extrernal support
might be necessary
Pronounced direct effect on poverty
reduction for children and expected positive
long-term effects on social development
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