The two lives of social protection: the tale of cash transfers and social security

Here’s a curious tale about two very different forms of social protection: one is much loved by researchers, the media and donors, but its charms are debatable; the other is too often shunned by academia, commentators and funders despite holding greater promise and staying-power. We could call them ‘cash transfers’ and ‘social security,’ writes Rasmus Schjoedt.

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Cash transfers have received attention from academia, consultants, the media, and think-tanks

Let’s look first at cash transfers targeted to ‘the poor,’ both the conditional and unconditional varieties. This form of social protection has received by far the most attention in recent years, as measured by column inches and mentions in the literature referring to their impacts on beneficiaries.

Poverty-targeted household cash transfers programmes – often with conditions and sanctions attached – have spread across the world, usually funded by donors while using highly problematic targeting tools, such as the proxy means test, to identify beneficiaries. Despite the hype, in many ways these programmes look like very traditional development interventions: they focus narrowly on poverty reduction and function as a form of charity. This is even more the case for small-scale NGO-run cash transfer programmes. It is likely that these programmes will eventually suffer the same loss of credibility as previous development fads, such as microfinance.

The likelihood of failure of cash transfers is particularly strong because these programmes – since they are development interventions focused on eradicating poverty – are often expected to ‘graduate’ their beneficiaries out of poverty. This is an unrealistic expectation, for several reasons. First of all, this approach focuses on individuals as the key actors, responsible for ‘lifting’ themselves out of poverty, with a little help from a generous donor. However, we know that reducing poverty and inequality requires structural transformation of economies and societies: it can never be an individual responsibility.

Second, cash transfers perceives ‘the poor’ as a particular group of people who need to be lifted out of poverty. Presumably, according to this perception, once all the poor have ‘graduated’ there will be no more poverty left in the world.

However, this misses the fact that ‘the poor’ do not really exist as a fixed group. Rather, poverty is a state that many people find themselves in for shorter or longer periods of time. It is highly dynamic, with people frequently moving in and out of poverty; often the same person will experience poverty at some points in their life, but be well off at others. It is therefore not possible to eradicate poverty by focusing on ‘the poor’. As an example, Figure 1 shows the movements between income groups in Rwanda between 2010/11 and 2013/14.

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However, there is another form of social protection which is far more likely to become a permanent focus of social policy in developing countries: This is the building of sustainable national social security systems – a core public service, alongside others such as health and education – with an initial focus on lifecycle benefits such as old age pensions, child benefits and disability benefits. In contrast to the cash transfer fad, this approach is rights based, since these programmes provide a right to income support for everybody who fulfil the eligibility criteria. And, as a core public service, a national social security system is no more a fad than a national health system or a national education system.

Nobody can dispute that life cycle social protection programmes comprise a core component of countries’ broader labour market and social policy. In high-income countries, these programmes often constitute the largest portion of government budgets.

In European Union member states, for example, Governments dedicate an average of 12% of GDP to social security (source, OECD Social Expenditure Database). These programmes are essential for reducing poverty and inequality and promoting economic growth, not by focusing on ‘the poor’ but by creating societies with income security for all across the life cycle. As Figure 2 shows, without taxes and transfers, poverty rates would be much higher in most OECD countries.Screen Shot 2017-12-21 at 15.48.37

Several developing countries have extensive life cycle social protection systems, including for example Mauritius, South Africa, Uzbekistan, Mongolia, Georgia, Namibia and Nepal. In Brazil, the national old age, disability and unemployment benefits, although not fully universal, are much more significant than the much hyped Bolsa Familia programme, a poverty-targeted household benefit. Mauritius has had a universal pension since the 1950s, which now co-exists with a universal disability benefit and a range of other social security schemes while Nepal has been quietly building an impressive inclusive social protection system since the mid-1990s (going well beyond its richer neighbours of India, Pakistan and Bangladesh. In 2017 Kenya launched a tax-financed universal pension for everybody aged 70 years and above; Uganda is expanding a pension that is universal in some parts of the country, while Zanzibar introduced a universal pension in 2016. In some cases, international donors have played a key role in introducing these programmes, but most often they are home grown. In fact, often governments have actually had to fight off international institutions to avoid introducing poverty-targeting – as in Mongolia.

Strangely, these life cycle programmes – which tend to be much larger than poverty targeted household transfer schemes – usually do not attract the same media attention. Researchers also seem to prefer poverty-targeted cash transfer programmes. The latest large review of cash transfers by the ODI included a review of research on 56 different programmes. Out of these, 45 were CCTs/UCTs and only 4 were social pensions. This choice was made despite the fact that no less than 67 low- and middle-income countries now have social pensions.

Perhaps this lack of interest from researchers is a result of what Lant Pritchet calls ‘X-centric research interests’ – his term for research that looks at effects of some controllable variable, rather than looking for causes of already known effects. It may also be because most of the poverty targeted cash transfer programmes are funded by donors, who have funding for research and need to provide evidence on the results of their investment.

Perhaps it is inevitable that Western media will always be more interested in the narrative of Westerners arriving with a bag of money – or chickens – to ‘fix’ poverty in Africa, than in the story of countries gradually developing better social security systems. But we should expect more from development researchers and practitioners, who ought to know that poverty is not something that can be ‘fixed’ through technical solutions or charity. Eradicating poverty requires the creation of more equitable societies, which is inherently a political undertaking. And the large life cycle social security schemes are inherently political solutions, because they link into the politics of their countries. But of course, that story is harder to sell to the media.
Rasmus Schjoedt is a Social Policy Specialist with Development Pathways, currently based in Kampala and managing Development Pathways' programmes in Uganda. He is interested in the political economy of social protection programmes, especially how local power relations influence implementation.

Rasmus Schjoedt is a Social Policy Specialist with Development Pathways, currently based in Kampala and managing Development Pathways’ programmes in Uganda. He is interested in the political economy of social protection programmes, especially how local power relations influence implementation.

So, what does this mean for those of us working in the area of social protection? Well, a rights-based approach to development would mean helping to build comprehensive national social security systems, by providing funding and technical support to governments to expand rights-based programmes. And by supporting local civil society organisations and citizens to advocate for improved access to income support across the lifecycle. This is the only way to create sustainable change and this is where development researchers, donors and NGOs should focus their attention. Anything else is just a distraction.

 

6 Responses to “The two lives of social protection: the tale of cash transfers and social security”

  1. Benjamin SIVASIMA Reply

    I one way I agree with your analysis. However, social security coverage is very limited, and unemployed people living in urban and rural areas have very oportunity to be part of the social security systeme that requires beneficiary contribution, most of the cas.
    Now the question to ask is whether one needs to wait until the social security reaches everybody or support also programs such as cash transfer programs so that we can have combined systems where social security, social assistance and community empowerment are complementary.

    • Development Pathways Reply

      Thank you, Benjamin. Is it a binary choice, however? Social security-type systems don’t have to be brought in wholesale overnight, but can be progressively introduced, starting, as many nations do, with pensions, which have wide support and also benefit others in the households of older persons.

  2. I couldn’t agree more. At World Solidarity we’ve been focussing on rights based social security for decades, together with our partner networks across the world.
    This also led to a 2 year campaign in Belgium focussing on social protection for all in 2015 and 2016. http://socialprotection.world/

  3. As always with these blogs, an excellent article. From a perspective of a non social -protection specialist (but having worked wit a lot of donor organisations and NGOs over the years)I think there are two things going on here. One is ideological – that quite a few people in powerful donor institutions believe in targeting to make sure the “deserving poor” get the money – as Stephen has pointed out in another blog. The other is institutional – donors love planting their flags and being the leading light in a programme, and showing that it has achieved narrowly-measured results (regardless of whether these are less significant than rights-based social protection). Supporting a larger government-led rights-based programme with a small contribution would give them much less of a role or scope to claim credit. Some used to be happy to provide budget support especially for education and health sectors but most have been backing away from this in the last few years. If they dont change both views then the only sustainable way to fund social protection will be through progressive national tax revenues – which would also be better for long-term consensus on rights based systems

    • Development Pathways Reply

      Thank you, and a good hypothesis on the possible motivations of donors. Would be good to hear from donors themselves on this.

  4. Dominic Oyaya Reply

    I agree with the researcher’s argument that poverty cannot be eliminated by targeting the poor and giving cash transfer to the targeted poor alone. As a practitioner working on government pro-poor programs I have realised that poverty can only effectively reduced by putting in place elaborate program targeting to improve the living standards of the entire society. Poverty is dynamic and one who is not poor today may be poor tomorrow due to unavoidable causes. Therefore a more elaborate social protection is a better strategy to deal with poverty than cash transfer.

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