Can social transfers play a role in tackling extreme poverty? This paper from the UK Department for International Development uses evidence from existing schemes across the world to suggest that social transfers could have a direct impact on poverty and help pro poor growth. When integrated within a wider national social protection system, social transfers could be an effective alternative to traditional humanitarian assistance.
Social transfers may be an important way to tackle inequality and ensure that the benefits of growth reach those living in chronic poverty. Social transfers are regular and predictable grants that are provided to vulnerable households or individuals. Grants are often directed to particular categories of the population, for example as disability benefit, child support, or widows allowance.
Evidence from social transfer programmes across the world is encouraging. Non-contributory social pensions are gaining recognition as a tool for protecting older people. Geographic or community-based targeting are ways of specifically targeting the poorest households, for example the poor urban dwellers in China or the war-displaced in Mozambique. Conditional cash transfers such as the programmes in Brazil, Mexico and Bangladesh are a promising innovation in household transfers.
Data from existing schemes suggests that social transfers can help tackle hunger, increase incomes, improve education and health, promote gender equity and contribute to empowering poor people. Lessons learnt indicate that:
- Conditional transfers provide incentives, but require administrative capacity and complementary investment in health and education services.
- Work programmes are often more expensive than direct cash transfers. They are not appropriate for chronically poor households that are unable to participate in the labour market.
- Regular, predictable cash transfers provide the potential for developing a market-based solution to chronic poverty, which is not possible with the current humanitarian approach.
- There is little evidence to suggest that a cash delivery system is more prone to corruption than in-kind transfers. The clarity of cash transfers means they are more easily monitored by recipients.
- Social transfers can be effectively implemented in fragile states, as seen in Mozambique. Social transfers can promote a strengthening of the states relationship with its citizens.
Social transfers offer an innovative delivery system that allows donors to reach the poor directly. Expenditure on national social transfer programmes could represent less than five percent of development assistance in some countries country. The international community should identify evidence gaps and support work in these areas, particularly in very poor countries in Africa. Suggested areas for further work include:
- Assessing the cost-effectiveness of social transfers as against other initiatives.
- Exploring how social transfers can be combined with other interventions to tackle priority issues. Strategic frameworks should be incorporated into national Poverty Reduction Strategies to ensure that social transfers complement other initiatives.
- Investigating the impact of social transfers on growth.
- Documenting the role of social transfers in building up local financial services.
- Assessing the relative effectiveness of conditional and non-conditional household transfers in improving health and education outcomes.
- Gauging the feasibility of using social transfers as an option for scaling up donor flows in countries with constrained capacity.
- Institutional strengthening and technical assistance may require complementary funding.
