Antipoverty transfers in the South – Using social assistance to achieve zero poverty

Since the turn of the century, antipoverty transfers have emerged as a key area of national policy and practice in the South. Large-scale programmes in middle income developing countries (MICs) providing direct transfers to households in poverty have made an important contribution to reducing global poverty. More recently, antipoverty transfer programmes are beginning to emerge in low income countries (LICs). Conservative estimates indicate that between three quarters and one billion people in the South lived in households receiving antipoverty transfers in 2010. The expansion of antipoverty transfers in the South largely represents domestic policy responses to poverty and vulnerability. Increasingly, antipoverty transfers are perceived as an essential component of effective development strategies, combining growth, basic service provision and social protection. ¹

Basic terminology is an issue and a necessary starting point. In developed countries and in the work of the International Labour Organization (ILO), social protection comprises social insurance (contributory programmes covering life-course and work-related contingencies), social assistance (tax-financed programmes addressing poverty and vulnerability) and employment programmes (‘passive’ or ‘active’). ² The importance of social protection is well understood in European countries, especially as it constitutes the core of the welfare states that emerged in the aftermath of World War II. In the context of developing countries and in international development policy debates, social protection has come to describe a range of programmes and policies addressing poverty and vulnerability (social assistance in the terminology described above).

Social protection in the South

In developing countries, social protection is generally underdeveloped. In some middle income countries, especially in Latin America, social insurance provisions are in place but mainly protect formal workers. Social assistance and employment programmes were, until recently, residual or non-existent. There is, however, now broad agreement across developing countries on the importance of social assistance. Policy activism is embedding this new understanding in appropriate policies and institutions.

The political and economic conditions within which social assistance has taken root in developing countries have ensured a focus on self-standing flagship programmes rather than comprehensive institutions. The reasons for this are complex and often country-specific. They include fiscal constraints, political opposition, knowledge gaps and uncertainty, the limited time window of international aid where relevant, and the love of silver bullets in international development policy. Prominent examples of these programmes include Mexico’s Progresa/Oportunidades, Brazil’s Bolsa Escola/Familia, South Africa’s Child Support Grant, Ethiopia’s Productive Safety Net Programme, India’s National Rural Employment Guarantee Scheme and China’s DiBao. In pioneer countries like Mexico or Brazil, a shift in policy and practice from flagship programmes to stable and more or less permanent institutions is underway. This is a welcome development and will determine the future shape of social protection in the South.

Direct transfers to households

The vast majority of social assistance programmes are designed around a direct transfer, in cash or in kind, to households. The programmes fall into three main categories: pure income transfers, income transfers combined with asset accumulation, and integrated poverty reduction programmes. 

Pure income transfers include transfers in cash specifically targeted at households in poverty. Some programmes target all households satisfying the selection criteria, while others target categories of individuals considered to be particularly vulnerable. An example of the former is the Kalomo Pilot Social Transfer Scheme in Zambia, which provides direct and regular transfers to the poorest ten percent of households in designated districts. Examples of categorical transfer programmes include children or family allowances or social pensions. South Africa’s social assistance is organized in the main through means-tested grants focused on older people, people with disabilities, children, and orphans in poor households.

Income transfers combined with asset accumulation include programmes providing transfers in cash or kind, which are combined with or facilitate the accumulation of productive assets. The term ‘asset’ is used here in its broadest sense, to include human, physical and financial assets. Linking direct transfers with asset accumulation underlines the fact that these programmes aim to strengthen the productive capacity of households in poverty. This category includes two families of programmes now common in developing countries. The first group comprises programmes which combine direct transfers with interventions supporting household investment in human development, especially education and health. Well-known examples are Mexico’s Oportunidades or Brazil’s Bolsa Família. The second group includes programmes which combine direct transfers with interventions supporting the protection and accumulation of physical assets. Examples are India’s National Employment Guarantee Scheme (infrastructure or community assets) and Ethiopia’s Productive Safety Net Programme (household and community assets). The Ethiopian programme provides households with the capacity to work with transfers in cash or kind, together with agricultural extension activities, while households without labour capacity receive direct support. These programmes require beneficiaries to supply work to create or protect household or community assets.

Integrated poverty reduction programmes are a significant innovation in social assistance, combining a range of interventions focused on the poorest and addressing social exclusion. Challenging the Frontiers of Poverty Reduction – Targeting the Ultra Poor, a programme developed by BRAC, a large NGO focused on poverty reduction, provides an integrated and sequential set of interventions aimed at strengthening the nutrition and health status of the poorest households in Bangladesh, as well as micro-enterprise training. Chile Solidario (now Ingreso Etico Familiar) is an influential example of this type of programme in Latin America. It provides an integrated set of interventions on seven dimensions of wellbeing (housing, health, education, employment, income, registration and intra-household relations) addressing a range of deficits responsible for keeping households in poverty.

The conceptual basis for this classification is provided by the understanding of poverty underpinning the programmes. Pure transfers assume poverty is largely to do with deficits in income or consumption. Transfers remedy these deficits and thus reduce poverty. Income transfers combined with asset accumulation embrace a broader understanding of poverty. They devote attention to deficits in income or consumption but also address deficits in productive assets. Programmes focused on human development, like Mexico’s Oportunidades, understand the persistence of poverty as arising from deficits in human capital. Ethiopia’s Productive Safety Net Programme is based on understanding poverty and its persistence as arising from asset depletion and destruction in response to droughts and other shocks, e.g. food-insecure households selling livestock to purchase food. These programmes adopt a multidimensional understanding of poverty, but focus on a few dimensions. Integrated poverty reduction programmes also share a multidimensional understanding of poverty, but focus on a wider set of dimensions, have a strong emphasis on social exclusion, and attribute only a marginal role to direct income transfers in the overall support they provide to households in poverty.

Different challenges in LICs and MICs

The growth of antipoverty transfers in developing countries has been remarkable, but important challenges remain. The expansion of social assistance has been slower in low income countries than in middle income countries. To some extent this is due to limited government capacity to design, implement and finance policies, but it would be wrong to focus solely on resource deficits. Political factors are very important, especially given the significant role of democratization in the expansion of social protection in countries like South Africa and Brazil, and in Latin America in general.

What is the future of social protection in the South? Social assistance has been the main focus for the expansion of social protection in developing countries, even in countries with large-scale social insurance. What are the implications of the recent expansion of social assistance for social protection systems in the South?

It is important to distinguish between low and middle income countries. In LICs with very limited social protection, the expansion of social assistance helps to focus government efforts on poverty reduction and eradication. The growth of social assistance generates few trade-offs with other policy areas like health or education. Moreover, social assistance can have positive outcomes by ensuring access to basic services for groups in extreme poverty. Replacing emergency assistance with regular and reliable transfers to households in poverty, for example, could generate additional demand for schooling and health care and other forms of asset accumulation. Evaluations of Ethiopia’s Productive Safety Net Programme suggest that the strongest gains in food security and asset protection were achieved when transfers were combined with agricultural development interventions. In LICs, social assistance needs to be linked with interventions to improve the productive capacity of the participant households. Trade-offs with other policy areas are more likely to emerge in contexts in which social assistance expenditure competes with resources for service infrastructure. There are few gains in diverting investment in schools and clinics to social assistance transfers.

In middle income countries, especially those in Latin America with large-scale social insurance, the future course of social assistance and protection presents a different set of challenges. Latin American countries, and especially Mexico, offer fertile ground for looking at future development. Prior to the growth of large-scale antipoverty programmes in the first decade of this century, social protection systems in the region had been described as ‘truncated’, in the sense that relatively generous social insurance schemes, enjoying significant public subsidies, catered for workers in formal employment and their households, while a large section of the population relied on informal employment with very limited protection. Against this background, social protection systems in the region have been strengthened by the growth of social assistance in the last decade. Social protection coverage has been extended to sections of the population traditionally excluded from social insurance provision. And the programmes have proved effective in reducing extreme and persistent poverty. In the medium term, new social assistance programmes have the potential to improve human development and economic inclusion among low income groups. Social assistance absorbs a very small fraction of public revenues, and there is every prospect that the required budgets will shrink in the future as poverty declines.

The growth of social assistance in developing countries is a welcome development. It fills in a large gap in social protection systems in the South, and is an essential component of a successful zero poverty strategy.

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