UN Department of Economic and Social Affairs Universal Benefits: Delivering rights and reducing poverty 8 February 2007, 1.15 – 3.00 pm United Nations

UN Department of Economic and Social Affairs

Universal Benefits: Delivering rights and reducing poverty

8 February 2007, 1.15 – 3.00 pm

United Nations Building, Conference Room D

Michael [email protected]

Policy

Research

Institute

The social and economic impact of benefits

to children

and older people

in Southern Africa

Overview

THE PROBLEM: Poverty in Southern Africa disproportionately affects children and older people

THE INSTRUMENT: Social transfers provide regular cash payments to poor households

THE OUTCOMES:

– MDGs: poverty, hunger, education, health, equality

– Decent work: jobs and empowerment

– break the inter-generational cycle of disadvantage

– Macroeconomic benefits

Households with older people and children are on average poorer than other household types in most African countries

0 10 20 30 40 50 60

AVERAGE

Zambia

Uganda

Nigeria

Mozambique

Malaw i

Madagascar

Kenya

Guinea

Ghana

Gambia

Ethiopia

Cote d'voire

Cameroon

Burundi

Burkina Faso

depth of poverty (poverty gap %)

Elderly and children

Elderly persons

No elderly persons

SOURCE: Kakwani and Subbarao (2005)

Older people & children

Only older people

No older people

South Africa’s cash transfers produce remarkable social outcomes while supporting economic growth and broad developmental impacts

Sub-Saharan Africa’s oldest social transfer program

Costs 3% of GDP Substantial impact on

poverty reduction Extensive studies of

growth outcomes– Human capital– Labor markets– Development

South Africa

South Africa’s social grants reduce poverty and destitution substantially

0%

20%

40%

60%

80%

Poverty gap

Destitution gap

48% reduction

67% reduction

The universal social pension in Lesotho mainly protects children and promotes human capital accumulation

The world’s newest universal social pension, started in 2004

Costs 1.4% of GDP 65% of the cash is

spent on children cared for by older people

Supports human capital investment, particularly for OVCs

Lesotho

Impact of South Africa’s Social Pension on adult labor force participation

SOURCE: Statistics South Africa Labor Force Surveys and EPRI calculations

Household does not receive social

pension in 2004

Household receives

social pension in 2004

Improvement associated with social pension

Probability that a poor adult of working age in 2005 will:

Find employment 7% 9% 2%

Actively look for work 13% 15% 2%

NOTE: Sample includes working age adults (older than 16) in households in the lowest income quintile but with no working individuals in September 2004.

Impact of South Africa’s Social Pension on adult labor force participation


Household does not receive social

pension in 2004

Household receives

social pension in 2004

Improvement associated with social pension





Impact of South Africa’s Child Support Grant on adult labor force participation


Household does not receive

child grant in 2004

Household receives

child grant in 2004

Improvement associated with child

grant





Impact of South Africa’s Child Support Grant on adult labor force participation



child grant in 2004

Household receives

child grant in 2004


grant





Impact of South Africa’s Child Support Grant on women’s labor force participation



child grant in 2004

Household receives

child grant in 2004


grant

Probability that a poor woman of working age in 2005 will:



NOTE: Sample includes women (older than 16) in households in the lowest income quintile with older people but with no working individuals.

Impact of South Africa’s Child Support Grant on women’s labor force participation



child grant in 2004

Household receives

child grant in 2004


grant

Probability that a poor woman of working age in 2005 will:



NOTE: Sample includes women (older than 16) in households in the lowest income quintile with older people but with no working individuals.

Social transfers in Namibia protect children and older people, support labour market participation and promote local economic activity

A transformed pension system since democracy in 1990

Near-universal take-up (85%)

Costs 0.7% of GDP Supports labour

market participation, particularly for women

Stimulates local markets

Namibia

Spending shares vary by income group—and social transfers redistribute income and restructure the composition of spending

Food

0%

10%

20%

30%

40%

50%

1 2 3 4 5 6 7 8 9 10

Income Decile

Ex

pe

nd

itu

re S

ha

re

Transport

0%

2%

4%

6%

8%

10%

12%

14%

1 2 3 4 5 6 7 8 9 10

Income Decile

Ex

pe

nd

itu

re S

ha

re

Source: Statistics South Africa Income and Expenditure Survey 2000

An illustration from South Africa

Conclusions

For countries in Africa, social transfers have demonstrated considerable success in helping to achieve MDGs in areas of poverty reduction, nutrition, education, health, equality.

In many countries they are the most effective government program for reducing poverty.

They help to break the cycle of inter-generational transmission of disadvantage.

Social transfers do not create dependency—they often break dependency traps, particularly by nurturing productive high-return risk-taking and promoting decent work.

Social transfers are developmental.

Documents

UN Department of Economic and Social Affairs Universal Benefits: Delivering rights and reducing poverty 8 February 2007, 1.15 – 3.00 pm United Nations