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Poverty reduction through transfers in cash and in kind: Contrasts and complementarity.
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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 2005Christina Behrendt Social Security DepartmentInternational Labour Office, Geneva
Outline • Introduction • Transfers in cash and in kind • Affordability • Effects on child poverty • Conclusions ILO SOCFAS
1. Introduction • 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? ILO SOCFAS
2. Cash vs. in-kind transfers • Mode of provision dependent on benefit to be provided • What is the role for for cash and in-kind benefits in low-income countries? • Encouraging examples ILO SOCFAS
2.1 Arguments in favour of in-kind transfers • Targeting • Control over use of transfer • Less inflationary risks • Less security risks • Less prone to corruption and diversion ILO SOCFAS
2.2 Arguments in favour of cash transfers • 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 ILO SOCFAS
3. Affordability • 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? ILO SOCFAS
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) ILO SOCFAS
Preliminary Results for Tanzania: Scenario I – Expenditure ILO SOCFAS
Preliminary Results for Tanzania: Scenario I – Financing ILO SOCFAS
Poverty reducing effects of a universal old-age pension ILO SOCFAS
Poverty reducing effects of a child benefit to school-age children ILO SOCFAS
Poverty reducing effects of an old age pension and a child benefit ILO SOCFAS
Poverty reducing effects of a targeted cash transfer to the most vulnerable ILO SOCFAS
Conclusions • 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 ILO SOCFAS