Cash transfers more beneficial for the poor

A pilot project in Zambia has shown that cash transfers to "critically poor" or destitute households are more beneficial and effective than material handouts. Transfers made to more than 1,000 households in the Kalomo district of Southern province during 2003/04 have not only enabled them to buy basic necessities but also to invest in seed and livestock, according to Dr Bernd Schubert, a consultant to the Social Safety Net Project initiated by the Ministry of Community Development and Social Services. Children aged below 19, who form 61 percent of the members of targeted households, not only benefited in terms of better nutrition but were also able to meet their school requirements like books, pencils, clothing and soap. According to Schubert, after nine months of transfers the headmasters of at least two schools in the district reported an improvement in the attendance and appearance of children from beneficiary households. The targeted households, which were either "critically poor" and facing chronic hunger, or "incapacitated" by the illness or death of a breadwinner, received US $6 in cash each month, equivalent to the average price of a 50 kg bag of maize, which can last a family of six at least a month and a half. "The transfer [of cash] does not lift the beneficiary households out of poverty; it just lifts them from critical poverty, which is life threatening, to moderate poverty," said Schubert in a report, 'The Pilot Social Cash Transfer Scheme, Kalomo District - Zambia'. According to the UN's Food and Agriculture Organisation (FAO), the poorest 10 percent of rural households in Southern province consume, on average, one meal a day. The transfers have enabled them to afford a second meal and dissuaded them from begging for a living. A number of beneficiaries also established the traditional "Chilimba system", or savings clubs comprising five households, where all the transfers were handed to one household every month, providing it with enough cash to make a substantial investment or purchase. Another benefit of the scheme was the far lower administrative and logistical costs of cash transfers, compared to those in kind. Around 50 percent of Zambians do not get enough food to eat. The fact that the "impact of AIDS will increase the number of incapacitated households considerably within the next 10 years" also has to be taken into account when designing a social protection strategy for the country, Schubert observed. The poorest are the 300,000 "non-viable" households, who have able-bodied adults with no access to productive employment. "If these households get access to credit, to employment, to programmes such as food-for-work or cash-for-work, they are able to escape from poverty", he noted. The ministry of community development, with the assistance of the African Development Bank (ADB), is planning to extend the social cash transfer scheme to eight districts in Southern province, which were seiously affected by droughts in 2002 and 2003. The project, expected to run for five years until 2009, will be financed by an ADB grant of $4 million, with another $1 million from the Zambian government. According to Schubert, the extension of the scheme to 200,000 destitute households who have no productive members, at a cost of about $16 million or 0.4 percent of the Zambian Gross Domestic Product, is affordable. He said the success of the programme would depend to a large extent on the performance of the ministry's structures at district level, which are responsible for identifying the destitute households. To view the report: www.sarpn.org.za