Safety nets are an investment for fighting poverty, building human capital, and responding to crises
The World Bank notes 120 cash transfer programs rolled out in Africa in 10 years
Rwanda’s Finance Minister says the Umurenge safety net helped his country reduce poverty
WASHINGTON DC, April 23, 2012— Safety nets—programs that invest in poor people and help them enhance their livelihoods and productivity by transferring resources to poor households—have been on the rise in Sub-Saharan Africa. These programs either transfer money directly to vulnerable households, or offer labor-intensive public works jobs such as building rural roads to adults who need temporary employment during the agricultural lean season.
World Bank analysis shows that over the past 10 years, 120 cash transfer programs have been rolled out in Africa. Experience has shown that families invest these transfers in the education and health of their children, and in their farms or small businesses. Against the backdrop of a volatile global economy and frequent local climate-related events such as drought, there is significant scope to improve and expand these programs. The latest evidence shows that they are helping to reduce poverty, respond to crises, and invest in people’s futures.
Despite drought in the Sahel, Dijée Issa, a 30-year-old mother of four, has been able to beat hunger, stay healthy, and keep her children in school thanks to a small monthly cash payment from the government of Niger. The program also includes an information element on health and nutrition. Through this program Dijé and others in Chagnassou village in Niger’s Illéla locality have also learned more about health and sanitation, and both the money and the training have been helpful.
“The 10,000 CFA francs that we receive has been a great help,” Dijé says, “I pay a man 5,000 francs to bring water for my family, and I use the rest to buy rice, oil, and firewood so that I can feed my children.”
The money allows Dijé to take care of her children even during hard times in a part of the world where many are chronically poor and malnourished, and lack basic food security.
“When my daughter was born, I made sure to breastfeed her exclusively,” she continues, visibly proud of the plump baby playing on her lap. “So now look at her. Whenever I go out in public, everybody wants to carry her and play with her, because she looks so beautiful and clean and healthy.”
People like Dijé who are benefiting from social safety nets in Niger, Kenya, and Ethiopia have been featured in a short film about safety nets in Africa released during the World Bank’s Spring Meetings in Washington DC. Safety nets were at the center of discussions at the Meetings attended by delegations from around the world. At an Africa-focused livestreamed event on April 20, finance ministers and experts gathered to look at the latest evidence about safety nets and how best to implement them.
Spreading the benefits of economic growth, fighting poverty, and investing in people
“Market reforms really deliver economic growth, there is no question about that,” said Obiageli Ezekwesili, World Bank Vice President for Africa, during her opening remarks at the event. “However, what we’re also realizing is that growth is not easily shared widely, so there must be deliberate policies to ensure that the benefits of growth reach all citizens, as much as possible.”
These policies include social safety nets, once thought to be mainly for middle-income and high-income countries, Ezekwesili said, adding that there is now strong evidence that these programs should be put in place systematically by low-income countries to fight poverty and reduce vulnerability. Ms. Ezekwesili also referred to a new World Bank review entitled The Cash Dividend: The Rise of Cash Transfer Programs in Sub-Saharan Africa.
Tamar Manuelyan Atinc, World Bank vice president for Human Development highlighted new evidence on social safety nets and poverty reduction in Africa. Kenya’s Cash Transfer for Orphans and Vulnerable Children program has resulted in a 13 percentage-point drop in the share of registered households living in extreme poverty, she said. And in Ethiopia, the growth rate of livestock holdings was 28 percent faster for those households participating in the Productive Safety Net public work program than for non-participants.
Over a million people lifted out of poverty in Rwanda in five years
Rwanda, which is aiming to become a middle-income country by 2020, stands out as a country that has witnessed both steady economic growth as well as very rapid poverty reduction. Minister of Finance and Economic Planning, Hon. John Rwangombwa, attributed the recent decline in poverty partly to Rwanda’s Vision 2020 Umurenge program, supported by many partners including the World Bank.
This program, which identifies the poorest people in each umurenge (district), offers labor-intensive work, credit to small businesses, and cash transfers and assets such as livestock to those who cannot work. The government also pays for health insurance for the poorest people in the country.
Together with other programs to do with agriculture and job creation, the Vision 2020 Umurenge program has contributed to very good results between 2006 and 2011, according to the Minister. Poverty fell from 57 percent to 45 percent in five years—with more than one million people no longer poor. During the same time, extreme poverty fell from about 36 percent to 24 percent.
“You can’t afford to have eight million people in vulnerable conditions. The government [of Rwanda] came up with a program that would tackle these challenges and give lasting solutions not just piecemeal handouts,” Rwagombwa said. “The best thing to do with our safety nets is creating jobs for these poor people, and also supporting them to get assets that can generate income.”
Technology: helping people get both cash transfers and access to financial services
John Staley, Director of Mobile Banking and Payments Innovation at Equity Bank in Kenya believes that new technology is making it possible to have a world free of poverty, if policymakers, the private sector, aid agencies, and other partners help bring modern financial services to even the poorest people.
“We have a rather audacious goal of having 600 million bank accounts in Africa; we can’t do that if we don’t bank everybody, including poor people,” Staley said. “Safety nets help us to do this.”
The Hunger Safety Net Programme in Northern Kenya is a good example of how to do this in partnership, Staley explained. Cash driven by truck to Northern Kenya would ordinarily mean leakage along the way. But the program, implemented by the Kenyan government, the United Kingdom’s Department for International Development, Oxfam, and Equity Bank uses biometrics, and smart cards to greatly reduce this risk and reach poor people more effectively and efficiently.
On the basis of a beneficiary list provided by Oxfam, Equity Bank provides money to these poor, often nomadic, people via a biometric smart card using a system of identified money agents, often shop keepers at 200 different points, he said. Leakage is prevented, people can receive money at many different points, and agents benefit from more business. Solar technology enables this to work in places with no electricity as well as to work longer hours and create a business around charging cell phones for others, and the bank has more customers.
Staley concludes: “We do have the technology to link people.”