Low Income

Low-income countries are normally characterized by poverty rates greater than 40 percent, with high vulnerability amongst the poorest, and often low economic growth rates.

Safety nets are increasingly being recognized in low-income countries as effective tools to reach out the most vulnerable groups. Emphasis is placed on supplementing the incomes of the poorest to prevent irreversible losses of human capital.

The traditional role of safety nets within low-income context is to redistribute income to needy households. Safety nets are also vital in reducing the risks of vulnerable groups by providing them with a cushion to invest scarce resources more efficiently and effectively in capital enhancement. This enables households to concentrate on high return activities such as holding assets in more productive ways and keeping children at school. The huge needs and limited resources of low-income countries mean that a thorough analysis of objectives and detailed attention to implementation are called for.

Lack of availability of basic household information: Priority should be given to programs that are self-targeting, use community targeting, or by opting for universal coverage with a very low threshold.

Limited institutional capacity: May be addressed by choosing fewer and simpler program designs, consistent with the available capacity, rather than many or complex programs, and using the administrative systems in place rather than creating additional ones.

Resource constraints: Safety net programs should be chosen so as to ensure that safety net expenditures are used to achieve other development goals, by investing in long-run physical assets such as infrastructure and/or human and social capital above and beyond the increase of income in the short term.

A number of different interventions may be considered in low income contexts ranging from public works, food based interventionsand more recently cash and conditional cash transfer programs.

For example, public works are a commonly selected program because it can be self-targeted and can help build or maintain much-needed infrastructure such as roads, irrigation systems, or drainage systems that will help raise productivity. In very low-income countries, public works programs can have fairly high labor intensity and workers can be organized in traditional construction or work gangs.

Safety net programs in low-income countries