Just Give Money to the Poor

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In tackling significant development challenges facing Southern Sudan, the Government of Southern Sudan (GoSS) is preparing a mid-term plan in collaboration with the UN Development Programme (UNDP). One of its proposals includes “social cash transfers” to the poor. In March 2011, UNDP invited author and London School of Economics Visiting Fellow Joseph Hanlon to assist by introducing the notion to the GoSS and other development partners. In Sudan interviewed him about the transfers and his proposals for Southern Sudan.

Interview: Joseph Hanlon

What is a social cash transfer?
A cash transfer is a child benefit, family grant, or non-contributory pension.

With a child benefit, the mother of the child gets money every month. With the family grant, you look at the income of the whole country and choose certain (poor) families. To make a family grant work you have to have an effective administration system because it is administrative and more complex. (Non-contributory pension is paid to those over 63 years old).

All of them are long term and they go to quite a large number of people. They are not relief or welfare. They are long-term payments. They are also very common in the north. In Britain, for instance, we have a child benefit that goes to all children under 18, unconditionally.

Where did this idea come from?
This is an idea that comes from the south. It does not come from aid agencies. It came originally from bigger countries like Brazil and South Africa about 10 to 12 years ago and has since been adopted by 45 countries in the south in one form or another.

In 2010, I published a book called Just Give Money to the Poor: The Development Revolution from the Global South, which is about social cash transfers in the south.

How is this different from charity or welfare?
People often say that these are welfare payments, handouts or whatever. But you have to think of this as an investment. You are investing in children and the next generation. This is no different from investing in a factory. This is investing in economic growth.

In rural Africa in general -- and this applies to South Sudan as much as any other country -- what you see is that economic problems are caused by lack of demand and money. If somebody grows a few extra tomatoes, people do not have money to buy. What you are trying to do is stimulate economic growth locally by getting money into that area.

Where in Africa has this concept been used?
The biggest in Africa is South Africa, which does both the child benefit and a non-contributory pension for everyone over 63 years old. Mozambique, Lesotho, Botswana, Namibia, Mauritius and Swaziland all do non-contributory pensions. In Ghana, they do a family grant.

Ironically, the country which may be most similar to Sudan is Mongolia, because it is a very big country with significant mineral resources, and a very small population. Mongolia does a child benefit and it works very well there.

What has been the outcome in Africa?
Cash transfers are especially important in Africa, as they reduce child malnutrition and stimulate the local economy. In developing countries in particular, half of that money is spent on food. An immediate result is a reduction in chronic malnutrition.

The second thing you see is that the money goes into the economy, because if it is in the rural areas the mother buys food from the neighbours and this begins to stimulate the rural economy.

What makes this concept ideal for Southern Sudan?
In the discussion document for the proposed development plan, there is some sort of cash transfer. The question UNDP had was whether this was something Southern Sudan might be able to use. The answer is yes.

We have concluded that probably the best thing would be a child benefit for children under five. They could do something else, pensions for instance. There are about 150,000 old people you could give pensions to, but that does not give you the kind of broad base that you would like.

Would government or nongovernmental organizations lead this initiative?
The only programmes that have worked have been generated by governments of the countries themselves. Where programmes have been pushed by donors, they have tended to fail. That is because donors do two things -- they make the programmes too complicated and you do not get political buy-in locally.

If (Southern Sudan) carried out such a programme, it would have to start with the government doing and paying for it. Funds would have to come from oil money or something.

Who are the implementing parties?
They would be several different ministries. The payments would have to be from the Ministry of Finance, which would contract a bank. Birth registration in Southern Sudan is the Ministry of Health, which would need to register all newborns. You might want to bring in the Ministry of Gender, Children and Social Welfare because we are talking of children under five. Bring the three together and form a committee to manage this process. While I have been here this week, we have talked to all three.

What was the response?
The response was largely positive, but of course they said, “We have a million priorities”. It is a political decision in the end. It (is) politically good for the Government of Southern Sudan because it is seen as giving something to everyone. The government could say the benefit will go to all children who were born in the Comprehensive Peace Agreement era. Then you call it the peace dividend. It will have wonderful political resonance.

Hypothetically, how would it work?
If you look at targets or what the UN Children’s Fund says, the most vulnerable group are children under five, so you would start with them. There are about 1.3 million children under five, roughly. You might want to try to give the mothers perhaps five Sudanese pounds for each child per month. What you want is something large enough to have an impact on the budget of a poor family, but not huge.

Five Sudanese pounds per child seems very little.
Remember when you are thinking about income in rural areas, most of it is imputed value from self-produced food. In rural South Sudan, five Sudanese pounds per month could actually buy a lot of food from neighbours if you are not trying to buy imported food. That begins to make a difference.

What sort of impact would we expect from this transfer?
What you are going to do with that money is stimulate local trade, which begins to have an impact on the local economy. As local trade becomes stimulated, more traders will come in -- people selling clothes and other things -- so you begin to get a market.

The things that the mothers will be buying first are things to feed and cloth their children. If there is a school in the area, then it will be spent on school-age children to give them clothes or shoes to go to school.

Birth registrations in Southern Sudan are negligible. How would you go about getting a comprehensive list of children under five?
The voter registration process was very impressive and most Southern Sudanese took part. That means that South Sudan has the capacity to register people. We could register all the children in exactly the same way in polling stations that were used for elections.

How about distribution of the money?
What we know from other countries is that mobile banking (sending out trucks/vans with cash) exists. Kenya has had mobile banking for years. Do a tendering. Say to somebody like KCB Bank Group, “We require that you go to every polling station on the same day of the month every month”.

It is perfectly reasonable to tell KCB Bank Group to use a simple system like a fingerprint reader to hand out the money. For the more difficult places, you tell KCB you are going to have to use light planes to get there. You put the cost of this in the contract. We estimate it is going to cost 10 per cent in administration fees. That is a very rough guess and that is high compared to what it costs in other countries.

Do you have an example where this has worked?
Namibia has the most wonderful system to pay pensions. They take a cash machine and weld it on to the back of a pickup truck that goes out to every village, every day of the same month. Women come out, queue up, put their cash card in, punch in their PIN number and then up comes their monthly pension. Other countries use fingerprint readers.

What role if any would the non-governmental sector play?
Donor agencies support the machine that gets this going. Agencies like UNICEF or PLAN or somebody can come in, and say, “We will support the Ministry of Health to set up the birth registration system,” and the UN could provide logistical support for the transfer of cash to remote areas.