Social Cash Transfers

Lessons from Expenditure and Market Tracking of Social Cash Transfer Pilots in Zambia
Social Protection A CARE International in Zambia Learning Product
Methodology
This Learning Product is based on data from the CARE Zambia market and expenditure surveys covering the November 2007 to February 2008 lean period, in terms of food availability in Zambia and the May to June 2008 harvest/marketing season when food supply is at its highest. In addition, price data was collected for 191 commodities from 3 vendors in each of the 3 markets surveyed per district, to monitor the influence of cash transfers on markets. One of the 3 markets was located within or near the beneficiary communities while 2 were in the nearest urban centre. Though prices were collected for a variety of commodities, analysis is focused on maize because SCT expenditure is greatly influenced by its price, being a staple food commodity for Zambia.

2009

CARE Zambias work in Social Protection

Since 2004, CARE Zambia has been working through a Program Partnership Agreement (PPA) with the UK Governments Department for International Development (DFID) to implement a number of Social Protection projects, aimed at increasing the capacity of institutions and the most vulnerable in society to better manage risk associated with food insecurity, destitution and HIV and AIDS. The PPA programme reflects CARE Internationals vision which seeks a world of hope, tolerance and social justice where poverty has been overcome and people live in dignity and security. An estimated 64% of Zambians are poor, mostly living in rural areas (Central Statistics Office 2007) on less than US$ 1 per day. The PPA programme has focused on addressing this through a Social Protection agenda that supports both the achievement of Millennium Development Goals one, two and six, and the Government of Zambias Fifth National Development Plan (FNDP). In this context, CARE Zambia regards Social Protection as a holistic approach to protecting and promoting the livelihoods and welfare of vulnerable groups through coordinated policies and transfer mechanisms such as cash, physical resources, training and in-kind contributions. The vulnerable groups targeted include: Low capacity households including widows, the disabled, the old, and other marginalized, low-income households, and informal sector operators; Incapacitated households with no self-help potential, including mainly households affected by HIV/AIDS; Child-headed households and street children

Lessons Learned
1. SCT beneficiaries are mostly households headed by the aged and widows, with little other income sources and keeping at least one chronically ill adult member, a proxy for people afflicted with HIV/AIDS. SCTs are largely used to the benefit of the whole family rather than certain members within a household. SCTs are largely spent on essential livelihood improving items. SCTs contribute to household food security of beneficiaries but the cash transfer level should consider the seasonality factor. A significant proportion of SCT is spent on income generating activities partly because beneficiaries do not have the guarantee that the transfers will be continued because of the pilot nature of the schemes and also the fact that the transfer levels are inadequate. Most SCTs are used in communities where beneficiaries stay. SCTs do not stimulate inflationary increases in prices.

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As part of the PPA, a series of learning products have been developed as a means of sharing knowledge and promoting greater understanding with a wide spectrum of stakeholders including policy makers, Government, donors, and civil society.

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Background to Social Cash Transfers

CARE Zambia has provided technical support to the Government through the Ministry of Community Development and Social Services (MCDSS) to implement Social Cash Transfer(SCT) schemes to incapacitated households in Chipata, Katete, Monze, Kalomo and Kazungula districts in line with the Fifth National Development Plan of the Government of Zambia (2006-2010). Other than the Katete scheme which targets individuals who are 60 years and above, all the schemes have used community based targeting focusing on the household.

Lesson 1: SCT beneficiaries are mostly households headed by the aged and widows, with little in terms of other income sources and keeping at least one chronically ill adult member, a proxy for people afflicted with HIV/AIDS
These are households with no self-help potential. Over 80% of these households have at least one chronically ill adult. They are headed mostly by the elderly over 60 years. Over

Social Protection

Beneficiary Profile
Male Headed Household Attribute Urban Age of household head Household size Widowed heads Presence of ill adult member 61.05 5.48 16.1% Pension 72.93 5.38 22.5% Rural 66.48 5.08 20.9% Female Headed Household Urban 56.83 5.67 77.7% Pension 71.22 4.58 8.3% Rural 67.71 4.64 93.4%

Figure 1: Proportion of SCT money spent on different members of a household

Female Adult 12% Male Adult 7% Female Child 5% Male Child 6%

96.4%

86.5%

80.5%

97.9%

86.7%

86.0%

Family

80% female headed households are widowed. Household size averages 5 people.

Lesson 2: SCTs are largely used to the benefit of the whole family rather than certain members within a household
According to the surveys, 70% of the SCT was spent on the family Figure 1. Expenditure on the female and male child was about the same, 5% and 6% respectively. Expenditure on the female adult was higher than that on the male adult 12% and 7%. Generally, this picture indicates that male adults do not have undue control over the SCT as is generally feared.

and savings, health and others is as shown in Figure 2. Food, agriculture, small businesses and house maintenance are important uses of SCT money by both male and female headed households. In terms of investments, male headed house holds tended to spend more on agricultural investment than the female who spent more on small businesses/ savings. This could be that small businesses are relatively easier to start, control and generation of regular income is possible (see case of Chipata widow).

Lesson 4: SCT contributes to household food security of beneficiaries but cash transfer level should consider the seasonality factor
The table below shows that beneficiary households had 3.31 and 3.90 weeks with enough food during the lean and ample food periods respectively after receiving the bimonthly cash transfers. The number of meals consumed per day during the lean period was 2.59 and 2.82 for adults and children respectively but the number of meals reduced to 1.56 and 1.76 per day for adults and children respectively when the

Lesson 3: SCTs are largely spent on essential livelihood improving items

Expenditure of SCTs by gender within the 7 broad categories including nutrition (food), agricultural investment, house maintenance, social obligations, education, small businesses

Figure 2: Share of SCT expenditures category by gender

30 25

25

24

Percent share

20

18 16 15 13 9 5 3 14 12 10
8

15

10

10 10

0 Food Education Health Small House businesses maintenance including rent and savings SCT expenditure category Male headed Female headed Agricultural investment Social obligations Other

A CARE International in Zambia Learning Product

The amounts paid to beneficiaries through SCTs

The Government pays cash transfers to beneficiaries on a bi-monthly basis. In Katete, beneficiaries receive K60,000/month/individual (K120,000 bimonthly). In all the other schemes, households without children receive K40,000/month (K80,000 bimonthly) and those with children receive K50,000/month (K100,000 bimonthly). In addition to this, households with school going children in Chipata receive a school bonus of K10,000/month/primary going child and K20,000/month/secondary going child (1US$ = ZMK3,700 January 2008). Sineli Zimba, a mother of 7 children from Navutika Compound in Chipata, buys some bags of charcoal when she receives her cash transfer. She then re-packs this into smaller packages for sale and continues to have daily income to buy food and send her children to school. This way, I am in control of my income and I am assured of food everyday! cash transfer run out. A similar pattern can be seen for the ample food supply period. However, generally, the household food consumption indicators tended to be better in the second round or period of ample food supply. This suggests that seasonality is an important factor to consider when designing cash transfer schemes especially the level of the cash transfer.
Food consumption indicators by period Food consumption indicator # of weeks household has enough food after receiving SCT # of meals per day for adults when household has sufficient food # of meals per day for children when household has sufficient food # of meals per day for adults when SCT has ran out # of meals per day for children when SCT has ran out 1st round (lean food period) 3.31 2nd round (ample food period) 3.90*** Share (%) of expenditure of cash transfers by period 2.59 2.78*** Percent share by period Expenditure category Food Agricultural investment 1.56 1.83*** House maintenance including rent Social obligations Education 1.76 1.89*** Small business and savings Health Other Total Lean food period 30 17 12 11 10 7 4 9 100 Ample food period 23 17 13 8 9 15 5 10 100

periods but that of businesses more than doubled. Although considered incapacitated, these households are in fact engaged in productive activities and this is important to consider in future designs of SCT, especially the need for complimentary services such as village savings and loans schemes, livestock extension and entrepreneurship training. The share on social obligations reduced perhaps because they had their own food in the 2 round. The relative high levels of investment calls to question the targeting objective which focuses on food consumption for incapacitated households.

2.82

2.84

*** means statistically significant at 95%

Lesson 5: A significant proportion of SCT is spent on income generating activities, partly because beneficiaries do not have the guarantee that the transfers will be continued because of the pilot nature of the schemes and also the fact that the transfer levels are inadequate
Apart from gender, household expenditure was influenced by general food availability. Food expenditure drastically reduced from the lean (round 1) to the ample (round 2) food period. Expenditure in agriculture remained the same across the two

Lesson 6: Most of the SCT is used in communities where beneficiaries stay

The fact that SCTs are predominantly spent within the communities means that the local economy is boosted thus benefiting a wider community of traders and their families. 63% of the SCTs were predominantly spent within a radius of 5 km of the beneficiary communities, either in the nearest local trading centers or to community members. 11% was spent in neighboring villages and 26% was spent at the nearest urban centers. Female headed households tended to spend more of their SCT money in local trading centers and

Social Protection

A CARE International in Zambia Learning Product

Share (%) expenditure by location

to other community members than the male headed ones. In addition, more food than non-food items were purchased from within communities. The above suggests that, any cash transfer delivery mechanism should factor this tendency.

Figure 3: Location of transfer cash purchases by district

60 53 50 47 42 40 37 55

Median price in ZMK per Kg Unit of sale 90 Kg bag 50 Kg bag 20 tin 5 liter gallon Meda 2nd round survey data 949 826 996 1,004 na Choma/Chipata AMIC database na 825 1,149 na 1,695

30 26 22 20 15 10 10 17

27

27

17 11

19

19 16 12

18 11

Chipata

Katete

Monze
District

Kalomo

Kazungula

Bought at trading centre within my village Bought from other villages

Bought within my village from member of community Bought from nearest town

Maize price comparison in survey areas and AMIC database 20 liter tin contains 17.0 Kgs of maize 5 liter gallon contains 4.0 Kgs of maize meda contains 4.5 Kgs of maize

Lesson 7: SCTs do not stimulate inflationary increases in prices

Preliminary analysis of market data in this survey did not show any significant differences in mean prices between the 2 rounds of data collection suggesting that SCTS do not depress or inflate prices as a result of increase in money supply. In fact maize prices, for example, were comparable with national prices collected by the Agricultural Market Information Centre (AMIC) of the Ministry of Agriculture and Cooperatives during the periods of the survey. Table 4 shows the median price of maize grain per Kg from the SCT market survey in the second round (1st round data was scanty) as well as the median from the Choma and Chipata AMIC database at the same time. AMIC collects prices of designated agricultural commodities from provincial centers in this case. Choma and Chipata data were used in this analysis because they are the nearest to the SCTS in southern and eastern provinces respectively. However, the data available is too limited to draw reliable conclusions.

Policy recommendations for Government and other stakeholders

Develop a mechanism to periodically adjust the SCT levels in relation to changes in inflation, household size and profile Develop SCT delivery mechanisms where payments are done in the local communities as much as possible in order to boost local economies thus benefiting many more rural people Offer complimentary services such as village savings and loans, livestock extension, entrepreneurship training and healthcare among others in SCT programs Incorporate SCT as part of the Government rural development strategy Monitoring food prices because it has a significant bearing on the lives of poor people

End Note: Predictable social cash transfers provided by Government to households suffering extreme poverty on a bimonthly basis proved to be an effective way of addressing chronic poverty. Consumption levels in terms of food intake increased, investment in the education of vulnerable children was enhanced and income generating activities through agriculture and small businesses were initiated thereby capacitating these households to better cope with food insecurity and destitution. The project therefore demonstrated that social cash transfers are a viable and sustainable method of strengthening a communitys resistance to vulnerability. Cash transfers did indeed provide alternative sources of income to prevent households from falling back into more vulnerable situations.

Department for International Development

Republic of Zambia