THE POTENTIAL OF COMMUNITY LEVEL SOCIAL GRANTS AS PROMOTIVE SOCIAL PROTECTION MEASURE FLORA KESSY INTERNATIONAL SOCIAL PROTECTION CONFERENCE DECEMBER 2014, ARUSHA

Outline Introduction Research questions Conceptualizing Social Protection – Vulnerability and Risks – Linkage with economic growth Methodology Results – Managing the grants – Promotive aspects of the grants – Conditions enhancing the functionality of the grants Conclusion and recommendations

Introduction Cash transfers-one of potential social protection measure in the current development discourse Cash transfers (conditioned or unconditioned have shown to: – Increase consumption level of poor households – Increase human capital investment – Cushion/protect households from deprivation – Avert/prevent deprivation/impoverishment Evidence on the potential of social protection in form of cash transfers in promoting economic growth is scanty

Research Questions Key question: Under which conditions do development grants work as a promotive social protection measure? Specifically, the study answers the following questions; – How is the grant managed by each group of poor rural women? – What are the major promotive aspects of the grant? – What conditions enhance the functionality of the grant?

The 3 “Ps” Social protection as a concept has evolved considerably gaining breadth over time: – Protective measures (insurance and diversification) – Preventive measures (social assistance and coping strategies) – Promotive measures (growth catalyst)

What is New in Social Protection? The radical definition that takes promotive and transformative approaches; – Promotive SP aims at strengthening production capabilities of the poor Education and health subsidies Agricultural subsidies Microcredit programs targeting the poor Grants (conditioned or unconditioned) – Transformative SP is mainly concerned with promoting equity (social equity and inclusion), empowerment and economic and social-cultural rights.

Promotive SP and Economic Growth Promotive SP is seen as catalyst for economic growth through; – Enabling the poor to partake in economic development – Improving labor productivity (investments in agriculture, off farm income generating activities), thus enhancing incomes of poor households) – Human capital development (improve productive capacity) – Asset accumulation and conservation

Social Protection and Livelihood Nexus Vulnerability Context/ Generalized insecurity Househ olds’ assets Livelihood strategies Livelihood outcomes such as enhanced incomes H NF P S Dev Grants H= Human capital S = Social capital N =Natural capital F = Financial capital P = Physical capital

Methodology Exploratory study conducted in ten villages in Kilombero and Ulanga districts which are the home of the groups of women supported by the Ifakara Health Institute (IHI) – 127 out of 382 members from all groups were randomly sampled – 10 Focus Group Discussions (FGDs); one per group – Key Informants; Community Development Officers (2), District Cooperative Officers (2), IHI staff in charge of the implementation the project (2). Data collected using a questionnaire with both open and close ended questions and an interview guide

Management of the Grants (1/2) Provision of soft loans to group members (e.g. loans for accessing health care) Investing some funds in group businesses (farming, livestock development, procurement of power tillers) Revolving funds in form of loans for investments – Interest rate 20% (67% of respondents) – Interest rate10%-15% (20% of respondents)

Management of the Grants (2/2) Loans issued Year Average amount (TZS) Range (TZS)N ,50030, , ,30020, , ,50030, , ,30030, , ,20025, ,00090

Groups’ Financial Position GroupMuungano 2Dhiki&FarajaUpendoNeemaPambazuko Cash at Hand 2,235, , ,600 1,410, ,350 Cash at Bank 166,000 1,000,000 1,100, , ,000 Total Cash Available 2,401,000 1,833,800 1,875,600 1,510,000 1,179,350 Existing Loans 1,998,000 3,522,000 5,100,000 8,000,000 3,482,000 Total Bal. incl. Loans 4,399,000 5,355,800 6,975,600 9,510,000 4,661,350 Balance (2012) 3,781,957 4,936,000 4,127,553 6,399,000 1,819,547 Balance (2008) 1,323,251 87, , , ,000 ACCESS Project Grant 3,000,000 2,500,000

Uses of the Loan No.ItemFrequency 1.Accessing health care5.5% 2. Accessing secondary education and vocational training 18% 3.Investment in agriculture80% 4. Investment in off farm businesses including selling of agricultural produce 41% 5.Livestock keeping19% 6.Buying and renting land4% 7.Construction4% 8.Buying household appliances2%

Preferred Investments (N=52)

Income from Various Investments, 2012 Type of Activity Average Income (TZS) Range (TZS)N Business (monthly)75,00010, ,00088 Selling paddy (seasonal) 857,20050, m101 Selling maize (seasonal) 340,80050, m38 Selling livestock (yearly) 15, m64

Accumulation of Assets (1/2) Asset Total value (TZS) Average (TZS) Range (TZS) N Battery lights 153,00030,60012, ,000 5 Motorcycle 4,100,000 1,366,700 1,200, ,700,000 3 Bed 630, ,000 80, ,000 5 Mattress 505, ,000 45, ,000 5 Bicycle 3,452, ,600 40, , Cell phone 1,283,000 44,300 25, , Radio 736,00035,000 15, , Furniture 365,000 91,300 20, ,000 4 Iron 88,000 14,7000 8, ,000 6

Accumulation of Assets (2/2) AssetTotal value (TZS)Average (TZS) Range (TZS) N Wardrobe 300, ,000 50, ,000 2 Solar panel/ Battery 115,000 57,000 15, ,000 2 Television 360,000 80,000 80, ,000 2 Power tiller 3,800,000 1 Refrigerator 450,000 1 Plough 180,000 1 Sewing machine 180,000 1

Conditions for the functionality of the grant Managing group dynamics by giving the group power to decide e.g. on the use of the grant Accrued income from interest rate remains within the group for further revolving Introduction of the savings aspect Provision of Business Development Services Entrepreneurship skills Identification of profitable ventures Training on Financial Management

Challenges Preference of some group members to spend money on social issues which deceases the amount that can be revolved for investment Jealous at various levels; – Household level-husband and wife if the household income is not pooled – Among members-successful versus non-successful members – Group members and the general community Contextual factors e.g. animal and crop diseases, poor road infrastructure low prices of agricultural produce etc.

Conclusions and Recommendations (1/4) Promotive SP is a catalyst for economic growth and reduction of poverty; – Improving labor productivity (inclusive participation in the labor market) – Asset accumulation; Productive assets Assets to cushion the poor against impoverishment – Investment in human capital beyond primary education

Conclusions and Recommendations (2/4) Microcredit from microfinance is not an option for extremely poor; – Their immediate need is to smoothen consumption of basic items such as food and accessing health care ; – Their incomes are too low and inconsistent – They need assistance first in stabilizing their immediate consumption needs before thinking of investment This calls for sequencing protection and promotion social protection measures (two tier program). – Grants for consumption smoothening – Grants for investment

Conclusions and Recommendations (3/4) Various funding avenues are available for youth and women through e.g. district councils – Provide funds in form of grants aimed and promoting investments – Allow the groups to manage the grants; community development officers to provide supportive supervision

Conclusions and Recommendations (4/4) Improve labor productivity by provision of Business Development Services such as entrepreneurship skills and financial management. Development grants/cash transfers should move beyond supporting primary education only to also support secondary education and vocational training.

Asanteni!!