UN Department of Economic and Social Affairs Universal Benefits: Delivering rights and reducing poverty 8 February 2007, 1.15 – 3.00 pm United Nations Building, Conference Room D Michael Samson The social and economic impact of benefits to children and older people in Southern Africa

Overview  THE PROBLEM: Poverty in Southern Africa disproportionately affects children and older people  THE INSTRUMENT: Social transfers provide regular cash payments to poor households  THE OUTCOMES: –MDGs: poverty, hunger, education, health, equality –Decent work: jobs and empowerment –break the inter-generational cycle of disadvantage –Macroeconomic benefits

Households with older people and children are on average poorer than other household types in most African countries SOURCE: Kakwani and Subbarao (2005) Older people & children Only older people No older people

South Africa’s cash transfers produce remarkable social outcomes while supporting economic growth and broad developmental impacts  Sub-Saharan Africa’s oldest social transfer program  Costs 3% of GDP  Substantial impact on poverty reduction  Extensive studies of growth outcomes –Human capital –Labor markets –Development South Africa

South Africa’s social grants reduce poverty and destitution substantially 48% reduction 67% reduction

The universal social pension in Lesotho mainly protects children and promotes human capital accumulation  The world’s newest universal social pension, started in 2004  Costs 1.4% of GDP  65% of the cash is spent on children cared for by older people  Supports human capital investment, particularly for OVCs Lesotho

Impact of South Africa’s Social Pension on adult labor force participation SOURCE: Statistics South Africa Labor Force Surveys and EPRI calculations

Impact of South Africa’s Social Pension on adult labor force participation SOURCE: Statistics South Africa Labor Force Surveys and EPRI calculations

Impact of South Africa’s Child Support Grant on adult labor force participation SOURCE: Statistics South Africa Labor Force Surveys and EPRI calculations

Impact of South Africa’s Child Support Grant on adult labor force participation SOURCE: Statistics South Africa Labor Force Surveys and EPRI calculations

Impact of South Africa’s Child Support Grant on women’s labor force participation SOURCE: Statistics South Africa Labor Force Surveys and EPRI calculations

Impact of South Africa’s Child Support Grant on women’s labor force participation SOURCE: Statistics South Africa Labor Force Surveys and EPRI calculations

Social transfers in Namibia protect children and older people, support labour market participation and promote local economic activity  A transformed pension system since democracy in 1990  Near-universal take- up (85%)  Costs 0.7% of GDP  Supports labour market participation, particularly for women  Stimulates local markets Namibia

Spending shares vary by income group—and social transfers redistribute income and restructure the composition of spending Source: Statistics South Africa Income and Expenditure Survey 2000 An illustration from South Africa

Conclusions  For countries in Africa, social transfers have demonstrated considerable success in helping to achieve MDGs in areas of poverty reduction, nutrition, education, health, equality.  In many countries they are the most effective government program for reducing poverty.  They help to break the cycle of inter-generational transmission of disadvantage.  Social transfers do not create dependency—they often break dependency traps, particularly by nurturing productive high-return risk-taking and promoting decent work.  Social transfers are developmental.