THE POTENTIAL OF COMMUNITY LEVEL SOCIAL GRANTS AS PROMOTIVE SOCIAL PROTECTION

MEASURE

FLORA KESSY

INTERNATIONAL SOCIAL PROTECTION CONFERENCE

15-17 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

Households’

assets

Livelihood strategies

Livelihood outcomes

such as enhanced incomes

H

N F

PS

Dev Grants

H= Human capitalS = Social capitalN =Natural capitalF = Financial capitalP = 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 issuedYear Average

amount (TZS)Range (TZS) N

2008 72,500 30,000 - 200,000 67

2009 88,300 20,000 - 400,000 64

2010 91,500 30,000 - 400,000 74

2011 104,300 30,000 - 500,000 76

2012 149,200 25,000 - 500,000 90

Groups’ Financial Position

Group Muungano 2 Dhiki&Faraja Upendo Neema Pambazuko

Cash at Hand 2,235,000 833,800 775,600 1,410,000 879,350

Cash at Bank 166,000 1,000,000 1,100,000 100,000 300,000

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 87,000 800,000 250,000 190,000

ACCESS Project Grant 3,000,000 3,000,000 3,000,000 2,500,000 2,500,000

Uses of the LoanNo. Item Frequency

1. Accessing health care 5.5%2. Accessing secondary education and

vocational training18%

3. Investment in agriculture 80%4. Investment in off farm businesses including

selling of agricultural produce41%

5. Livestock keeping 19%6. Buying and renting land 4%7. Construction 4%8. Buying household appliances 2%

Preferred Investments (N=52)

Income from Various Investments, 2012

Type of Activity Average Income (TZS)

Range (TZS) N

Business (monthly) 75,000 10,000 - 400,000 88

Selling paddy (seasonal)

857,200 50,000 - 4.5m 101

Selling maize (seasonal)

340,800 50,000 - 2m 38

Selling livestock (yearly)

15,000 5000 - 1.2m 64

Accumulation of Assets (1/2)

AssetTotal value (TZS)

Average (TZS) Range (TZS)

N

Battery lights 153,000 30,600 12,000 - 90,000 5

Motorcycle 4,100,000 1,366,700 1,200,000 -

1,700,000 3

Bed 630,000 126,000 80,000 - 150,000 5Mattress 505,000 101,000 45,000 - 120,000 5Bicycle 3,452,000 104,600 40,000 - 170,000 33Cell phone 1,283,000 44,300 25,000 - 80,000 29Radio 736,000 35,000 15,000 - 170,000 21Furniture 365,000 91,300 20,000 - 200,000 4Iron 88,000 14,7000 8,000 - 40,000 6

Accumulation of Assets (2/2)

Asset Total value (TZS) Average (TZS) Range (TZS) N

Wardrobe 300,000 150,000 50,000 - 150,000

2

Solar panel/Battery 115,000 57,000

15,000 - 100,000

2

Television 360,000 80,000 80,000 - 280,000

2

Power tiller 3,800,000 1Refrigerator 450,000 1Plough 180,000 1Sewing 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!!