Missing the Target

This blog was published jointly with RHVP colleagues as a Wahenga Comment

The boundaries of social protection are hard to define. Especially recently, as it has become “flavour of the month” in development circles, we have seen governments, donors and NGOs falling over themselves to repackage a whole variety of traditional development interventions as “social protection”. But, however wide you cast the social protection safety net, everybody should be agreed on one thing: that there is a core constituency who should be the priority focus of social protection. These are the poorest and weakest in society.

 Conventional thinking, especially in a neo-liberal ideology, goes on to suggest that the best way to support this group is to target them for specific interventions. The argument is that limited resources are more efficiently used when allocated to this particular sub-group. And so we have seen a proliferation of programmes, especially in Africa, that attempt to target the poorest and weakest in society, in order to provide them with some kind of social transfer. But does such targeting work? The answer is rarely, or never.

First, targeting the poorest is notoriously difficult to do, especially in an African context where a substantial proportion of the population is poor (50%-80% in many countries), and where the differentials between poor households are minimal (viz. the often-heard refrain that “we are all poor”). A variety of targeting mechanisms has been tried in order to identify the most needy; but all have significant weaknesses. Indeed many of them have inherent flaws that mean they will systematically miss the target group:

• Self-targeting through public works programmes by definition excludes those with no labour.
• Community-based targeting (especially at large scale) tends to exclude those with no voice and no status, by perpetuating local power structures (for example, a study of Malawi’s Targeted Inputs Programme found that random selection would have resulted in better targeting of the poorest than relying on the local community).
• Means-testing excludes those who lack official documents and bureaucratic savvy (for instance, only 10% of eligible recipients accessed South Africa’s Child Support Grant, until the means-testing bar was lowered).
• Targeting through the markets, for example using input subsidies, excludes those with no cash (because they cannot afford even the subsidised price), and with no land (because they cannot use the subsidised product).

Since those in the core constituency for social welfare typically have no labour, no voice, no documentation, no cash and no land, they risk being missed by each of the above targeting mechanisms. Perhaps in African countries it would be better to accept this, and – if you have to target at all – to target the better-off, who are a much smaller and more easily characterised group, for exclusion from social benefits (although this might be dangerous from the perspective of political support – see below).

Second, targeting is highly demanding in time, resources and institutional capacity. Studies, even from staunch advocates of targeting such as the World Bank, show that the administrative costs of a targeted programme are in the region of 15%-30%, compared with 5%-10% for universal programmes. And, since good targeting requires good information and strong administrative capacity, we cannot expect it to work well in the majority of countries in sub-Saharan Africa. Again the World Bank[i] admits: “institutional capacity in very poor countries tends to be very limited, making targeting mechanisms even more difficult to administer”. Thus a much-quoted World Bank review[ii] of 122 antipoverty targeting interventions in 48 countries concluded that: “the median targeting programme in Africa transfers 8 per cent less resources to poor individuals than universal programmes”[iii].

Third, the efficiency of targeting raises serious questions[iv]. Most targeted programmes attempt to gauge the accuracy of their targeting by measuring the percentage of the transfers that reaches the poorest. They boast, for example, that 70% of transfers are made to the poorest quintile. This reflects a preoccupation with minimising “leakage” to the non-poorest.  But if one’s interest is in poverty reduction, then the issue of under-coverage is of equal – or arguably even greater – importance, than that of leakage. Traditional assessment of targeting accuracy takes no account of this. As an example, let us look at the much-vaunted Kalomo social cash transfer scheme in Zambia. Even if one accepts a quota system as being an ethically-justified approach to social protection (where only a fixed 10% of any community receives the benefit); and even if one overlooks the fact that such an approach completely ignores the geographical distribution of poverty (ie that the poorest 10% in one area is likely to be significantly more, or less, poor than the poorest 10% in another area), one is still dealing with a highly inefficient targeting mechanism. In terms of inclusion error, Kalomo’s own Final Evaluation Report[v] suggests that “42% of all beneficiary households should not have benefited” (even based on the scheme’s already very restricted criteria) – this is a high, though by no means exceptional, level of leakage. But of much more concern is the likely level of exclusion error: in a country where 70% of the population is poor, the arbitrary 10% cut-off necessarily involves very significant under-coverage. Taking this too into account, it is likely that the actual efficiency of the targeting is lower than if it had been a universal programme.

Finally, there is the issue of the political economy of targeting, where such under-coverage as described above becomes particularly significant. By targeting, especially in the African context of pervasive poverty, you are essentially creating a privileged group among the poor, an inequitable practice in the first place, but one which will inevitably result in perverse incentives, arbitrary treatment, corruption and patronage. As a recent UNRISD report[vi] comments laconically: “stated simply, combating social exclusion with programmes that exclude a high number of the socially marginalized does not look like a successful formula for reaching the poor”. And this is supported by considerable evidence, from developed and developing countries alike, showing that targeted programmes are less popular than universal ones. As the number of beneficiaries decreases, the balance between those receiving and those paying for a benefit changes, and political support ebbs away: the drive to reduce a programme’s leakage in reality undermines the popular appeal of that programme. As Amyrta Sen[vii] observed: “benefits meant exclusively for the poor often end up being poor benefits”.

The sooner we recognise this and move to universal rather than targeted social transfers, the sooner social protection – in whatever guise – will have a genuine impact on poverty.

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[i] Grosh M E (1994) “Administering Targeted Social Programs in Latin America: From Platitudes to Practice”, World Bank.

[ii] Coady, D, M E Grosh and J Hoddinott (2004) “Targeting of Transfers in Developing Countries: Review of Lessons and Experience” World Bank.

[iii] As quoted in wahenga.comment (2007) “Should we forget about targeting?”, RHVP.

[iv] This section draws on the excellent analysis in Dutrey, A (2007) “Successful Targeting? Reporting Efficiency and Costs in Targeted Poverty Alleviation Programmes”, UNRISD, to which the reader is strongly recommended.

[v] GTZ (2007) “Final Evaluation Report: Kalomo Social Cash Transfer Scheme”, GRZ/GTZ.

[vi] Dutrey, A (2007) “Successful Targeting? Reporting Efficiency and Costs in Targeted Poverty Alleviation Programmes”, UNRISD.

[vii] As quoted in “RHVP Policy Brief No 6: Targeting Social Transfers”, RHVP.