Crocodiles and CROCO Dials

The original version of this blog appeared on Development Pathways

I have just read a paper[i] on social protection in Africa with which I profoundly disagree. It has a good main title – “Beware of the Crocodile” – but it goes steadily downhill from there. Even the sub-title is misleading: “Quantitative Evidence on How Universal Old Age Grants Distort the Social Assistance Systems of Low-Income Countries”. It’s about as “quantitative” as Roald Dahl’s “The Enormous Crocodile”; it provides as much solid “evidence” as one of Rudyard Kipling’s “Just So” stories (perhaps “How the Crocodile Got its Teeth”); and the two countries whose “old age grants” have allegedly “distorted their social assistance systems” are not in fact “low-income” countries!

The paper compares the old age pensions in Eswatini and Lesotho (both lower-middle-income countries) with the Social Cash Transfer (SCT) programme in Malawi. It argues for the virtues of the latter programme, despite the fact that it represents an approach that has single-handedly set back social protection in parts of Africa by more than a decade. The paper falls into all the customary crocodile traps: that it is better to target households than individuals; that you can accurately select beneficiaries based on poverty; that, if you can make someone work for their social protection, you should (a throwback to nineteenth-century poor relief); and a whole load of similar crock[ii].

But its most egregious and unwarranted assumption is that the budget for social protection is fixed. It posits that if more is spent on one flagship programme of social protection, then less will be available for other programmes (“The OAG grew and is still growing like the famous crocodile, which became bigger and bigger eating all the other crocodiles on their small island”). But the reality, as we have seen historically in higher-income countries, is that the opposite is true! Once a country implements a rights-based life-course entitlement programme, the likelihood is that not only will that programme expand, but also that other life-course programmes will start to be introduced. Both Lesotho[iii] and Eswatini[iv] now have child-oriented programmes (funded by government) alongside their old age pensions, and Eswatini has a disability benefit. Malawi has nothing other than its SCT (except public works and school feeding which all three countries have).

Based on these fundamental misperceptions and its flawed analysis, the paper comes down in favour of Malawi (and other countries which have adopted the same blinkered approach): “the performance of their social assistance systems is by far better [sic] compared to the performance of the social assistance systems in Eswatini and Lesotho”.

This got me thinking: how does one compare the “performance” of social protection systems across countries? Like a good crocodile, how would I get my teeth into this absurd assertion in order to refute it? And I decided it came down to five criteria, which can, appropriately, be summarised by the acronym CROCO: Coverage, Rate, Ownership, Continuity and Opportunity. To “perform” well, a social protection system should have high Coverage, its Rate of transfer should be meaningful, it should be Owned by government, it should have Continuity over time, and it should create the Opportunity for further expansion. As we shall see, by all of these metrics, the old age pensions in Eswatini and Lesotho outchomp the SCT in Malawi.

Let’s start with Coverage and Rate. These are interlinked, because it is difficult to compare coverage between programmes that are based on individual entitlement with those that are allocated to households, especially when, as in Malawi’s case, the rate of the transfer is (a) banded according to household size and (b) includes a bonus for school-going children. In terms of Coverage pure and simple, Malawi’s SCT is paid to only 280,000 household heads, out of a national population of 18 million (representing 1.6 percent coverage), compared with Eswatini’s old age pension which goes to 70,000 individuals out of a population of 1.1 million (6.4 percent) and Lesotho’s which goes to 80,000 out of a population of 2.1 million (3.8 percent). One could reasonably argue, however, that the coverage of Malawi’s SCT should include every household member as a beneficiary (though the same is of course equally true for the pensions![v]): on this basis the coverage of individual household members under Malawi’s SCT would be about the same as Eswatini’s coverage of individual pensioners and higher than Lesotho’s.

But this then brings us to the question of the Rate of the transfer. Because it lacks domestic political traction, the real value of Malawi’s SCT has diminished over the years (it is now worth on average around USD9/month/household), while the value of Eswatini’s and Lesotho’s pension transfers have increased at a faster rate than inflation (they are now USD25/month and USD42/month respectively). To fairly compare coverage and rate between programmes we need to judge consistently at the level either of the household or of the individual within the household. So either we can conclude that Malawi’s SCT has a similar coverage of individuals to the other two programmes but at a vastly lower rate (a one-person household in Malawi gets USD3.50 each month and each individual in a larger household even less than that, compared with USD25 and USD42 per individual in Eswatini and Lesotho respectively). Or we can conclude that, at the household level, Malawi’s has both a much lower coverage (a quarter and a half respectively) and, even then, a substantially lower rate of transfer. As an example, a household of six, containing two older persons, two adults and two children might receive around USD10/month in Malawi, while the same household in Lesotho would receive USD84 (plus, potentially, further support for children). On whatever basis you compare, the SCT’s performance can only be judged to be significantly worse.

The next measure of performance is Ownership. The old age pensions in Eswatini and Lesotho are – and have been since they began in the early 2000s – fully funded by their respective governments. They also both emerge from autochthonous political processes, so are genuinely home-grown responses to the particular challenges faced in the two countries[vi]. The Malawi SCT relies – and has done ever since it began[vii] – on external donors for some 90 percent of its funding. It is also an imposed model, an imported carbon copy of the Kalomo pilot in Zambia, owing little to domestic political impulsions. This is reflected in the much higher place on the political agenda for the pensions in Eswatini and Lesotho, as manifested in the increasing value of the transfers: pensioners demand, and usually get, a Cost of Living Adjustment each year. Similarly, at one stage, when pensions weren’t paid on time, Eswatini had to shut down its parliament until the situation was resolved. Contrast that with the lack of accountability and the absence of a sense of entitlement among SCT beneficiaries in Malawi.

The lack of national Ownership has serious implications for the Continuity of the programme, surely another important measure of “performance”. It took more than ten years to scale up Malawi’s SCT from a single district to every district in the country, whereas Eswatini’s and Lesotho’s pension began as, and have remained, truly national programmes. The SCT programme has limped from one funding crisis to another and is now a patchwork of separate donor-funded initiatives: some districts are funded by the World Bank, some by the EU, some by KfW, some by Irish Aid and so on. The worst-performing district has traditionally been the single one funded by the Government, Thyolo. What are the prospects for continuity after the development partners pull out? In contrast, the old age pensions have become established elements of the domestic political landscape in Lesotho and Eswatini. Their future is guaranteed, and evidence from their evolution to date suggests that they will play an increasingly valuable role in the national social protection policies of both countries.

This provides the Opportunity for further expansion. Lesotho and Eswatini have the chance to progressively expand their coverage to provide entitlement-based social protection appropriate to the vulnerabilities and objectives at each stage of the life-course (as has happened over the years in neighbouring South Africa). By contrast, the danger of relying solely on an unintuitive and discretionary programme like Malawi’s may actually deter its government from instituting proper social protection, as indeed has proved to be the case in some of the countries similar to Malawi that the paper cites (e.g. Zimbabwe, Ethiopia, Mozambique). Zambia, in contrast, offers an illuminating example where the massive expansion of the programme through increased government ownership and domestic funding only occurred after it shifted from being a household-based discretionary programme on the same Kalomo model as Malawi’s to being substantially an entitlement programme for the elderly and those with disabilities. Fortunately, there are early signs in Malawi of recognition of the need for such a shift: a 2016 study by the Ministry of Gender, Children, Disability and Social Welfare found that a universal old age pension was feasible and desirable and, in late-2018, a Private Member’s Motion proposed this measure in Parliament.

It is clear, using all of these CROCO dials, that the two old age pensions perform much better than Malawi’s SCT. Does it matter that the paper turns out to be making false claims? Well, yes, it does, because Malawi’s programme (and others like it) negatively impact the potential of social protection in Africa. The paper suggests in a muddled way that there is a distinction between “systemic universalism” and “programmatic universalism” (presumably in both case intending to use the word “universality”, since “universalism” is a theological belief in the existence of fundamental truths!). But by no stretch of the imagination can Malawi’s social protection be described as universal: its SCT is a tokenistic social assistance programme for “the poor”, providing inadequate levels of support (from largely external donor resources) to far too few beneficiaries. Pretending that this is a model to be followed actually damages the prospects for introducing rights-based social protection of the kind we are beginning to see in Eswatini and Lesotho. This is true not only in Malawi, but also in countries like Ethiopia and Zimbabwe, where the existence of such social assistance for poor households has similarly blocked the development of genuine life-course based social protection. Unless these countries can break away from the Kalomo model, as Zambia itself has done, they are heading (like Captain Hook in Peter Pan) in only one direction: into the crocodile’s jaws. Tick tock!

---

[i] Schubert, Bernd, 2020. Beware of the Crocodile: Quantitative Evidence on How Universal Old Age Grants Distort the Social Assistance Systems of Low‐Income Countries. Poverty and Public Policy, Volume 12 Issue 2 pp188-205.

[ii] Merriam-Webster helpfully provides a number of synonyms for “crock”, among them: balderdash, baloney, bilge, blarney, blather, blatherskite, bosh, bull, bunk, bunkum, claptrap, codswallop, drivel, drool, fiddle, fiddle-faddle, fiddlesticks, flannel, flapdoodle, folderol, folly, foolishness, fudge, garbage, guff, hogwash, hokeypokey, hokum, hoodoo, hooey, horsefeathers, humbug, malarkey, moonshine, nonsense, nuts, piffle, poppycock, rot, rubbish, senselessness, silliness, stupidity, taradiddle, tommyrot, tosh, trash, trumpery, twaddle.

[iii] The share of the social assistance budget allocated to the child support grant in Lesotho has increased from 6 percent in 2016/17 to nearly 10 percent in 2018/19, which suggests it is not simply crocodile-fodder!

[iv] Eswatini’s education grant pays USD120 per academic year for 51,000 beneficiaries (nearly 5 percent of the total population) – again a fairly meaty programme.

[v] Interestingly, the paper rather disingenuously makes this same point when talking about the Eswatini OAG. It argues “For a household with seven or more members (the average household size of extremely poor households is 6.5), a grant of L400 is insignificant”. Yet this ignores the fact that even in such an extreme case the per person value of the Swazi OAG would still be over USD3.50 per month compared with about USD1 per person per month for the same size of household on Malawi’s SCT!

[vi] The paper asserts, somewhat gratuitously, that “In 2005, Eswatini followed the advice of HelpAge International (HAI) and of the Regional Hunger and Vulnerability Programme (RHVP)—both financially supported by the UK Department for International Development (DfID)—to launch a universal OAG”. In reality, RHVP did not even begin until July 2005, some four months after the OAG had made its first payments in April 2005! The OAG is a home-grown Swazi initiative.

[vii] There is an incorrect suggestion (and a further sleight-of-hand over dates) in the paper when it states that “When Malawi in 2010 started to consider and eventually introduce social protection, it based it on a quantitative and qualitative analysis of the poverty and vulnerability of different population groups.” This ignores the reality that the SCT actually began in 2006, preceded by very little in terms of analysis.

Poverty-targeting: the social protection flaw?

The original version of this blog appeared as a Pathways Perspective on Development Pathways

As we start 2018, please may I have the temerity to suggest a common New Year’s resolution for all of us, as a social protection community: that we stop, definitively, the promotion of poverty-targeted approaches?

There are many, many disadvantages of poverty-targeting; and even its one supposed advantage – that it is cheap – is illusory, because low-cost social protection delivers few of the social, economic and political benefits that result from higher levels of investment. As with all things in life, you get what you pay for. Benjamin Franklin, a believer in egalitarian democracy, observed: “The bitterness of poor quality remains long after the sweetness of low price is forgotten”. And who really wants to be associated with something as tawdry as poverty-targeting?

Here are some of its many drawbacks:

·       It is impossible to do. First, of course, it is impossible to accurately identify the “poorest”, especially in contexts where the majority of the population live on low incomes. The charade that you can accurately measure and compare the poverty of different households is manifestly absurd, as has been frequently documented. We should all, at the very least, be open and honest that approaches to targeting on the basis of poverty (whether community-based or proxy means tested) are simply rationing mechanisms; and, in the case of the proxy means test, are as arbitrary as a lottery.

·       It adds cost and complexity. Even if a semblance of accuracy were possible at a given point in time, it is prohibitively expensive and complicated to maintain up-to-date information on comparative destitution, especially in countries where incomes are highly dynamic. In all low- and middle-income countries, a substantial proportion of the population moves in and out of poverty on a seasonal or annual basis. It is fanciful to think that a metric collected one year will have any validity in one year’s, three years’, or five years’ time.

·       It damages social cohesion. Because the outcomes are so random and unintuitive, poverty-targeting that chooses one household and excludes a nearly-identical neighbour will inevitably create jealousies and social tensions.

·       It is inequitable. In situations where many people are equally poor, to give an arbitrary selection of them a comparatively significant benefit will catapult the lucky few into a higher wealth category than the unlucky many. The “have-nots” will become the “haves” and will remain better off than the new “have-nots” until eventual re-targeting…when the iniquitous yo-yo will reverse.

·       It creates perverse incentives. As soon as people understand that they will only remain beneficiaries of a programme if they meet certain criteria of deprivation, they will be faced with the perverse choice between remaining poor and continuing to receive the benefit, or bettering themselves and losing it. Why pour a concrete floor, put a tin roof on your house, or save for your old age if, by doing so, you will be excluded from State benefits?

·       It rewards dishonesty. Again, with a growing understanding of the system, some people will be tempted to game it: they may borrow extra children from neighbours, feign disability, hide assets, or deny ownership of small livestock. The result is that dishonesty is rewarded and honesty penalised, which is damaging to the moral fabric of society.

·       It incites patronage. Giving anyone the discretion to influence the choice of beneficiaries for a programme puts that person in a position of power. This opens the door to abuse, patronage or exploitation. Even where such temptation is resisted, there may nonetheless be a perception of patronage, which again jeopardises the social compact.

·       It stigmatises. Poverty-targeting demeans programme beneficiaries, the polar opposite of the desired effect of social protection, which is to include and dignify. Posting the names of beneficiaries on walls, for example, or announcing them in public, has the effect of stigmatising vulnerable people, not empowering them.

But these defects, while egregious, are not the real issue. If you were an insensitive, extravagant, patronising bigot who didn’t care about dignity, ethics or equity, you could probably live with them. The real problem is the wider impact of such deficiencies on political support for social protection. National politicians shy away from poverty-targeted interventions. I challenge you to name one such programme that has led to an adequate – and sustainable – fiscal commitment to social protection, or has increased the real value of its transfers to beneficiaries over time.

Poverty-targeted programmes never become entitlements. As a result, they never generate popular demand (except among a voiceless minority) and, in consequence, they never gain political traction. Therefore, they never generate adequate domestic fiscal space for improved social protection.

Let’s look at a few examples: first, the much-vaunted – but poverty-targeted – Pantawid Pamilyang Pilipino Program (4Ps) in the Philippines. Figure 1 shows the evolution of the real value of the transfer since 2007: ever downwards. Worse still, as a result of this 32 per cent reduction over ten years, recent research by the World Bank has shown that some recipient children are now obliged to work to cover the costs of attending school in order to avoid being sanctioned or excluded from the programme.

Figure 1: Real value of the Philippines 4Ps transfer

Next, let’s look at a telling comparison between Malawi’s Social Cash Transfer (SCT) and Lesotho’s Old Age Pension (OAP). Both programmes started at around the same time and in response to the same problem: the ravages of HIV/AIDS. But Malawi’s was poverty-targeted, based on the (baseless) “10 per cent labour-constrained ultra-poor”, while Lesotho’s was near-universal, targeting all citizens once they reached the age of 70 years. Malawi’s has remained externally-driven, and is still – fifteen years on – more than 90 per cent funded by donors. Lesotho’s is (and has always been) fully domestically-funded and is very much part of the political landscape, with recent elections having been won and lost on competing pledges to increase the value of the transfer. As Figure 2 shows, the very different trends in the real value of the respective transfers is indicative of the difference between an inclusive “social protection floor” and a poverty-targeted “social protection flaw.”

Figure 2: Comparison between the real value of transfers in Lesotho’s OAP and Malawi’s SCT

Finally, look at the evolution in Zambia’s Social Cash Transfer scheme. Originally, like Malawi’s, this was tightly poverty-targeted at the “non-viable” poorest 10 per cent. For its first ten years it was almost exclusively donor-funded, and gained no attention from local politicians. It drifted unconvincingly, expanding from one district to five, then to eleven; from 1,000 households to 8,000, then to 24,000. But at this point (see Figure 3) it started experimenting with different categorical targeting approaches. Suddenly, politicians sat up and took notice…and domestic funding started to flow. In the five years since 2012, it has become essentially a near-universal old-age and disability pension…and it has expanded exponentially: to nearly 600,000 households in all 108 districts of the country. Donor funding has barely increased: the cost of the expansion has come from domestic resources.

Figure 3: Changes in coverage of Zambia’s Social Cash Transfer scheme

What we are striving for, as social protection practitioners, is programmes that are based on entitlement, that generate increased domestic funding, and that maintain (or even raise) the value of their benefits to the poor and vulnerable over time. We are not going to get this from poverty-targeting. So please can we make a common resolution to promote only inclusive approaches in 2018?

One Out of Ten: Social Cash Transfer Pilots in Malawi and Zambia

An explicit objective of the current social cash transfer pilots in Malawi and Zambia is to learn lessonsⁱ. Between them, these schemes, which are now operational in over ten districts, have unquestionably provided a wealth of valuable information on how to implement cash transfer interventions in southern Africa. But they could, and should, also be providing important lessons in how not to operate such schemes: we need to have the courage to recognize this, and to broadcast the weaknesses as readily as we proclaim the strengths.

Recent studies have highlighted two major flaws in the particular model that is being tested: one practical and one conceptual. Unless and until these are resolved, it is unlikely that the pilots will receive the necessary technical and political support to scale them up to national programmes.

The practical flaw is that community-based targeting of the poorest does not work. It doesn’t work now, even in geographically-constrained pilot areas, where additional technical support and resources can be mobilized to support weak government and community institutions, so it will never work at more extended, less rigorously scrutinized national levels. A recent studyⁱⁱ in Machinga district in Malawi demonstrates this powerfully and graphically. The study undertook a random sample survey of households in Mlomba, and gathered data on each household (production, revenue, assets and other variables) to estimate that household’s “income”. Income was calculated as the “disposable” money remaining per adult equivalent after the household had met its essential food energy needs, either through purchase or own production (the 48.9% of households with negative income do not even reach this minimum acceptable nutrition threshold). The resultant income distribution of the sampled households is shown in Figure 1.

The standard model of targeting in the majority of Zambian and Malawian SCT pilot districts is to use community structures to identify the most labour-constrained households from within the so-called “ultra- poor” (estimated to comprise the poorest 22% or so of the community in both Zambia and Malawiⁱⁱⁱ). By definition, therefore, beneficiary households should both (a) be labour-constrained and (b) fall in the lowest quintile (20%) of household income. In the Machinga study, however, only half met the criterion of being labour-constrained (using the pilot’s own definition), and only 24% fell into the lowest income quintile (corresponding broadly to the 22% figure for the “ultra-poor” in Malawi). The majority (29%) fell into the third (middle) income quintile, and – staggeringly – 32% of selected households fell in the two wealthiest quintiles. Selected households are shown in red on Figure 2. This means, in effect, that fewer than 12% of households selected by the community to receive the SCT met the Programme’s targeting criteria. As the study wryly notes, “the relationship between income and household selection to receive the SCT was found to be effectively random”!

This leads on to the serious conceptual flaw in the current SCT model: that it is impractical, and unethical, to target SCTs at only 10% of a population in which some 60% are poor, and a further 20% or so are highly vulnerable to poverty: the situation that prevails in most of sub-Saharan Africa. Another recent paper^iv, by RHVP’s Frank Ellis, argues the theoretical case convincingly. His paper examines the circumstances of small economic difference which gives rise to the oft-expressed sentiment that “… we are all poor here”. Using national budget survey data from Malawi, Zambia and Ethiopia, the paper demonstrates that there are only very minor differences in per capita consumption (as a rule of thumb no more than US$2 a month) between each of the lowest six income deciles. In other words, there is no more than US$9-10 a month separating an individual in the poorest decile from an individual in the sixth decile.

Current SCT models are therefore unable to meet their goals of reducing destitution, “without inevitably creating some proportion of ‘leapfrogging’ by recipients above the levels of per capita consumption of non-recipients in adjacent income deciles”. Put simply, let us imagine that it were possible to target accurately the poorest 10% of a community (which the preceding paragraphs have shown to be a pipe- dream!). If you were to provide an SCT of US$6 per month to an individual within that decile – an amount which is fully consistent with current transfer levels (e.g. to a household with school-going children in one of the Malawian or Zambian SCTs) – then that individual would thereby be catapulted four deciles to be among the middle-income members of the community. This raises complex practical issues (such as the need for frequent retargeting), and serious ethical concerns around inequity and social divisiveness – both of which may seriously erode political support for such SCT programmes.

A third study^v, also supported by RHVP, casts further light on the potential for social division created by flawed community targeting. Through a process of social mapping, targeting exercises and group discussions in six randomly-selected villages (two in each of Malawi’s three regions), this study concluded in every case that targeting was “inappropriate”. A variety of reasons was given for this: that targeting is against the sprit of umodzi (togetherness); that it creates tensions in the village and provokes reprisals (even witchcraft) from those excluded; and that non-beneficiaries withdraw from community development initiatives. Contrary to suggestions by its proponents that community-based targeting may enhance social capital, this study found that “targeting in a context of high poverty levels breeds suspicion, hatred, accusations and corruption”. Similarly, assertions that social empowerment is achieved through participation in targeting processes are flatly contradicted by the study’s findings that “in all the villages except one community based targeting does not qualify to be a democratic process, with community leaders dominating the decision-making process”. The study concludes that “asking people to select one poor family against another is tantamount to procedural injustice … In a context of high vulnerability, targeting for a precious resource … is a matter of death and life. It is not surprising that communities are unwilling to pass that judgment”.

For a practical illustration of these conceptual problems, demonstrating that inaccurate targeting merely compounds much more invidious inter-household equity issues, we need look no further than the Machinga study cited above. If we add the value of the SCT received over the course of a year by each household to its pre-transfer disposable income, we can represent the impact graphically. Figure 3 shows the effect on recipient households (in red).

If we then re-order the same graph in ascending order of disposable income per adult equivalent (Figure 4), we can see that the beneficiary households are all now (after just one year of receiving the SCT) grouped in the top half of the income distribution chart. That is inequitable.

With the justification that a stated objective of the current raft of SCT pilots in Malawi and Zambia is to learn lessons, we need to be honest enough to recognise the fatal flaw in the prevailing model: that community-based targeting of an inadequate 10% quota is an unacceptable model for national replicability in sub-Saharan Africa. New targeting approaches – such as categorical schemes (social pensions, child benefits and disability grants), or targeting for exclusion rather than inclusion – need to be tested; beneficiary numbers need to be significantly raised to reflect national levels of poverty and vulnerability; and transfer amounts need to be adjusted to levels where they do not cause some lucky beneficiaries to leapfrog the standard of living of non-beneficiaries in the same communities. Recognising this would be an important step in the key process of gaining political support for the national implementation of comprehensive social protection schemes.

ⁱ Both countries’ schemes have as their third objective: “To generate information on the feasibility, costs and benefits, and on the positive and negative impacts of a Social Cash Transfer scheme”.

ⁱⁱ John Seaman, Celia Petty and Patrick Kambewa, “The Impact on Household Income and Welfare of the pilot Social Cash Transfer and Agricultural Input Subsidy Programmes in Mlomba TA, Machinga District, Malawi” (June 2008).

ⁱⁱⁱ The use of such estimates, derived from national data, itself worsens the targeting problem: a single proportion (such as 22% in Malawi) clearly cannot be expected to apply evenly across geographical and social space, even if it can be delineated satisfactorily at a national aggregate level. It follows that it will over-capture the kind of households it seeks to target in some places (wrong inclusion) while under-capturing such households in other places (wrong exclusion).

^iv Frank Ellis, “‘We Are All Poor Here’: Economic Difference, Social Divisiveness, and Targeting Cash Transfers in Sub- Saharan Africa” (Sept 2008).

^v Overtoun Mgemezulu, “The Social Impact of Community Based Targeting Mechanisms for Safety Nets” (August 2008).