Developmental responses to the food price crisis: evidence on the

role of social transfers

UNICEF Workshop

Bangkok

11 November 2008

Economic

Policy

Research

Institute

Michael Samsonmsamson@epri.org.za

Food prices have risen sharply in the past

year…

94. 1

0

50

100

150

200

250

2002 2003 2004 2005 2006 2007 2008*

Source: United Nations Food and Agriculture Organisation * April 2008

…precipitating a wave of sometimes violent

protests around the world

Source: United Nations World Food Programme

… food price inflation eroded social protection measures aimed at protecting the poor…

Baseline valuein March 2006

Consumption purchasing power in March 2008

Basic grains purchasing power in March 2008

SOURCE: EPRI based on data provided by Statistics South Africa and SOCPEN

The greatest vulnerability is concentrated in

Africa and South Asia

Source: United Nations World Food Programme

African agricultural productivity growth has

significantly lagged the rest of the world

0

1000

2000

3000

4000

5000

6000

7000

1961 1970 1980 1990 2000 2002 2004 2006

kg/H

a

United States

Latin America & Caribbean

Asia

Africa

Source: United Nations Food and Agriculture Organisation

USA

Africa

African agricultural productivity growth has

significantly lagged the rest of the world

0

1000

2000

3000

4000

5000

6000

7000

1961 1970 1980 1990 2000 2002 2004 2006

kg/H

a

United States

Latin America & Caribbean

Asia

Africa

Source: United Nations Food and Agriculture Organisation

USA

Africa

WHY?• Risk• Scale• Investment

Impact of social cash transfers

Empowerment

Access to

markets

(nutrition)

Most cash transfers buy predominantly food

Use of Cash Transfer by Program

0%

10%

20%

30%

40%

50%

60%

70%

80%

Food Education Health Other Savings &Investment

South Africa OAP Zambia SCTSKenya Cash Transfer for OVC Mozambique INAS (urban)Namibia Old-Age Pension (urban) Malawi DECTMalawi FACT

SOURCE: IFPRI

SOURCE: IFPRI

-20

-10

0

10

20

30

40

50

60

70

Health visits I llness Growth monitoring

Stunting

Ch

an

ge (

percen

tage p

oin

ts)

Honduras

Mexico

Nicaragua

Colombia

0

5

10

15

20

25

30C

hange in enrollm

ent

(percentage p

oints)I mpacts of Conditional Cash Transfers on School Enrollment

Primary School Secondary School

Social transfers also foster developmental education and health outcomes

Human capital development promotes pro-poor growth

Social protection

Human capital

Labour productivity

Pro-poor growth

Human capital development promotes pro-poor growth

Social protection

Human capital

Labour productivity

Pro-poor growth

South Africa

Increase wages 60-130% more than the cost of transfers

Social transfers in South Africa support economic growth along multiple dimensions

Sub-Saharan Africa’s oldest social transfer programme

Costs 3% of GDP Substantial impact on

poverty reduction Extensive studies of

growth outcomes– Human capital– Labour markets– Macroeconomics

South Africa

South Africa’s social pension reduces poverty and destitution substantially

96%

54%

21%

98%

71%

32%

0% 20% 40% 60% 80% 100%

Householdsonly with

older people

Householdsincluding

older people

Allhouseholds

Poverty gap reduction Destitution gap reduction

The distribution of social benefits in South Africa

SO

UR

CE

: S

ou

th A

fric

an N

atio

nal

Tre

asu

ry

and

Sta

tist

ics

So

uth

Afr

ica

0%

10%

20%

30%

40%

50%

60%

70%

Out of LF Unemp., nosearch

Unemp.,searching

Employed

Labor force status, March 2005

CSG households Non-CSG households

n=3462 n=1795

Social protection improves labour market participation and employment

Propensity score matching techniques provide ex post evidence on agricultural resilience

Propensity score

13% agricultural attrition

8% agricultural attrition

Lesotho demonstrates how social pensions build human capital for children

The world’s newest universal social pension, implemented in 2004

Formal evaluations still in progress

Costs 1.4% of GDP Supports children

increasing living with older people

Lesotho

Social protection promotes better risk management and encourages investment

Higher investment and growth

Risk Manage-ment

Social protect

ion

Social protection supports local economies

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

Namibia

Mauritius

Social protection reinforces social cohesion, facilitating economic reforms that promote pro-poor growth

EXAMPLES

Mauritius

Botswana

Nepal

Papua New Guinea