3 May 2015

Uganda: How Social Protection Grants Can Be a Force for Development

interview

DR MICHAEL SAMSON is a leading scholar on social protection. He is the director of research at the Economic Policy Research Institute (EPRI) in Cape Town, South Africa.

He is also an associate professor of Economics at the Williams College Center for Development Economics in USA. He has been involved in designing social protection programmes in Malawi, Kenya, Rwanda, Senegal and South Africa, among others.

Samson was recently in the country as a guest speaker at the national dialogue on social protection organized by the Uganda National NGO Forum. He told Edward Ssekika that cash transfers as a form of social protection do not create dependency as many think but are tools that enable vulnerable individuals and households to meet their basic needs and to start income-generating activities that further insulate them from falling back into poverty.

In this country, the talk is about investment in infrastructure; don't you think social protection can be seen as a distraction?

Infrastructure is important. Uganda should develop the infrastructure. It is widely demonstrated to be the top investment governments can make to drive economic growth and productivity. But think about the rail line from Mombasa to Kampala.

That is a great investment, a good thing for government to do. But will that railway be used to bring goods from the rest of the world to Uganda, competing with Ugandan industries [which then lose] jobs?What is right is that you want this railway to be shipping goods made in Uganda by Ugandans to Mombasa and to the rest of the world.

This stimulates growth and creates opportunities in Uganda. It means that Uganda has to invest in her people, to create a good environment for local industry, so that Uganda is a net exporter rather than a net importer. That way you maximize the productivity of the country's labour force. There is no better investment to Uganda's growth than social investment.

The country needs to invest in children to build intellectual capacity. We need to balance investment in social protection and infrastructure. A computer will be useless without software, infrastructure will be useless without social protection, agricultural development, etc.

How would you rate the performance of SAGE compared to other similar programmes?

Uganda has a model social protection system at its beginning phase. If you look around the world, and compare when countries were at Uganda's stage of social protection, Uganda is doing much better.

Its model [SAGE] today is seen as one of the best practices in the region. When you look at Mexico's programme [called opportunidades], it is still struggling compared to a very well-implemented phase of SAGE in Uganda today.

How is SAGE empowering the communities?

It works in a number of ways. At the most basic level, SAGE is providing support cash transfers of Shs 25,000 per month to older persons] to help these vulnerable people. The idea is that they can meet their basic needs, but these grants also help them to start activities that can further improve their incomes. That is why when you give them these grants, they buy a goat or a cow which helps them in times of need.

Secondly, we have older people often taking care of their grandchildren. SAGE is enabling these older person-headed-households to feed themselves, pay scholastic needs and to get health care when they need it.

This is the purpose of SAGE; to provide a core foundation of support to vulnerable households. This means that these kids living with older persons who would otherwise be malnourished, they would be having nothing to enable them go to school, but by having this little cash transfers, they are enabled to fulfill their basic needs. This is very important. So, social protection is an investment.

Of course these grants have a multiplier effect. There is something that is very surprising that is emerging from our observation of SAGE. We looked at the 15 districts where SAGE is being implemented and looked at how many people were employed (that is offering labour for a pay be it in agriculture, small business, or formal employment) in these districts before SAGE started.

We found out that only 15 per cent of the people were working for a pay before SAGE started. But today, employment in the SAGE districts grew twice more than in other districts where SAGE is not being implemented.

In the pilot phase, social protection has been mostly about cash transfers to older persons. Is social protection mainly about the elderly?

No, social protection is a broad intervention. Therefore, focusing on older persons is one component, but an important one. Many countries historically have started their social protection systems from older persons grants because they are easy to manage and are affordable.

Secondly, because today countries grow rich by their intellectual capital, not minerals anymore; think about Facebook, Microsoft, etc. These are multibillion dollar innovations of human capital. Uganda needs to develop her human capital to levels of such innovation.

Now if children are being taken care of by older people who don't have money, they cannot get good nutrition, they cannot get appropriate healthcare or go to school. We know that a child's cognitive abilities are developed in the first two years of their life. If a child doesn't get good nutrition, their human capital is lost.

If Uganda wants to grow rich, the country has to invest in its human resources. The most vulnerable children may lose out if not supported. If children are well fed and educated, they are given opportunity to break intergenerational poverty which would be transmitted to them from their poor parents.

Educating these children gives them opportunity to break out from that poverty, but it also builds the human capital of the country. Social protection makes sure that people have security at old age, but second, it ensures that they take care of their children to grow intellectually and this contributes to the growth of the economy.

Aren't there other interventions through which government can empower these people without cash transfers?

That is part of it. Of course there are other ways like UPE, free healthcare, etc. Social protection reaches out to the most vulnerable. You can have free healthcare, but if someone can not raise little money for transport to the health facility, how is that person benefiting from the health services?

The social protection grants enable these otherwise-excluded people to access the services provided by the government. Social protection expands people's choices. Evidence shows that when poor people get these grants, they start looking for work. These grants enable them to go to work.

I met a 73-year-old great grandmother in Zambia. She was on a UK-funded social protection programme earning $8 a month [approximately Shs 24,000]. She had three grandchildren to take care of on eight dollars a month. It was little but, she hired youths from the village; she paid $8 for one month and promised them another eight dollars the next month.

They tilled the land and she planted maize and at the end of the season, she sold the maize and quadrupled the value of her annual social protection assistance. She was able to feed and take care of her grandchildren better. Here is a 73-year grandmother, getting cash transfer and turning it into an economic power. That is what social protection can do. We hear the same stories here in Uganda under SAGE.

From your examples of Malawi, Kenya and Uganda, these people are on social protection programs funded by the UK government or other donors. Can a country like Uganda sustain social protection programs if the UK government and other donors pull out? What is the sustainability of cash transfers?

When donors pull out, the government reaps the economic benefit if they decide to continue with social protection programs. Uganda started four years later than Kenya, six years later than Zambia and [over 10 years]later than Mexico. It is true that Uganda has a lot of challenges, mainly priorities amidst scarce resources.

In Kenya, there was this visionary person in the ministry of home affairs, Mohamed Hussein, who started a cash transfer program for vulnerable children funded by Swedish government.

The government of Kenya didn't care and social protection was a strange idea in East Africa back then. It started small but grew up to 5,000 households. The government of Kenya got interested after realizing what social protection can do for vulnerable households and started funding it, because it was strengthening livelihood opportunities.

The social protection programme in Kenya is now one of the biggest in East Africa. It started as a pilot, but today the government of Kenya is by far the main funder of the programme. So, as long as government realizes that it is beneficial, it will be funded just like other infrastructure projects.

Today the government of Kenya is committed to the programme not because it is good for tackling poverty, not because it is politically popular but because [it's] the centre pillar of their development strategy. It has a multiplier effect, either it provides jobs to vulnerable households or it provides cash transfers which are turned into businesses.

[Uganda's ministry of Gender, Labour and Social Development maintains that long-term affordability is feasible; a national rollout of the senior citizen grant would cost barely two per cent of total government expenditure, dropping progressively as the population of older people is expected to grow at a slower rate than the economy.]

In Uganda only people in formal employment can socially save with funds such as NSSF. People in the informal sector, they get a lot of money, but there is no pension fund arrangement for them. How should government handle such a scenario?

This is so important. This is one of the reasons as to why Uganda has a model social protection system. You need to find a micro pension instrument. In South Africa, we are piloting a program where if a household saves 50 rands, five months later, they get five times as much. This gives an incentive to save for the future.

Uganda has a very young population. How can it turn into an economic power?

A young population is what we call a demographic dividend. When they enter into a labour force, a country gets abundant labour supply and if channeled into production, it translates into growth and wealth for the country.

As much as the population is young today, 50 years from now it will be much older. What Uganda needs is to invest now in its young population to generate economic growth.

From your experience, are there any challenges that cut across social protection initiatives in Africa?

The biggest challenge I think is the challenge of political will. Government needs to have the political will to scale up these programs. We need to use technology to make these programs work. We are not talking about handouts, we are talking about opportunities.

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