18 CHAPTER 2


approaches, in Chapters 6, 7, and 8, on education, health, and nutrition, respectively, and in Chapter 9, on complementary approaches. However, cash transfers are the primary focus of this review because of their particular advantages in protecting the human capital of the extreme poor and most severely AIDS affected, in large numbers, with the reliability required of a social protection system. Interventions intended to build physical and finan- cial assets, such as livelihoods activities and microcredit (the latter normally intended to invest in the former), demand more capacities on the part of both beneficiaries and program implementers, are more complicated and take longer to scale up, and are more demanding with respect to inputs and institutions (materials, training, markets). They cannot reach as many people as quickly as can cash transfers, and they tend to benefit those who are bet- ter off because people with higher capacities are better able to participate and succeed.5 Microcredit programs have been used successfully by many poor people, but they tend not to do as well in benefiting the extremely poor (Rahman and Hossain 1995, cited in Kabeer 2002; Hashemi 1997; Hulme and Mosley 1997; Halder and Hussain 1999), although some have managed to be better targeted than most (Sharma et al. 2000). Microcredit programs in highly AIDS-affected areas also involve high risks to borrowers and lenders. Families affected by AIDS are not just poor; they are also struggling with poverty and severe illness and are labor constrained, often headed by the elderly, the sick, or even children.6 Furthermore, many countries with large AIDS-affected populations have low administrative and technical capacities. It is unlikely that they would be able to scale up livelihoods interventions for a large proportion of people who need them. This is not to argue that livelihoods interventions or microcredit should


not be undertaken for people affected by HIV and AIDS. They should. Numer- ous NGOs and community-based organizations (CBOs), as well as some govern- ment programs, are doing excellent work in these sectors, and they should be supported to scale these activities up at the pace that is feasible. This is not a question of either/or—different types of interventions should be used simul- taneously. Some microcredit programs have been adapted to reduce risk in AIDS-affected contexts (see Chapter 9), for example, through mandatory loan


5Although programs involving graduated steps into microcredit, such as the Vulnerable Group Development Programme in Bangladesh, have been much more successful in reaching poorer


people and offer valuable models, they are still more demanding than cash transfers. 6Parker, Singh, and Hattel (2000) argue that there is a tension between the scale of microcredit and the extent of services and that those who most need services are also those most likely to default. Barnes et al. (2001) found that HIV-affected households in Zimbabwe that started microenterprises had a decline in profits compared with nonaffected households.


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