POVERTY IMPACTS OF CASH TRANSFER PROGRAMS 79
poverty gap and the severity of poverty. Although 0.5 percent of GDP is in- sufficient to bring about significant poverty reduction (particularly when measured by headcount) in the short term, the impact would likely be higher if the transfers were made over a longer time period if accompanied by posi- tive economic growth. Additional results show that the impact on poverty is higher when transfers are made to rural children rather than all children and that there is little difference in impact between a progressive transfer and a fixed-value transfer across age groups (Kakwani, Soares, and Son 2005, 35, 38). A transfer proportional to the poverty line has a much greater impact than
one equivalent to 0.5 percent of GDP. Table 5.4 shows the poverty impacts of a transfer given to all children ages five through sixteen representing 30 per- cent of the average poverty line in countries in southern and eastern Africa (the focus of this monograph). Here even headcount poverty is affected. A transfer equivalent to 30 percent of the poverty line is slightly larger
than the value of Kenya’s cash transfer and smaller than those provided in Malawi and Zambia. The transfer given by Kenya’s Cash Transfers for OVC Programme (providing about $20 per OVC per month) is, on average, equiva- lent to 12 percent of the poverty line and 24 percent of the ultra poverty line (Kenya, OVPMHA 2006; UNICEF, Kenya 2007a).7 In Zambia, the SCTS transfer ($10 per household per month, plus an additional $2.50 if the household has children) represents 55 percent of the 2003 national basic poverty line (cal- culation based on Demombynes 2005; Zambia, MCDSS/GTZ 2007, 8).8 In Malawi, the average transfer of $12 per month represents more than 100 percent of the 2005 national poverty line (calculation based on Malawi, Ministry of Eco- nomic Planning and Development/World Bank 2005, 4; Schubert and Huijbregts 2006).9 The second study, by Kakwani and Subbarao (2005), focuses on the pov-
erty impact of social pensions in the same 15 African countries. The method- ology is similar to that of the study described earlier in that scenarios are defined in terms of a fixed budget (0.5 percent of GDP in local currency) and a fixed benefit level (equal to 35 and 70 percent of the national poverty threshold expenditure level).10 Impacts on the headcount and the poverty gap are measured under several targeting alternatives: perfect targeting, univer-
7These figures refer to the rural poverty line of 2,228 ksh and assume an average family size of
5.5 people. Ultra poverty is half the poverty line (UNICEF, Kenya 2007a). 8According to Demombynes (2005), the national poverty line in 2003 was MK73,394. 9The national poverty line is MK16,165/person per year and the ultra poverty line is MK10,029/ person per year. The average transfer per year is MK20,400, or $144 (Schubert and Huijbregts
2006; Malawi, Ministry of Economic Planning and Development/World Bank 2005, 4). 10The authors choose the second value due to the significant poverty gap that characterizes some vulnerable groups, such as the elderly with children (Kakwani and Subbarao 2005, 19).
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