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Grants payment crisis is an opportunity to learn valuable lessons
03 January 2007
While the recent suspension of grants to the elderly in Swaziland was highly regrettable, and no doubt created a crisis for any number of poor households, the speed and passion with which all sectors of society responded to this crisis has been heartening to observe. While the grant to each pensioner is small, at US$32 every 3 months (US$10.50/month), it means a lot not just to them but to their dependants: who are often vulnerable children and orphans with no one else to care for them.
Now it seems that the disbursement of the grants is to be outsourced. While welcoming this, articles in the media have raised questions about the costs associated with outsourcing, and whether financial institutions are indeed capable of eliminating delays and long queues when paying out the grants.
Whichever company is finally given the task, and whatever long-term solutions are found, it is crucial that the payment of grants is reliable and predictable. Predictability is a critical part of providing social protection. Ad hoc suspensions of the programme undermine the value of social transfers in providing the vulnerable with a base from which to plan their resource use.
As Patricia Musi, the Swaziland representative of DFID’s Regional Hunger and Vulnerability Programme (RHVP), explains: “We are undertaking a lot of research into social protection in southern Africa, to see what works and what doesn’t. One of the key lessons emerging is that people value predictability. Only once they are certain of the reliability of a particular source of revenue with they plan around it: setting aside savings, investing in micro-enterprise, sending children and grandchildren to school”.
Governments across southern Africa are acknowledging the importance of providing social protection to the most vulnerable members in our societies. Evidence, from southern Africa and beyond, shows that the long-term benefit of providing social protection outweighs the short-term costs. Social protection has an economic and social effect well beyond the immediate provision of relief to the elderly. The injection of cash into the local economy supports markets in food and basic household commodities. There are two immediate benefits of this. First, it increases local economic activity by increasing local demand. Second, if goods and services are generated locally, it keeps money circulating in the local economy for longer, with producers hiring other people locally to provide inputs.
The Swazi government recently has taken a bold step in announcing a multi-million dollar National Plan of Action to address the health and education needs of orphans and vulnerable children in the country. The government certainly faces an uphill battle in providing the necessary resources to the vulnerable sectors of its population, such as the elderly, orphans and vulnerable children and destitute members of the society.
The Swazi government need not be left on its own to find long-term solutions. Given the rhetorical support from international donor agencies in favour of social protection programmes, these agencies must be encouraged to back up their rhetoric with long-term financial commitments and technical support to ensure the long-term success of the existing grant programme.
RHVP is currently undertaking research within Southern Africa, to gather evidence and learning lessons about the impact and benefits of social protection systems, and the best ways of financing and delivering them. The Swazi government should be encouraged to examine successes and failures elsewhere in the region, and to investigate the viability of new delivery systems, such as smart card technology. These new systems show promise in solving familiar problems associated with the payment of grants – such as securing cash in transit, avoiding fraud and misallocation of payments, and ensuring efficient record-keeping.
To help share some of the lessons learned, RHVP is hoping to organise a national workshop on social transfers in Mbabane that reviews the Swaziland social transfers system, sets it in regional context, both to applaud Swaziland for its efforts to date and to highlight that rolling back or failing to deliver on its programmes is bucking the trend across southern Africa, and makes the case that social protection is a human right and a sound productive investment for governments.
A quick review of news coverage and responses to the announcement that payments to the elderly are to be suspended. See...
Image Credit: Eric Miller / World Bank
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