The Food Subsidies Programme (Progama de Subsídio de Alimentos - PSA) implemented by the National Institute for Social Action (INAS) is the only long-standing cash transfer programme in Mozambique and is funded exclusively from the state budget. A number of stakeholders regard the PSA as providing the potential basis for a more comprehensive social transfer programme.

Yet, there are many questions including those around broad political will and INAS capacity to scale up the programme. The main objective of this study was to look at lessons learned from existing experience with PSA implementation and the implications for future planning.

Information was obtained from relevant documentation; interviews with key informants; group interviews with programme beneficiaries; individual interviews and home visits to programme beneficiaries and observation at INAS Payment Posts. Field work was carried out from February – March 2007 in Maputo and Inhambane provinces where 160 beneficiaries and INAS community agents (permanentes) participated in interviews.

The PSA originated in 1990, when Mozambique was still at war, and aimed to enable destitute households in urban areas achieve an adequate diet. Initially the value of the transfer was roughly one third the minimum wage. Since then, the programme has passed through successive phases of expansion and restructuring. The programme has been transferred from the Ministry of Finance to INAS under the tutelage of the Ministry of Women and Social Action (MMAS); however INAS maintains administrative autonomy from MMAS as the PSA is funded directly by the Ministry of Finance. The target group includes the destitute elderly, disabled, and chronically ill and malnourished pregnant women.

Findings suggest that the PSA is broadly effective in targeting people who fall within the target group whilst the PSA is the only long term social assistance programme effectively reaching the most vulnerable people unable to work.

Yet, coverage is extremely limited. The current number of beneficiaries stands at just over 100,000 people of whom some 92% are elderly. This probably represents less than 20% of the elderly destitute population whilst other target groups are barely reached. Notably, targeting criteria for the "chronically ill" excludes people with HIV/AIDS or TB.

The administrative apparatus for delivering the PSA is effective but fairly onerous and administrative costs are very high in relation to the value of the subsidy, especially in rural areas. The value of the transfer has not accompanied inflation and is now worth less than 10% of the current minimum wage. Its value is so small as to have little or no impact on the livelihood strategies or food security of beneficiaries.

Coordination of the PSA with other INAS programmes and between INAS and other social protection initiatives has been weak until recently; whilst INAS has limited support from the overseeing ministry.