This briefing paper critically examines two concepts that permeate contemporary policy debates about the advisability and feasibility of introducing comprehensive social protection programmes in low-income countries – ‘dependency’ and ‘graduation’. Both issues are commonly raised by governments and donors that are sceptical about making firm, long-term commitments to social transfer programmes. ‘Dependency’ is generally thought of as a negative but inevitable consequence of providing people with regular social transfers on a long-term basis. The concern is that beneficiaries will come to regard these transfers as an alternative means of meeting basic consumption needs, and will lose any motivation to secure their livelihoods through their own efforts. ‘Graduation’ is often presented as a positive antidote to dependency; financial assistance to poor individuals and families in distress should be limited in scale and time in order to avoid the ‘dependency trap’, and complementary programmes should be put in place to ensure that beneficiaries are able to ‘graduate’ from ‘handouts’ and become self-reliant. However, this paper shows that it is not difficult to expose flaws in these generalisations about human behaviour and the risks of social transfers.

In April 2008, RHVP published a thematic brief on delivery systems for social transfers, reporting on the variety of delivery systems used in the 20 social protection programme case studies that were analysed as part of the Regional Evidence Building Agenda (REBA). With the growing popularity of cash transfers relative to other social transfers, emphasis has shifted to investigating innovative delivery mechanisms that increase effectiveness and efficiency. A number of public (government-to-person) cash transfer projects and programmes, including some covered within the REBA, have experimented with the use of electronic delivery systems. There is a growing body of literature highlighting the benefits of electronic delivery of cash transfers (see, for example, Langhan et al, 2008; Bankable Frontier Associates, 2006) and the acceptability of high technology mechanisms to recipients, so this brief concentrates on perspectives relevant to private sector partners. It elaborates changes in the business environment that have prompted an increase in the potential for electronic delivery systems (including those initially intended for private person-to-person transfers such as remittances), provides an update on the existing use of such systems in Kenya, Malawi, Namibia and Swaziland and outlines interest from Ghana, Lesotho and Mozambique.

This brief places emphasis on fertiliser subsidies and social cash transfers as alternative, but overlapping, policy instruments for protecting chronically vulnerable people from hunger. When undertaken as scaled-up programmes, each of these policies entails a regular annual budget commitment by government, but involves different mechanisms by which vulnerability reduction is tackled in the short- and long-run. To the extent that they address the different needs of different vulnerable groups, or different time horizons for their effectiveness, they can be seen as complementary policies. On the other hand, they both compete for scarce public resources, and each represents an ‘opportunity cost' compared to the other with respect to their relative success at achieving vulnerability reduction outcomes. The objective of this briefing paper is to examine in detail the comparisons, contrasts and trade-offs between these two policy instruments. This is an important task since it may indicate adjustments in the relative funding priority that is attached to each of them in order to enhance their complementarity in pursuit of the common goal that they both strive to achieve.