Can cash transfers prevent inter-generational poverty in South Africa?

Cash transfers reduce current poverty by enhancing poor people’s access to food and other basic needs. Claims for long term impacts can also made, based on recipients’ investment of cash grants in their farm, business or human capital. Evidence from South Africa confirms that cash transfers achieve positive education, health and nutrition outcomes – even without attaching conditions.

The ‘irresponsible’ behaviour of poor people is sometimes blamed as the cause of their poverty, and ‘conditioning’ this behaviour – by giving them cash inducements to invest in their children’s education and health – is therefore proposed as a solution. An alternative view is that poverty is a consequence of social and economic structures, and unless these underlying causes are addressed then imposing conditions on cash transfers is unnecessary and potentially counter-productive.

Several evaluations of social cash transfers show that conditionalities are not necessary to improve poor people’s lives. Studies in South Africa have found that unconditional social grants reduce hunger among both children and adults, by increasing household food expenditure and dietary diversity, and measurably improve children’s height-for-age and weight-for-height indicators. Where women receive the grants, these food security impacts are often gendered, with girls achieving faster anthropometric gains than boys. Similar positive nutritional outcomes were recorded among beneficiaries of Zambia’s pilot cash transfer programme.

Unconditional programmes also improve school attendance and enrolment rates significantly. A review of case studies from 15 African countries found that cash transfers ensure that children in AIDS affected households remained in school rather than being withdrawn, and are less likely to engage in child labour. Programmes where these educational gains have been documented without conditionalities include Ethiopia’s Productive Safety Net Programme, social pensions in Lesotho and Namibia, and social grants in South Africa, where the positive effects are particularly pronounced for girls.

South Africa's Child Support Grant (CSG) is the country's largest social cash transfer programme and is regarded as one of the government's most successful social protection interventions. Research from the Economic Policy Research Institute, in South Africa, analysed panel data constructed from the General Household Survey (2002 to 2004), and compared eligible children who received the CSG in 2003 and 2004 with those who did not receive it. The study found robust evidence that the CSG is improving nutrition and education outcomes for children.

• Hunger fell among both CSG recipients and non-recipients over the study period, but the reduction in hunger was 2-3 times larger for children receiving the grant.
• Children under seven years of age who were eligible for the CSG were significantly less likely to be attending school in 2002 than those not receiving the CSG, but after receiving the CSG for two years there was a 6 percent increase in their pre-school and early grades enrolment by 2004.

The study concludes that these effects are likely to be sustained over time among households receiving the Child Support Grant, with cumulative improvements in children’s nutrition and educational attainment in the future, and spill-over effects in terms of improved labour market outcomes and lifetime earnings for beneficiary children in adulthood. These long term gains clearly have great potential to break the intergenerational transmission of poverty in South Africa – the same claim as is made for conditional cash transfers in other countries.

Michael Samson
The Economic Policy Research Institute,
Sanclare Building, 3rd Floor,
21 Dreyer Street, Claremont 7700,
Cape Town, Republic of South Africa
T +27 21 6713301
msamson@epri.org.za