Special gift: social transfers for health and education

Can social transfers – cash or vouchers targeting the poorest – reduce poverty and accelerate progress towards the Millennium Development Goals? A paper from the UK Department for International Development reviews the impact of this demand-side policy option on access to health and education services for extremely poor people.

Policies that promote poor people’s access to services are critical tomaking the best use of increased resources. Lack of demand for services can bea major constraint to expanding effective education and health programmes inlow income countries. Social transfersare regular and predictable grants, in cash or services, given tovulnerable households or individuals to ensure a minimum level of well-being. Can social transfers boost demand forservices and reduce barriers to access by targeting subsidies directly tospecific groups?

The paper reviews evidence from research papers, programme evaluationsand ‘grey’ literature on a range of conditional and unconditional cashtransfers (social pensions, child grants, family grants, scholarships/bursaries,stipends), vouchers and entitlement cards. It findsthat social transfers:

• can make education andhealth investment more effective and equitable by extending the impact andreach of services and through better nutrition
• act as incentives toincrease poor people’s demand for services and improve their education andhealth outcomes, even if they are given unconditionally
• are most effective whencomplementing efforts to strengthen and extend the provision of health andeducation services
• require effective targeting of vulnerable groups for maximum impact.

However, there is very little cost-benefit data on different cash transfersand voucher schemes. There is alsolittle evidence that social transfers alone can improve quality standards or serviceproviders’ accountability to clients.

The report finds that different forms ofsocial transfer suit different situations:

• conditional transfers – if using services has high 'opportunity costs', such as lost income,or when there is discrimination against certain groups
• vouchers – when the main cost involved is paying for the service and otherexpenses and opportunity costs are low and when targeted to easily-definedgroups
• unconditional cashtransfers – when vulnerable people are able to make informed choicesabout health and education.

Social transfers are apotentially workable and cost-effective way to increase investments in healthand education more effectively and equitably. Policymakers considering the useof social transfers should take into account policy objectives, politicalfeasibility, administrative and institutional capacity, governance issues andaffordability. They will also need to decide on the form and targeting of transfers.The paper recommends that they should also:

• avoid imposing conditionsthat exclude the very groups that need most help
• minimise the inclusion ofbetter-off people in the scheme
• guarantee long-term,predictable financing
• work to improve servicequality
• address other barriers toaccess, such as discrimination by providers and lack of facilities orinformation
• complement socialtransfers with other strategies, such as removal of user fees or fee waiversand exemptions
• integrate social transfers into country-ledpoverty reduction plans.