This guest post comes from Chris Desmond and Linda Richter, contributors to the Joint Learning Initiative on Children and HIV/AIDS (JLICA). Among other conclusions, JLICA’s final report advocates that, in countries heavily affected by HIV, the most appropriate economic strengthening action to be taken in support of children is the establishment of a social protection plan to transfer resources to the poorest families. Given the range of activities pursued in the name of improving the economic security of children affected by HIV, CYES asked Chris and Linda to discuss their findings in more detail. To learn more about JLICA and to access the report in multiple languages, visit their website at www.jlica.org.
Although there is a great deal of controversy about the relationship between poverty and the risk of becoming infected with HIV, it is not debatable that HIV and AIDS place a financial strain on affected individuals and families. Over time, and often repeated shocks, AIDS is impoverishing. Many of the impacts which occur as a result of the epidemic, particularly those which affect children, result from this financial strain. For families already facing serious economic constraints, the added burden of HIV/AIDS can push them into destitution. Budgets are further constrained, food consumption may fall, children may be withdrawn from school, and less is available to spend on the health care of children and adults who are not ill.
Economic strengthening for individuals and families is an obvious response to financial strain, and there are a range of programmes which seek to do just this. These include, in an approximate order of rising complexity in delivery: cash transfers, in-kind transfers (such as food), livelihood development, micro- credit and public works programmes, among others. Identifying the most appropriate program to protect children in the context of HIV/AIDS and poverty was a major focus of the Joint Learning Initiative on Children and AIDS (JLICA). The JLICA concluded that cash transfers for the poorest families is the optimum policy choice given need, flexibility and capacity constraints. There are two parts to the JLICA recommendation: firstly, the provision of cash transfers as opposed to other forms of economic strengthening and, secondly, the targeting of the poorest families as opposed to orphans or people living with HIV/AIDS.
There are a number of arguments in favour of cash transfers. Cash transfers are a proven means of improving the health and well-being of vulnerable families. They also require, relative to livelihoods or public works, less capacity to implement. Unlike in-kind transfers, cash provides some flexibility and avoids goods being sold by families so they can purchase what they feel they really need. Cash transfers respond to constraints in demand for services. While there is frequently a focus on the delivery of health and education services, the capacity of families to access these services has not been addressed. Perhaps most importantly, cash transfers recognise that the leading role in child care and protection is played by the family. Outside responses should support families rather than try to by-pass them.
A common objection to cash transfers is that they foster dependency. But the amounts of money involved are small and can only been seen as supportive of other forms of family income and livelihood. Even if there is dependency, it may well be legitimate. Cash transfers are typically intended to benefit children, the elderly or families affected by illness or disability with no one able to work – all of whom are legitimately dependent on their families and the state. It is curious that descriptions of old or very young caregivers of children affected by HIV/AIDS and poverty are accompanied by arguments in favour of livelihood or public works programmes, the very forms of economic strengthening of least benefit to these groups of caregivers.
The JLICA, as mentioned, recommends targeting the poorest families in HIV/AIDS affected communities. This is premised on the contention that, at the point of delivery, the only appropriate indicator of need is need itself. Families affected by HIV/AIDS may be more at risk of being pushed deeper into poverty, but this does not mean that they are all more at risk than all other families. The same applies to orphans. Needs arise because of poverty; therefore the targeting should be based on poverty. It so happens that targeting the poorest families has been shown to cover the majority of families affected by HIV/AIDS being covered.
The above summarises some of the main arguments behind the JLICA recommendations relating to cash transfers. There are, however, other important arguments in favour of cash transfers not directly related to HIV/AIDS. Key among these are the protection and promotion of human capital and their potential impact on economic growth. Far from fostering dependency, cash transfers have been shown to increase household productivity and labour force participation. Moreover, the injection of money directly into poor communities has the potential to increase economic activity which leads to benefits for others in the community, not only targeted families.
The Global Assets Project at the New America Foundation recently released a new brief, produced in conjunction with Proyecto Capital, on whether savings-linked conditional cash transfers (CCTs) are helpful in reducing poverty by facilitating asset accumulation and increasing the financial inclusion of the poor.
The arguments for CCTs include that they are highly scalable and easily adaptable to a variety of goals and contexts. In conjunction with technological and programmatic innovations, they are becoming easier to deliver. The concept of linking CCT delivery to the formal financial system is gaining ground: for instance, the Colombian government is planning to link its CCT programs to savings accounts with the aim of increasing financial inclusion. The Assets Project policy brief examines existing savings-linked CCT initiatives, including the “Youth with Opportunities” project in Mexico that makes use of savings accounts to deliver cash transfers that encourage youth to complete additional years of schooling.
The brief was launched with a panel discussion featuring experts in financial inclusion and social protection – Michelle Adato (IFPRI), Mark Pickens (CGAP), Marguerite Robinson, and Luis Tejerina (IADB). I attended, and highly recommend listening to the summary podcast or watching the webcast of the full session and question and answer session. The discussion was excellent.
In terms of positions, none of the panelists questioned the basic premise of the paper – there was baseline agreement that CCTs have a place in poverty alleviation and reduction, and that increasing the financial inclusion of the poor is an important goal. As always, the devil is in the details: questions arose about whether the formal financial system is ready and able to serve poor clients effectively and whether the poor understand how to use bank accounts to their advantage. Education seems to be a clear need: education in financial literacy for the poor, and education in how to reach the poor profitably for banks.
There was also discussion of the need to educate practitioners – several panelists identified critical gaps between the economic development and social protection fields in their approach the poor and their respective perceptions of the capacity of poor households to save and build assets. This issue in particular struck me because of similar challenges in the field of market-driven economic strengthening for children and youth – effective cross-sectoral communication is difficult when practitioners are operating from very different perspectives. The point was raised during the discussion, but we sadly did not get into how to address or overcome it.
Since we have a forum for discussion here, I thought I might ask the CYES Network – what has your experience been with cross-sectoral communication? What are the frustrations? What are the rewards? What is your advice on how to approach it?
