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World
Poverty
(21/03/06)
Ann
McKechin (Glasgow, North)
(Lab): As we are all aware, 2005 witnessed the unprecedented Make Poverty
History campaign, with global calls to take action on debt relief,
increased aid and trade justice. As my hon. Friend the Minister will no
doubt mention, substantial progress was made on the first two of those
demands, and the Government should rightly take credit for that. However,
the issue of trade justice still waits to be resolved.
Those
developments have created new opportunities to tackle global poverty, but
the debate has moved on this year to the question of the best ways of
achieving a sustainable route out of poverty. The Department for
International Development's current policy review, which will lead to the
anticipated White Paper this summer, should look at three macro-economic
priorities: economic growth to create real employment for local
populations; durable and sustainable tax systems to achieve a route out of
aid dependency; and social protection systems to ensure that the most
vulnerable in society can benefit from development progress. Those are
weighty issues so I shall focus on the latter, although it is not
unconnected to the other two or, for that matter, to the thorny issue of
fairer world trade.
As the
Minister will be aware, I visited Malawi with fellow members of the Select
Committee on International Development a few weeks ago. One of our first
visits was to a food aid programme that had been set up to cope with last
year's partial failure of the maize crop, which forms a staple part of the
country's diet. The system was being run—fairly efficiently, I might
say—by a non-governmental organisation, with financial assistance from our
Government. Indeed, almost 5 million people in Malawi currently benefit
from such schemes, and famine has been prevented. However, I was reminded
of a comment that Professor Jeffrey Sachs made when he visited Westminster
last November. He said that people who visit Africa frequently comment
that they can see little evidence of progress on the ground. According to
Professor Sachs's figures, $38 per person was spent on development
assistance to Africa in 2003. However, the cash flow that is released and
which reaches the ground in sectoral investment is much lower than that
figure suggests. Of that $38, $4 goes on emergency aid for food, $10 goes
on what Professor Sachs terms debt relief accountancy and another $6 goes
on technical co-operation, which he believes does relatively little for
the developing world. On that basis, the real figure is reduced to $17 or
$18 per person per annum for investment. That stands in contrast to the
$70 per capita that Professor Sachs calculates is necessary to pull Africa
out of poverty.
It is
very likely that all the people we met on that food programme in Malawi
faced malnourishment consistently and regularly, as did those who just
failed to qualify for such schemes. Crop failures are nothing new, and
with increasing signs of global warming they are likely to increase.
However, we still appear to rely on methods that were considered outdated
in our own country by the 19th century and which work on the underlying
theory that we cannot trust the poor with cash. That is not to say that
the current aid spending priorities are not important. Improving
Government capacity at the upper levels is vital, and investment in major
infrastructure and economic development is essential. Improving
agricultural production in countries such as Malawi is a key long-term
objective, while tackling corruption and inefficiencies in regulation must
be a main priority. However, many people are falling behind and have
witnessed precious little progress throughout their lifespan.
In its
recent practice paper on social transfers, which was printed last October,
DFID states that the number of people living on less than $1 a day is
projected to rise in sub-Saharan Africa from 314 million to 366 million.
Deaths from AIDS continue to rise over the next 10 years, leading to an
increase in the number of orphans from the present level of 43 million.
Only yesterday, Save the Children highlighted the fact that among 15 to
24-year-olds in sub-Saharan Africa, young women are six times more likely
than men to be infected with HIV/AIDS.
Although
change at the top of Government and in state institutions is essential, we
also need to refocus our efforts on the ground to provide protection for
the elderly, the disabled and children if we are to achieve the first
millennium development goal of reducing the number of people living on
less than $1 a day. There is growing evidence that the use of cash
transfers as part of comprehensive social protection systems, which are
grounded not in simple charity but in a human rights approach, can play a
key role in reducing poverty and vulnerability.
In its
report "Age and security", which was published in 2004, Help Age
International showed how poverty in old age impacted on the whole family.
In South Africa, one in three households is headed by an older person. In
66 per cent. of those households, older people care for children. The
impact of AIDS means that the role of older people is changing rapidly.
Many are acting as the main family breadwinner and caring for sick adult
children and orphaned grandchildren. Some of the older people I met in
Malawi also informally adopt orphan children when they have no children of
their own.
The
social pension scheme in South Africa has reduced older people's poverty
by an astonishing 94 per cent. and the poverty of the population as a
whole by 12.5 per cent. Research shows that even very low social pensions
are extremely valuable to poor, older people. The fact that the payments
are consistent and regular allows households to put money aside for
emergencies and to invest in their children's health and education. That
reduces their vulnerability in the event of a crisis and significantly
reduces the risk of their remaining permanently stuck in absolute poverty.
A further
report, which was commissioned by Help Age International, Save the
Children and the Institute of Development Studies and issued last year,
reviewed cash transfer schemes in 15 countries across east and southern
Africa. It showed that most of the schemes had transparent eligibility
criteria and were accepted as fair by community members. Those who support
vulnerable children and community members are often poor themselves, so
social transfers can help to reduce the burden of care. The study showed
that, rather than creating dependency, cash transfer schemes are a crucial
response to rising dependency ratios in the context of high HIV
prevalence.
For
children, specific payments that are dependent on school attendance or
health care have proved successful in many south American countries. In
Mexico, for example, the Opportunidades programme has showed impressive
results, with improved health care for under-fives and increased school
enrolment for girls, and the growth rate for 12 to 36-month-old infants
has risen by 16 per cent. That last statistic is important because infant
malnutrition often has an irreversible effect on life expectancy, and
targeting vulnerable children, particularly in that age group, is key not
only to their own long-term survival, but to that of future generations.
Clearly,
many political and financial decisions will shape the size and type of
social protection. However, it should always be remembered, as Plan UK
noted in its report "Ending Child Poverty and Securing Child Rights",
which it released last October, that
"the most
marginalised and the chronically poor typically lack a voice, organisation
and political capital."
All too
frequently, the voices of women and, to an even greater extent, children
are undervalued in decision-making processes. Donors, including DFID, need
to play a part in bringing the solutions that I have outlined into the
poverty reduction debate. Such schemes not only give poor people dignity
and choice in their everyday lives, but form an important social contract
with Government that helps to improve state accountability.
Schemes
also need to suit a country's individual circumstances. For example,
payments dependent on children's school attendance or on attending health
facilities have not been as successful in Africa as in south America,
perhaps owing to the lack of adequate facilities, which have not been able
to cope with increases in demand. Identifying the vulnerable children can
be difficult in countries where births are not registered, or where there
are urban street children or child-headed households.
Cash
transfer schemes need to be integrated into a comprehensive package of
social protection measures that involve scaling up pilot projects,
providing the necessary capacity to achieve effective delivery and
institutionalising those measures within Government structures. The social
contract between citizen and Government must be upheld and cannot be
viewed just as a donor-driven experiment that can be abandoned when the
project cycle ends.
Securing
sustainable funding for such systems is obviously crucial, but evidence
that DFID presented last year shows that although the costs are not
insignificant, they are affordable if the political will exists, even for
many of the poorest nations. The cost of scaling up the Kalomo pilot cash
transfer programme in Zambia to the national level, to provide the poorest
10 per cent. of households with around 50 cents a day, would be about $20
million a year, or just less than 1 per cent. of the 2005 Zambian
Government budget. Similar schemes in sub-Saharan Africa could be achieved
in most cases with less then 5 per cent. of existing development
assistance.
The
current increases in donor aid, which are based on much longer-term and
predictable commitments, now allow Governments in sub-Saharan Africa and
other poor parts of the world seriously to consider such initiatives on a
wider scale. Obviously such schemes need to be linked with policies to
increase taxable income streams, so that in the long term they can provide
funds from their own resources.
I
mentioned the link between social transfers and trade justice. Sadly, in
the current trade discussions there is far too little debate about how
trade should link with labour policies. Increasing globalisation and
industrialisation lead inevitably to more "churning" of jobs. If we are to
encourage workers in emerging economies to take risks, we must also
consider the need to provide basic social protection during periods of
unemployment, so that they are less vulnerable to financial disaster and
better able to make use of new opportunities created in the labour
markets.
In the
approach to the White Paper, the Secretary of State for International
Development has placed emphasis in his speeches on the need to look at
fundamental rights, such as social payments. I very much welcome his
thinking on that. I hope that we can use the principles of social
protection that we developed to such success in the 20th century in our
new policy approach. I should be interested to hear from my hon. Friend
the Minister how his Department hopes to take such initiatives forward in
the coming years.
The
Parliamentary Under-Secretary of State for International Development (Mr.
Gareth Thomas):
I congratulate my hon. Friend the Member for Glasgow, North (Ann McKechin)
on securing the debate and more generally on her work on the International
Development Committee and as chair of the all-party group on debt, aid and
trade. I share her view that we made substantial progress on debt and aid
last year. We saw important progress for the very poorest nations of the
world at Hong Kong. However, like her, I hope that we shall see more
substantial progress on securing the outcome from the Doha development
round of World Trade Organisation talks that we all want.
I have
been interested in social transfers ever since I visited the Germiston
township just outside Johannesburg to see a project that DFID was funding
and which Christian Aid ran. The project supported a number of women in
the township and provided support to those living with HIV/AIDS. The
scheme helped to ensure that orphans got into school and—crucial to this
debate—that elders in the community were provided with support to access
the pensions that are available in South Africa. Those pensions make a
fundamental difference to the lives of elderly people in that community
helping to look after those who have been orphaned by HIV/AIDS.
My hon.
Friend's contribution in this debate is particularly timely, building on
the attention generated by the Department's paper on social transfers,
which was published in October 2005, and on what was more recently
expressed in the UNICEF and DFID-hosted global partners forum on
AIDS-affected children, which also considered how social transfers might
best help those orphaned by AIDS.
As my
hon. Friend rightly said, the Department is preparing a new White Paper on
international development. We are exploring a range of options and I shall
take her comments about meaningful work on economic growth, tax systems
and social protection systems as a contribution to the consultation
process on that White Paper. My right hon. Friend the Secretary of State
has already made it clear that further work on economic growth will be a
key part of DFID's work going forward. I accept my hon. Friend's point
about the need to support developing countries to do more work on tax
systems—I would see that as part of the broader work on governance—and
social protection systems. There is a debate going on in the Department,
and more generally with NGOs, parliamentarians and so on, about the role
that social protection and social transfers can play.
My hon.
Friend drew attention to a number of countries where social transfer
systems are already in place. Bangladesh and Nepal have social pensions,
and Mozambique has had a social transfer programme since the early 1990s.
There is no question in my mind or the Department's but that social
transfer schemes have a role to play. The idea that poor people cannot be
trusted with money, which my hon. Friend described, certainly has no
traction in DFID or on the Labour side of the House generally. If there
were any doubt, the appetite for micro finance and the success of micro
finance institutions around the world should have put that to bed. The
success of social transfer programmes also provides powerful evidence of
that point.
There is
an issue, however, about the speed at which social transfers are
introduced. If it happens too fast, it can overwhelm local capacity and
often undermine broader civil service reform initiatives. A gradual
expansion, from smaller initiatives and pilot projects, has proved to be
effective, not least in Brazil and Mexico, which are two of the examples
that I think my hon. Friend mentioned. We see our role as providing
finance and helping to build the capacity of the developing country
Government to put in place social transfer schemes.
My hon.
Friend will be familiar with the Commission for Africa, which recommended
in its final document that donors should commit to long-term predictable
funding of national social protection strategies with some $2 billion a
year immediately, rising to $5 billion to $6 billion by 2015. We are
seeking to build a consensus on the adoption of such commitments. As part
of our work following last year's publication of the social transfers
paper, we are developing a handbook to provide guidance and advice for
developing country Governments and for our staff who work on such projects
on the setting up of social transfer programmes, drawing on good and bad
experiences from around the world. I hope that that will be ready towards
the end of May and that my hon. Friend will see it as a tangible
demonstration of the fact that the Department wants to take such work
forward.
My hon.
Friend is also right to highlight the scale of the challenges that face us
in tackling poverty, which is demonstrated by many statistics, not least
that half of Africa's children live in absolute poverty. A daily reality
for many of the families wherein those children live is the constant worry
as to whether the children will go to bed hungry or have to miss school
because they cannot afford the user fees, and whether they can afford to
go to the clinic and access the necessary medicines when they are ill.
Hundreds
of millions of families worldwide live with those uncertainties, and are
unable to care properly for their children or plan properly for their
future. They cannot access the fundamental human rights to social security
and an adequate standard of living. In that context, social transfers have
a huge potential role to play in helping to reach poor families with
regular and predictable grants of cash or food over a period of years.
My hon.
Friend rightly pointed out that social transfers are not new. In the UK,
our poverty rate would probably be three times higher if we did not have a
national, tax-funded system of social transfers. In the past 10 to 15
years, middle-income countries such as Brazil, Mexico and South Africa
have put in place national social transfer programmes. The most common
schemes are non-contributory old-age pensions and programmes that provide
cash transfers to support children and their families. In Brazil, the
Bolsa Familia cash transfer programme aims to reach a quarter of the
population by the end of this year.
Evaluations of existing social transfer programmes suggest that their
impact has been pretty impressive to date. They have transformed the lives
of millions of households and increased the incomes of poor
households—significantly, in some cases. The evaluations show that in
South Africa and Mexico there have been major impacts on early childhood
development, with young children being significantly taller than they
would have been. Clearly, the health and education of the poorest families
has improved as a result of the programmes.
Evaluations of the effects of such programmes in Mexico, Brazil, and South
Africa show that people are healthier as a result of their improved
nutrition and greater ability to travel to and access health services and
buy medicines. School attendance among those who benefit from social
transfer programmes has also risen as families use the cash to send their
children to school. Given the success of such programmes in middle-income
countries, it is clear that well-implemented social transfers have a role
to play and could have a similar impact in the world's poorest countries.
My hon.
Friend might know that last October I travelled with the Minister of
State, Department of Health, my hon. Friend the Member for Doncaster,
Central (Ms Winterton), to Zambia and then Malawi. We were in Zambia at
the start of a small pilot scheme, to which my hon. Friend the Member for
Glasgow, North referred, that provides 1,000 households with up to $8 a
month, which is beginning to demonstrate the potential of social transfers
in the world's poorest countries. The early results of that scheme show
that families are eating more meals, fewer people are dying, health has
improved and there has been a significant increase in school attendance.
In
Bangladesh, a social transfer programme that we fund has resulted in a 70
per cent. reduction in the number of families without enough to eat.
My hon.
Friend talked about children who are affected by AIDS, and the potential
for support to carers. Given the severe challenge that HIV/AIDS poses in
sub-Saharan Africa, where the number of AIDS orphans is projected to rise
to 18 million by 2010, we certainly believe that social transfers have a
huge potential role to play.
Let me
give a personal example of the difference that social transfers make. In
Zambia, a 50-year-old widow called Jesinaya Kambanje, who cares for eight
children who have been orphaned as a result of HIV/AIDS, has been able to
access the social transfer pilot programme. The children used to go hungry
and she was often forced to beg from her neighbours. Now, as a result of
the pilot, she can buy maize and vegetables for the children, and when one
of them was ill she was able to take her to hospital and buy medicine to
support her.
Social
transfers can provide millions of children with a future. They are an
investment by the state in its poorest citizens. I agree with my hon.
Friend's point that by sharing wealth, the state creates wealth. As a
result, children can grow up free from hunger, better educated, and
healthy enough to become more productive members of society, in turn
providing poor countries with more competitive work forces. By directly
channelling cash to poor people, the state is recognising that poor people
know best how to care for their families. The evidence suggests that they
spend that cash well. As my hon. Friend says, they can be trusted to spend
money appropriately and in a way that suits their needs.
Supporting human development is not the only way in which social transfers
contribute to economic growth. As well as providing poor people with
security and the knowledge that they can provide their children with the
essentials for life for the foreseeable future, social transfers encourage
adults to invest in new business opportunities. In Mexico, beneficiaries
of the Progresa programme—to which my hon. Friend referred—spend, on
average, a quarter of their social transfer payment on investment in
micro-enterprises, giving, on the basis of the evaluation that we have
seen, high returns up to 50 per cent. In Zambia, Jesinaya used her
transfer to buy two chickens to invest in production, and is planning to
purchase a pig. My hon. Friend will recognise that there is potential for
Jesinaya to make more money as a result of those investments.
The
criticism that social transfers create dependency is not a valid argument.
In South Africa and Brazil, recipients of social transfers are more likely
to be in work than those without a transfer. That might be partly because
the extra cash means that poor people are better able to cover the costs
of finding work and more likely to keep their jobs due to their improved
health. There is also evidence that cash transfers help to stimulate local
economic activity by increasing purchasing power, particularly in areas
where the economy is weak.
Ann
McKechin:
Does my hon. Friend agree that social payments establish—for the first
time in many cases—a direct relationship between the poorest citizens and
the state because they act as a contract of payment, and that that helps
to strengthen the democratic accountability of the state to its citizens?
Mr.
Thomas:
I certainly agree that it helps to encourage the relationship between the
citizen and the state. One hopes that it is not the first time that there
is evidence of that relationship, and that direct democracy provides that
first opportunity. However, I accept my hon. Friend's point that it helps
to cement the relationship and give the poorest citizens confidence in the
ability of the state to help them, and that it helps to build social
cohesion in the poorest communities in that way.
Another
argument that is often made about social transfers is that they cost too
much and cannot be afforded. My hon. Friend referred to studies on this
issue. A recent study conducted in seven African countries suggests that
most countries could already afford a minimum package of social security,
if it were a political priority. In all but one of the countries, a
transfer equivalent to half a dollar a day to 20 per cent. of the
population could be financed by less than 10 per cent. of donor
assistance. A study by the International Labour Organisation suggests that
if that initiative were rolled out across sub-Saharan Africa, it would
cost $1.5 billion annually, which is a relatively small sum when set
against the commitments made last year to scale up donor assistance.
It is not
easy to implement social transfer programmes, because many countries have
weak capacity, but it is clear from the experience across a range of
middle and low-income countries that it is possible—
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