Paper short abstract:

Universal pension is scantly studied in developing countries. A non-contributory, basic pension was recently piloted by a non-state actor in north-west, Tanzania mainland. Our microsimulation study provides old-age pension upscaling implications based on poverty, income inequality and financing.

Paper long abstract:

Universal pension schemes are scantly covered in academic literature on African states. A non-contributory, basic pension was recently piloted by a non-state actor in north-west, Tanzania mainland. Since the scheme was limited in scope and not implemented by the state it is plausible to explore upscaling potentials. This simulation study considered two scenarios: first, the universal pension of 15,000 Tanzanian Shillings (TZS) to elders of 70 years and above is provided on monthly basis at the national level; and second, the earlier scenario is means-tested to include same elders but those who are below the food poverty line. Our static analysis based on 2022 system of tax-benefit microsimulation model for Tanzania (TAZMOD) derives associated implications on poverty, income inequality and government expenditure in terms of how the scheme(s) can be financed. Findings suggest that first and second scenario can reduce share of food and basic need poverty for poor population by 2.1% and 2.9%, respectively. For the same scenarios, share of food and basic need poverty for households with elders will be reduced by 10.2% and 15.7%, respectively. However, the government will be required to allocate around 295.78 (3% of total revenue) and 17.80 (0.18% of total revenue) billion TZS per annum to cover the expenditure for financing universal pension (scenario 1) and non-contributory, basic pension for elders under food poverty line (scenario 2), respectively. If specified pension will be provided national-wide to food poor elders, is feasible without too high cost with greater chance of reducing poverty gap.

Paper short abstract:

The paper explores using a major part of Overseas Development Assistance (ODA) in Uganda to fund large-scaling of social cash transfers. We analyse the economic impact of providing old age pensions and child grants at selected scaling scenarios using the UGAMOD tax-benefit microsimulation model.

Paper long abstract:

The paper explores the radical idea of using a major part of Overseas Development Assistance (ODA) in Uganda to fund large-scaling of social cash transfers (SCTs). We analyse the economic impact of providing old age pension and child grants at selected scaling scenarios using the UGAMOD tax-benefit microsimulation model. The scenarios include selected levels of universal and means-tested old age pensions and child grants.

Donor funding for SCTs has typically been given either to provide immediate relief for recipients, in particular in humanitarian aid, or as a tool to help governments in the Global South to build their own social protection systems, which are seen as an integral part of a responsible state taking care of its vulnerable citizens. However, ambitious “out of the box” thinking is emerging which explores large-scaling SCTs in the Global South as a way to substantially reduce or even eliminate poverty.

The key conclusion of our analysis is that shifting substantial parts of current ODA in Uganda to SCTs is predicted to lead to relatively large reductions in poverty levels. It is a banal and trivial point that giving poor people money results in reduced poverty. But the scale at which this could be achieved within current aid budgets in Uganda is far from banal. Our data suggest that reducing national poverty by close to 1/3 or 2/3 is possible and this would, seen in isolation, be remarkable. This comes with considerable opportunity costs, which are discussed in the paper.

Paper short abstract:

This paper analyses the use of cash transfers for the social protection response to Covid-19 in sub-Saharan Africa. It discusses the nature of reforms triggered by the pandemic and argues that the pace and extent of cash transfer expansion in the region have lagged behind global expectations.

Paper long abstract:

Heeding the calls from the global community, virtually all sub-Saharan African governments introduced social protection measures to mitigate the socio-economic impact of Covid-19. Cash transfers made up a third of the pandemic response, consisting in horizontal and vertical expansions of existing programmes and the launch of new emergency transfers. In addition, mobile payment technologies experienced a significant boost during the early stages of the pandemic, compared to pre-Covid times. Experts and policy makers were quick to label the pandemic as a turning point in terms of cash transfer coverage and payment digitization, based on the initial emergency response. However, announced programme expansions were slow to materialize, and most temporary emergency transfers did not last beyond 2020. Similarly, mobile payments may have played a key role in the emergency response phase, but rarely translated into reforms to existing payment systems. This paper explores the extend and nature of the cash transfer response to Covid-19 in sub-Saharan Africa, based on data collected for a mapping of Covid-19 responses by the International Policy Centre for Inclusive Growth in 2020 and 2021, supplemented by additional research. It contrasts the immediate emergency response with sustained long-term reforms two years after the outbreak of the pandemic, and argues that the pace and extent of cash transfer reforms in the region have lagged behind global expectations.