Paper short abstract:

People with disability are impoverished as they are a disadvantaged group. This study employs TAZMOD microsimulations to analyse the impact of the disability grant on welfare indicators and found positive impact. The government will require up to 0.05% of GDP to finance the cash transfer program.

Paper long abstract:

People with disability are impoverished as they are disadvantaged across a wide range of socioeconomic indicators. Recent statistics indicated that 9.3 % of people aged 7 years and above in Tanzania have some sort of disability. There is limited evidence on the implication of social protection to this segment of population to welfare indicators and government spending. About 55,000 Tanzania Social Action Fund (TASAF) households benefit from the disability grant; which is only 40 % of all targeted households. However, a significant proportion of disabled are living in non-targeted TASAF households. This study presents a discussion of the implications of upscaling disability grants to all people with severe disabilities on poverty, income inequality and government expenditure in Tanzania. The analysis is based on Tanzania tax-benefit microsimulation model (TAZMOD) using 2017/18 Household Budget Survey (HBS) data updated for a 2022 system. Consistent with disability grant programs from other sub-Saharan Africa (SSA) countries, the results from the simulation show that disability grants will reduce the poverty rate by 1.3 to 2.1% with minimal effect on inequality. The impact on poverty is higher for households with older people and those headed by women compared to otherwise. With regard to income inequality, the cash transfer to people with disability will reduce inequality for those on the lower quantile. The government budget needed to finance the program will range from 8.9 to 79 billion Tanzanian shillings annually (equivalent to 0.006% to 0.05% of GDP), respectively. Financing options for the program are further analysed in the paper.