Social protection schemes like the Cash Transfer to Older Persons or the older Orphans and Vulnerable Children (OVC) programme go a long way to help the hardest hit among the poor. While poverty has an impact on the 46 per cent living on less than a dollar a day, it is the fraction of this group outside the workforce and traditional safety nets that suffers most.
The HIV and Aids pandemic, by decimating young people who would have cared for their ageing parents and children, creates the dilemma of retired older persons having to bring up their grandchildren on fixed and limited incomes. The challenges this presents usually means truancy from schools (even with free or subsidised education), inadequate diets, child labour and a vicious cycle of poverty. Thus, measures to lighten the load, keep children in schools and the elderly from destitution or dependency are most welcome. However, given the way the country’s population is growing, it is clear cash transfers can only be a short term measure as we put in place a more sustainable set of protections.
Yesterday, the Ministry of Gender, Children and Social Development officially launched a cash transfer programme that will put Sh550 million into 33,000 households. These have been selected on the basis of HIV and Aids and poverty figures. The Government has been testing the system since 2006 and should have ironed out the wrinkles in operations. As for scaling up to cover the one million or so Kenyans above 65 years of age, this will follow, as was the case with OVC, with donor aid or increased allocations.
With a large proportion of the population under 30 and getting into the workforce, there should be no difficulty funding this programme in the short term. But as has been noted with the unfunded pension schemes in the Civil Service, with time the amount involved will balloon to unsustainable proportions. The only ways to keep the programme from getting out of hand are to lower poverty, improve national savings or keep allocations at such low rates they become pointless.
Half the country lives in absolute poverty (less than a dollar a day). It is for these people that a Sh1,500-a-month transfer makes an appreciable difference. But as a large fraction of the other half lives on less than two dollars daily — the UN’s new cut-off for absolute poverty — it is clear more people need old age social protection than Government can help. The reduction of poverty for all is key to this. This means not merely reducing absolute poverty as is required in the Millennium Development Goals, but ensuring a measure of wealth distribution in society. Upward mobility cannot stop or stall at two dollars a day.
National Savings
Improving national savings to international levels, especially in retirement savings, is also essential. This paper has strongly supported the unpopular measures introduced in recent years to get more people to leave retirement savings untouched into old age.
In the absence of a culture of savings, old people will continue to rely on their children for their upkeep in retirement, impeding the flow of savings into investment. Should the children die early, they are forced to depend on the State or return to the workforce. The cash transfer scheme will ensure those that cannot work live out their lives with dignity. But to succeed long term, entry of new beneficiaries must be limited.
The more people able to live off pensions and retirement savings, the fewer the numbers that need the protection of the State.
It will doubtless be noted that Sh1,500 will not go far in a household, especially as the average is 4.5 people. There are grandparents caring for up to a dozen Aids orphans who require more help. Inflation will also have to be factored in with time. Adjustments to the figure will be needed with these things in mind: The register of beneficiaries must be credible, with no room for fraud; and the amount need only be enough to stave off destitution, not so high as to attract benefits fraudsters.
As the Free Primary Education programme has shown, even the noblest of ideas can be subverted and used to enrich looters within the system. This must not happen here, not if we are to have success with the OVC.
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