Let the cash transfers continue

Wednesday July 21 2021

Author: Mathew Cummins

By Guest Writer

Eleven-year-old Jane (Name changed to protect identity) attended her Primary three classes in Amudat District in north eastern Karamoja. In the middle of the lockdown, her mother traded her in marriage to an older man rumored to have HIV so that she could cover a growing list of unpaid bills. Child marriage, kidnappings for ransom and child sacrifice are among the abuses that intensified against children during lockdown, driven by increasing poverty and desperation in various communities. 

Early this year, the Ministry of Finance, Planning and Economic Development (MoFPED) estimated that poverty had spiked by 7.5 percent nationally, with 1.3 million additional persons now under the national poverty line. In addition to that is the rising food insecurity. 

The Integrated Food Security Classification shows that one in every four Ugandans (or 11.5 million) is facing some level of food insecurity, with more than two million in a crisis situation or worse. This has been compounded by school closures, as about 15 million children who should be in the classroom are at home, with every day of lost learning translating into lost economic and development potential for the country. 

 In the midst of such challenges, where is the silver lining? In July 2021, the government announced plans for cash grants to be delivered to 500,000 households countrywide, and by mid-July more than 200,000 households had received a mobile money transfer of shs 100,000. The big question is, what can a cash transfer do beyond empowering families to invest in their most pressing needs?

 Over the past two decades, UNICEF has been supporting governments across Sub-Saharan to introduce and expand cash transfer programmes that target households with young children. By supporting investments in productive assets and consuming local products, cash transfers act as potent fiscal stimulus, with each Shilling generating up to two or even three Shillings worth of economic activity.

 To transform children’s lives and the economy, more and recurrent investment is required. Say for instance, the Government of Uganda provides cash support to all households that rely on informal employment (around 8.6 million), this would increase the cost from 0.3 per cent of GDP at present to about 0.5 per cent. If the government were to offer six payments – one payment per household through the end of the year – the financial requirement would be around 2.7 per cent of GDP. Note that this would be in line with the average global amount of government spending on social protection to respond to COVID-19.
 Herein lies the trade-off: A one-off transfer to all needy households could increase per capita economic growth by 1 per cent this year according to a UNICEF methodology. Extending that to six months could lift growth from 3.2 per cent at present to 7 per cent. Beyond the economy, this income support would prevent or minimize most of the risks facing children, while also eliminating financial barriers to enable them to return to schools when they reopen.
 Though Jane escaped from her husband-to-be and found refuge in a primary school in Amudat that was established to protect girls in these circumstances, the biting poverty before, during and even after COVID-19 will put many more girls at risk. A realignment of resources towards small periodic cash transfers could change the story for Jane and many other poor and vulnerable families, communities and ultimately, for Uganda’s economic growth and development trajectory. 


The author, Mathew Cummins is the UNICEF Eastern and Southern Africa Regional Advisor,  Social Policy