The potential and possible impact of different types of social cash transfers on poverty reduction of households with children

or other vulnerable groups

Aim of the paper: The paper aims to analyse the Benazir Income Support Programme (BISP), Pakistans Social Protection Programme, a social cash transfer programme for families targeting poor women and analyses how it contributes to poverty reduction and empowering women. You will also read about the cash transfer mechanism which initially was carried out by the Postal Services Department of Pakistan, a state agency. The responsibility of cash transfer to the poor households was later piloted through a private commercial bank operating in Pakistan; United Bank Limited (UBL), who had introduced Omni branchless banking system, which was originally not intended to perform Government-to-person (G2P) transfers. Moreover, the paper discusses the potential and actual impact of the programme on poverty reduction and the challenges faced by BISP in the initial stages. The paper also reviews the eligibility criteria, which in the initial stages was criticized because it was said to be a politically motivated and non-transparent by major stakeholders, and also had doubts about the transparency of cash management. Furthermore; the papers also describes the traditional safety nets and the current safety net programmes and their underlying differences in them.

Comment [AA1]: You may have to change the title of the paper ; here are a couple of options 1) use of Alternative Delivery channels for cash transfers to poor and vulnerable groups 2)usefulness of different types of social transfers on poverty reduction of households or other vulnerabl e groups

Comment [AA2]: The entire programme was not given to UBL. Only selected districts were given to them as a pilot project

Comment [AA3]: a)Do we know about the actual impact? I don t think any impact study has been conducted as it is too early b) The paper does not provide info on impact

Introduction: Pakistan is a country of more than 170 million people. Social and economic progress has been very slow and the state t has become more fragile and unpredictable as the security situation and internal conflicts seem to worsen. Other than that, the country has repeatedly faced natural disasters such as the massive earthquake of 2005 and one of the most devastating floods in the history of the country last summer. The human development indicators of Pakistan are amongst the worst in South Asia and even lacking behind SubSaharan Africas. The Nation Social Protection Strategy (NSPS) provided a structure to the Government to reach the poor and vulnerable with a combination of social assistance and other poverty exit programs. The Government in 2007 approved everything, but nothing much happened after its approval in terms of implementation. Social Protection remained just a talk and the papers approved remained on the bookshelves in Government departments rather than a reality for Pakistani citizens. The newly elected Government; the Pakistan Peoples Party (PPP), partly for political reasons and to pay tribute to its martyred leader Benazir Bhutto, launched a new social cash transfer programme called the Benazir Income Support Programme (BISP).

Benazir Income Support Program (BISP): The Government of Pakistan launched in 2008 one of the largest cash transfer programs yet seen in any low income developing countries: the Benazir Income Support Programme (BISP). A detailed communication needs assessment was undertaken in connection with the new program, which identified an urgent need to label social protection and to introduce the program in the context of establishing an effective safety net system in the country. BISPs objectives were both to tackle extreme poverty and also to empower women with particular reference to Millennium Development Goal (MDGs). BISP is an initiative to improve the status of women and empower them by making them important and responsible members of the society. At first there was no data available to target the deserving households; qualification for BISP was initially decided by the members of the parliament who distributed a set number of forms in their respective constituencies to the households who they thought were actually in extreme poverty. In 2010, BISP began collecting information on the eligible households to create a standard database. The rollout was assisted by the fact that Pakistan has a unique computerized database of citizen national identity card (CNIC) and associated ID number. These numbers are issued and sorted on the national database maintained by National Database & Registration Authority (NADRA), a state agency. The funding for BISP is done directly from the budget of the Government of Pakistan (GoP), supported by a World Bank loan. There are several other donors like USAID who have also agreed to contribute. Initially the programme aimed to reach 3.5 million families which were later revised to 7 million families in 2010-11. It would roughly cover 35 million people which are about 22% of the total population. By June 2010, BISP had distributed $500m in cash grants to almost 2.2 million households. In order to be eligible to receive monthly cash grants from BISP, the monthly income of the household has to be less than Rs. 6000 with no family member in government service. The possession of a computerized National Identity Card is also a requirement because screening and verification of basic criteria are carried out by the National Database & Registration Authority (NADRA); and possession of no or less than three acres of agricultural land or up to 3 marlas of residential property. The project would support four main components: 1. National Targeting System: Based on the lessons learnt from the targeting test phase funded by the Department for International Development (DFID) and managed by World Bank, this component would include the finalization and update of the targeting plan, data collection with the poverty score card at the national level, data processing and double-checking with the existing data bases as needed. The administration of data appeals and maintenance of the data base. 2. Supporting Safety Net Operations: This would provide support for BISP to operate smoothly and transparently at the central and provincial levels. Moreover; it will also support the implementation of a communications strategy including training of and communication with beneficiaries, the implementation of grievance redressal and reconciliation mechanism, review of payment mechanism, as well as the implementation of monitoring and social accountability mechanisms.

Comment [AA4]: Also give figure in BP or $

3. Evaluation, Accountability and Safety net Programme Management: This component would fund the operations of the safety net Management Information System (MIS), for strategic staffing and capacity building. The establishment of effective controls, internal audits, cross verifications with other programs and spot checks. The impact evaluations are also carried out under this component. 4. Strategy Monitoring and Social Development Policy: This would support the design of the institutional and legal framework for carrying out of the National Social Protection Strategy (NSPS) and planning and implementation of a monitoring and evaluation system. It will also provide support to training and capacity building for policy makers. Pre-Scorecard Targeting: Effective and accurate targeting instruments in a cash transfer program have higher impact on poverty reduction and inequality. The Government had to quickly launch the programme and therefore it was decided that the Government would provide BISP beneficiary forms to all the elected members of the national and provincial assemblies, including members of the opposition, to identify households that are eligible and collect information on the forms provided for further processing by the National Database & Registration Authority. This method of targeting was highly criticized in the media for being politically biased , centralised and non-transparent. The Government has been blamed by the opposition parties for favouritism and for including political workers as the beneficiaries. The Government was under pressure because the party workers on the other hand were unhappy with their own Government for including the opposition in the distribution of the beneficiary forms. Based on the pre-score card targeting, the information gathered in the beneficiaries forms provided by the members of the national and provincial assemblies, the Government approved 1.5 million beneficiary families who were going to receive cash at their door -step. Score-Card Targeting: In the face of the criticism over targeting by opposition parties and media, the Government in December 2008, decided to use a scorecard system for identifying the beneficiaries of BISP. The scorecard targeting tool included simple indicators that correlate with poverty. The scorecard proposed for BISP was developed by the support of World Bank. Ease of implementation and proxy mean testing were the two main characteristics that helped to improve the targeting performance. The score card developed with the support of World Bank piloted with more than 500,000 households in 16 districts that can be applied to most of the Pakistani households. The BISP poverty score card is a 12 dimensional tool that comprises of household size, type of housing and toilet facilities, education, child status, household assets, agricultural landholding, and livestock ownership. Based upon their conditions, households are scored against each dimension. After dimension specific scores are assigned, aggregate score is then calculated by simple addition. The lower the aggregate score, the poorer a household would be. This would be followed by determining a cut-off score as the poverty line for the BISP and households having total score below that point will be declared poor. The identified poor households will then be entitled to the standard cash grant of Rs. 1,000 per month.

Pakistan made its choice based on the World Banks advice. The network externalities generated by the governments massive application of the BISP scorecard will tend to make it the scorecard that local, pro-poor organizations would like to use for their own purposes.

Coping with Poverty: According to the Pakistani Center for Poverty Reduction backed by the United Nations Development Program, the poverty level as of the 2007-2008 year was at 17.20% (The News), the lowest in Pakistan's history. Statistics from the 2009 Human Development Report put Pakistan with 22.6% of the population living on only $1.25 a day and 60.3% on only $2 a day. Also, the Human Development Index places Pakistan at .572 which is below India (.612), but above Nepal (.553) and Bangladesh (.543). This information is somewhat outdated, however it provides evidence to the large gap between urban and rural poverty. GDP has been fairly flexible over the past decade, as there has been consistent growth even with the onset of several potentially-crippling events like the Asian Financial Crisis, global recessions, post 9/11 reactions, and drastic changes in oil/food prices. Pakistan was even recognized by the World Bank as being the top economic reformer of the South Asia and in the top 10 globally overall in 2006 (World Bank). Regardless of the economic restrictions, the Government of Pakistan (GoP) introduced the new social safety net, the Benazir Income Support Programme (BISP), to supplement the income of the poorest of the poor, who have been severely hit by the global recession, the 2008 earthquake, the ongoing war against terrorism in the Federally Administered Tribal Area (FATA) and Swat and recent devastating seasonal floods. The budgeted allocation for the BISP is Rs. 70 billion (US $ 875 million). This is the third largest allocation in the total budget and is over 0.3 percent of the GDP for FY 2008-09. The BISP has been initiated to partly counterbalance the impact of inflation on the purchasing power of the poorer sections of the society. As mentioned above the BISP beneficiaries, who fulfil a certain criteria, will be given monthly cash support of Rs. 1,000 (approximately US$ 12/month). This monthly grant will add to the income of a family earning Rs. 5,000/month (around US $60/month) by 20 percent. The BISP aims to cover around 15 percent of the entire population, which is almost 40 percent of the population below the poverty line. Traditional safety nets Some policy-makers and social policy analysts question whether social cash transfers deteriorate existing traditional safety nets. Evidence exists that in some cases the payments of cash transfers by government to poor individuals decrease private remittances to their households. Where there is no public safety net, the load falls on the working poor, often with negative growth and development effects for these households. The weakening of traditional safety nets means the households of the working poor have more resources - including for productivity enhancing use of the workers themselves. In many other countries, however, mainly those deeply affected by HIV/AIDS, cash transfers revitalises a weakening structure of traditional support. HIV/AIDS increases mortality and morbidity for the traditional funders of private safety nets while increasing the burden on older people who often must care for

children orphaned by the illness. Cash transfers increasingly enable caregivers to manage this growing burden.

Recent Safety Nets Among the SAARC country, India has the rich experience of implementing a large number of Safety net programmes meant to improve household and individual level food security by addressing access component of food security. Some of these initiatives are listed below. Mid-day Meal Scheme: The scheme initiated for student of primary schools run by government and local governments. Under this scheme food grains were provided free of cost to each child at the rate of 100 grams per school day. Annapurna Scheme: Under this scheme senior citizens are providing 10 kg grains free of cost per person per month Food for Work Program: The scheme implemented in 150 most backward districts and at least one able-bodied person from each household is provided 100 days of employment at minimum wage rate. National Rural Employment Guarantee Scheme: Implementation started during 2006-07 in 200 poorest districts and gradually extended to all the 610 districts of India during 2008-09. The allocation for 2009-10 is Rs. 780 billion (0.66 % of GDP of India). In Pakistan, Benazir Income Support Program (BISP) is the main social safety net programme to provide cash transfers to the vulnerable identified on the basis of poverty scorecard. Under this scheme the female head of the households is provided Rs 1000/month per family which roughly amounts to an increase of 20 percent in family income. Among other schemes Food Support Program (FSP) and Child Support Program (CSP) are important and are being sponsored through the Government of Pakistan department called Bait-ul-Mal. Under FSP 1.25 million households are being disbursed a support of Rs. 3000 per year. The CSP is initially piloted in three districts as a conditional cash transfer program. It has been scaled up to 11 districts so far. At present, the scheme has only one condition that is admission of beneficiarys children aged 5-12 years in school with at least 80 percent school attendance. The beneficiary families are paid Rs. 300 per month with no child in school and Rs. 500 per month with more than one child at school. Challenges for BISP: Initial reports in the national newspapers said that women and children were the worst affected during the recent floods in Pakistan. Usually, the requirements of the most vulnerable part of society are ignored in countries like Pakistan. Ignoring gender aspects in disaster response, recovery, and attentiveness is likely to result in worsening existing poverty and inequality levels. It is imperative that the assessments and the programs developed for rehabilitation of flood victims aim at de-intensifying the existing political, social, and economic inequalities faced by women (NDMA 2010). In spite of the destruction that they cause, natural disasters provide opportunities for social and economic change. Women can be empowered as equal stakeholders to act as key resources before, during, and after disasters to reduce deaths, reinstate the household economy, and reduce the breakdown of social safety nets.
Comment [AA5]: Some challenges that are not mentioned in the paper are verification of beneficiary, embezzlement by post office workers, high delivery cost. Comment [AA6]: I am not sure but in my view BISP beneficiaries are only women. If that is so then this factor should be highlighted in your paper at the very start

The president of Pakistan directed that the partnership between BISP and NADRA (the National Database and Registration Authority) being used in the ongoing income support program be used in the same way to offer essential financial support to flood victims in different parts of the country. Under BISP cash transfer of 1,000 PKR per month is provided to worthy poor women on the basis of confirmation of the computerized National Identity Card (CNIC) by the postal system and the banks. Under the presidents flood relief directive to BISP and NADRA, the government intends to award 20,000 PKR ($232 dollars) to each flood-affected family as compensation for their losses. The money will also be used to repair damages to their homes. The first instalment of 5,000 PKR ($58) was to be disbursed before Eid ul Fitr (the Muslim holiday that marks the end of the fasting month of Ramadan), around September 10, 2010. In order to meet the presidential order, these agencies confronted two obstacles. First, the job of registering the inhabitants affected by the floods is massive. At present the mission of registering the flood victims rests with the provincial governments. A large number of people are being registered at the flood relief camps established by the army and the government. However, an equally large number of people have not been able to reach the camps or have been denied space in them due to overcrowding. Second, initial reports indicated that a large population affected by the floods do not possess CNIC cards. They were either not registered or have lost their cards along with their belongings in the flood. If the verification procedure through NADRA is similar to the procedure of BISP, the victims who do not possess a CNIC will be excluded. Unfortunately, the families who do not have the CNIC are the poorest of the poor. As it waits for the listing of the flood victims, BISP initiated support to the existing flood-affected beneficiaries of BISP by providing them the announced flood relief assistance of up to 20,000 PKR. They suggest expanding this process as the verified database becomes available. Therefore, for the program to function, priority needs to be given to the comprehensive listing of all flood victims. This listing exercise was expanded to the elicit basic socioeconomic information that can be used as a baseline to check the relief and rehabilitation effort. US-led War Against Terrorism: Pakistans role as a front -line state in the War on Terror has had deep implications for its domestic politics and foreign policy. During the ongoing war against terrorism in the Federally Administered Tribal Areas (FATA) and Swat District, millions of people were forced to move out of their houses in order to carry out an operation against the militants who were hiding in these areas and were continuously challenging the writ of the Government and also trying to destabilize the country especially the province of Khyber Pukhtoonkhwa, by bombing the civilians and targeting, political and Government officials. The operation in FATA and Swat and the security of the western borders has over-stretched the Pakistani Army and has resulted in disturbances in Khyber Pukhtoonkhwa. The operation in tribal areas has damaged the basics of the social, political and economic structure of KPK; the Pashtun areas in particular.

Actual Impact of Cash Transfer on Poor Households

Emergency Relief Packages of BISP: Emergency relief packages were launched for the Internally Displaced Persons (IDPs) and bomb blast victims:
iIDPs of Swat/Malakand: A military operation was launched against the miscreants in Malakand Division in April, 2009. The operation internally displaced a large number of families from the area. These families shifted to the nearby districts of Khyber-Pakhtoonkhwa. Although a majority of these families have returned back to their areas, a need was felt to compensate them in the form of cash assistance, for a limited period of time. BISP on the instruction of the government of Pakistan has extended its monthly cash assistance to these internally displaced families as well for a period of one year only. In the meantime, arrangements are being made to con duct the Poverty Scorecard based survey and identify the underprivileged and enrol them for cash assistance and other benefits of BISP, on a regular basis.

Comment [AA7]: This title is misleading as you are not describing impact in the paras below. I suggest you take this section out.

ii-

IDPs of South Waziristan (FATA): A military operation was started against the

miscreants in South Waziristan in October, 2009. The operation has displaced a large number of families from that area as well. These families have shifted to D.I.Khan and Tank districts of Khyber-Pakhtoonkhwa. An estimated number of 59,355 IDP families have been registered by the Social Welfare Department, NWFP. NADRA has verified 37,017 IDP families out of the total registered families. Government of Pakistan (GoP) has already announced to extend cash assistance of Rs. 25, 000 per family to the verified IDP families from South Waziristan. In the initial stages Special Security Group (SSG) and NADRA disbursed cash to 21,597 IDP families through debit cards. Actual disbursement was made through UBL. Later, it was decided that the BISP assistance to the IDP families from Swat/Malakand Division under its Emergency Relief Package would be extended on the same pattern to the IDP families verified by SSG and NADRA. It was, therefore, decided by BISP that the verified IDP families from South Waziristan Agency may also be included in emergency cash transfer may also be extended to these families on the same pattern as was done for the IDP families from Swat/Malakand Division.
iiiBomb Blast Victims: Pakistan has suffered more than any other country in the global war of terror. Bomb blasts and incidents of violence have increased in the country especially in Khyber-Pakhtoonkhwa and have claimed thousands of precious lives, even the bread earners of the families. Thousands have either been killed, disabled or have sustained injuries. Keeping in view the situation, the government has decided to compensate the affected from Benazir Income Support Programme (BISP), being main social safety net programme. The affected families are offered a monthly cash grant of Rs.1000/ month.

Potential Impact of Cash Transfer on Poor Households

Comment [AA8]: The paragraphs below does not describe impact (see comment 3 above)

Cash transfer is generally considered a temporary measure which may be beneficial for consumption smoothing, but does not modify the conditions of persons to improve income or increase their assets. Health and economic shocks are the most prevalent triggers fo r slipping into poverty which is a multidimensional problem that can be addressed through a set of interventions to target its different causes. Exit strategies to make sure that people receiving cash grants from BISP ultimately graduate into income earning individuals has been developed. To promote household independence and to upgrade the poor beneficiaries to the level of self sufficiency various initiatives like training and employment of one person per household; and provision of workfare through small public works under a social mobilization programme are part of the BISP special initiatives program. Other initiatives like SelfEmployment Initiative, to permanently bring out families from extreme poverty by giving loans for their self-employment, Health Insurance are part of the program. A scheme aimed at improving access to health services and reducing income loss from disastrous health shocks for the poor and Vocational Training to crate and initiate market demand jobs or business opportunities for beneficiaries of BISP who can make their livelihood sustainable are being carried out by BISP from its regular budgetary support from the Government of Pakistan. Waseela-e-Haq (The Right Source): Small loans can make a significant impact on the livelihoods of the poor families. In order to come out of poverty through micro loans, the female beneficiaries of BISP or their nominees are given small loans to cater and eliminate chronic and extreme poverty. This initiative will allow and facilitate women to participate in their personal growth as well as national development. The monthly cash transfers can potentially create dependency of income from other sources, therefore as an exit strategy out of poverty Waseela-e-Haq will provide loan amounting up to Rs. 300,000/- to randomly selected beneficiary families currently receiving cash transfers from BISP. The main objectives of this scheme is that it promotes loan as a human right and it is especially aimed to help the underprivileged families, particularly deprived women to come out of poverty. BISP provides these services at the door step of the underprivileged and the services are entirely interest free. Waseela-e-Rozgar (Vocational & Technical Training): This initiative aims to empower female beneficiary or her nominee through acquiring a skill; become economically independent by acquiring vocational training through dynamic and integrated technical education and vocational training service. This scheme has planned to provide complete rehabilitation of a beneficiary through vocational training including guidance and counselling, vocational training facilities and vocational and professional training. Trainees will be offered vocational trainings of 4 weeks, 3-6 months and one year. Waseela-e-Sehat (Health Insurance): More than 70 percent of the people in Pakistan, including many underprivileged, seek better health care facilities in the private hospitals and pay out of pocket. This causes extra financial burden on them. To empower this underserved fragment of the nation BISP is launching Benazir Health Card through National/International Health Insurance Companies, initially in 15 Districts where poverty is considerably high as compared to the other districts.

Improving Cash Transfer Mechanism Most of the BISP grants are in the form of a money order issued by the Pakistan Post Office to the doorstep of beneficiaries by their postman. For this service, Pakistan Post Office receives a fee of 1.5% of the value. Having around 11,000 post offices nationwide, Pakistan Post offered a much wider reach than the banking system and was able to adapt its existing money order product to start payments rapidly. Official reports are that 96-98% of payments are delivered on time by the post office. There have also been reports that postmen asks for a cut of the grant of up to 20% before they effect delivery. Receiving several complaints from the beneficiaries on this regard, BISP invited all the banks to make presentations on how to effectively and transparently transfer the cash to the beneficiaries. United Bank Limited (UBL) was the only bank selected for this purpose as they already had past experience with World Food Program (WFP) in one of their cash transfer program in Pakistan.

Comment [AA9]: As mentioned in comment X above critically examine the issues with using past office for delivery of cash to beneficiaries - like problems with verification, staff fraud and high cost of delivery etc

Omni An Agent Banking Channel The new banking channel was different from the standard UBL account offering. Omni clients could perform a range of services; that included, signing up for an Omni account, deposit or withdraw money from that account or pay bills or other remittances to other Omni account holders. There was a standard fee set for the agent for each transaction performed or for opening a new account. The Omni channel was not planned to make Government to Person payments (G2P). However; a series of opportunities arose around Government-toPerson payments, for which the new integrated channel Omni was well placed. BISP Smart Card: Having prior experience with WFP, UBL was able to use its emerging Omni network of agents to allow the beneficiaries of BISP to withdraw cash. The BISP smart card works in a way that the beneficiaries have to present themselves at the agent and hands over the BISP smart card and CNIC to the agent. The agent then scans the 2D barcode and the beneficiary enters her PIN number into the agents mobile phone or keypad to confirm the transaction. In areas with a high quantity of BISP payments, UBL provided agents with barcode scanners at its expense to expedite the process of reading the number and also provided internet access to Omni via a PC . Upon authentication, the beneficiary is then paid the amount due in cash and the cards handed back. The agent also hands over a receipt printed out on a printer linked by bluetooth to phone or PC; and as a record of payment, the beneficiary enters a fingerprint in the agents payment record book against her name and CNIC number. Conclusion & Recommendations Distribution of cash is not a long term solution to the deep rooted problem of poverty. The monthly Rs. 1000 given to the head of the family translates in Rs. 167 per month per person. Even at one Dollar a day, the monthly income requirement is Rs. 2, 550 per person. The BISP support should increase as it is only 6.5 percent of the requirement of a dollar a day. BISP does not just give a helping hand to the poor people, but it also brings them out of the household economical crises in the form of vocational training. Although there is a need to conduct survey and research to find out the depth of poverty in different regions in Pakistan

Comment [AA10]: First describe what is Omni, how it functions an d what type of services it can provide to low income people through its network of agents called OMNI Dukans Then describe the effectiveness of this payment system better identification, verification, efficiency, low cost

and programme should target according to the severity of poverty in different regions for best outcomes using the limited resources. BISP should also focus more on the reduction of unemployment and for increasing the country skilled labour force. A good safety net requires constant interaction with the community it is suppose to save a protect, and this is only possible in a decentralized environment. References: WWW Michael, S. Social Cash Transfers and Pro Poor Growth. [Online] Available from:
http://www.oecd.org/dataoecd/26/63/43280571.pdf [Accessed 12th April 2011] Mark, S. A Simple Poverty Score Card for Pakistan. [online] Available from: http://www.microfinance.com/English/Papers/Scoring_Poverty_Pakistan_2005.pdf [Accessed 16th April 2011] Ashraf, H. Zamir, A. The Implications of the Global Economic Slowdown on the Poverty and Sustainable Development in Asia and the Pacific. [Online] Available from: http://www.adb.org/Documents/Events/2009/Poverty-Social-Development/impact-channels-pakHayat-Ahmed-paper.pdf [Accessed 19th April 2011] Dr. Sarfaraz, k. Gender and Governance in Pakistan. [Online] Available from: http://www.napsipag.org/pdf/SARFRAZ.pdf [Accessed 11th April 2011]

State Bank of Pakistan. (2007) Branchless Banking Guidelines. [Online] Available from:
http://www.sbp.org.pk/bprd/2007/Guidelines-Branchless-Banking.pdf [Accessed 20th April 2011] Benazir Income Support Programme, Government of Pakistan. [online] Available from: http://www.bisp.gov.pk/ [Accessed 14 th April 2011]