Public Policy Repository

social1
KIPPRA

KIPPRA

An International Centre of Excellence in Public Policy and Research

Social Assistance a Lifeline for Households During COVID-19 Crisis

Introduction

The spread of coronavirus pandemic around the world has seen governments introduce, leverage and expand social assistance programmes through cash transfers to caution the poor from adverse effects of COVID-19. The pandemic has increased the risk factors of vulnerability and if one was not infected, they were affected. Further, the pandemic affected household finances through increased unemployment, reduced income, and increased cost of basic commodities such as food following the disruption of markets. The negative impacts were worse for poor households, women, children, the elderly and chronically ill, and groups that were already affected by food insecurity.

Between February and June 2020, almost 1 in 3 household enterprises in Kenya were not operating and the average revenue from household enterprises decreased by almost 50 per cent[1]. Further, in September 2020,  unemployment rate had doubled to an estimated 10.4 per cent compared to 5.2 per cent in March 2020 when the first case of COVID-19 was reported. This is also a 3.9 percentage point increase compared to 2019 unemployment rate of 6.5 per cent.

In addition, a microsimulation estimated that the COVID-19 pandemic would increase poverty in Kenya by about 4 percentage points, resulting in 2 million ‘newly’ poor Kenyans1.These newly vulnerable households are different to households previously supported by poverty-targeted social assistance programmes in Kenya. These new categories of vulnerable households mainly comprised of urban households with younger and better-educated household heads, smaller household sizes and, with more working-age household members.

Government Social Assistance Programmes

In recognition of the need for immediate and timely support in response to the crisis, the government turned to cash transfer programmes to quickly provide economic relief to households that were in need of social assistance. Social assistance, social security, and health insurance are the three main pillars of social protection in Kenya. Social assistance is a non-contributory transfer programme aimed at preventing the poor or the vulnerable from falling below poverty levels, which can undermine human dignity. The key programme under the social assistance pillar is the National Safety Nets Programme (NSNP) commonly known as Inua Jamii, which consists of three cash transfer programmes, namely: Cash Transfer for Orphans and Vulnerable Children (CT-OVC), Older Persons Cash Transfers (OPCT) and Cash Transfers for Persons with Severe Disabilities (CT-PWSD). Such transfers are made with an aim of providing a minimum income protection as a safety net to vulnerable population that is unable to meet their basic needs through targeted social assistance programmes. These cash transfers have proven to be effective in reducing suffering, since they boost the limited household budgets among the vulnerable households.

Social assistance programmes are funded from the State budget. Over the years, government spending on social protection (including social assistance and social security) as a share of GDP has slightly increased. For instance, the percentage share of social protection to GDP increased from 0.38 per cent in 2017 to 0.42 per cent in 2019[2]. This is lower than both the Sub-Saharan regional average of 1.5 per cent and the average for its income group of 1.4 per cent. Nonetheless, the government has strived to provide safety nets in form of monthly stipend of Ksh 2,000 per beneficiary household to enable them to live a dignified life. As at December 2020, the government had disbursed a total of Ksh 166.9 billion to 1.2 million poor households through the programme.

In response to the COVID-19 crisis, the government deployed fiscal policies to protect the most vulnerable households. The first strategy was to ensure that there was no disruption of the routine delivery of the social assistance support to the initial beneficiaries of the cash transfers. Therefore, a Presidential directive ordered an immediate release of funds previously committed to the safety net programmes to cover the payments in arrears and for timely disbursement for the months ahead. Further, Ksh 500 million which were in arrears were also released to PWSDs. The second strategy was to cushion the “new” poor and vulnerable households who were not beneficiaries of the Inua Jamii programme against the negative effects of the pandemic. The Government appropriated Ksh 10 billion during the financial year 2019/20 and rolled-out an emergency cash transfer programme that targeted the “newly” vulnerable households. Through this funding, a total of 333,200 beneficiary households from 47 counties were supported, with each household receiving Ksh1,000 on a weekly basis through mobile money transfer for a period of four months. Moreover, during 2020/21, the government allocated Ksh 1 billion to the Ministry of Labour and Social Protection to enhance economic stimulus activities that supported poor households.

Indirect cash transfers were also provided when the government undertook various fiscal measures through the Tax Laws (Amendment) Act, 2020 to stimulate the demand and supply of goods and services during the lockdown by increasing the purchasing power of households. Such interventions included but not limited to reduction of Value Addition Tax (VAT) from 16 per cent to 14 per cent, 100 per cent tax relief for individuals earning a gross monthly income of Ksh 24,000 and a reduction of the Pay As You Earn (PAYE) tax from 30 per cent to 25 per cent for higher income groups. The aim of these interventions was to improve the livelihoods of many Kenyans by increasing their disposable income as an indirect form of cash transfer by the government, hence lessening the immediate financial burden on households. The government also implemented additional economic support measures, which included a waiver on transaction fees for customers who transact money between their bank account and mobile money wallets, which also enabled the government to disburse cash transfer payments to recipients at minimal or zero transaction costs.

Social assistance by non-profit institutions supporting households

Non-state actors complement government initiatives. During the pandemic, their impact was equally felt, since they implemented a number of emergencies, time-bound and cash-based interventions that complemented the governments’ social assistance response to address vulnerabilities arising from the crisis. To ensure that Inua Jamii beneficiaries in informal settlements in Nairobi and Mombasa had adequate cash transfers that covered 50% of the urban minimum expenditure, the European Union (EU)-funded consortium, led by Kenya Red Cross Society and Oxfam provided monthly cash top-ups of Ksh 5,668. Additionally, the consortium further identified 29,400 additional vulnerable households that were non-beneficiaries of any other form of cash transfer in these informal urban areas and provided cash transfers of Ksh 7,668 per month for three months.

Further, households in Garissa, Kajiado, Kilifi, Kakamega, and Migori counties (high prevalence of child malnutrition), with children under the age of 10 and were beneficiaries of government safety net cash transfers, benefited from a monthly cash top-up payment of Ksh 2,000 per month that was provided by UNICEF. The World Food Programme Kenya also complement the government’s COVID-19 emergency response by providing cash support to 70,500 households in Nairobi’s informal settlements and 24,000 households in Mombasa’s informal settlements for three months. Other initiatives that were key in providing social assistance to the vulnerable households is the Shikilia initiative, which is a collaboration between Kenyan private sector and non-profit organizations. The main objective of this initiative is to raise funds and provide emergency cash transfers to low-income households to replace lost income due to COVID-19.

Mode of payments of the cash transfers to beneficiaries during the pandemic

Normally, the social safety net cash transfer payments were made through beneficiaries’ bank accounts. However, as a measure to curb the spread of COVID-19 through cash transactions and crowds in the banks, digitalized cash transfer payment method in form of mobile money was adopted. This mode of payment was more convenient, reliable, and safe and secure for the beneficiaries compared to physical food relief measures that were in most cases chaotic and led to mass gathering, which could have easily fueled the spread of COVID-19. In addition, social assistance in the form of digitalized cash transfers was more effective and efficient than the in-kind assistance since they gave the beneficiaries the independence to choose what they need, and where and how to purchase their food preferences. This cashless and digitalized mode of payment was also adopted by the non-profit institutions supporting households. Key to the success of the immediate cash transfer interventions was the readily existing and wide-reaching digital infrastructure platforms such as mobile banking, which eased the transfer of funds to recipients.

Challenges encountered while implementing the social assistance intervention during the pandemic

Whereas social assistance has been a popular crisis response strategy, funding constraints have limited its impact on vulnerable populations. Inadequate budgetary allocations have led to low coverage of social assistance programmes and relatively low impact on poverty reduction. Non-adjustment for inflation reduces the purchasing power of households and thus most of existing beneficiaries had to receive top-ups to sufficiently support their livelihoods amid the pandemic. Additionally, inadequate coordination and linkage of the National Single Registry Framework and non-profit institutions led to duplication of efforts and double dipping of beneficiaries following different design features targeting the same households and target areas, such as vulnerable households in informal settlements. There also exists uncertainty regarding the sustainability and funding of the COVID-19 social assistance support for the “new” poor and vulnerable due to the impact of the pandemic on economies.

Conclusion

While double dipping of beneficiaries was one of the challenges faced, the government can overcome future occurrence by fast-tracking the updating of the Enhanced Single Registry (ESR) that accommodates the existing beneficiaries and potential beneficiaries in case of any shock in the economy. There is an urgent need to increase budgetary allocation for social assistance programmes from 0.4 per cent of GDP to match the SSA regional average of 1.5 per cent to attain a wider coverage and for positive social impacts such as poverty reduction among the vulnerable groups.

Authors: Grace Mukami Muriithi, Young Professional, Social Sector Department

Miriam Karwitha Mwiti, Young Professional, Social Sector Department

Photo: Courtesy of Ministry of Labour and Social Protection


[1] Kenya Economic Update: Navigating the Pandemic (English). Kenya economic update; no. 22 Washington, D.C.: World Bank Group. http://documents.worldbank.org/curated/en/957121606226133134/Kenya-Economic-Update-Navigating-the-Pandemic

[2] World Bank. 2020. The Human Capital Index 2020 Update: Human Capital in the Time of COVID-19. World Bank, Washington, DC. © World Bank. https://openknowledge.worldbank.org/handle/10986/34432  License: CC BY 3.0 IGO. https://databank.worldbank.org/data/download/hci/HCI_2pager_KEN.pdf?cid=GGH_e_hcpexternal_en_ext

Share this post

Share on facebook
Share on google
Share on twitter
Share on linkedin
Share on pinterest
Share on print
Share on email

Stay Up to Date

More Blogs