Policy Instrument:

Unconditional cash transfer

Keywords: Cash Transfers; Adaptive Social Protection; Families; Children; Migrants & Displaced Persons

Definition

Unconditional cash transfers (UCTs) are cash-based programmes provided to poor and vulnerable individuals and families without imposing behavioural conditions on recipients.

Rationale

UCTs are among the most direct and efficient instruments for addressing poverty and vulnerability. By providing cash transfers without conditions, they are particularly well-suited to reaching the most marginalised populations, including those who face difficulties in meeting the requirements attached to conditional transfer programmes.

UCTs aim to: (i) increase the incomes of the poor; (ii) help individuals and families cope with the consequences of shocks; and (iii) facilitate government reforms, such as the consolidation of other social programmes or the introduction of compensatory measures for policy changes such as the removal of energy subsidies.

Key Interventions

UCT are implemented in many forms and their target groups vary depending on the programme type:

Poverty-targeted cash programmes: Direct cash transfers provided to poor and vulnerable households living below the poverty line, including the extreme poor and the near-poor.
Family, child, and orphan allowances: Direct cash transfers or tax breaks and credits to certain family types (such as lone-parent families), or for children with specific needs (such as child disability or orphans benefits ).
Non-contributory funeral grants: Burial allowances provided to poor and vulnerable family members of the deceased to cover funeral-related costs.
Emergency cash transfers: Payments made to address humanitarian needs in any type of emergency, including those related to conflict, climate change and other natural disasters, economic or health crises, as well as displacement. The usual target group for these include, refugees, internally displaced persons, shocked affected population, etc.

Poor and/or vulnerable families including families in extreme poverty, children, orphans, refugees and internally displaced people, migrants, crisis affected population, elderly.

Low coverage, inadequate benefit size and irregular payments are some of the issues often linked to limited financial resources. Some potential ways to increase expand fiscal space for cash transfer are:

Increase budget: Tax policy reforms including broadening the tax base, progressive taxation and taxation of wealth and assets;
Reallocation of public expenditures towards social protection: making government reallocate funding from other social sectors budget items towards social protection;
Increase donor aid towards social protection: Donor support and international financing mechanisms;
Increase efficiency and innovative financing: This can be done through better targeting, reducing administrative cost (through shift to digital), climate financing, etc.

Limited delivery system capacity. Limited integration with other existing services and programs, low social digital payments, and limited ID coverage. This requires governments to:

Invest in social service workforce and case management systems to identify needs and refer people to other services, as well as integrated service delivery, e.g., one-stop shops where families can access multiple services;
Develop interconnected information systems (incl. dynamic and interoperable social registry), such as interoperable social information systems, unified beneficiary registries;
Invest and develop in robust digital payments to reduce administrative costs;
Invest and develop in increasing national ID system or other related databases which allow for uniquely identifying the beneficiary.

Political economy aspect. This includes about concerns about program disincentives, ad hoc adjustments in program parameters (e.g., coverage, adequacy, duration) depending on the political scenario in the country (e.g., elections approaching, etc.). To avoid this, governments should:

Embed the program in national legislation to ensure continuity of program even when the government changes;
Clearly communicate the program's objectives, rules and impact to intended recipients but also wider population;
Develop strong M&E mechanisms to counter concerns regarding disincentives.

a) support the expansion of coverage of those either experiencing poverty or vulnerable to it in national social protection systems and addressing risks and contingencies throughout their lifecycle (SDG target 1.3), therefore, contributing to the progressive realization of the right to social security, b) contribute to the realization of the right to adequate food in the context of national food security in order to achieve a world free from hunger (SDG targets 2.1 and 2.3), c) support access to basic services (education, health, water and sanitation and housing), productive assets, appropriate technology (prioritizing low-carbon options), information, integrated social and economic inclusion programmes, skill building (including technical assistance and extension services in rural areas), financial inclusion, decent employment creation and access to safe, nutritious, and sufficient food (e.g.,home-grown school meal programmes) (SDG targets 1.4, 2.1 and 2.2), d) Contribute to addressing discrimination against women that leads to poverty, hunger and malnutrition such as differences in the prevalence of moderate or severe food insecurity between men and women, absence of women equal rights to economic resources, as well as of access to ownership and control over land and other forms of property, financial services, inheritance and natural resources, in accordance with national laws (SDG targets 5.a1 and 5.a.2), or contribute to recognize and value unpaid care and domestic work through the provision of public services, infrastructure and social protection policies and the promotion of shared responsibility within the household and the family as nationally appropriate (SDG 5.4), and h) reduce the exposure and vulnerability and increase the resilience of poor and vulnerable populations to climate related-extreme events and social, economic, and environmental shocks and disasters, as well as their capacity to properly respond to these shocks, when they occur (SDG targets 1.5 and 2.4)

ILO Social Protection Floors Recommendation, 2012 (No. 202)

Universal Declaration of Human Rights (Art. 25)

CFS Policy Recommendations on Social Protection for Food Security and Nutrition

CFS Voluntary Guidelines on Food Systems and Nutrition (VGFSyN)

Sustainable Development Goals;