Description of Main Social Safety Net Benefits

1. Ghana spending in SSN programs covered in this Annex amount to 0.3 percent as of 2022.² The livelihood empowerment against poverty (LEAP) program, the school feeding program, and the free senior high school (SHS) initiative are the primary social safety programs in Ghana. The largest allocation was for the school feeding program at 0.18 percent of GDP, followed by the SHS at 0.06 percent of GDP, and the LEAP, despite being the government’s flagship cash transfer program, received a mere 0.05 percent of GDP. For Ghana, these estimates do not include the allocation for the National Health Insurance Authority.³

2. Ghana’s primary unconditional cash transfer program is the Livelihood Empowerment Against Poverty (LEAP) program. Transfers are targeted to the poorest households, and eligibility is assessed through proxy means tests (PMT) aimed at identifying the bottom 20 percent of the poor. Alongside the PMT criteria, beneficiaries must fall into one of the following categories: individuals aged 65 and above, individuals with disabilities, expectant mothers, or individuals responsible for orphaned and vulnerable children. The benefit amount varies based on the number of eligible individuals within the recipient household. As of 2022, the monthly transfers ranged from GH¢ 64 (US$ 5.73) to GH¢ 106 (US$ 9.49). The average annual benefit amounted to GH¢ 845 (4.6 percent of GDP per-capita). In total, the program benefitted 2.06 million individuals in 344 thousand households.

3. The Ghana School Feeding Program aims to increase school enrolment, attendance, and retention by providing meals that can account up to 30 percent of the daily calories’ intake. The program has showcased its effectiveness in addressing hunger and malnutrition while also encouraging local food production. The program targets pupils in public schools at the pre-secondary school level (i.e., students aged between 2 and 12 years old). Since its inception in 2005, the school feeding program has seen a substantial increase in its reach. The number of children receiving school meals has expanded significantly from 1,900 to 3.8 million in 2023. The program extends its benefits to 43 percent of children within the targeted age group. In line, with this expansion, there has been a notable increase in the program’s expenditure, mirroring the growth in coverage and the annual cost per pupil. As of 2022, the estimated annual cost per pupil stood at GH¢ 313 (1.7 percent of GDP per-capita) and the benefits reaches 3.6 million pupils.

4. The Free Senior High School program was instituted in the 2017–18 academic year to support students attending public senior high schools. The benefit is not means tested and its amount differs between resident students (GH¢ 1,002.47) and non-resident students (GH¢ 648.47). In the 2022–23 academic year, all students enrolled in Public Senior High Schools received the benefit. This encompassed approximately 400 thousand students, reaching one-third of the 1.1 current students. The average annual benefit per student amounted to GH¢ 985 (5.4 percent of GDP per-capita).

Assessment of Social Safety Nets

5. LEAP targets the poor more than the other SSN programs. About 58 percent of total LEAP expenditures reach household in the poorest quintile. This is significantly higher than the corresponding figure for the School Feeding program (31.3 percent) and SHS (10.4 percent). A decreasing share of LEAP reaches households in richer quintile groups, until reaching 3.5 percent for households in Q5. A similar trend although less progressive, is observed for the School Feeding program. On the contrary, only 10.4 percent of the total spending in SHS reaches households in the lowest quintile group, against 24.6 percent reaching household in Q5 (Figure 1).

6. Coverage rates vary substantially across programs. LEAP and SHS has the same coverage among the program analyzed. In total, about 4.7 percent of households receive LEAP in 2022, similarly 4.8 percent of the households benefit from SHS, and 27.9 percent benefit from the school feeding program. Both LEAP and the School feeding program show a progressive coverage pattern, with higher coverage at the bottom of the welfare distribution than at its top. About 21.7 percent of households in the poorest welfare quintile receive LEAP, against 0.5 percent of households in the richest quintile. Figures for the School Feeding program amount to 60.6 percent and 7.1 percent respectively. The coverage of the SHS shows a flat distribution, with 4 percent of household in Q1 receiving the support, similarly 4 percent of the households at the top of the distribution benefit from the program.

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Coverage and Targeting of Main SSN Programs in Ghana

Citation: Policy Papers 2024, 011; 10.5089/9798400272400.007.A002

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7. All SSN benefits show highest adequacy at the bottom of the income distribution (Figure 2). LEAP represents about 7.7 percent of the consumption of households receiving it. The same figure amounts to 3.1 percent and 3.5 percent for the School Feeding program and the SHS respectively. For all benefits the adequacy declines with household resources. Specifically, LEAP’s adequacy declines from 12.7 percent in Q1 to 4.1 percent in Q5, the School Feeding program share of equivalized income declines from 7.9 to 1.1 percent; the adequacy of the SHS declines from 9 to 2.2 percent.

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Adequacy of Benefits: Main SSN Programs in Ghana

(In percent of household consumptions)

Citation: Policy Papers 2024, 011; 10.5089/9798400272400.007.A002

Sources: Fund staff estimates using SOUTHMOD

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8. The school feeding program has the largest poverty reduction properties, followed by SHS and LEAP. Out of a baseline poverty rate of 24.6 percent, the school feeding shows poverty reduction properties of 1 percentage point, i.e., poverty would have been one percentage points higher in the absence of the program. The SHS reduces poverty by 0.4 percentage points, while LEAP by 0.2 percentage points. The school feeding program reduces the poverty gap by 0.81, followed by LEAP (0.31) and SHS (0.18).

^{Table 1.}

Poverty Reduction of Main SSN Programs

(In percent)

Sources: Fund staff estimates using SOUTHMOD

^{Table 1.}

Poverty Reduction of Main SSN Programs

(In percent)

Baseline Poverty Rate	Poverty Reduction
	LEAP	School feeding	SHS
24.60	0.20	0.98	0.20
Baseline Poverty Gap	Poverty Gap Reduction
	LEAP	School feeding	SHS
8.85	0.31	0.81	0.09

Sources: Fund staff estimates using SOUTHMOD

View Table

^{Table 1.}

Poverty Reduction of Main SSN Programs

(In percent)

Baseline Poverty Rate	Poverty Reduction
	LEAP	School feeding	SHS
24.60	0.20	0.98	0.20
Baseline Poverty Gap	Poverty Gap Reduction
	LEAP	School feeding	SHS
8.85	0.31	0.81	0.09

Sources: Fund staff estimates using SOUTHMOD

Reform Scenarios for LEAP

9. We evaluated two scenarios to enhance the SSN impact on poverty reduction: (i) increasing benefits while keeping the coverage and (ii) expanding coverage while keeping benefit amounts constant, aiming for a LEAP program budget of 0.5 percent of GDP. Table 2 shows the outcomes in poverty reduction, coverage, adequacy, and the percentage of the total benefits going to the households in Q1. In the benefit increase scenario, achieving 0.5 percent of GDP expenditure would mean decupling the current transfers, representing up to 60 percent of beneficiary households’ consumption in Q1, well above the 20 percent international benchmark. This is expected to reduce poverty by 2.9 percentage points. Conversely, relaxing eligibility criteria to increase coverage could lower poverty by 4.1 percentage points. However, it would also decrease the benefit share for the poorest from 57.5 percent to 35.6 percent, indicating higher leakage. Improvement in targeting will allow the government to achieve similar poverty reduction with less than half the proposed budget.

^{Table 2.}

Characteristics and Poverty Reduction Reform Scenarios

Sources: Fund staff estimates using SOUTHMOD

^{Table 2.}

Characteristics and Poverty Reduction Reform Scenarios

	Actual	Benefit increase	Coverage expansion
Panel A: Poverty reduction effects
Poverty Rate reduction (p.p)	0.20	2.88	4.09
Poverty Gap reduction (p.p)	0.31	2.07	2.19
Panel B: Scheme characteristics
Coverage Q1	21.71	21.71	100
% benefit received by Q1	57.48	57.48	35.56
Benefit Adequacy	12.65	60.57	14.74

Sources: Fund staff estimates using SOUTHMOD

View Table

^{Table 2.}

Characteristics and Poverty Reduction Reform Scenarios

	Actual	Benefit increase	Coverage expansion
Panel A: Poverty reduction effects
Poverty Rate reduction (p.p)	0.20	2.88	4.09
Poverty Gap reduction (p.p)	0.31	2.07	2.19
Panel B: Scheme characteristics
Coverage Q1	21.71	21.71	100
% benefit received by Q1	57.48	57.48	35.56
Benefit Adequacy	12.65	60.57	14.74

Sources: Fund staff estimates using SOUTHMOD

Description of the Main Social Safety Net Benefits

10. Mozambique’s primary social transfer is the Basic Social Subsidy Programme (BSSP). The BSSP is a cash transfer to low-income households belonging to one of the following categories: a) having a member who is permanently unable to work due to age, chronic illness, or disability; b) containing malnourished children or orphan children living in poverty; c) households headed by an orphan aged 14 to 18. The assessment of benefit eligibility includes means tests at both the individual and household levels. The BSSP is implemented in all districts, but geographical gaps in coverage exists. As of 2022, the monthly transfer depends on household composition, ranging from MZN 540 (USD 8.46, equivalent to 1.56 percent of per capita GDP) to MZN 1000 per household (USD 15.66, 2.89 percent of per capita GDP). The benefit reaches 492 thousand households, about 8.7 percent of the household population. Annual spending on the benefit amounts to 0.4 percent of GDP.⁴

Assessment of Social Safety Nets

11. The BSSP has limited efficiency in targeting and coverage. The targeting and coverage indicators of BSSP are relatively uniform across welfare quintiles, with the exception of the richest. Quintile groups from Q1 to Q4 receive between 20 and 24 percent of the total benefit each; coverage ranges from 12 percent of household in Q1 to 9 percent in Q4. The poor targeting observed could originate from the fact that both means tests are based on incomes from employment and pensions, while welfare quintiles are based on consumption.

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Coverage and Targeting of the BSSP Program in Mozambique

Citation: Policy Papers 2024, 011; 10.5089/9798400272400.007.A002

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12. The BSSP adequacy decreases steeply with household resources. Adequacy ranges from 34 percent of household consumption in Q1 to 3 percent in Q5. The BSSP account on average for 8.54 percent of household consumption at the country level.

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Adequacy of Benefits: The BSSP Program in Mozambique

(In percent of household consumptions)

Citation: Policy Papers 2024, 011; 10.5089/9798400272400.007.A002

Sources: Fund staff estimates using SOUTHMOD

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13. The poverty reduction properties of the BSSP are modest. With a baseline poverty rate of 47.49 percent, the BSSP contributes to a reduction of 0.5 percentage points (Table 3). The program reduces the poverty gap by 0.58. It should be noted that both poverty rate and poverty gap are well above the value observed in other countries analyzed in these case studies.

^{Table 3.}

Poverty Reduction of the BSSP Program

(In percent)

Sources: Fund staff estimates using SOUTHMOD

^{Table 3.}

Poverty Reduction of the BSSP Program

(In percent)

Baseline Poverty Rate	Poverty Reduction
	BSSP
47.49	0.49
Baseline Poverty Gap	Poverty Gap Reduction
	CG
21.91	0.58

Sources: Fund staff estimates using SOUTHMOD

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^{Table 3.}

Poverty Reduction of the BSSP Program

(In percent)

Baseline Poverty Rate	Poverty Reduction
	BSSP
47.49	0.49
Baseline Poverty Gap	Poverty Gap Reduction
	CG
21.91	0.58

Sources: Fund staff estimates using SOUTHMOD

Reform Scenarios for BSSP

14. Consistent with other case studies, we evaluate two reform scenarios. First, we increase the BSSP generosity by 25 percent, with unchanged coverage; second, we expand coverage to those fulfilling eligibility conditions but not receiving the benefit in 2022, maintaining benefit levels constant. In both scenarios, we target a BSSP budget of 0.5 percent of GDP (i.e., extra 0.1 percent compared to baseline). Table 8 shows that increasing benefit generosity, improves marginally the poverty reduction properties of the scheme. Under this scenario, the transfer would account for 40 percent of Q1 beneficiary households’ consumption, potentially reducing poverty by 0.58 percentage points. Expanding coverage would have similar poverty reduction properties. Different from other case studies, the poverty reduction properties remain limited even in the reform scenarios. A mix of factors contribute to this finding. First, considering the high level of poverty rate and poverty gap in the baseline, the BSSP is not generous enough to lift from poverty households from the bottom of the income distribution. Only households already close to the poverty threshold exit poverty. Second, the total benefit already amounts to 0.4 percent of GDP in the baseline, so there is limited fiscal space for benefit increase.

^{Table 4.}

Characteristics and Poverty Reduction Reform Scenarios

Sources: Fund staff estimates using SOUTHMOD

^{Table 4.}

Characteristics and Poverty Reduction Reform Scenarios

	Actual	Benefit increase	Coverage expansion
Panel A: Poverty reduction effects
Poverty Rate reduction (p.p)	0.49	0.58	0.59
Poverty Gap reduction (p.p)	0.58	0.70	0.72
Panel B: Scheme characteristics
Coverage Q1	11.82	11.82	14.99
% benefit received by Q1	23.98	23.98	24.29
Benefit Adequacy	33.6	40.02	33.8

Sources: Fund staff estimates using SOUTHMOD

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^{Table 4.}

Characteristics and Poverty Reduction Reform Scenarios

	Actual	Benefit increase	Coverage expansion
Panel A: Poverty reduction effects
Poverty Rate reduction (p.p)	0.49	0.58	0.59
Poverty Gap reduction (p.p)	0.58	0.70	0.72
Panel B: Scheme characteristics
Coverage Q1	11.82	11.82	14.99
% benefit received by Q1	23.98	23.98	24.29
Benefit Adequacy	33.6	40.02	33.8

Sources: Fund staff estimates using SOUTHMOD

Description of the Main SSN Benefits

15. The Productive Social Safety Net (PSSN) program is the main social program in Tanzania. The PSSN consists of a basic cash transfer paid to low-income households and a top-up cash transfer related to household composition (number of children of various age groups, number of people with disability). Eligibility is based on PMT and community inputs. As of 2022, about 685 thousand households (6 percent of the household population) benefit from PSSN, with total spending amounting to 0.14 percent of GDP. The basic cash transfer amounts to 12 thousand TZS per month for households with at least one adult (0.4 percent of per-capita GDP) and an additional 5 thousand TZS per month for households with at least one child (0.18 percent of GDP). The top-up amounts depend on the household composition, with the average benefit amounting to 30.6 thousand TZS per month (1.1 percent of per capita GDP).

16. This case study focuses solely on the PSSN and does not analyze other SSN components. The SSN encompasses various other initiatives, such as the public work component within the PSSN, the National Agriculture Input Voucher Scheme (NAIVS), and the Bed Net Program, which distributes anti-mosquito nets. However, these components are not included in the scope of this case study analysis.

Assessment of Social Safety Nets

17. The PSSN demonstrates high efficiency in beneficiary selection, effectively directing 83 percent of its benefits to households within the lowest two income quintiles (Figure 5). This precision in targeting ensures that most of the program’s resources are allocated to its intended recipients, effectively minimizing leakage to non-poor households. However, coverage remains a critical area for enhancement. Currently, the PSSN extends to merely 25 percent of households in the lowest quintile and only 8 percent in the second quintile. As household consumption levels rise, the coverage of the PSSN diminishes, extending to just 1 percent of households in the fourth and fifth quintiles. This robust targeting mechanism is primarily attributed to the program’s dual strategy, which blends means-tested targeting with community-based selection, effectively identifying and enrolling predominantly impoverished families, aligning closely with the program’s core objectives of poverty alleviation and social protection.

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Coverage and Targeting of the PSSN Program in Tanzania

Citation: Policy Papers 2024, 011; 10.5089/9798400272400.007.A002

Sources: Fund staff estimates using SOUTHMOD.

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18. The PSSN exhibits its highest benefit adequacy at the bottom of the consumption distribution (Figure 6) yet remains modest compared to international best practices. For households receiving PSSN benefits, these account for approximately 11 percent of their consumption. The benefit adequacy declines with household consumption and represents a significant proportion of the consumption for households in Q1. Specifically, PSSN adequacy decreases from 14.8 percent in Q1 to a mere 3.1 percent in Q5, highlighting its targeted support to the most vulnerable households.

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Adequacy of Benefits: The PSSN Program in Tanzania

(In percent of household consumptions)

Citation: Policy Papers 2024, 011; 10.5089/9798400272400.007.A002

Sources: Fund staff estimates using SOUTHMOD

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19. The poverty-reducing properties of the PSSN are modest. Despite the good work of the program in selecting poor households, the program fails to lift a significant portion of households out of poverty. This limited impact is attributable to the relatively modest benefits, as well as low coverage. With a baseline poverty rate of 25.62 percent, the PSSN contributes to a marginal reduction of 0.62 percentage points (Table 5). Furthermore, the program reduces the poverty gap by 0.56. It should be noted that both the poverty rate and the poverty gap are in line with the values observed in other countries analyzed in these case studies.

^{Table 5.}

Poverty Reduction of the PSSP Program

(In percent)

Sources: Fund staff estimates using SOUTHMOD

^{Table 5.}

Poverty Reduction of the PSSP Program

(In percent)

Baseline Poverty Rate	Poverty Reduction
	PSSN
25.62	0.62
Baseline Poverty Gap	Poverty Gap Reduction
	PSSN
6.27	0.56

Sources: Fund staff estimates using SOUTHMOD

View Table

^{Table 5.}

Poverty Reduction of the PSSP Program

(In percent)

Baseline Poverty Rate	Poverty Reduction
	PSSN
25.62	0.62
Baseline Poverty Gap	Poverty Gap Reduction
	PSSN
6.27	0.56

Sources: Fund staff estimates using SOUTHMOD

20. When looking at the tax-benefit system, we found that, on average, all households are net contributors in Tanzania. The tax system in Tanzania imposes a progressively heavier burden with increasing household consumption. Even those in the first quintile, the lowest income group, are net contributors to the system, contributing 4.1 percent of their consumption. For the poorest 20 percent, benefits constitute 3.9 percent of household consumption and 0.03 percent for the top quintile. Direct taxes represent 12.2 percent of consumption for the highest quintile, compared to 3.2 percent for the lowest. The burden of indirect taxes also increases with consumption, rising from 4.7 percent in the lowest quintile to 7.7 percent in the highest.

Reform Scenarios for BSSP

21. In line with the other case studies, we evaluate two reform scenarios for the PSSN: enhancing benefit generosity and expanding coverage, both targeting a budget of 0.5 percent of GDP. The first scenario involves a 173 percent increase in PSSN generosity without altering coverage, while the second entails extending coverage to all eligible households not currently receiving benefits in 2022, keeping benefit levels constant. Enhancing benefit generosity significantly reduces the poverty rate (Table 6). In this scenario, the transfer would represent 37.5 percent of consumption for households in the first quintile (Q1), potentially reducing poverty by 3.16 percentage points – a fivefold compared to the current impact of the program. The poverty gap will be reduced by 1.37 percentage points.

22. Expanding PSSN coverage, while less impactful in poverty reduction, significantly increases coverage and reduces the poverty gap. Expanding coverage under the PSSN would lead to a slightly lesser effect on poverty reduction compared to increasing benefits, but it would significantly enhance the program’s coverage. This expansion would result in the program covering 84.3 percent of households in Q1, given the efficiency of the current targeting mechanism. Due to this extensive coverage among poor households, the poverty gap would be notably reduced by 1.92 from a baseline of 6.27. The reason for the lower poverty reduction effect, relative to the benefit increase scenario, is attributed to the fact that while increased coverage brings more households closer to the poverty line, the amount transferred is insufficient to fully lift them out of poverty.

^{Table 6.}

Characteristics and Poverty Reduction Reform Scenarios

Sources: Fund staff estimates using SOUTHMOD

^{Table 6.}

Characteristics and Poverty Reduction Reform Scenarios

	Actual	Benefit increase	Coverage expansion
Panel A: Poverty reduction effects
Poverty Rate reduction (p.p)	0.62	3.16	2.89
Poverty Gap reduction (p.p)	0.56	1.37	1.92
Panel B: Scheme characteristics
Coverage Q1	24.57	24.57	84.28
% benefit received by Q1	63.25	63.25	62.98
Benefit Adequacy	14.76	37.53	14.27

Sources: Fund staff estimates using SOUTHMOD

View Table

^{Table 6.}

Characteristics and Poverty Reduction Reform Scenarios

	Actual	Benefit increase	Coverage expansion
Panel A: Poverty reduction effects
Poverty Rate reduction (p.p)	0.62	3.16	2.89
Poverty Gap reduction (p.p)	0.56	1.37	1.92
Panel B: Scheme characteristics
Coverage Q1	24.57	24.57	84.28
% benefit received by Q1	63.25	63.25	62.98
Benefit Adequacy	14.76	37.53	14.27

Sources: Fund staff estimates using SOUTHMOD

Description of the Main Social Safety Net Benefits

23. Uganda’s flagship social protection program is the Senior Citizens Grant (SCG), which provides cash benefits to senior citizens, and the only eligibility criterion is age. Initially, the program targeted individuals over 65 in specific districts (lowered to 60 in the Karamoja region). In 2020, it expanded to encompass all seniors aged 80 and above nationwide. This increased age criterion is now uniformly applied, although beneficiaries registered prior to July 2020 maintain their eligibility. As of 2022, the program disburses UGX 25,000 monthly per beneficiary (USD 6.75), accounting for 8.7 percent of per capita GDP. Currently, the SCG reaches about 645,000 individuals, representing 42 percent of those over 65, with its total spending constituting 0.12 percent of GDP.

24. Other social programs exist, but their analysis falls beyond the scope of this study. The Extremely Vulnerable Households Program offers in-kind and cash transfers to food-deprived households in the Karamoja region. The program reached 215,218 households in 2018, less than 2.5 percent of national households. The Youth Livelihood Program and the Uganda Women’s Entrepreneurship Program focus on empowering youth and women through skill training and project financing. Meanwhile, the Operation Wealth Creation initiative aims to transition subsistence agriculture to commercial levels by providing agricultural inputs.

Assessment of Social Safety Nets

25. The SCG program shows limited progressivity and experiences significant leakages toward better off households by design. While the largest proportion of the transfers goes to households in the lowest consumption quintile, those going to households in Q2 to Q5 are relatively uniform, with each quintile receiving, on average, 19 percent of the benefits. The program’s sole eligibility criterion is age, with no linkage to household consumption levels. This absence of a Proxy Means Test (PMT) or other targeting mechanisms accounts for the SCG’s moderate progressivity and significant leakages; around 76 percent of the total benefits go to non-poor households. On average, 6.4 percent of households benefit from the SCG, with the highest coverage among the poorest 20 percent, where 8.8 percent of households have at least one beneficiary. Coverage decreases with rising consumption levels, dropping to 4 percent in the highest quintile.

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Coverage and Targeting of the SCG Program in Uganda

Citation: Policy Papers 2024, 011; 10.5089/9798400272400.007.A002

Sources: Fund staff estimates using SOUTHMOD

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26. The SCG program shows the highest adequacy at the bottom of the consumption distribution (Figure 8). The SCG accounts for approximately 7.6 percent of consumption for beneficiary households. This adequacy diminishes as household consumption increases, ranging from 26.3 percent in the lowest quintile to 2.5 percent in the highest quintile. Notably, among poor households benefiting from the program, the SCG comprises a significant proportion of their total household consumption.

27. The poverty alleviation impact of the SCG program, while modest, aligns with trends observed in other SSA countries. With a baseline poverty rate of 20.4 percent, the SCG contributes to a reduction of 0.6 percentage points (Table 7). In other words, in the absence of the SCG, the poverty rate would have been higher by this margin. This level of poverty mitigation is consistent with outcomes in similar countries, considering the program’s budget allocation.

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Adequacy of Benefits: The SCG Program in Uganda

(In percent of household consumptions)

Citation: Policy Papers 2024, 011; 10.5089/9798400272400.007.A002

Sources: Fund staff estimates using SOUTHMOD

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^{Table 7.}

Poverty Reduction of the SCG Program

(In percent)

Sources: Fund staff estimates using SOUTHMOD

^{Table 7.}

Poverty Reduction of the SCG Program

(In percent)

Baseline Poverty Rate	Poverty Reduction
	SCG
20.37	0.57
Baseline Poverty Gap	Poverty Gap Reduction
	SCG
5.27	0.34

Sources: Fund staff estimates using SOUTHMOD

View Table

^{Table 7.}

Poverty Reduction of the SCG Program

(In percent)

Baseline Poverty Rate	Poverty Reduction
	SCG
20.37	0.57
Baseline Poverty Gap	Poverty Gap Reduction
	SCG
5.27	0.34

Sources: Fund staff estimates using SOUTHMOD

Reform Scenarios for SCG

28. We evaluated two reform scenarios: (i) increasing benefits with unchanged coverage; and (ii) expanding coverage to all seniors and newborn, maintaining benefit levels, targeting a SCG budget of 0.5 percent of GDP. Table 6 presents a detailed analysis of the potential impact on poverty reduction, coverage, adequacy, and the allocation of total benefits to households in the lowest consumption quintile. In the scenario of increasing benefits to achieve 0.5 percent of GDP in expenditures, a more than fourfold increase in the current transfer amounts is required. Under this scenario, the transfer would account for 60 percent of Q1 beneficiary households’ consumption, potentially reducing poverty by 1.72 percentage points. A larger reduction in poverty, estimated at 2.1 percentage points, could be achieved by expanding the coverage to include all individuals over 65 and all newborn while maintaining the transfer at UGX 25,000. However, this coverage expansion, lacking specific targeting measures and including children, leads to a decrease in the proportion of benefits reaching the poorest 20 percent, thereby increasing leakages. Consequently, incorporating a targeting mechanism could yield comparable reductions in poverty with significantly lower resource requirements.

^{Table 8.}

Characteristics and Poverty Reduction Reform Scenarios

Sources: Fund staff estimates using SOUTHMOD

^{Table 8.}

Characteristics and Poverty Reduction Reform Scenarios

	Actual	Benefit increase	Coverage expansion
Panel A: Poverty reduction effects
Poverty Rate reduction (p.p)	0.57	1.65	1.68
Poverty Gap reduction (p.p)	0.34	0.64	0.77
Panel B: Scheme characteristics
Coverage Q1	8.80	8.80	26.32
% benefit received by Q1	24.07	24.07	18.62
Benefit Adequacy	26.35	56.35	18.36

Sources: Fund staff estimates using SOUTHMOD

View Table

^{Table 8.}

Characteristics and Poverty Reduction Reform Scenarios

	Actual	Benefit increase	Coverage expansion
Panel A: Poverty reduction effects
Poverty Rate reduction (p.p)	0.57	1.65	1.68
Poverty Gap reduction (p.p)	0.34	0.64	0.77
Panel B: Scheme characteristics
Coverage Q1	8.80	8.80	26.32
% benefit received by Q1	24.07	24.07	18.62
Benefit Adequacy	26.35	56.35	18.36

Sources: Fund staff estimates using SOUTHMOD

Description of Main Social Safety Net Benefits

29. Budget allocations within SSN programs in Zambia vary significantly, with the SCT program budget allocation being the largest, amounting to approximately 0.44 percent of GDP. According to SOUTHMOD simulations, agricultural benefits not covered in this note have the second-highest allocation. Meanwhile, the school meal program, benefiting from its policy of using local products, gets 0.1 percent of GDP despite broader coverage. Smaller allocations are seen in the SWL and KGS programs, complementing the SCT, at 0.05 and 0.01 percent of GDP, respectively. It should be noted that these figures only cover transfer costs and exclude the administrative expenses of the programs.

30. Zambia’s flagship social assistance program SCT targets labor-constrained individuals and extremely poor households. SCTs employs proxy means tests, categorical targeting, and community input, to identify potential beneficiaries. Moreover, beneficiary households must fall into one of the following categories: Households with an elderly person; households with members with severe disability; households with members who are chronically il and on palliative care; child-headed households; female-headed households with at least three children. As of 2022, the SCT is operational in all 116 districts, providing bi-monthly cash transfers of 400 ZMW. Households with severely disabled members receive a higher benefit of 800 ZMW. In 2022, the program benefitted 680 thousand households, with an average annual transfer of ZMW 3283 (equivalent to 13 percent of GDP per capita).

31. Other social assistance programs work alongside the SCT in Zambia’s effort to combat poverty. Key among these programs are:

• Supporting Women’s Livelihoods (SWL): The SWL is one component of the Girls Education and Women Empowerment and Livelihoods (GEWEL) Project. SWL provides training, grants, and support, primarily to women in SCT beneficiary households in targeted districts. In 2022, a total of 50.2 thousand households received a one-time transfer of ZMW 4442 (USD 225, equivalent to 15 percent of GDP per capita).

• Keeping Girls in School (KGS): Operating under the GEWEL initiative, the KGS program aim to enhance secondary education access for girls aged 14 to 18 from extremely poor households in 39 districts. Targeting girls in SCT households, KGS provides school fee vouchers and, since 2021, an additional lump-sum equivalent of 15 per cent of the annual SCT amount for school-related incidentals like uniforms and shoes. In 2022, the program reached almost 56 thousand girls or 2.7 percent of all girls aged 14 to 18 in the country. Beneficiary girls received an average transfer of ZMW 1466, amounting to 5.81 percent of GDP per capita,

• Home-Grown School Meal Program (HGSM): Managed by the Ministry of General Education, the HGSM initiative operates in 70 districts, providing daily free meals to public school students using locally sourced products. The program, linked to school attendance. In 2022, 1.3 million students received benefits from the program, comprising 54 percent of the school-aged population (5 to 14). The value of the provided meals amounted to ZMW 397 per child annually, equivalent to 1.57 percent of GDP per capita.

Assessment of Social Safety Nets

32. In Zambia, the reach and accuracy of different SSN programs vary substantially. On average, about 60 percent of these programs’ benefits go to the poor, those in the bottom 40 percent of the consumption distribution (Figure 9). The school feeding program and the SCT are the biggest and most widespread, reaching 41 and 38 percent of the poorest families, respectively. Smaller programs like the SWL and the KGS don’t reach as many households. Importantly, SWL does a great job of targeting the right people, giving 94 percent of its benefits to the bottom 40 percent of the consumption distribution. However, there is room for improvement on the targeting instrument used by the other programs, as around 20 percent of their benefits go to the households on the top 40 of the consumption distribution.

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Coverage and Targeting of Main SSN Programs in Zambia

Citation: Policy Papers 2024, 011; 10.5089/9798400272400.007.A002

Sources: Fund staff estimates using SOUTHMOD

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33. SSN program transfers form a notable portion of beneficiary household’s consumption, especially for the households in the bottom 20 percent of the consumption distribution. SCT program transfers account for 28 percent of the household consumption for households in the lowest quintile (Figure 10). This importance decreases as household consumption increases. The school feeding program, with the broadest coverage, provides smaller benefits, averaging 7 percent of the household consumption of households in the bottom 20 percent, and 1 percent for those in the highest quintile. SWL program benefits are comparable to the SCT, and households benefiting from both programs can see transfers amounting to as much as 57 percent of their consumption. Benefits from the KGS initiative are similar in scale to the school meal program.

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Adequacy of Main SSN Programs in Zambia

(In percent of household consumptions)

Citation: Policy Papers 2024, 011; 10.5089/9798400272400.007.A002

Sources: Fund staff estimates using SOUTHMOD

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34. The effectiveness of SSN programs in poverty alleviation in Zambia is closely linked to their respective budget allocations. This correlation is evident in the substantial contribution of the SCT to poverty reduction, where it effectively lowers the poverty rate by two percentage points. Without the program, the poverty rate would escalate to 40.8 percent (Table 9). The KGS program, being the smallest in terms of budget, has a correspondingly lesser impact on poverty reduction, reducing it by only 0.08 percentage points. The targeted nature of these programs not only reduces the poverty headcount but also significantly narrows the poverty gap. The magnitude of the poverty gap reduction mirrors that of the reduction in the poverty rate.

^{Table 9.}

Poverty Reduction of Main SSN Programs

(In percent)

Sources: Fund staff estimates using SOUTHMOD

^{Table 9.}

Poverty Reduction of Main SSN Programs

(In percent)

Baseline Poverty Rate	Poverty Reduction
	SCT	School meal	SWL	KGS
38.76	2.05	0.56	0.39	0.08
Baseline Poverty Gap	Poverty Gap Reduction
	SCT	School meal	SWL	KGS
15.46	1.94	0.55	0.32	0.06

Sources: Fund staff estimates using SOUTHMOD

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^{Table 9.}

Poverty Reduction of Main SSN Programs

(In percent)

Baseline Poverty Rate	Poverty Reduction
	SCT	School meal	SWL	KGS
38.76	2.05	0.56	0.39	0.08
Baseline Poverty Gap	Poverty Gap Reduction
	SCT	School meal	SWL	KGS
15.46	1.94	0.55	0.32	0.06

Sources: Fund staff estimates using SOUTHMOD

Reform Scenarios for SCT

35. We evaluated two SSN reform scenarios: (i) increasing the SCT benefit while keeping the coverage, and (ii) expanding coverage while keeping the benefit constant, aiming for SCT program expenditure at 0.5 percent of GDP. Table 4 details the effects on poverty reduction, coverage, and benefit distribution, particularly for households in the first quintile. Boosting spending from 0.44 to 0.5 percent of GDP translates into a 9.14 percent rise in household transfers in the first quintile, resulting in an additional 0.39 percentage point drop in the poverty rate. Alternatively, broadening coverage by easing eligibility nearly doubles first quintile beneficiaries to 65.5 percent of households. This strategy reduces leakages to non-poor households, with 66 percent of benefits reaching the poorest 40 percent, up from the current 56 percent. Such a reform could significantly reduce poverty, potentially decreasing the poverty headcount rate up to 3.52 percentage points.⁵

^{Table 10.}

Characteristics and Poverty Impact Reform Scenarios

Sources: Fund staff estimates using SOUTHMOD

^{Table 10.}

Characteristics and Poverty Impact Reform Scenarios

	Actual	Benefit increase	Coverage expansion
Panel A: Poverty reduction effects
Poverty Rate reduction (p.p)	2.05	2.44	3.52
Poverty Gap reduction (p.p)	1.94	2.16	3.39
Panel B: Scheme characteristics
Coverage Q1	37.75	37.75	65.46
% benefit received by Q1	28.68	28.68	36.55
Benefit Adequacy	27.90	30.45	24.30

Sources: Fund staff estimates using SOUTHMOD

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^{Table 10.}

Characteristics and Poverty Impact Reform Scenarios

	Actual	Benefit increase	Coverage expansion
Panel A: Poverty reduction effects
Poverty Rate reduction (p.p)	2.05	2.44	3.52
Poverty Gap reduction (p.p)	1.94	2.16	3.39
Panel B: Scheme characteristics
Coverage Q1	37.75	37.75	65.46
% benefit received by Q1	28.68	28.68	36.55
Benefit Adequacy	27.90	30.45	24.30

Sources: Fund staff estimates using SOUTHMOD