Pivoting to cash-based poverty relief during COVID-19

Students at a vocational skills training centre in South Africa.

New form of welfare for people living in poverty in South Africa, enables the government to provide assistance through cash grants rather than food parcels.

Traditionally, welfare support in low-income countries is given in the form of food parcels rather than cash. Policymakers perceive there is a risk of money being spent on non-essential items.

In South Africa, as elsewhere in the world, the COVID-19 lockdowns brought devastating mass layoffs and poverty. Efforts to distribute food parcels began in April 2020, but the government struggled to implement this emergency relief at scale. One in five people were going to bed hungry, and 9.8 million households were unable to buy enough food to cover basic needs during lockdown.

Research by Dr Kate Orkin, University of Oxford, provided insights that helped the South African government design and implement a radical new welfare response to the pandemic. The innovative approach was based on her Economic and Social Research Council-funded (ESRC) research on ‘unconditional cash transfers’, where money is distributed, without conditions, directly to poor households.

The recommendations led the South African government to provide emergency relief as cash, rather than food parcels, with £7 billion distributed in grants to 28 million people. The emergency relief programme led to 5.5 million fewer people facing poverty and hunger between April and June 2020.

The research also informed government policy to introduce a new monthly grant for unemployed people previously ineligible for welfare, which is estimated to have resulted in 1.4 million fewer people living in food poverty each month.


Video credit: ESRC 
Video transcript and on-screen captions are available by watching on YouTube. 

About the project

Prior to the COVID-19 pandemic, Dr Orkin conducted an ESRC-funded trial that evaluated unconditional cash transfers. The 18-month experiment, conducted in Kenya across 415 villages with a population of over 8,000 people, tested this new approach to welfare distribution.

The research revealed that, contrary to many policymakers’ perceptions, households receiving welfare as cash used the money for a broad range of useful purposes. They increased spending on food and improved the quality of their housing. They started new businesses, invested in existing economic activities, worked more hours and increased their income.

When South Africa was impacted by COVID-19, Dr Orkin drew on this research and led a team of academic collaborators, including Ingrid Woolard, Murray Leibbrandt and Maya Goldman from the University of Cape Town. They advised a number of South African government agencies on the government’s welfare response to the pandemic.

Dr Orkin explains:

The economic crisis required an immediate, urgent, policy response. There was no time to conduct academic trials to test targeting and welfare grant design features. So we had to rely on existing studies and data, including the ESRC-funded large-scale welfare support study that I conducted in Kenya pre-COVID.

The team produced a series of rapid reviews of the evidence on cash transfers in low and middle-income countries to determine how best to design a grant that would deliver assistance to those most in need. They also developed a model to simulate the South African economy and evaluate the effectiveness of different grant design options on poverty reduction, using government registry data and household survey data.

The evidence reviews, economic modelling and recommendations were then presented and discussed in regular workshops with the South African Presidency, Department of Social Development and Social Assistance Agency.

Dr Orkin says:

My research led to recommendations to the South African government to implement the distribution of cash directly to poor households without conditions during the COVID-19 emergency. Based on this evidence, the government rapidly shifted to delivering emergency relief as cash, instead of food parcels.

This approach was scaled at pace. The number of people reached through this intervention went from 1.2 to 28 million in weeks.

Impact of the project

The emergency relief programme directly reduced poverty and hunger in South Africa during COVID-19. Dr Orkin’s research also informed a new unemployment grant that is expected to reduce food poverty beyond the pandemic.

Directly reduced poverty and hunger

Policies based on Dr Orkin’s research have led the South African government to send more than £7 billion through unconditional cash transfers, about 3% of their annual gross domestic product, to the country’s poorest households since April 2020. Other independent research in South Africa found the shift to unconditional cash transfers kept 5.5 million people out of severe food poverty.

As part of this new policy the government provided a new £30 monthly cash grant to 10.5 million unemployed people living in poverty for most months from May 2020 to April 2023, and made extra payments to 18 million existing child benefit and pension recipients.

The main beneficiaries of these payments have been those living in food poverty or below the breadline, people who earn or receive less in income each month than the amount a person needs to buy sufficient calories. This particularly affects children in these households as they lack sufficient nutrients to grow and develop properly.

Saul Musker, Director, Project Management office, Private Office of the President of South Africa, says:

South Africa implemented one of the most rapid, far-reaching and effective emergency welfare programmes in the world in response to the COVID-19 pandemic. Our government drew on the advice, data and evidence of Dr Orkin, and researchers at the University of Cape Town, about delivering emergency assistance to the most vulnerable South Africans as well as their recommendations on increasing employment in the longer term.

We made major policy changes, including the largest expansion of the social safety net since the early 2000s, based on the modelling and literature done by these researchers.

New support to help unemployed search for work

Based on Dr Orkin’s evidence and recommendations, the South African government also implemented a new monthly cash grant for 10.5 million able-bodied unemployed people who were previously ineligible for welfare. The programme has enabled people to receive costs to look for work and, in doing so, stimulate local economies.

Independent research found that the grant increased the probability of job searches by 36%. Simulations by Dr Orkin found this new cash grant approach for unemployed people is currently leading to 1.4 million fewer people living in food poverty each month and the government is working to make the unemployment cash grant permanent.

Saul Musker, Director, Project Management office, Private Office of the President of South Africa, says:

Based on Dr Orkin’s research and modelling, we established the temporary Social Relief of Distress Grant, the first comprehensive unemployment grant in Africa. The grant will have reached over 10 million recipients by the end of the first quarter 2023. And we are now targeting the unemployment grant using banking data which reduces our costs of distributing it.

Find out more

Getting cash-based poverty relief to the poorest quickly during COVID-19.

Top image:  Students at a vocational skills training centre in South Africa. Credit: Sunshine Seeds, Alamy Stock Photo

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