How effective are social grants in supporting families? Tax-benefit model family analysis 3 rd ISCI Conference, York, July 2011 Petra Hoelscher UNICEF Namibia

2 nd lowest population density in the world

Some scenery Highest sand dunes in the world

Highest income inequality in the world Source: UNDP HDR 2009

Source: World Bank WDI and UNDESA 2009 Poverty rates (USD 1.25) & GDP per capita

Namibia – one of the few African countries with government funded social grant system  Basic state grants – universal old age pensions and pension for people with disabilities: N$ 500  Child welfare grants – child maintenance grants (mainly for orphans), foster care grants and special maintenance grants (for children with disabilities): N$ 200  War veteran grants – for participants in liberation struggle: N$ 2000  Contributory social security – provisions for maternity, long term sickness, work-related accidents/illness/death But system not geared towards poverty reduction

Orphaned Children (155,000) Foster Children Vulnerable & Poor Children Child Welfare Grants (127,000) NHIES: Child poverty profile Impact of social grants on poverty Social Protection Qualitative Assessment: How do poor children live? How do services and systems interact with poor families and their children Will Better inform programming outcomes SA Study tour How it will work in practice Expected costs, experiences & lessons learned Administrative processes STRATEGY & THE HOW Tax-benefit model family analysis: Visualises child poverty Potential impact of social grants Modelling impact of alternative policy options Different policy options Modelling & costing of alternative policy options Strategies for gradually phasing in

Tax-benefit model family analysis Mapping out for different typical model families  different income levels (formal and informal)  income taxes paid  social contributions paid  social grants received  expenditure for child health package (children at different ages)  expenditure for education (urban/rural)  How much income is left for the family?  How far away are they from the poverty line?  Can social grants reduce poverty?  Alternative policy options

Basic assumptions  Families have one earner  Everybody in the formal sector pays tax and social contributions  No private pensions & health insurance taken into account  Anybody entitled to benefits gets them  Child welfare grants paid to orphaned children  Education cost include: school development fund, school uniforms (incl. track suits), stationery, extra-curricular activities – costs in urban areas considered higher than in rural  Health cost include: annual clinic fees for children for standard health package: immunisation & growth monitoring for infants and U5, bednets for U5, health and dental check-ups for primary school children  Costs do not include transport to school or clinics

Methodological challenges  Family structures are very complex and variable (for adults and children in the household), issue of kinship care, incl. for children with both parents alive  No reliable data on household composition from census or NHIES  Income difficult to estimate, often irregular  Analysis focuses on low income jobs, covering majority of population; 51.2% unemployment  many families no income & no income support  Analysis applies consumption poverty line to income – home consumption, support from relatives, remittances etc. not taken into account  Poverty line comparatively low

How to determine the poverty line Poverty line NHIES 2003/04: N$ per adult equivalent per month  adults, 16 years and over – 1  children, 6-15 – 0.75  poverty line: N$  children, 0-5 – 0.5  poverty line: N$ Uprating based on Consumer Price Index Food index 2003: 121.6July 2010: Adjusted poverty line: N$ per adult equivalent per month  adults, 16 years and over – 1  children, 6-15 – 0.75  poverty line: N$  children, 0-5 – 0.5  poverty line: N$ (Exchange rate: approx. N$ 7 –US$ 1, N$ 10 – 1 €)

Case 1: 2 adults, 1 infant, 1 U5, 2 school age, urban poverty line

Case 2: 2 adults, 1 infant, 1 U5, 2 school age, rural poverty line

Case 3: 1 parent, 1 infant, 1 U5, 2 school age, all orphaned, urban poverty line

Case 4: 1 pensioner urban, 2 U5, 1 school age, 7 orphans (1 infant, 2 U5, 4 school age) poverty line

Policy option 1: universal child welfare grants 2 adults, 1 infant, 1 U5, 2 school age, urban poverty line

Policy option 2: means-tested N$ 36,000 p.a. 2 adults, 1 infant, 1 U5, 2 school age, urban poverty line

Summary of results  Low income families great difficulties to make ends meet – only family (2 adults, 4 children) with N$ 2500 above poverty line  Cost of education prohibitive for many families  Tax threshold high enough to protect low income families, social security contributions low enough to be affordable  Pensions and child welfare grants can be important contribution to families‘ income – but not reaching low income families  Pensions and child welfare grants alone cannot lift families out of poverty

Orphaned Children (155,000) Foster Children Vulnerable & Poor Children Child Welfare Grants (127,000) NHIES: Child poverty profile Impact of social grants on poverty Social Protection Qualitative Assessment: How do poor children live? How do services and systems interact with poor families and their children Will Better inform programming outcomes SA Study tour How it will work in practice Expected costs, experiences & lessons learned Administrative processes STRATEGY & THE HOW Tax-benefit model family analysis: Visualises child poverty Potential impact of social grants Modelling impact of alternative policy options Towards an integrated social protection framework for children: National Development Plan 4 NPA for Children Policy options

Thank you! For more info: