Poverty and poverty alleviation programmes in the urban areas of Mozambique

HABITATZNTL.

Vol. 19, No. 4, pp. 499-514, 1995 Copyright @ 1995 Ekvier Science Ltd Printed in Great Britain. All rights reserved ON-3975/95 $9.54 + 0.00

Pergamon

0197-3975(95)ooo42-9

Poverty and Poverty Alleviation Programmes in the Urban Areas of Mozambique BERND SCHUBERT Humboldt

University, Berlin, Germany

ABSTRACT

The first part of this paper provides an analysis of poverty and destitution in the cities of Mozambique. The second part summarises the existing programmes for poverty alleviation and the social safety net. The last part describes in some detail the only organisation and programme which has had significant impact in terms of alleviating poverty and destitution: the Gabinete de Apoio a Populagcio Vulnercivel (GAPVU) Cash Transfer Scheme. A poverty profile of Mozambique’s urban centres shows that over half of all households are living in poverty. It distinguishes between absolutely poor and destitute households. The latter have expenditures less than two thirds of the poverty line, are at risk of malnutrition, high child mortality and low life expectancy and comprise nearly a third of the population. A distinction is made between structural and conjunctural causes of poverty and used as a basis for classifying households in different situations, in order to identify appropriate types of intervention. Existing policies and programmes to reduce poverty and alleviate destitution are reviewed and their strengths and weaknesses identified. The cash transfer scheme designed and operated by the GAPVU is described in more detail, and its effectiveness in reaching destitute households assessed. Finally, its administrative efficiency and financial and institutional sustainability are evaluated. It is shown to be a well designed programme which succeeds in reaching increasing numbers of vulnerable households because of its use of decentralised health and community administrative structures, and strong political and institutional backing.

A POVERTY

PROFILE

The population of the City of Maputo (including the City of Matola) is estimated at 1.3 million. Approximately 50% of this population is living in absolute poverty. The urban population living in the nine provincial capitals and in the cities of Nacala and Maxixe is estimated at 1.7 million. The estimates of poverty in the provincial capitals and in Nacala and Maxixe are based on the assumption that the situation in these cities is on average similar to that of Maputo. This assumption may have to be revised as soon as survey data from these cities are available. 1 499

Bernd Schubert

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The estimate for the number of absolutely poor in Maputo given above is based on the following definition of the poverty line. In December 1991 a household was absolutely poor if the household expenditure per capita per month was less than 30,000 Mt2 (US$ 15)3. According to the household survey carried out in Maputo between April and July 1991 by the National Directorate of Statistics (DNE), 47.7% of the surveyed population lived on monthly expenditures per capita of less than 30,000 Mt4. Four months later this percentage had increased to 52.8 (see Table 1). This means that approximately 650,000 people in Maputo and Matola (85,000 households) and approximately 850,000 in the other cities (115,000 households) are absolutely poor.

Table 1. Monthly Expenditures per capita of Households in Maputo, 1991

Cumulative number of households in different expenditure groups as % of the total sample Expenditure per capita per month (Mt)

Apr.-July

1991

Aug.-Nov.

Under 10,000 lO,OOl-15,000 15,001-20,000

5.7 15.0 26.3

20,001-25,000 25,001-30,000

38.0 47.7

30,001-35,000 35,001~,000 40,001~5,000

55.7 62.1 68.0

60.3 65.8 70.4

45,001-50,000 50,001-100,000 Over 100,000 No information

73.0 90.6 100.0 -

74.1 92.1 99.8 100.0

1991

absolutely 1 poor

Source: DireccHo National de Estatistica, Relat6rio Sobre OS Resultados do 2” Mddulo do Inqukrito ds Familias na Cidade de Maputo, Maputo, July 1992, p. 9.

These 1.5 million absolutely poor people in urban Mozambique (200,000 households) are very heterogeneous. To be able to identify their needs and to assess how effectively the social security system meets these needs, the heterogeneous mass has to be subdivided into groups which are more homogeneous with regard to: ?? the ?? the

degree of poverty; and main cause of poverty.

The degree of poverty With regard to the degree of poverty, the results of the 1991 DNE-IAF survey (see Table 1) are used for further analysis. Based on the survey results, the 85,000 absolutely poor households in Maputo and Matola can be subdivided into two categories. Absolutely expenditures

poor but not destitute. The households in this category which ranged between 67% and 100% of the poverty

had line

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(20,000-30,000 Mt per capita per month). At this expenditure level their average daily food consumption per capita will range between 1,400 and 2,000 kcal (if they try to maintain a low-cost balanced diet). They face hunger but they can survive. In Maputo and Matola 35,000 households (20% of the population) were in this category. For all cities in Mozambique, including Maputo and Matola, their number was roughly estimated at 80,000. Destitute.5 The households in this category had expenditures which were less than 67% of the poverty line (under 20,000 Mt or US$lO per capita per month). If they tried to maintain a balanced diet they would have to live on less than 1,400 kcal per capita per day. If they live on a diet which gives them more calories (e.g. by increasing the share of maize, cassava or other cheap calorie sources and reducing the share of oil, beans, fish and vegetables) it will be deficient in protein and fat. They face severe hunger which affects their ability to work and endangers the health, especially of the more vulnerable members of these households (children, pregnant women and lactating mothers). These households are at risk of malnutrition, high child mortality and low life expectancy. In Maputo and Matola, 50,000 households (30% of the population) are in this category. For all cities in Mozambique including Maputo and Matola their number is roughly estimated at 120,000. An indirect indicator of the degree of poverty is the share of food expenditure in the total expenditures of households. According to World Bank standards, households who spend more than 60% of their total expenditure on food are absolutely poor and those who spend more than 80% on food are destitute. Using this indicator, DNE-IAF survey results (see Table 2) show even higher shares of absolute poverty and destitution than those calculated above.

Table 2. Average food and food-related expenditures as a share of total household expenditures by per capita expenditure quintiles, Maputo 1991

Expenditure

as % of total expenditure for:

Expenditure quintiles

Food

Fuel and water

Food, fuel and water

1st Quintile 2nd Quintile 3rd Quintile 4th Quintile 5th Quintile

73.9 74.9 71.7 72.0 61.1

12.3 9.6 8.8 6.9 5.0

86.2 84.5 80.5 78.9 66.1

All expenditure groups

67.9

7.1

75.0

Source: Direc@o National de Estatistica, Relat6rio Sobre OS Resultados do 2” Mddulo do InquCrito cis Familias na Cidade de Maputo, Maputo, July 1992, p. 87.

The causes of poverty

With regard to the causes of poverty or destitution a distinction between structural, conjunctural and contextual causes is made. Households which suffer from structuralcauses of poverty and destitutionlack gainfully employable labour. This has a quantitative and a qualitative aspect: (a)

(b)

The quantitative aspect is an unfavourable ratio between the number of economically active members (potential bread winners) and the total number of household members (mouths to feed). Economically active members are those who work and those who are unemployed. The qualitative aspect is related to structural constraints which the economically active members of a household face with regard to access

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to renumerative employment. One example of such structural constraints is their educational status. Illiterate female adults are structurally excluded from formal-sector employment. Households affected by conjunctural causes of poverty or destitution have sufficient labour power to earn an income which is adequate to provide for basic needs. However, this productive capacity is unused or underused because one or more adult members of the household are unemployed or underemployed. Contextual causes of poverty and destitution are not directly related to the characteristics of a household but affect more or less all households. Structural causes. Absolute poverty and destitution

is mainly a structural problem. This is underlined DNE-IAF survey: (a)

(b)

in the cities of Mozambique by the following results of the

Maputo is a city predominantly inhabited by children and women, while adult men are less than a quarter of the population: ?? 47% of the population is under 15 years old and 3% over 59 years; ?? in the age group 2&39 years, 55% are women and only 45% are men; ?? only 23% of the population are men in the employable age range (15-59 years). Of those 50% of the population who are in the employable age range: ?? only 54% are working; ?? 6% are unemployed; ?? 40% are economically inactive (24% men, 54% women). The main reasons given for being economically inactive are being a student or being a housewife.

As a result of these factors only 30% of the population is employed (27% of persons in the employable age range and 3% of children under 15 or the elderly over 59). Even if all the unemployed could find work, the proportion of the population in employment would only increase to 33%. This means that on average every breadwinner has to feed three mouths. The qualitative aspect of structural poverty and destitution is indicated by the abundance of female street vendors seen everywhere in Maputo. Fifty per cent of all economically active women are traders. Most of them seem to earn less than the minimum wage. The gender income differential of self-employed operators in the informal sector is estimated at 5 to 1 in favour of male operators.6 The vast majority of these traders are women with no or little education; they are either relatively old or have children to care for. Only a few of them would qualify for higher productivity employment. There may be scope to increase the productivity of some of these women, but it will not be easy to achieve large-scale impact in this area. Middle-wage jobs are not going to increase rapidly and to the extent that they do, younger primary school graduates will get them, not middle aged women. All these data indicate that for a number of reasons (migrant male labour in South Africa and females heading the households, demographic distortions created by the war, the low educational status of women) Maputo has a high number of households which lack (in terms of quantity and/or quality) gainfully employable labour power. Households with extreme labour scarcity include: (a) (b) (c)

elderly, disabled or chronically diseased people who are unable to work and who live alone; elderly, disabled or chronically diseased people who are unable to work but are, at the same time, head of a household with no other person in the employable age range (15-39) living in the same household; female-headed households with three or more dependents (small children

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and/or old people) and no other employable person living in the same household; other households where the ratio between potential bread-winners and the total number of household members is higher than 1 to 4.

These households have in common that their income-earning capacities are extremely restricted. Unless they have some source of unearned income (such as remittances or transfers from relatives) they are, with a high probability, absolutely poor or destitute for structural reasons. DNE-IAF results show that 48.6% of all households with five or more household members per bread winner were destitute (see Table 3). At the same time only 24.7% of the households with no economically active members are destitute and 48.5% of this category are not poor at all. This shows that a considerable number of labour-scarce households receive relatively high remittances and transfers, e.g. female-headed households receiving regular transfers from a relative working in South Africa. The destitute are the labour-scarce households who receive no transfers. Table 3. Households

in Maputo by ratio between economically active persons and total number of persons in a household and by expenditure per capita per month, 1991

Ratio of economically active persons to all persons Expenditure pc, per month (Mt)

Between 1:l and 1:2

Between 1:2.1 and 1:3

Between 1:3.1 and 1:4

Between 1:4.1 and 15

Over 1:5

No econ. active person

up to 20,000 20,001-30,000 30,001-45,000 Over 45,000 All households

12.8 22.3 17.9 47.0 100

30.0 24.5 19.9 25.7 100

35.4 24.5 17.9 22.2 100

36.4 23.1 15.7 24.8 100

48.6 18.6 15.8 17.0 100

24.2 13.6 13.6 48.5 100

No. of households a absolute ??in %

296 23.3

327 25.8

212 16.7

121 9.5

247 19.5

66 5.2

All households 30.7 22.1 17.6 29.6 100

1269 100

Source: Calculated on special request by Direc@o National de Estatfstica from data of the 2nd Module of the Inquerito ris Familias. ‘Economically active’ is defined as persons who are employed and persons who are unemployed (in search of employment).

At the same time there is a strong correlation between household size and destitution: 51.2% of all households with more than 10 persons are destitute (see Table 4). These figures demonstrate the extent to which poverty and destitution are determined by the structural characteristics of households. Table 4. Households

Expenditure p.c. per month (Mt) up to 20,000 20,001-30,000 30,001~5,000 Over 45,000 All households No. of households ??absolute ??in %

in Maputo by size of household and by expenditure per capita per month, 1991

Number of persons in household 1

2-4

5-7

8-10

Over 10

6.9 9.0 6.8 77.3 100

15.0 17.7 17.0 50.3 100

30.1 22.6 20.8 26.5 100

39.6 27.0 15.2 18.2 100

51.2 23.1 15.7 10.0 100

44 3.5

282 22.2

495 39.0

296 23.3

152 12.0

Source: DireqHo National de Estatistica, Relatbrio Sobre OS Resultados do 2” Module Familias na Cidade de Maputo, Maputo, July 1992, p. 96.

All households 30.7 22.1 17.6 29.6 100 1269 100 do Inquerito b

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Bernd Schubert

Conjunctural causes. Compared to the large number of households which are absolutely poor and destitute for structural reasons, the number of households suffering predominantly from conjunctural causes of poverty is smaller.

(a) The unemployment (b)

rate of the population in the employable age group is estimated at only 6.2% by the DNE-IAF survey. Under employment (defined as working less than 15 days per month) is estimated at 5% of all working men, 10% of all working women and 7.9% of the total working population.

Contextual causes. In addition to the structural and conjunctual causes of poverty which affect only certain types of households, there are other factors which affect most households. The most important of these factors are low wages and inflation. They aggravate the impact of the structural and conjunctural causes of poverty. Since starting the Structural Adjustment Programme (PRE) in 1987 price increases for basic foods have been much higher than increases in average incomes. This means that real incomes have declined. In 1987 a minimum wage was sufficient to feed three persons. In September 1992 a minimum wage could hardly keep one person above the absolute poverty line. An increase of the minimum wage from 40,000 Mt (US$20 in December 1991) to the Mt equivalent of US$30 would reduce absolute poverty to 35% and destitution to 22.5%. A poverty matrix

By combining degree and causes of poverty we can arrive at a poverty matrix which distinguishes between four types of poverty situations (see Fig. 1). Table

Fig. I. Poverty situations of households in urban Mozambique.

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1 shows that in Maputo approximately 20% of the population are in situations (a) or (b) and 30 OO / in situations (c) or (d). The DNE data also indicate that the number of structurally poor or destitute households is higher than the number of conjuncturally poor households. This means that group (d) is the largest of the four groups. The following paragraphs give a short description and a preliminary estimate of the size of each group: (a) Households in a conjunctural situation of absolute poverty but not destitute (8-10% of all households). Of all the absolutely poor households these are in the most favourable situation. Their most urgent need is productive employment (yielding at least a minimum wage) for the unemployed or underemployed members of their households. An increase in the minimum wage can contribute to improving their situation, but it is not as essential as employment. (b) Households in a structural situation of absolute poverty but not destitute (1042% of all households). These households cannot benefit from employment generating programmes because they have no unused or underused labour power. An increase in the level of real wages will improve their situation to some extent. Most of these households will remain in the situation of being absolutely poor but not destitute as long as the household structure does not change. (c) Households in a conjuncturalsituationof destitution(10% of all households). These households are in urgent need of productive employment, like those in group (a). However, due to their destitute situation, their chances of achieving productive employment are small. Because of their acute malnutrition they have less physical strength, initiative and hope to search for employment. If they stay in this situation for a long period their health will deteriorate to an extent where even the employable adults will become unemployable. In other words, they face the danger of gliding into the group of structurally destitute. They need temporary social assistance (income transfers) to ensure their survival and their ability to work and they need employment opportunities. Once they have found employment the social assistance can be terminated. However, quite a number of these households have one wage earner (see Table 5). This means that a higher minimum wage would lift many of these households from group (c) to group (a). (d) Households in a structural situationof destitution (20% of all households). Of all types of poverty this is the worst. Households in this group have no

Table 5. Average share of wages in total expenditures of households by per capita income quintiles, Maputo, 1991

Income group 1st Quintile 2nd Quintile 3rd Quintile 4th Quintile 5th Quintile

(very low) (low) (medium) (high) (very high)

All income groups

Share of wages as % of total expenditures 45.3 44.3 43.7 36.2 35.2 39.4

Source: DireqLo National de Estatfstica, Relatdrio Sobre OS Resultados do 2” Mddulo do Inqukrito cts Familias na Cidade de Maputo, Maputo, July 1992, Tables 20 and 28.

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Bemd Schubert

or extremely limited income-earning capacity and receive no or insufficient income (e.g. pensions or donations from other households). Even if additional employment opportunities were available these households could not use them because they are scarce in labour power. To ensure their survival the households in this group need income transfers. These transfers are needed as long as their household structure (ratio between the number of employable adults and the total number of household members) does not change. In addition to income transfers, many households in this group need other social welfare interventions. EXISTING

Programmes

POLICIES

AND PROGRAMMES TO REDUCE ALLEVIATE DESTITUTION’

POVERTY

AND TO

to create employment and to generate income

Policies and programmes to create employment and generate additional income for the poorer sections of the population - if effective - will benefit those households with unemployed or underemployed labour capacities. So far structural adjustment and liberalisation have resulted in decreasing employment in the industrial sector and in a boom in small-scale commercial and service activities. Projects to promote small enterprises have created between 3,000 and 5,000 jobs during the last 4 years. Recent initiatives focus on providing credit and know-how to micro-enterprises. These initiatives together might increase the income of approximately 6,000-10,000 urban households within the next 4 years. The minimum wage policy has the objective of ensuring that the real wages of low-salary earners who are employed in the formal sector do not decrease. Because 50% of the working population is employed in the formal sector and 40% of average household expenditures are financed from formal-sector wages (see Table 5), the minimum wage has a decisive role in influencing the level of poverty. However, the modest objective of protecting low-wage workers from a decrease in their incomes has not been met. In order to keep at least two persons above the absolute poverty line, the minimum wage should be gradually increased from US$20 equivalent to at least US$30. Basic services such as health, education, clean water and sanitation, protect and develop human resources and contribute to increased labour productivity. In urban Mozambique, most poor and destitute households have access to these services and social services show the best performance of all the poverty related policies and programmes. The social safety net The social safety net has to ensure

that those poor or destitute households which cannot sufficiently benefit from the employment, income and productivityrelated policies and programmes listed above are also able to live a healthy and productive life, or can at least survive. To achieve this, the social safety net has to provide a minimum of food security and other essential services to the population at risk. This task is shared by a patchwork of organisations and programmes which together constitute the existing safety net. With regard to their functions, three different types of safety-net organisations and programmes exist in Mozambique (see Fig. 2). Availability of food at low and stable prices. The Commercial Food Aid System, in combination with the Food Ration and Subsidy Scheme (NSA), has to ensure that basic food commodities are available to poor consumers at low and stable prices. Their task is to transfer income indirectly to the poor

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Fig. 2. Main components of the social safety net.

by reducing their food procurement costs. This objective has only partly been achieved. By supplying 67% of all cereals sold in the retail outlets of the cities of Mozambique, Commercial Food Aid has ensured that food is available to urban consumers. However, the existing system has three serious flaws: Irregular and unpredictable food aid arrivals cause sharp fluctuations of consumer prices for cereals. An inefficient food aid marketing system based on quotas and controlled prices leads to high profits by a small number of licensed middlemen while government revenues (countervalue) from the sale of food aid are low. Ration shops are most of the time not able or not willing to sell at controlled prices and consumer prices on the open market to which most food aid is diverted are high. The small income-transfer effect which NSA manages to achieve goes mainly to middle- and higher-income households. For all these reasons the Government of Mozambique has started a process of deregulating, decontrolling and liberalising the food marketing system. The Food Ration and Subsidy System (NSA) will be terminated. In future, food prices will be mainly determined by supply and demand. Effective competition as a means of reducing trade margins is encouraged. Under the assumption that donors support these efforts by more regular and predictable food aid arrivals and that the end of the war and normal weather enhance domestic market supplies, in future food will be available to the urban population at relatively low and more stable prices. Access to purchasing power. The National Social Insurance System, the Wage Supplement, Scheme and the GAPVU Cash Transfer Scheme have the task of increasing the purchasing power of those households which have insufficient income to survive, even if food prices are relatively low and stable. The poverty analysis given above indicates that in 1991, 120,000 households (30% of all urban households) were destitute, that is needing additional purchasing power to survive. So far, the only organisation which has had a significant impact in terms of alleviating destitution is the GAPVU Cash Transfer Scheme. By May

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Bernd Schubert

1994, GAPVU had reached 60,000 households with monthly cash transfers of approximately US$2.5 per capita. Details of the organisation and performance of the GAPVU Scheme are given below. The Wage Supplement Scheme, which concentrates on destitute households in the government sector is completely ineffective. It accepts only households with more than six members and pays only the equivalent of US$l per month for each additional household member (an eight-person household receives, e.g. US$2). So far, this scheme has reached less than 500 households out of the 20,000 which are probably eligible. The National Social Insurance Scheme has insured more than 100,000 workers in Maputo and Matola (70% of formal-sector workers) and is in the process of expanding to other provinces. Its task is not to cure but to prevent poverty and destitution. In its first 2 years of operation it has made payments in more than 5,000 cases of sickness and in more than 500 cases of death. This scheme will have a much larger impact after 1994 when invalidity pensions can be claimed. The main benefits will materialise after 2010 when the first regular old-age pensions are due. All the safety net organisations together have so far managed to solve the most urgent purchasing power problems of approximately 70,000 absolutely poor households (15% of all urban households), of which 70% were destitute. It is feasible to increase this number to 90,000 households (22.5% of all urban households) within the next 3 years.8 Social welfare interventions. The Social Fund for Medicines and for Food Supplements for Children, the Secretariat of State for Social Action (SEAS) and the Social Programmes of NGOs have the task of providing essential commodities (medicine, nutritious food, meals) and services (special care for children, the elderly or the disabled) to extremely vulnerable groups. They have to reach those households who face life-threatening problems which cannot be overcome by cash transfers alone but need other social welfare interventions. For different reasons - especially lack of funds, lack of personnel and lack of management competence - all these programmes together reach only a small percentage of those households which urgently need their services. The Social Fund should be used to organise special nutrition programmes for severely malnourished children. This would meet an urgent need, would complement the cash transfer scheme (which concentrates on the alleviation of destitution, but not specifically on child malnutrition), and can be achieved within a year. Increasing the coverage of households needing other social welfare interventions will be a long-term process in which SEAS should play the role of a facilitator, enabler and supporter of civil society group initiatives to assist individual households missed or not well served by broad approach programmes.9

The GAPVU

Cash Transfer Scheme

The Gabinete de Apoio a Populacao Vulnerhvel (GAPW) is a quasi-autonomous national government organisation under the Minister for the Coordination of Social Action. It was founded on the basis of a decree of the Council of Ministers of the Republic of Mozambique in June 1990. GAPVU’s budget (both for administrative costs and for social assistance) is part of the state budget. GAPVU has 16 departments. Four departments are based in Maputo and are immediately subordinate to the Director. Twelve departments (the 12 GAPVU units in the provincial capitals) are supervised by a Co-ordinating Department. This structure and the management system allows decentralised, and at the same

Poverty and Poverty Alleviation Programmes in the Urban Areas of Mozambique

time sufficiently co-ordinated, objectives).

operation of the 16 departments

(management

509

by

Target groups. The target population for social assistance in the form of regular cash transfers are Mozambique’s destitute households, which neither have sufficient labour power to ensure survival on their own nor receive transfers from other organisations or households. They are households which all existing formal, informal and traditional social safety nets have failed to reach and for which cash transfers are the only remaining safety net for survival. In this sense, welfare payments are supplementary to the other forms of social security. In order to identify such households, GAPVU uses proxy indicators. Two of these indicators relate to easily identifiable cases of severe undernourishment; three of them relate to certain types of life situation and make it possible to identify households with extremely low labour power. Using these indicators, GAPVU at present has four target groups. Those households eligible for social assistance have a per capita income (in cash or in kind) of less than US$lO per month, have been resident in one of the 13 cities for at least 1 year and belong to one of the following groups: ?? households

with a severely undernourished child or with a severely undernourished pregnant woman; ?? elderly persons (over 60 years) living alone or heading households with no employable members; ?? severely disabled people living alone or heading households with no employable members; ?? female-headed households which have at least five children to keep and which have no other employable members. Eligibility for social assistance is reviewed annually. Households are delimited as a group of persons ‘who share the same fire’ (who take meals and keep stores jointly) and stand in certain family relationships to each other. The social assistance paid by GAPVU to beneficiary households amounts on average to the equivalent of US$2.5 per capita per month. Administrative procedures for identifying and selecting households qualifying for social assistance payments and for making such payments. The process of

identifying eligible households, filling in and processing applications, verifying the statements made by an applicant, issuing beneficiary cards and transferring the cash benefits is organised differently for the different target groups. For households with severely undernourished children and/or severely undernourished pregnant women, a flow chart (see Fig. 3) shows which organisations have functions to carry out in the process. The Maternal and Child Care Units have been chosen because in urban Mozambique these health facilities work relatively well. Approximately 90% of pregnant women and children under 5 years of age make regular use of the health-monitoring programmes of these units. The nurses who run these programmes have taken over the task of identifying cases of severe malnourishment and starting the application process for social assistance. After having been identified as severely malnourished the pregnant women and the mothers of the respective children have to contact the lowest level administrative officer in their neighbourhood. This officer, the Group0 Dinumizudor Officer, who is in charge of one sub-district (bairro), is employed by the municipal administration. His main task in the application procedure is to fill in a form in order to establish a number of socio-economic characteristics of the household to which the severely malnourished pregnant woman or child belongs. This is done on the basis of the birth certificates, identity cards, residency cards and

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Bernd Schubert

’Group0 Dinamizador Oft’kers _ _

Fiuillfows”~ofthcHcadofIIousehold” Ifttlcpotmw~hasau documanofthc”Lirrroftoaketork OroupoDlntmiudoromcd,theomccrteIlrthe~mgtoOAPvu. rfllpf thcafnccrgivc3tk%quatofDsclaratian” tothepotathlpotmdrlandmdldm to give me %apdt .“’tolds.alcfcdcQuutdnoarldtoconlebackarsandrlatcr

Chefes &e Quarteirao

Fig. 3. Flow chart of administrative procedures from application through to payment of social assistance (Programme for Severely Malnourished Children (O-4 years) and Severely Malnourished Pregnant Women).

marriage certificates of all household members. In addition a declaration of the monthly wages of all household members (given by their employers) has to be produced. If all or some of these documents are unavailable, the Chefes de QuarteirtIo have to provide the missing information about the respective households. The Chefes de Quarteira’o are voluntary members of the so-called neighbourhood administration in Mozambique; they are in charge of a neighbourhood consisting of approximately 50 households. The Chefes de Quateirtio report to the Group0 Dinamizidor

Officers.

Based on the information on the proxy indicator (severe malnourishment) received from the Maternal and Child Care Units and on the socio-economic information received from the Group0 Dinamizador Officers, GAPVU decides which applications meet the eligibility criteria.

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511

in the Urban Areas of Mozambique

The other target groups (elderly, disabled and female-headed households) cannot be identified by the health centres. They have to apply directly through their Group0 Dinamizador Officer and are usually assisted by their Chefes de Quarteirao. After the application has reached GAPW, a GAPVU officer visits the household to crosscheck the information provided by the Group0 Dinamizador Officer. All approvals are limited to 1 year, after which the eligibility of a household is re-examined. In order to facilitate co-operation with the Maternal and Child Care Units of the Ministry of Health and with the Group0 Dinamizador Officers and the Chefes de Quarteirao, GAPVU runs an intensive training and retraining programme for all the functionaries involved. They are supplied with guidelines, forms and stationery. The nurses in the Maternal and Child Care Centers and the Group0 Dinamizador Officers receive a moderate compensation for the considerable amount of work which they have to contribute to the GAPVU programme. The monthly cash transfers are currently made in most cities by GAPVU staff, either at the GAPVU office or at one of the offices of the urban district administrations, depending on the size of the city. In Beira and Nampula transfer is carried out by a bank. The intention is to extend payment by bank to all cities. Effectiveness of horizontal and vertical targeting. The goal of horizontal targeting is to reach a high proportion of those households which fulfil the eligibility criteria. Since GAPVU was established in 1990, the aim has been to reach at least 60,000 destitute households. This is equivalent to 15% of all urban households or 75% of all households which are destitute for structural reasons. In the first 8 months the whole scheme threatened to fail because GAPVU was unable to reach more than a handful of households. In order to solve this problem, the programme was reorganised between June and September 1991. As a consequence of the reorganisation and management consultancy by short-term experts, in the following 2 years GAPVU was able to considerably increase its coverage (see Table 6). In May 1994 the target figure of 60,000 households was reached. In September 1994 GAPVU had 67,000 beneficiary households and had to suspend the approval of additional households because the 1994 budget did not permit a further increase. The goal of vertical targeting is to concentrate the benefits of social programmes on those who need them most. In the case of GAPW this means limiting the cash transfers to destitute households. The effectiveness of vertical targeting can therefore be measured by how many of the households reached by GAPVU are

Table 6. Payments to the beneficiary households, administrative costs and total expenditure 1992-1994 1992

of GAPVU,

1993

1994

(a) Average number of households reached

S,OOO

35,000

60,000

(b) Value of payment to households reached (US$l,OOO)

1,400

6,300

10,800

(c) Administrative costs* (in US$l,OOO) As % of total expenditure of GAPVU (d) Total expenditure of GAPVU (US$1,000)

211 13% 1,617

380 6% 6,680

570 5% 11,370

*The costs include GAPVU’s budget for current costs and for investments. They do not include the salary of the Director, which is paid by UNICEF, and the acquisition costs of some office equipment, which was also donated by UNICEF.

512

Bernd Schubert

destitute, in other words those with incomes of less than US$lO per capita per month. Estimates of the effectiveness of GAPVU’s vertical targeting have to rely on a smaller-scale household survey conducted in 1991 and on internal inspections done by GAPVU itself. On this basis the author estimates that 70% of households receiving cash transfers from GAPVU are destitute (below US$lO per capita per month): 20% are absolutely poor but not destitute (US$lO-15), and 10% are not absolutely poor (above US$15). This ‘leakage’ of 30%) mainly to households which are absolutely poor though not destitute, seems acceptable. Another way of measuring the effectiveness of vertical targeting is to calculate the incidence, which specifies the distribution of the benefits of a social programme over income quintiles and measures the share of benefits going to the poorest two quintiles (see Table 7). In 1992 the incidence of income transfers by food price subsidies (the NSA) was about 16%. In GAPVU’s social assistance scheme, which takes the form of regular cash transfers, the incidence is estimated at 80%.

Table 7. Incidence

of the Maputo Food Ration and Subsidy Scheme (NSA) and estimated incidence of the GAPVU Cash Transfer Scheme

% of benefits reaching households by expenditure p.c. quintiles Scheme NSA* GAPVUt Sources:

*Direc@o

1st

2nd

3rd

4th

5th

All

5

11

17

33

34

100

50

30

12

5

3

100

National

de Estatistica,

3rd Module

of the Inqutrito

As Famflias.

tAuthor’s

estimates.

Administrative costs: ejjkiency. The efficiency of the cash transfer scheme carried out by GAPVU is measured by the proportion of administrative costs within GAPVU’s total expenditure. Administrative costs are all those which arise for identifying beneficiaries and all other administrative procedures carried out until the subsidies actually reach the beneficiary households. This share in 1992 was about 13% and has fallen to 5% in 1994 (see Table 6). This means that 95% of the total GAPVU budget reaches the beneficiary households. Financial and institutional sustainability of the GAPVU Cash Transfer Scheme.

The annual budget which is required to serve 60,000 households has reached the equivalent of US$ll million in 1994 (see Table 6). This is 2% of the state budget, from which GAPVU is directly financed. The state budget as a whole is partly refinanced by development aid in the form of counterpart funds. Of the average total inflow of development aid between 1990 and 1992 (not accounting for the high additional inflows in connection with the UNMOZ operations since 1993) the GAPVU budget amounts to 1.5%. These are the costs of ensuring the survival of the poorest 15% of Mozambique’s urban population (maybe 4% of the national population). Is this expenditure financially sustainable? Can a poor country like Mozambique afford this scheme? This question has to be answered by the Council of Ministers every year when it comes to approving the state budget. For 6 years in succession (including 1995) the GAPVU budget has been approved. Whether or not this will continue depends on the political economy. The last paragraphs of this paper will, therefore, analyse the financial and institutional sustainability of the GAPVU Cash Transfer Scheme from a political economy perspective.

Poverty

and Poverty

Alleviation

Programmes

in the Urban Areas of Mozambique

513

In many countries it has been observed that there is a trade-off between effective targeting of social programmes and their political viability, because a programme which reaches only the poorest of the poor is less interesting for politicians than programmes for the majority of the population. However, this has not so far been the experience in Mozambique. In spite of the fact that the GAPVU social assistance scheme is rigidly targeted on destitute households, replaces a food subsidy scheme which benefited the majority of the population in Maputo, Matola and Beira, and involves substantial costs, the GAPVU Cash Transfer Scheme has had the continuous and emphatic support of the President and Council of Ministers. This strong political will was and still is a crucial factor in the existence and success of the scheme. There are many reasons for this strong political will. One of them is related to the value system of political leaders. Before the civil war Mozambique had exemplary effective rural health and education services. And even after more than 10 years of war, ordinary people still have better access to health care in the cities of Mozambique than in most other African countries. High priority is, therefore, given to poverty alleviation. Another important reason no doubt lies in the fact that the GAPVU cash transfer scheme was not initiated, promoted or forced on the country by development aid organisations, but is a genuinely Mozambican initiative which has the whole-hearted support of a number of ministers and senior staff. This support is important to GAPVU, not only when budget decisions are being taken by the Council of Ministers, but also in the solution of day-to-day problems arising in its co-operation with the various ministerial departments (SEAS, the Finance Ministry, the Ministry of Health, city councils). At the same time the GAPVU programme enjoys considerable good will among bodies such as the IMF, the World Bank, UNICEF, SIDA and more recently USAID too. In order to maintain this political good will and to secure both the existence of GAPVU as an organisation and the funding of the cash transfer scheme in the long term, the organisation of GAPVU was structured in such a way as to promote intensive co-operation with other organisations: ?? GAPVU

reports directly to the Minister for the Coordination of Social Action. January 1993 the Director of GAPVU was a senior official from the Ministry of Finance. At the same time the Provincial Directors of Finance (the second most powerful officials after the Governors) are also the heads of the provincial units of GAPVU. ?? In each GAPVU unit one representative of the Ministry of Health works as a liaison officer to ensure smooth co-operation with the Health Centres. ?? GAPVU is controlled by an administrative council in which senior officials of the following Ministries are represented: Finance, Health, State Administration, Labour and the Ministry for the Coordination of Social Action.

?? Until

This network of organisational links is actively used to keep the politicians of various ministries informed about the problems and progress of GAPVU and to obtain participation in evaluating and developing the scheme. In addition, contacts are cultivated with important organisations through regular workshops on the GAPVU scheme and media work is done (newspapers, radio and television). All these activities contribute to maintaining the political will which is absolutely essential for the sustainability of a targeted social-assistance programme. They strengthen the coalition between those with a positive interest in securing the survival of the destitute.

514

Bernd Schubert

NOTES 1. 2.

3.

4.

5.

6. 7.

8. 9.

The 1988-1989 Tete Urban Household Survey indicated 40-50% absolute poverty in Tete. This is comparable to the results of the Maputo Household Survey carried out in 1988. The calculation assumes that a person requires 2,000 kcal per day (average of all age groups in Maputo) or 60,000 kcal per month for a healthy and active life. At a low-cost diet using open market prices 60,000 kcal cost 24,000 Mt in December 1991. It is further assumed that a household has to spend at least 6,080 Mt per capita per month on unavoidable non-food expenditures. This calculation has provoked controversial discussions: while some experts feel that a poverty line of 30,008 Mt leads to inflated estimates of absolute poverty, others argue that the two assumptions (2,000 kcal per capita and 20% for non-food) are very much on the low side. Using 2,200 kcal and 25% for non-food expenditures would lift the poverty line to 35,000 Mt. At this poverty line 60.3% of all urban households would be considered as absolutely poor (see Table 1). In December 1991 US$l was equivalent to 2,000 Mt at the official second market rate. In September 1992 USSl had risen to 2,808 Mt. We can assume that the decline in the value of the Mt reflects roughly the inflation in Mozambique. Under this assumption a poverty line of US$1.5 was equivalent to 42,000 Mt in September 1992. Direccao National de Estatistica, Inqukrito cfs Famllias, Relatdrio Sobre OS Resultados do 2” M6dulo do In&?rito na Cidade de Maputo,.Maputo, July 1992. Data collection for this survey was carried out from April to July 1991 (1st Module) and again from August to November (2nd Module) from a sample of 1274 households comprising 8,542 persons. The average household size of the 1st and 2nd income quintile was 7.5 persons. This survey will be quoted as the DNE-IAF survey. For a detailed iustification of distinguishing between absolute poverty ‘and destitution see M. Lioton. Poverty, Undekrition and Hunger, World Bank Staff Working- Paper No. 597 (World Bank; Washington, DC, 1983). Little and Lundin, Case Study of Vegetable Traders, Maputo, April 1992, and Ohio State University, Peri-Urban Baseline Research Results, Maputo, Mozambique, October 1991, p. 29. This chapter is a summary of a more detailed analysis of Poverty Alleviation Policies and Programmes and of the Social Safety Net for the Cities of Mozambique, given in B. Schubert, “A Low Cost Social Safetv Net for Destitute and Absolutelv Poor Households in the Cities of Mozambiaue”. , I\,(Maouto. I 1992) (mimeo), pp. 16-32. Specific recommendations on how to establish a cost-effective system of direct income transfers and cash-for-work programmes to reach 90,000 households is given in Schubert (1992), see note 7. Detailed proposals on how to achieve this are given in Schubert (1992), see note 7, pp. 32-36.