How to Maximize the Development Impact of Social Protection Policies in Africa
Background paper to the ERD 2010
Paper prepared for the Workshop “Experiences and Lessons from Social Protection Programmes across the Developing Word: What Role for the E?” organised by the European Report on Development in Paris, 17-18 June 2010
Conditional cash transfer programmes (CCTPs) are now at the centre of the debate on social protection policies. To date the emphasis has been on “conditional”, while, in this paper, we stress “cash”. This paper highlights the thus far largely-neglected relationship between CCTPs and financial development. Our hypothesis is that CCTPs benefit from being implemented in countries concerned about financial development, while financial sector deepening occurs in countries that have opted for CCTPs. CCTPs can improve access to financial services, which may lower banking account fees, which, in turn, drive financial deepening, improve access to finance and lower the costs, and increase the efficiency of CCTPs delivery. Albeit intuitive, these
links are still largely unexplored. The objective of this policy paper is to demonstrate the extent of this neglect, articulate the main mechanisms and channels, and distil lessons for future policy and research.