Publish d on L t's T lk D v lopm nt (/d v lopm ntt lk)

A m ch n r for soci l prot ction?

Six r fl ctions on COVID-19 nd th
futur of c sh tr nsf rs
UGO GENTILINI (/TEAM/UGO-GENTILINI) | JANUARY 11, 2021
This page in: English

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There is little doubt that the magnitude of the social protection response to
COVID-19 is of historical proportions. According to our research
(http://documents1.worldbank.org/curated/en/467521607723220511/pdf/Social-
Protection-and-Jobs-Responses-to-COVID-19-A-Real-Time-Review-of-Country-
Measures-December-11-2020.pdf) on measures taken by 215 countries and
territories, at least $800 billion have been invested in social protection in the past
nine months, a level 22% higher than during the great recession of 2008–09. This
amounts to more than 1,400 social protection measures, of which about one-third
took the form of cash transfers reaching over 1.1 billion people, or 14% of the
world’s population. Relative to pre-COVID levels, cash transfer bene ts nearly
doubled and coverage grew by 240%, on average. 

Yet “large scale” doesn’t mean “adequate”: our analysis shows that in the
countries examined, cash transfer programs lasted 3.3 months on average, with a
mere 7% of them being extended; 30% of programs were one-o payments; and
only one-quarter reached more than one-third of the population. In low-income
countries, spending per capita amounted to a scant average of $6 per capita,
which is 87 times lower than in high-income countries.

The crisis is shedding light on longstanding holes in current social protection

systems – at the very bottom of the distribution, but also in its ‘middle.’ As such,
there are concerns that as the crisis winds down, so will much-needed social
protection programs (https://www.ft.com/content/7c721361-37a4-4a44-9117-
6043afee0f6b?shareType=nongift).

Could the pandemic o er an opportunity to move the needle in scaling-up social

protection more permanently? 
To address the question, we need to unpack six pre-pandemic bottlenecks that
are inhibiting coverage extension. These relate to mindsets and preferences;
sectoral priorities; institutions; delivery; nancing; and politics. Let’s examine if
and how each of these dimensions were a ected by the COVID-19 response.

First, societal attitudes toward e ort, work, self-reliance, family, or mutual support
play an important role in shaping social protection coverage and design. While
studies on cash transfers have largely disproved fears of dependency, work
disincentives or unwise use of money
(https://academic.oup.com/wbro/article/33/2/259/5127165), a certain level of
wariness may still endure among policymakers. It is plausible that the lifeline
provided by cash transfers during the pandemic might have represented a “proof
of concept” and boosted trust in those programs. Whether programs would “stick”
might hinge on their adaptation to local cultures, values and norms
(https://fdslive.oup.com/www.oup.com/academic/pdf/openaccess/9780198850342.p
This would put a premium on e orts to understanding the nature of reservations
as opposed to “convincing” skeptical policymakers.

Second, because of cash transfers’ extensive multisectoral evidence

(https://blogs.worldbank.org/developmenttalk/round-key-cash-transfers-papers-
2020), there could be in ated expectations about their e ects. This risk may have
been ampli ed by the magnitude of the cash response to the pandemic. A
humble approach that acknowledges degrees of trade-o s with other competing
priorities (typically investments in education, health, agriculture, and
infrastructure) may be needed. Cash transfers are no silver bullet
(https://theconversation.com/universal-basic-income-helped-kenyans-weather-
covid-19-but-its-not-a-silver-bullet-147680?
utm_medium=email&utm_campaign=Latest%20from%20The%20Conversation%20fo
%201786117331&utm_content=Latest%20from%20The%20Conversation%20for%20
%201786117331+CID_50f16dda55885902164b3d6468e83d20&utm_source=campaig
19%20-%20but%20its%20not%20a%20silver%20bullet): even within a sector, they
have a role in some cases  (e.g., when child malnutrition is caused by limited
access to food and dietary diversity
(https://gh.bmj.com/content/bmjgh/5/12/e003621.full.pdf), or learning at school is
hampered by household income), while less in others (e.g., when malnutrition is
the result of poor health environments, or when learning is deterred by other
factors
(http://documents1.worldbank.org/curated/en/801901603314530125/pdf/How-
to-Improve-Education-Outcomes-Most-E ciently-A-Comparison-of-150-
Interventions-Using-the-New-Learning-Adjusted-Years-of-Schooling-Metric.pdf)). 
Third, a range of institutional developments are underway. In higher income
countries, monetary policies by central banks and scal measures by
governments are converging around cash transfers. About a century ago,
Depression-era monetary and scal policy coalesced around public works as the
program of choice. “Unconventional” monetary measures involving direct support
to households played an important role in the last decade’s great recession. Cash
transfers are now becoming a premier vehicle for attaining monetary and scal
objectives (https://www.wsj.com/articles/the-case-for-a-big-coronavirus-stimulus-
11583448500) (i.e., injection of liquidity to bolster consumer demand and protect
the population, respectively), and in 7 cases such fusion took the form of universal
transfers (https://t.co/8ex8pRINyD?amp=1). 
Compared to other crises, in lower income countries governments moved center
stage in the pandemic response relative to external assistance
(https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7458781/#:~:text=The%20 ndings%
and other sources of support (https://edi.opml.co.uk/wpcms/wp-
content/uploads/2020/09/2020-09-14.-COVID-19-Survey-report-002.pdf). This also
included spurring an array of innovations, such as working with mayors to
extending cash transfers in urban areas (https://t.co/I4gmss5YFt?amp=1) and
devising programs to reach migrants
(https://www.cgdev.org/sites/default/ les/digital-cash-transfers-stranded-
migrants-lessons-bihars-covid-19-assistance-program.pdf). Furthermore, the
salience of reaching informal sector workers is leading to ‘quasi-universal’
provisions (http://pubdocs.worldbank.org/en/655201595885830480/WB-G2Px-
Scaling-up-Social-Assistance-Payments-as-Part-of-the-Covid-19-Pandemic-
Response.pdf), and the debate on universal basic income is intensifying
(https://www.brookings.edu/blog/future-development/2020/03/13/5-lessons-for-
using-universal-basic-income-during-a-pandemic/). Some of these approaches
were probably considered unorthodox just a few years ago. Future scale-up
decisions in crises could also be better tied to preparedness plans, including early
warning systems that trigger assistance in a more objective and transparent
fashion (https://www.nber.org/system/ les/working_papers/w27911/w27911.pdf).
Fourth, the crisis put on full display options and creativity in extending delivery
capabilities
(https://socialprotection.org/sites/default/ les/publications_ les/SPACE Rapid
Expansion 20052020v1.pdf), including streamlined enrollment processes, exible
payments schedules, etc. Policymakers may consider retaining practices that can
help overcome longstanding challenges related to accessibility of bene ts
(https://t.co/Ne3Nf9OzB3?amp=1). Since the pandemic has engulfed nearly the
entire population in many countries, they may establish “universal delivery
systems” that could potentially reach everyone. Such systems would be
instrumental as countries build their paths toward universal social protection. In
addition to programs’ administration, their design has also been simpli ed by
waiving conditions or work requirements. As such, it is possible that the pandemic
raised the bar for demonstrating the comparative cost-e ectiveness from adding
layers of activities around cash transfers – that is, we may see more
benchmarking alternative designs against “simple” unconditional cash transfers.

Fifth, there are lingering questions related to nancing matters, including in terms
of sources of revenue and levels of scal space required. There are valid reasons
for why nancing constraints have been relaxed, and past experiences have
underscored the risks of “scaling down” too early
(https://poseidon01.ssrn.com/delivery.php?
ID=683099006066122026113024084109020069028040070052091020024000067025
So far, funding modalities for social protection included among others de cit
spending, reprioritization of expenditures, and cuts to other services
(http://documents1.worldbank.org/curated/en/737761605775837011/pdf/Where-
is-the-Money-Coming-From-Ten-Stylized-Facts-on-Financing-Social-Protection-
Responses-to-COVID-19.pdf). These may not be feasible or desirable options in
the longer-run. Fiscal constraints may become particularly challenging where
social protection is already heavily reliant on external assistance
(https://openknowledge.worldbank.org/bitstream/handle/10986/29789/9781464811
sequence=2&isAllowed=y). In such contexts, reimagining partnerships in the
humanitarian space will be important
(https://www.thenewhumanitarian.org/analysis/2021/01/04/humanitarian-aid-
policy-trends-2021). Yet historically, the development of domestic tax systems has
been a key step for domestic social protection expansions. The crisis, perhaps,
could generate further space for such conversation. Governments could build on
the emerging response to forge a new social contract with “tax and bene ts”
(https://www.imf.org/-/media/Files/Publications/WP/2020/English/wpiea2020105-
print-pdf.ashx) at its center.

Finally, there are political challenges. Real-world policymaking is messy. Societies

are an amalgamation of a wide array of constituencies which can gain or lose
from reforms. The in uence, power and pressure that speci c coalitions can exert
on decision-making processes can be substantial. The fact that COVID-19 reached
people previously uncovered – including large shares of informal sector workers –
may generate a new constituency demanding social protection, hence possibly
enhancing the political sustainability of large-scale programs
(https://www.developmentpathways.co.uk/wp-content/uploads/2020/11/Social-
Contract-paper-Nov242020.pdf). The prospects for coverage expansion may hinge
in no small measure on whether new measures would “translate into votes” and
trigger political gains
(https://opendocs.ids.ac.uk/opendocs/bitstream/handle/20.500.12413/15863/IDS_W
sequence=1&isAllowed=y). 
In sum, the COVID-19 temporary cash transfers are helping; but they operate
alongside preexisting structural gaps in social protection. Whether the pandemic
can be a game changer for addressing such gaps may depend on how the crisis
a ects six factors inhibiting coverage pan out in di erent contexts. On balance,
the pandemic response may help address some bottlenecks, for example related
to mindsets, delivery, and institutions (e.g., monetary- scal policy coherence,
coverage in urban areas, crisis preparedness), while others may remain more
uncertain (such as sectoral trade-o s, nancing, and politics). 
Sometimes history presents an unexpected window of opportunity for change.
When this occurred in the past, windows tended to close rapidly, and the path
taken (or not taken) at those junctures could set the course for decades.
 

GOVERNANCE (/SEARCH?F[0]=TOPIC:296&F[1]=LANGUAGE:EN), HEALTH (/SEARCH?

F[0]=TOPIC:297&F[1]=LANGUAGE:EN), SOCIAL PROTECTION (/SEARCH?F[0]=TOPIC:301&F[1]=LANGUAGE:EN), COVID-19
(CORONAVIRUS) (/SEARCH?F[0]=SERIES:881&F[1]=LANGUAGE:EN)
Authors

 
(/team/ugo-gentilini) (/team/ugo-gentilini)
U o G ntilini (/t m/u o- ntilini)
Global lead for social assistance

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