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Economy

World Bank asks Kenya to expand cash transfer plan for poor

Elderly people wait to receive their monthly stipend
Elderly people wait to receive their monthly stipend in Molo, Nakuru County. FILE PHOTO | NMG 

The World Bank has urged the Treasury to ramp up allocations for direct cash transfer programmes beyond the 519,878 Kenyans covered as at 2015 under the social safety net plan.

In a new study, the World Bank says the direct transfer programmes are well-targeted but reach only a small fraction of the population, resulting in only “a modest effect” on poverty and inequality.

“The Government of Kenya should consider further expanding direct cash transfer programmes,” it says.

“These programmes, which have been introduced only recently, should further be expanded in order to increase their poverty-reducing effect.”

In the 2018/19 financial year, Treasury allocated a total of Sh24 billion for the programmes.

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The plans include Hunger Safety Net Programme (Sh4.5 billion), the Cash Transfer for Orphans and Vulnerable Children, (Sh7.95 billion), the Older Persons Cash Transfer (Sh17.3 billion), and the Cash Transfer for Persons with Severe Disabilities (Sh1.2 billion).

“Our resolve to empower the Youth, Women, Persons with Disabilities and other vulnerable groups through various initiatives including provision of affirmative funds and reservation of public procurement opportunities remain steadfast,” said Treasury secretary Henry Rotich last month.

In the World Bank report titled “Fiscal Incidence Analysis for Kenya” which analyses the impact of the direct cash programmes in Kenya, the multilateral lender says the elderly cash transfer programme covered only around three percent of all households in Kenya in 2015/16.

The study concludes that the programmes are however “mostly well-targeted” and, therefore, “progressive and pro-poor”.

“Overall, more than 60 percent of the benefits are captured by the poorest 40 per cent of the population,” says the World Bank in the study report, noting that direct cash transfers reduce the poverty rate by only 0.7 percentage points.

Under the social welfare programme dubbed Inua Jamii, poor citizens aged 70 and above receive Sh4,000 every two months. The programme is aimed at ensuring the country’s senior citizens do not slide into extreme poverty, hunger and consequent premature death.

Equity#ticker:EQTY, KCB #ticker:KCB, Cooperative Bank #ticker:COOP and the Postbank are among the lenders listed by the government to distribute the cash allocations for the elderly.

The World Health Organisation report of 2015 estimates life expectancy in Kenya at 63 years.

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