Study roots for inflation-adjusted safety net cash

The cash payout to vulnerable groups could be adjusted for annual inflation if the State implemented the recommendation of a new study.

The study, funded by World Food Programme (WFP) and Unicef, notes that the impact of Kenya’s cash transfer programmes have been minimal due to inflation, coupled by barriers in design and delivery.

The Social Protection Department oversees the bi-monthly payment of stipends to the elderly, severely disabled persons as well as orphans and vulnerable children.

It is only the Hunger Safety Net Programme (HSPN) targeting extremely poor households –handled by the Ministry of Devolution- that adjusts its payment to beneficiaries annually to inflation.

“As a minimum transfer, values should be annually indexed to protect their (the beneficiaries) purchasing power,” says the report.

Senior citizens, severely disabled persons and orphans and vulnerable children receive Sh2,000 per month, which is paid every two months in a lumpsum of Sh4,000.

Kenya’s inflation has been on the rise over the past two years to 5.82 percent in December driven by high cost of food. Inflation stood at 4.5 percent in December 2017.

A rise in inflation means that the purchasing power of poor households is limited.

The report dubbed Linking Social Protection to improved Productivity: An investment case for Cash Plus Programmes in Kenya says the static payment limits the effect of the cash transfer programmes.

“As consumer prices increase over time, the amount of goods and services that can be purchased with a minimal amount will gradually reduce,” says the report.

The National Safety Net Programme (NSNP) was started by the government is to relax the budget constraints on the beneficiaries.

The Study sought to establish the rate of returns to social protection cash transfers and to assess impact of introducing complimentary services.

The government contracted KCB, Equity Bank, Co-operative Bank and Post Bank to process the payment for the beneficiaries of its cash transfer programms.

Beneficiaries are required to register their biometrics such as fingerprints with banks for use in withdrawal.

Last year, the beneficiaries complained of delays in receiving their cash, which was linked to Treasury late dsbursements.

The Social Protection Department also linked the delays to an upgrade of the beneficiaries’ bank accounts to allow their access through biometrics to curb fraud.