IMF harps on benefits of social cash transfers

THE International Monetary Fund (IMF) has said that social cash transfers that are targeted and far-reaching help people buy food and rebuild after weather shocks.

It further said this allows families and small businesses to invest in resilience-building equipment and technology.

In a blog post on its website, the multilateral institution said that by offering people control of the support they receive, these cash transfers are more effective at containing inequality than agricultural subsidies.

Titled ‘How Africa Can Escape Chronic Food Insecurity Amid Climate Change,’ the report, authored by Laurent Kemoe, Cedric Okou, Pritha Mitra and Filiz Unsal, noted that protecting food production and distribution from weather events begins with climate-resilient infrastructure. This type of public investment also creates jobs and can catalyse private investment.

“Consider, for example, solar power that facilitates irrigation, water access and temperature control for food storage. Equally impactful is a flood barrier that protects ports and roads critical to food distribution.

“Digitalisation is also crucial. It gives farmers access to early warning systems and mobile banking as well as platforms to purchase fertilisers, seeds, or sell produce, helping to connect small producers to large vendors.

“Access to finance from private markets can play a similar role to social assistance. Raising it requires developing financial markets, which can take time. In the interim, micro-finance or public-private partnerships can help provide credit to people who currently don’t have access through banks,” the report said.

To this end, establishing collateral through advances in property rights is crucial.

With World Bank support, Mozambique and Tanzania are expanding title and survey registers and developing digital land administrative services. A pilot project in Ghana uses blockchain technology to improve incomplete or missing land records, it noted.

According to the IMF “Food supplies and prices are especially vulnerable to climate change in sub-Saharan Africa because of a lack of resilience to climatic events, food import dependence, and excessive government intervention.

Most people live in rural agricultural and fishing communities that can’t afford infrastructure to protect them from adverse weather. For example, they depend on rain to water their crops, and less than one per cent of arable land is equipped with irrigation.”

The IMF said it is supporting countries in these efforts including through climate-oriented public financial management advice and lending facilities such as its resilience and sustainability trust. Soon to be operational, this new lending facility would provide longer-term affordable financing to address climate change and other challenges.