Getting cash-based poverty relief to the poorest quickly during COVID-19, in partnership with the South African government

A project led by Kate Orkin, Senior Research Fellow in Behavioural Economics, with the Centre for the Study of African Economies, resulted in a partnership with the government of South Africa on their emergency social protection response to COVID-19.

In poor countries, COVID-19 lockdowns and business closures led to mass layoffs of casual workers and devastating spikes in unemployment and poverty. In April 2020, before any poverty relief, an estimated 1 in 5 South Africans were going to bed hungry (compared to 1 in 10 before the pandemic). Government delivered some food parcels to the destitute but struggled to reach sufficient scale: only 1.2 million parcels were delivered from April to July 2020, but 9.8 million households were unable to buy enough food to cover basic needs.

Kate team’s research in Kenya had highlighted that sending cash payments to poor households through mobile phone payments is cost-effective and scalable. Other research worldwide finds it is a cheaper method of distributing emergency poverty relief than food parcels, and as effective at reducing hunger. Over time, receiving regular cash payments can also improve people’s ability to generate income, enabling them to search for work, start businesses or buy agricultural inputs.

During the first months of the pandemic, Kate argued in the media for expansion of emergency relief and delivery via cash payments instead of food parcels and in April 2020, the South African Presidency asked her to make recommendations for changes to emergency poverty relief. She formed a team of economists from Oxford, the University of Cape Town, the World Bank and Duke University, funded by UKRI and then an Oxford Policy Engagement Network Fellowship, who delivered rapid evidence reviews and recommendations throughout 2020 and 2021. From government side, the work was co-led by Blavatnik School alumn, Saul Musker (MPP 2019), who is now a Director in the Office of the President of the Republic of South Africa working on the Presidential Employment Stimulus.

Based on these recommendations, the South African government rolled out a new monthly welfare grant for all unemployed people in May 2020. Applications and payments occurred by mobile phone to minimise health risks. The grant now reaches over 10 million unemployed people, 6.6 million of whom signed up in the first two months of the grant. The intervention was initially designed as emergency relief during lockdown, but has now been extended to April 2023 based on the team’s recommendations.

Government also increased the amount of money given to 18 million existing welfare recipients during lockdown. The recommendations led to the allocation of ZAR 97.5 billion (GBP 4.87 billion) in additional spending on poverty relief. Independent analysis estimates the grants led to 5.5 million fewer people living in food poverty between April and June 2020 than if they had not been in place.