Examining the Catalytic Effect of Aid on Domestic Resource Mobilization for Social Transfers in Low-Income Countries

Abstract

Social transfers, a non-contributory form of social protection, present a great potential to tackle poverty and inequality, and support inclusive socioeconomic development. Yet, they also represent a long-term financial commitment, and in environments where they are most needed, national policymakers are often reluctant to introduce them. In reaction to this situation, foreign aid actors have been allocating resources to support the expansion of social transfers in low-income countries. Progress in terms of policy uptake has been slow, and there has been concern over the ability of aid initiatives around social transfers to translate into sustainable policy changes and contribute to more inclusive development patterns. Better understanding why governments come to adopt and finance certain types of social transfers - and what role, if any, foreign aid actors play - can usefully inform the formulation of strategies towards the expansion of basic social protection in countries where the process appears to have stalled. This paper is part of the UNRISD research project on "The Politics of Domestic Resource Mobilization for Social Development". Its specific contribution is with regards to the catalytic effect of foreign aid on domestic resource mobilization for social transfers in low-income countries. The paper elaborates on a comparative analysis of the origins and features of six sizable social transfer schemes currently operating in low-income African countries. Findings suggest a catalytic effect of aid on mobilizing additional domestic resources for social transfers. But in light of these findings, the paper questions whether, at least in some cases, a narrow focus on social transfer instruments may have distracted public resources (domestic and foreign) away from deeper causes of poverty and marginalization, doing a disservice to the transformative agenda development partners claim to defend.

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