Modest, targeted cash transfers mitigate poverty at every level - UNDP

In its latest report on the ripple effects of the Ukraine war on households, the United Nations Development Programme (UNDP) said that over 70 million people could be pushed to extreme poverty as a result.

FILE: A general view of the township of Khayelitsha, in Cape Town. Picture: AFP

JOHANNESBURG - The United Nations Development Programme (UNDP) said that modest, targeted cash transfers mitigated poverty at every level.

In its latest report on the ripple effects of the Ukraine war on households, the organisation said that over 70 million people could be pushed to extreme poverty as a result.

It also looks at how policy interventions could cushion the poor, such as South Africa's social relief of distress grant.

The UNDP said that among challenges being faced by policymakers amid the cost-of-living crisis was the provision of short-term relief to poor and vulnerable households as most developing nations struggled with shrinking fiscal space and ballooning debt service payments.

The report projects that the current cost-of-living crisis may have pushed over 51 million people into extreme poverty at $1.90 a day, and an additional 20 million at $3.20 a day, with hotspots in sub-Saharan Africa, particularly in the Sahel.

Time-bound targeted cash transfers are advocated to alleviate the pressure, with the organisation saying that this was more equitable than using blanket subsidies.

"Developing countries are going through a tough time because they have very costly access capital market so if the country was trying to borrow on the capital market today it would be paying a high additional interest rate price on that borrowing, so we know that most countries now rely either on development finance coming from multilateral development system or are on their on fiscal resources," said UNDP senior economist, George Gray Molina.

While South Africa has faced several hurdles in the distribution of the R350 SRD grant, the report points to the problem being much wider.

It said that the administrative challenge was targeting poor and vulnerable households affected by food and energy price surges, which may not be currently included in existing administrative registries.