WINDHUK, Namibia (ILO Online) - Solomon Natimbi is a pension paymaster. He travels around a 3,000-km long circle of villages with 300 pay points paying about 20,000 pensioners. His crew of five works for a private company (United Africa Group), which - under contract with the Ministry of Health and Social Services - pays the state old-age pensions, child maintenance grants and disability pensions to all eligible residents in rural areas.

The United Africa Group employs 13 such crews for the whole country, each running in circles of 25 days with hundreds of pay points. They travel in two pickup trucks, one containing guards and the money containers, and the second the paymaster and operator. In the back of their truck they have a stripped-down automated teller machine (ATM) similar to the ones in the walls of many banks.

The ATM is hooked up to a laptop computer, a fingerprint and smart card reader, and a simple digital camera. The laptop contains the bio-data, identification data and benefit amounts of all beneficiaries at each pay point. The Ministry of Health and Social Services provides the data for each new circle. The beneficiaries bring their smart cards, also containing a photo, and put their index fingers on the reader. The machine checks the identity of the fingerprint, notes the payment on the smart card, and dispenses the money. A person who is too sick to come to the pay points may designate a proxy, whose fingerprints will also be registered on the smart card.

Once paid their N$200 per month (about US$25), pensioners will do their shopping, may have a beer and then walk back to their homes. Officially, nobody has to walk more than 7 to 8 km to his or her pay point. The sequence of pay points is changed for security reasons and people are notified about pay dates and times by radio at short notice. The "bush telegraph" reliably notifies those who have no radio.

At one typical pay point, 11 women and ten men pensioners were interviewed. They all said that the pension is the only regular cash income in their rural households. The average size of their households is 5.4 people. Three quarters of them pay school fees out of their pension. On average, every pension paid also finances school fees for three children. Half of the pensioners say they also need the pension to buy pharmaceutical products on a regular basis.

"The total cost of the system amounts to only 0.8 per cent of GDP. The old system was less foolproof, slower and more expensive. The new one reaches almost all people over 60 and has changed many families' lives all over Namibia", says Michael Cichon, Director of the ILO's Social Security Department.

Basic welfare schemes could reduce poverty by 35 per cent or more

The ILO has calculated that even in some of the poorer African countries, such a package of benefits consisting of basic pensions for the elderly and disabled and child benefits would cost between 1 and 2 per cent of GDP, equating to roughly between 5 and 10 per cent of national budgets. In countries like Senegal and Tanzania, ILO estimates show that such basic social cash transfers could directly reduce extreme poverty rates by 35-40 per cent.

"Comprehensive tax and transfer systems require effective public sector institutions. The least-developed countries in particular are still beginning to build up the public institutions needed to manage both contributions to the social expenditure pool and their distribution to those in need. However, a number of developing countries have in recent years introduced basic pensions or child benefit schemes financed from public households which were extremely successful in combating poverty", explains Michael Cichon.

Social cash transfer programmes provide a modest, but regular income to vulnerable groups of the population, but have a strong impact on the reduction of poverty and investments in human capital. Conditional cash transfer programmes in Latin America, such as Brazil's Bolsa Familia or Mexico's Oportunidades programme, provide poor families - usually paid to mothers - with cash grants under the condition that their children attend school and that family members regularly attend health services. Evaluations of such programmes have unveiled positive effects on children's school enrolments and attendance, nutrition, health status and the reduction of child labour.

In South Africa, social grants for the elderly and children show similarly positive effects. Children living in a household together with a pensioner tend to attend school more regularly, enjoy a better health status and are even taller than children living in a household without access to regular social cash transfers. Similar effects are shown for the country's cash grants for children. Studies have shown that these grants reduce South Africa's poverty gap by 47 per cent.

Although countries like Brazil, Mauritius, Namibia, Nepal and South Africa show the way in this respect, only one in five people in the world has adequate social security coverage. The other four need it too, but somehow must manage without. This is why governments, employers' and workers' organizations attending the ILO's International Labour Conference in June 2001 considered that the highest priority should be given to "policies and initiatives that bring social security to those who are not covered by existing systems". As a result the ILO launched a Global Campaign on Social Security and Coverage for All to encourage the extension of social security coverage as a means for combating poverty and social exclusion.