Targeting to maximise impactWhat is poverty? How is it defined? Who are the poor? Where are they living? How can they be reached? These are questions frequently asked by those involved in development. The approach or means one adopts to address poverty largely depends on how one defines poverty.
Our understanding of poverty in South Africa is partly conditioned by international indices, such as the Human Development Index produced by the United Nations Development Programme, or the competitiveness index produced by the World Economic Forum. These reports use particular indicators and assess countries in their totality. What these reports often fail to reflect (because they are working at a national level) is the deep inequality that South Africa inherited from its past. South Africa is rated as a middle-income country: the abject poverty of hundreds of thousands of citizens is obscured by the wealth of others.
It is against this background that targeting has become a buzz word in development circles in South Africa. What exactly is targeting and how useful is it? These are some of the questions we focus on in this article.
The basic problem of targeting is how to maximise the gains to the poor for a given cost. Crudely put, without targeting, a programme could just do no more than spread income, which may lead to widespread leakage (i.e. the benefits may go to those not necessarily in need). The issue therefore becomes how to efficiently deliver programme benefits to the poor.
Targeting obviously requires a mechanism to distinguish the poor from the non-poor. Since there is no universal definition of poverty, identifying this mechanism becomes one of the important tasks of targeting. A second important task of targeting is to ensure more poverty reduction benefit per transferred amount of money. In the light of government's budgetary constraints, targeting is therefore a vital exercise.
There are certain conditions that dictate when one should and when one cannot or should not target.
Firstly, information on the poor or vulnerable group needs to be readily available and reliable for targeting to occur. More importantly, the cost of targeting must not outweigh the benefits. The system that needs to be put in place to administer and manage the programme should be as simple as possible.
There are a number of costs and constraints associated with targeting that need to be borne in mind.
Firstly, it is often difficult to define, and subsequently target a particular target group. Having identified the poor, targeting may miss the intended beneficiaries (i.e. exclusion errors) and/or include the non-poor (i.e. inclusion errors).
Secondly, there are administrative costs associated with targeting. Generally, the higher the degree of targeting the higher the administrative costs. A further constraint is that any targeting exercise and subsequent intervention creates losers and winners. Targeting may be unpopular if politicians' constituencies are ignored.
A final factor that needs to be recognised is that of incentive compatibility which may give rise to undesirable programme effects. For example, a food nutrition programme at a school may result in the school children getting little or no food from home as their care-givers ration scarce food resources to those members of the household that are not attending the school. In addition, there may be a stigma attached to receiving benefits which recipients may be wary of.
Implications for targeting
Questions around whether to target, how to target and which programmes to be used should result from an empirical analysis of the country or programme situation. A number of issues need to be borne in mind. It should be noted that targeting is not a panacea for resolving poverty. Secondly, appropriate targeting methods help but are constrained by factors outlined above. Therefore, the design of a programme is extremely important and must be monitored and evaluated at all steps in the process.
At the end of the day, there is no single, perfect solution to targeting. The poor are not a homogenous group and therefore perfection can never be attained in any targeted programme. However, targeting remains an important exercise given the challenges the government has to tackle and the limited resources that they have at their disposal.