About Karama and Takaful

Hania Sholkamy
Wednesday 7 Oct 2015

Cash transfer programmes like Karama and Takaful can partially eliminate poverty in Egypt, provided they are well implemented, well researched and well documented

With surprisingly muted fanfare, the government of Egypt launched two new social pension/transfer programmes in December 2014.After decades of "wanting" to address deprivation and poverty, the current government finally did do something!

Karama (dignity) and Takaful (mutual support or welfare) are both objectively targeted cash transfers that aim to increase the consumption of individuals and families living in poverty.

Karama provides the elderly and the severely handicapped with a monthly stipend of LE320 per beneficiary. Takaful is for families with children living in poverty and is a conditional cash transfer that is given four times a year to help families provide for their children. Takaful provides a LE320 base pension with increments per child ranging from LE60 to LE100 depending on the age of the child.

Both rely on the use of a proxy means testing formula (PMT) that identifies poverty without recourse to questions on income or expenditure.

The Ministry of Finance developed in 2014 this PMT formula and procedures on the basis of household income expenditure data and poverty maps. The benefits are managed by the Ministry of Social Solidarity and rely on its staff and experts for enrolment and registration, validation, supervision and management of both programmes and their valuable databases. Actual dispersal of funds is through ATMs for which beneficiaries have smart cards issued by a specialised financial services provider.

Egypt has always had a system of social pensions called el damman el igtima’i that provides monthly cash to applicants who are deemed eligible by social workers. It is a system whereby certain categories of "poor" are covered by pensions. These categories include the chronically sick, the handicapped, the elderly, female heads of households, orphans, divorced or widowed women with children, families of conscripts and families of convicts who have a sentence that is longer than six months.

Social workers ensure that documents proving the eligibility of applicants are correct, on the basis of which they make the allocation of the pension.

The system of social pensions in Egypt was a celebrated model of social protection at one point, but it is now haggard and tired. The money is never enough to comply with all the requests, there are more categories of poor than currently recognised and the one million and more who are on pensions have not been reviewed or revisited. These pensions have done little to dent the rising rates of poverty and deprivation. Life would be worse without these pensions, but Egypt now needs more tools to protect its citizens from destitution and deprivation.

Karama and Takaful are new tools distinguished by specific design features. Karama is an individual entitlement. If a man is poor and elderly he gets a pension, but if he has a wife she is not a dependent and gets her own pension. Similarly, children and persons with disabilities also get individual pensions. In cases of severe disability, the female care-giver gets the transfers on their behalf.

Takaful provides families with a cash injection four times a year that is given to the mother or female in the household and is meant to enable children to increase their consumption, go to school and stay healthy. This is why Takaful is conditional. It is contingent on school attendance of children over the age of six and preventive health utilisation such as immunisation and growth monitoring for the little ones.

The main features of the programmes are that they are designed to support those who cannot work due to age or disability and support those who may have a meagre income with enough cash to care for their children. The programmes are also aimed at women and at honouring their care giving responsibilities. Finally, they are designed to be amenable to study and change.

The question is, what now for these programmes? How can they be made effective, efficient and fair? Hopefully, these programmes will eliminate a layer of need from the current stock of poverty in villages and neighbourhoods, but only if they are well implemented, well researched and well documented.

As a member of the team of mostly women who designed and are implementing the programmes [1], I believe it is important to scrutinise these programmes and lobby so that they are robust and universal. They must be made available to anyone who needs them. They must remain protected from abuse and manipulation. They must be researched, tested and overseen by community representatives and by the larger society. The PMT needs to be continuously revised and updated. The programmes should yield annual reports that are compiled by credible researchers and distributed widely. These programmes are important because they are avenues of redistribution of wealth, and for that they should be well targeted and generously funded. But they also have to be open, systematic and transparent so that they are accepted and protected by people at large and by beneficiaries in particular.

These types of cash benefits only succeed if they are managed in accordance with international standards. They can only become better if their systems, decisions, ethical norms, procedures and practices are shared and debated.

If there are bottlenecks, they need to be cleared, and when mistakes are made they will be corrected. But we as citizens should engage with Karama and Takaful. We should understand their promise and hold policy makers accountable for the fulfilment of this promise.

The writer is an associate professor at the American University in Cairo's Social Research Centre.

[1] Ghada waly is the minister who implemented the programmes, Nevine Kabbage is the director of the programmes, Heba El-Laithy, Dina Armanious and others developed the PMT, and Sherine El-Shawarby headed the Economic Justice Unit at the Ministry of Finance.

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