Takaful and Karama: cash transfer programs for marginalized groups (2015–ongoing)

Takaful and Karama is a set of cash transfer programs designed in 2015 following the economic reforms to mitigate against the impact of poverty. Takaful is a conditional cash transfer to low-income families with children. It is conditional upon school attendance and regular health check-ups. Karama is an unconditional cash transfer to low-income orphans, older people, and people with disabilities.

In 2014, following years of low and non-inclusive growth and high unemployment, Egypt adopted an economic reform program to (i) increase growth and create jobs, (ii) increase tax revenue, (iii) encourage greater foreign direct investment, and (iv) reduce the budget deficit and high public debt.¹ As part of the reform to reduce the deficit, the government transitioned away from general untargeted, inefficient, and costly fuel and bread subsidies. (Bread subsidies remained to some extent, but became more targeted and voucher-based, whilst fuel subsidies were lifted altogether).²

Transitioning away from general subsidies provided fiscal space to deliver a targeted social protection program that would mitigate the impact of poverty on the most vulnerable, and subsequently a “Ministerial Committee for Social Justice” was established to tackle issues of social inequality.³ Consequently, the Takaful (solidarity) and Karama (dignity) programs were established in 2015.⁴ In the absence of a defined poverty line in Egypt in 2015, the programs target the poorest 40 percent of the population.⁵

The Takaful component provides conditional cash transfers to low-income families with children. Each family receives EGP 325 per month,⁶ plus EGP 60 for every child aged 0-6 years old, EGP 80 for every primary-school aged child, EGP 100 for every preparatory-school aged child, and EGP 140 for every secondary-school aged child. The program covers a maximum of three children per household.

In 2018, a soft conditionality was introduced to Takaful in an attempt to break the intergenerational cycle of poverty. To be eligible for the program, children must attend school at least 80 percent of the time, and must have at least four health visits a year, parents must attend hygiene and nutrition sessions, and expectant and new mothers must attend prenatal and postnatal sessions.⁷ The conditionality has been supported by a media campaign to emphasize the importance of healthcare and education.⁸

The Karama component is an unconditional cash transfer to low-income older persons (those above the age of 65 receive EGP 450 per month), persons with disabilities (EGP 450 per month) and orphans (their legal guardians receive EGP 350 per month).⁹

In 2018, the government of Egypt introduced the “Forsa” (opportunity) program, which provides training opportunities and access to formal employment for low-income families, and those in rural areas where fewer formal job opportunities are available. “Forsa” provides asset transfer (livestock, tailoring equipment, agricultural equipment, car service equipment) and training in financial literacy so that families may engage in productive self-employment.¹⁰

Implementation

The program is implemented by the Ministry of Social Solidarity (MoSS), in partnership with the Ministry of Education and Technical Education, the Al-Azhar Institute, and the Ministry of Health. The United Nations International Children’s Emergency Fund (UNICEF), and the World Bank provided technical support and initial funding¹¹ to implement the programs gradually, starting with the nine governorates that had a poverty rate exceeding 60 percent in 2015.¹²

In order to decrease errors of including the non-targeted or excluding targeted groups in the program, MoSS launched voluntary social accountability committees across the governorates. The committees are responsible for ensuring that only targeted beneficiaries are included in the programs, and they report cases of unintended beneficiaries. Each committee includes three community leaders—two women and one man—two NGO representatives, a rural woman leader, the President of the Social Unit, a youth leadership representative, an Imam, a Priest, a health center representative, and a school representative.¹³

In addition, a Grievance Redress Management (GRM) system was set to capture grievances and inquiries through a website and a call center.¹⁴

MoSS is in the process of integrating its information system with those of the Ministry of Health, Ministry of Education, and the Al-Alzhar network of religious schools in order to be able to track and enforce conditionality.¹⁵

Cost

The government’s budget for the TKP has grown from EGP 147 million in 2014-15 (USD 19 million according to the 2015 rate) to EGP 19 billion in 2021-22 (USD 1.2 billion according to the 2022 rate).¹⁶ The budget growth is due to the growth and perceived success of the program.

UNICEF also provided seed funding of USD 20,000 in 2015 to launch the Takaful and Karama program. Furthermore, the World Bank provided loans to the government to maintain the program.¹⁷ This included loans worth USD 400 million in 2015, USD 500 million in 2019, and USD 500 million in 2022.¹⁸

Assessment

The International Food Policy Research Institute (IFPRI) conducted an impact evaluation of the TKP in 2018. At the time of the evaluation, there were 2.26 million households registered under the two components, equivalent to 10 percent of the Egyptian population. The study found that 89 percent of beneficiaries were satisfied with TKP, and the program had a positive impact by decreasing (by 11 percent) the chance that households in receipt of Takaful would fall below the poverty line. The program increased food consumption by 8.4 percent and reduced malnutrition in children under five years by 3.7 percent.¹⁹

According to the World Bank, by December 2021, there were 2.2 million people registered under the Takaful program and 1.3 million under the Karama program. 75 percent of direct beneficiaries are women and girls. ²⁰ The World Bank found that the program demonstrated high targeting efficiency, with 93 percent of beneficiary households being under the poverty line.^{21, 22} Under the Takaful component, 81 percent of households are achieving at least 80 percent school attendance. Whereas only eight percent are achieving regular health checkups,²³ despite health services provided free of charge.

As TKP covered 14 percent²⁴ of the Egyptian population, it may have contributed to a decrease in the poverty rate from 32.5 percent in 2017–18²⁵ to 27.3 percent in 2023.²⁶ However, the TKP has not kept up with inflation: in 2022 the benefit increased once by 1.5 percent, whereas inflation in Egypt reached 24.4 percent.²⁷

Proven to be popular with the population and more cost effective than universal subsidies, TKP receives strong political support. Consequently, the government is planning to turn it into Egypt’s SSN (Social Security Network) program.²⁸

Tags

• Children & Youth
• Education
• Egypt
• Health
• Income & Wealth
• Low-Income Groups
• Middle East & North Africa
• Middle-Income Country
• Older Adults
• People with Disabilities
• Redistribution
• Social Protection