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FEATURE STORY July 11, 2021

In Sri Lanka Cash Transfers Give Essential Support to People Hit Hardest by COVID-19


World Bank

Story Highlights

  • Direct cash transfers provide essential support to thousands during multiple COVID-19 waves in Sri Lanka
  • It is imperative for governments to prepare in advance arrangements to scale up social protection programs in response to shocks, and that the financing of this scale-up is also pre-planned
  • Governments need to focus on long-term policy responses to address inequality and vulnerability in the face of shocks like the COVID-19 pandemic

When the first lockdown was imposed in March 2020, Nayani’s financial woes worsened overnight. Struggling with partial loss of sight and Chronic Kidney Disease (CKD) the 36-year-old’s meagre savings evaporated like smoke from the incense sticks she sells to make a living. Nayani’s husband is blind and the couple struggled to make ends meet, especially given the cost of Nayani’s dialysis treatment.

On this World Population Day, governments should take stock of rising inequalities that have been exacerbated by the pandemic and bolster their social protection and welfare schemes. Improving the reach, depth and flexibility of these programmes is crucial to equitable recovery from COVID-19.    

In response to these challenges posed by COVID-19, the Sri Lankan government stepped in to provide a monthly allowance of Rs.5000 to struggling families. Nayani was among the more than 5.6 million families that received assistance in April and May last year as the first COVID-19 wave swept through Sri Lanka. In this initial round of support the government responded to appeals from vulnerable families like Nayani’s who lost their livelihoods.

The elderly and differently abled, as well as CKD patients, were also included in payments given during these two months. The elderly allowance was also increased from Rs.2000 to Rs.5000. Many people who were eligible for monthly allowances but were earlier waitlisted, including differently abled people and CKD patients, were also drawn into the beneficiary scheme for the first time in April/May 2020 as the government worked to minimize the pandemic’s impact. An additional round of Rs.5000 cash transfers were provided during the second COVID-19 wave.    

The Additional Financing of the COVID-19 Emergency Response and Health Systems Preparedness Project’s assistance improved the inclusivity of the government’s cash transfer measures to reach more vulnerable families, the differently abled and patients suffering from chronic kidney disease,” said World Bank Senior Social Protection Specialist Srinivas Varadan.

Many of those receiving the cash transfer used it for essentials such as medicine and food. Photo: Shehan Gunasekera

Direct cash transfers are a useful and effective support mechanism during a crisis, and this approach was chosen by many governments around the world to respond to the COVID-19 pandemic. Cash-strapped governments often struggle to scale up their direct cash transfers during a crisis, particularly when it has a significant impact on public revenues like the pandemic did. It is therefore imperative for governments to prepare in advance arrangements to scale up social protection programs in response to shocks, and that the financing of this scale-up is also pre-planned.

In order to do this, and reach all those who need help, the government needs to know in advance which households depend on precarious or low incomes and are most likely to be affected in a crisis. This means collecting better data and pre-registering those who might need temporary assistance in the future, in addition to those who regularly receive it. Better identification and payment systems can speed relief payments, ensuring people get assistance when they most need it.

“The pandemic shows us that even people who are not poor can fall into a situation where they need government support. Many people around the world have received support during the COVID-19 pandemic because there is a universal understanding that these shocks were not anyone’s fault and the State has a responsibility to help households get through it,” said World Bank Senior Economist Thomas Walker.

Although half of Sri Lankan households do not receive regular cash transfer support from the government, many of these have been severely affected by the COVID-19 pandemic. Several groups are less likely to receive regular government support, such as single-headed households that may not have children, young children (under 10 years of age), adults aged 25-44 who are likely caring for children, and single-headed households under 60 years of age that may well include people with disabilities.

Social assistance coverage is also low among informal workers who make up about 70 percent of the workforce and were hit hard by the crisis. Many were shop workers, informal workers, or street vendors who lost their incomes. While these workers will hopefully recover quickly as economic activity improves, families like Nayani’s are likely to face more challenges and need ongoing financial support from the government. A mix of interventions – from temporary income support to active job placement assistance and long-term social assistance – is needed to help Sri Lanka’s citizens recover from the COVID-19 pandemic and build back better.

*Beneficiary name has been changed to protect identity