Impacts of the Global Economic Crisis on Child Poverty and Options for a Policy Response in Cameroon

This study aims to evaluate the potential impacts of the 2008/09 global economic crisis on child poverty in Cameroon. It also explores the potential effects that policy responses to such a crisis could have on children. In order to do this, the study uses a macro-micro methodology. A dynamic computable general equilibrium (CGE) model is used to simulate various scenarios of the economic crisis together with policies which respond to the crisis, taking into account the different transmission channels of the global crisis to the Cameroonian economy. The results of the CGE model are then used in a micro-econometric module in order to evaluate the impacts of the simulated shocks on households in general and children in particular. Five dimensions of child poverty are examined: monetary poverty, caloric poverty, child school participation and child labour, and children’s access to health care services. The study shows that the crisis is projected to lower the real GDP growth rate by 1.3 percentage points in 2009, 0.9 in 2010 and 0.8 in 2011. The crisis would also bring about a 1.05% increase in the number of children who were poor in monetary terms in 2008 and a 4% increase in 2009, 2010 and 2011, compared to the situation without a crisis. With respect to this reference scenario, the crisis is simulated to increase the number of children who are poor in caloric terms by 0.56% in 2009, 1.08% in 2010 and 1.60% in 2011, and negatively affects, albeit lightly, both children’s school participation rate and their access to health care services. Four alternative policy responses to the crisis are simulated: a reduction in the VAT levied on the sale of food products; elimination of customs tariffs applied on imports of food products; free access to school canteens for children under the age of 15 in districts where monetary poverty is higher than the national average; and granting cash transfers to poor children. These policies, with a cost of 1%, 0.4%, 0.19% and 1% of Cameroon’s before-crisis GDP respectively, are financed either by foreign aid or by draining the state’s foreign reserves. Results from these simulations show that, in terms of poverty reduction, cash transfers appear to be the most effective of the four policy responses mentioned above, but this policy is the most ineffective at improving the real GDP growth rate. At the national level, the cash transfer policy completely counters the increase in monetary and caloric poverty engendered by the crisis over the entire period of the study. It even lowers these two types of poverty to less than the situation where the crisis did not occur. Moreover, these transfers have beneficial, although small, effects on children’s school and labour participation rates. Furthermore, beside the cash transfer policy, the subsidy for school canteens has a relatively low cost but carries fairly considerable benefits in response to the crisis, especially in alleviating caloric poverty; while the other two policies are quite ineffective, regardless of which dimension of poverty is considered.