Presentation of preliminary results of ERD 2010

“Social protection as an integral part of development policy”

Johannesburg, 11 th October 2010

Giorgia Giovannetti

Robert Schuman Centre for Advanced Studies, European University Institute, and University of Florence

The European Report on Development (ERD): a one year process

International Conference on “Experiences and lessons from social protection programmes across the developing world: what role for the EU?” Paris ; 17-18 June 2010 International Conference on “Promoting Resilience through Social Protection in Sub-Saharan Africa”. Dakar; 27-30 June 2010 International Workshop on “The ERD 2010 zero draft report presentation” Florence, 17 September 2010 Second consultative activity organized by the DG Dev to discuss the consolidated Draft Report, Brussels ; November 4 2010 Also: Internal multidisciplinary brainstorming, jointly organized with Max Weber Programme at EUI, Florence, May 5-7

Over 20 commissioned papers Drafting team: A. de Haan, S. Dercon, S. Klasen, L. Prados, R. Sabates Wheeler, T. Verdier, P. Vennesson

What conceptualization of social protection fits better to the goal of the ERD2010?

• Working definition:

Social protection is a

specific set of public actions addressing the vulnerability

of people’s life via:

social insurance social assistance

(offering protection against risk and adversity throughout life), (offering payments to support and enable the poor), and

social inclusion efforts

(enhancing the capability of the marginalised to access social insurance and assistance).

• • • • •

In the background: some facts

Forms of social protection (SP) exists in almost every SSA country; SP has deep roots in Africa.

In the last decade, SSA countries have made progress in their SP agenda (Africa Union). SP in SSA follows different models depending on nature of institutions, level of economic development and specific country features (e.g. demographics).

SP helps enhancing productivity and Growth, decreasing conflicts, reaching MDGs (evidence) Countries with effective SP tend to be more resilient to shocks (crises).

For countries with less SP (or programs not fully implemented), negative impacts tend to be longer term and domestic consumption dampened. Importance of a long run horizon (not only safety nets)

Moving from Short to long term policy responses:

• Short term measures

- even if focused on increasing social expenditure do not allow graduation out of structural weaknesses .

• A longer term perspective is needed.

SP is more than an instrumental response to vulnerability .

• SP

can leverage state building , reduce inequality, build resilient livelihoods, bolster growth, promote social justice.

• But obstacles….

Major obstacles for moving from short term to long term SP policies (in SSA)



Low domestic borrowing and resource mobilization



Identification of the Fiscal Space



Re-prioritization of public sector spending:

For example, prioritizing social sectors over military spending.



Macroeconomic policy framework for social and economic recovery not “accommodating” (crises, deficits…)



Need for external financing in transition phases (grants, concessional borrowing, or debt relief) (Predictability)

 European Commission grant budget support; IMF’s rapid credit facility; World Bank’s economic recovery loans; ADB’s countercyclical support facility…

Learning from around the world (also SSA):

experiences to support policy recommendations

– We evaluated programs through three main criteria: (I)

Preconditions

Externalities; (Fiscal sustainability, Administrative capacity, Political commitment); (II) Impact; and (III) – There are more options available for pro-active social

protection in African countries

(even low-income ones)

than previously thought

(cash transfers, public works programs, supporting –through regulation and reinsurance- the build-up of microcredit and microinsurance schemes); – Case studies show that

social protection programs are feasible and sustainable

and can have large poverty impacts with relatively few disincentive effects.

Sub Saharan Africa: Examples social cash transfer programs with government support

Child grants Old age pensions

Lesotho (80,000) South Africa (4 million) Namibia (108,000) South Africa (8 million)

Pov/community based targeting

Malawi (24,000 hhs and scaling up)

General/national plans

Rwanda (25,000 hhs and scaling up) Zambia (8,000 hhs; scale up to 22,000) Ethiopia (PNSP 1.6 million hhs; BOLSA 8000) Namibia (115,000) Botswana (91,000) Swaziland (60,000) Zambia (4,500 hhs in pilot) Zambia (will scale up to 33,000 hhs) Zimbabwe (2,800 hhs in pilot)

OVC /community based targeting

Kenya OVC (70,000 hhs; scaling up to 125,000) Lesotho (1,000 hhs in pilot; scale up to 10,000) Tanzania (2,000 hhs in pilot) Kenya Hunger (scaling up to 60,000 hhs) Mozambique (170,000 hhs)

Pilots on the way

Madagascar (10,000 hhs planned) Angola (pilot under discussion) Uganda (pilot approved)

Two questionnaires for a bottom-up approach

The Sub Saharan Africa

Questionnaire (SSAQ)

circulated to African stakeholders and experts in social protection (government, civil society, academia, international institutions etc)

Five sections – open and close ended questions How: Questionnaire participants by e-mail Snowball sampling: interviewed persons were asked to nominate other experts to create a network: i) Networking

ii) New ideas iii) Updated information iii) Dissemination

Total date respondents:

sent

50

to

to

The EU questionnaire (EUQ) sent to EU practitioners managing their donors’ social protection portfolio in the field Who: EC, GDC, DFID the the questionnaire representatives. As for BE, ES, IE, LU, NL we contacted the people in field directly.

EU

circulated to their Practitioners from

9

Germany, Luxembourg,

donors

UK, France, (COM, Ireland, Spain, Belgium, The Netherlands) have participated in the initiative.

Where: The questionnaires cover 11 SSA countries (Burkina Faso, DRC, Ethiopia, Ghana, Kenya, Lesotho, Cambodia, Mozambique, Senegal, Tanzania, Zambia) as well as 6 non-SSA (Afghanistan, India, Nepal, Vietnam). Rwanda, Indonesia,

SSA Questionnaire: “External donor programs suffer from a lack of follow-up once they have been funded (e.g no capacity building, lack of long term financing)”

50.0

45.0

40.0

35.0

30.0

25.0

20.0

15.0

10.0

5.0

.0

12.9

19.4

41.9

25.8

Disagree Neither Disagree or Agree Agree Strongly Agree An overwhelming majority (67.7%) agrees or strongly agrees that donor programmes suffer from lack of follow-up, notably long-term financing. Lack of sustainability is considered the “most harmful” aspect of donor intervention, before lack of ownership .

Government commitment:

We have asked respondents to identify the main constraints to the improvement of social protection in SSA. Their answers provide an interesting starting point for discussion.

In your opinion, is the gove r nm e nt com m itte d e nough (politically, financially) to im pr oving s ocial pr ote ction?

60.0

50.0

40.0

30.0

20.0

10.0

.0

54.8

Y es, although social protection coverage and systems still need to be improved

35.5

No, because it lacks political w ill

9.7

No, because it lacks f unds WITHOUT SENEGAL 60.0

50.0

40.0

30.0

20.0

10.0

.0

56.3

37.5

Yes, although social protection coverage and systems still need to be improved No, because it lacks political will

6.3

No, because it lacks funds

Effectiveness of SP measures

In your opinion, which type of social protection measures are the most effective?

6,0

Other Unconditional Cash Transf ers (UCTs) Conditional Cash Transf ers (CCTs) School f eeding Public works Community-driven schemes (traditional solidarities, informal networks etc.) Social pensions 0,0 5,0 10,0

13,0 13,0

15,0

16,0 15,0 18,0 19,0

20,0

Social Protection should be an integral part of EU development policy

• Beyond description and analysis (e.g. 15 SSA have SP in Constitution), ERD aims at understanding the

links and interplays between SP and development

• SP involves specific policies and is a good way to build up long-term relationships between donors and recipients, to generate mutual trust. • We want to understand if and how can EU play a role and be effective, whether it can help to identify priorities and policy measures and to fill the gap between programs and implementation

Implementing Social Protection has also indirect effects….

• Because in every country some form of SP exist (if not at the government level, at village or community level), it is important to align donors development policies with existing domestic SP policies; • The indirect effect is to build partnership on specific grounds. • The mutual learning experience can empower

SSA countries

• The commitment to long term SP policies can enhance the credibility of donors

ERD focuses on the EU role, argues that SP should be an integral element of EU development policy

• Aims: Set perspective to EU’s development policy.

• Review what EU donors actually do (EU main donor).

Suggest that development comprehensive framework.

policies and social protection policies now dealt with separately (not only at the EU level) should be integrated in a • Single out challenges that can/should be tackled at EU level.

• Show both “capabilities” and “expectations” in order to assess the “gap”.

• Provide adequate policy recommendations for EU

Summarizing: a role for international donors (EU) in supporting SSA countries to upscale social protection

• Why? For some SSA countries to only rely on their (limited) domestic resources can be a barrier to scaling up SP and achieving higher resilience • How to intervene, given that social protection is under state sovereignty?

• In the framework of political dialogue, it is crucial that the EU (and its member states) promote national- instead of donor-driven initiatives, to ensure ownership and sustainability

THANKS!

Universal benefits for vulnerable groups: Social pensions in Lesotho

• • •

(a) Reaches defined group and (b) is universal

• Cash delivery subcontracted to the post office: minimizes delivery costs, post offices are familiar and “safe”

Preconditions

: the program rose

entirely from the domestic political agenda,

is financed out of

domestic resources; no

technical or financial support from external actors; high age qualification was chosen to make

it affordable

. In 2005-2006, 126 million of Maloti (US$21 million), i.e 2.7% of the government expenditure;

Impact

: 90% of household were living below the poverty line compared before, 70% after the introduction of the program. Also the effect on the average poverty gap was substantial as it decreased from 135 Maloti per month to 90 Maloti (Bello et al., 2007) .

Emerging Contributions-based SP for better Health: National Health Insurance Scheme in Ghana

• • • It solves (a) health risk = a key problem and (b)it is a functioning contributions based system: NHIS is included in national budget for health; is financed from V.A.T. originating taxation (70-75%); formal sector contribution (20-25%) and informal sector premia (5%). Regulated by the NHI Coucil at the central level, which manages the NHI Fund.

Preconditions

: Operationalized at regional and district level. Commitment very high. NHIS has originated from the National Health Insurance Act that passed into law in 2003. One of the pillars of the Social Protection Strategy of the Government, which includes also an education grant and a conditional cash transfer (LEAP) program.

Impact

: could contribute to address horizontal inequality with equal contribution across country and risk pooling among districts.

Targeted Rural Support at a Large Scale: PSNP in Ethiopia

• • (a) it offers targeted support to needy rural population with productive aim (b) it shows

large scale is possible (

4830,000 2005; 7574,530-2009) in Africa PSNP budget equals 1.2% of GDP; Government expected to provide 8.4% of total PSNP cost, the rest donors. Threat to sustainability from food price inflation eroding wages.

Preconditions:

Timeliness of payment improved significantly 2006-2009 (food & cash wages). Cash payment transfers enhanced as

computer-based system (PASS) addressed bottlenecks;

strong will to move away from emergency relief to predictable support, to reduce chronic poverty and protect assets; political preference for cash payment; PSNP has covered 8 most food-insured regions. • Impact: good overall, moderate on asset accumulation, strong in terms of livestock assets.

Reaching Children when Vulnerable: School

• •

feeding in Kenya

• (a) targets potentially vulnerable population (b) with plausible productive consequences (better human capital formation) According to the Boston Consulting group, cost of a school meal,11 KES per student per day in 2008, 12.4 KES in 2009. 85 % of this cost in food procurement, storage, transportation 15% is for administrative costs (WFP, 2010).

Preconditions:

The program is managed by the Ministry of Education but very

strong and effective cooperation

between the Ministry & the WFP.

Impact:

Not measured yet but, according to some impact analyses made on previous programs held in Kenya, school meals allow households to save between 4 and 9 % of the annual household income for feeding their children.

• • •

Developing Social Protection Plans: Vision 2020 Umurenge (VUP) in Rwanda

Included because it offers a comprehensive SP strategy

Precommitment:

2008/12 $ 72 per capita each year. $ 44 million during the pilot phase; High levels of subsidiarity and bottom up approach; Political commitmente Strong. VUP is a component of the PRSP of Rwanda for the fiscal period

Impact:

Positive impacts observed in the form of increased consumption; spending on human capital; asset accumulation and financial services (impact evaluation is a component of the programme)