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Ethiopia’s
        Productive Safety Net Programme




                 John Hoddinott, IFPRI
(drawing on co-authored work with Daniel Gilligan, Neha
       Kumar and Alemayehu Seyoum Taffesse)
Historical Context

•   Ethiopia has long been one of the largest recipients of emergency food aid in
    Africa
    – The emergency appeals approach has been costly, yet has had limited impact in
      terms of protecting productive assets and mitigating drought shocks

• In 2005, the Government of Ethiopia revised its strategy of distributing food
  aid
    – Emergency appeals were replaced with a standing safety net in areas suffering
      from chronic food insecurity
    – Focus was to provide more reliable and timely support to chronically food insecure
      households in more than 260 woredas across Ethiopia
    – Funding for complementary programs to foster asset accumulation was increased




                                           Page 2
The Food Security Program and the PSNP

•   Starting in 2005, the Productive Safety Nets Programme (PSNP) has been
    implemented as part of a broader Food Security Program (FSP)
     1. Productive Safety Net Program (PSNP)
          •   Labor intensive public works (PW) building productive community
              assets
          •   Transfer payments in cash rather than food in some areas to
              encourage market development
          •   Direct Support (DS): unconditional transfers to labor-scare households
              including elderly and disabled
     2. Other Food Security Programs (OFSP)
          •   Makes available packages of services such as: fertilizer, credit, other
              inputs or assets
     3. Resettlement to other locations with more productive land



                                              Page 3
How is the PSNP supposed to work?


• The objective of the PSNP is to improve food security while preventing households
  from being forced to sell assets

• The objective of the OFSP, combined with the PSNP, is to increase productivity and
  promote asset accumulation

The PSNP seeks to address the malign consequences of chronic poverty in the short
      term while laying the platform for longer term income and asset growth

• The PSNP reaches more than 7 million people and operates with an annual budget
  of nearly 500 million US dollars. Outside of South Africa, it is the largest social
  protection programme operating in sub-Saharan Africa.



                                         Page 4
Impact of the PSNP: Data


• Working in partnership with the Central Statistics Authority, the Food Security
  Coordination Bureau and donors, we collectively designed, and CSA implemented,
  a longitudinal (panel) quantitative household and community level survey

• The survey was fielded in 68 woredas served by the PSNP in 2006; approximately
  3,700 households were interviewed. These are found in Tigray, Amhara, Oromiya
  and SNNPR

• These households were re-surveyed in 2008 and the survey was extended to
  woredas in Amhara covered by USAID contributions to the PSNP.




                                       Page 5
How well has it worked?
                                 Successes
• A series of local administrative structures – “Food Security Task Forces” - have
  been established to assist in the selection of public works projects, to liaise with
  programme staff, to keep records, monitor implementation and identify
  households who should receive benefits

• There has been a relatively high level of beneficiary involvement in the PSNP;
  between 20 and 30 percent of households report being involved in the selection of
  public works activities.

• Between 85 and 90 percent of households perceive that their community has
  benefitted from the construction or rehabilitation of roads, schools and soil and
  water conservation



                                          Page 6
Successes: Targeting

• Controlling for household location, as household wealth increases, the likelihood
  of participation in public works declines.
    – Ownership of two oxen reduces the probability of participation by 10 percent points.
    – Compared to a household with no land, land holdings of one hectare of land per
      person reduces the probability of participation by 16.9 percentage points.

• Demographic characteristics dominate the likelihood that a household receives
  Direct Support.
    – Consider two households. Household A has a female head aged 70; Household B has a
      male head aged 40. In all other respects, they are identical.
    – The probability of receipt of Direct Support by Household A is 22.9 percentage points
      higher than Household B.




                                            Page 7
Successes: Impact

• Using quasi-experimental methods (difference-in-differences matching estimators)
  we find that program impacts on asset accumulation are greatest when higher
  levels of transfers are received and when participants have access to both the
  PSNP and the OFSP.

• High levels of transfers and access to the OFSP improved food security between
  2006 and 2008 by 0.45 months.

• Households receiving high levels of transfers had a 14.3 percent higher growth
  rate in the value of their livestock holdings.

• Growth in yields of maize and wheat was highest when both PSNP transfers and
  OFSP services were received



                                        Page 8
Successes: Impact


• Payment for at least 10 days work per month in the three months prior to the
  2008 survey improved food security, even though food prices were rising
  dramatically at the time. These households experienced, relative to control
  households, a 19.2-percent higher growth rate in caloric acquisition and higher
  growth in livestock holdings.

• The PSNP does act as a safety net. Households that received at least 10 days work
  per month in the three months prior to the 2008 survey and reported being
  affected by drought had growth rates of caloric acquisition 30 percent higher
  relative to non-beneficiaries, while increasing livestock holdings by 0.62 TLU.




                                        Page 9
Challenges


• Analysis of the 2006 survey data suggested that there was a considerable problem
  with wage arrears.

• The 2008 data suggests that wage arrears have been reduced. In some parts of the
  country (SNNPR), timeliness of payments has been impressive. But there is still
  room for improvement

• Apart from Tigray, there was limited overlap with the OFSP in 2006. By 2008,
  coverage of the OFSP has expanded

• Providing cash became problematic during a period of rapidly rising food prices




                                        Page 10
Ratio of PSNP Cash Wage to Maize Prices, SNNPR
                                  4.50

                                  4.00

                                  3.50
Cash wage: Price of 1 kg, maize




                                  3.00

                                  2.50

                                  2.00

                                  1.50

                                  1.00

                                  0.50

                                  0.00
                                         January,   March, 2007 May, 2007   July, 2007   September, November,   January,   March, 2008 May, 2008
                                           2007                                             2007      2007        2008



                                                                                    Page 11
Summary


• Ethiopia’s Productive Safety Nets Program is one of the largest social protection
  programs in Africa

• After several years of implementation, the program has had success in modestly
  reducing food insecurity, facilitating asset creation and protecting households
  from price and drought shocks

• Further improvements to implementation have the potential to lead to further
  improvements in these outcomes




                                         Page 12

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Ethiopia’s Productive Safety Net Programme

  • 1. Ethiopia’s Productive Safety Net Programme John Hoddinott, IFPRI (drawing on co-authored work with Daniel Gilligan, Neha Kumar and Alemayehu Seyoum Taffesse)
  • 2. Historical Context • Ethiopia has long been one of the largest recipients of emergency food aid in Africa – The emergency appeals approach has been costly, yet has had limited impact in terms of protecting productive assets and mitigating drought shocks • In 2005, the Government of Ethiopia revised its strategy of distributing food aid – Emergency appeals were replaced with a standing safety net in areas suffering from chronic food insecurity – Focus was to provide more reliable and timely support to chronically food insecure households in more than 260 woredas across Ethiopia – Funding for complementary programs to foster asset accumulation was increased Page 2
  • 3. The Food Security Program and the PSNP • Starting in 2005, the Productive Safety Nets Programme (PSNP) has been implemented as part of a broader Food Security Program (FSP) 1. Productive Safety Net Program (PSNP) • Labor intensive public works (PW) building productive community assets • Transfer payments in cash rather than food in some areas to encourage market development • Direct Support (DS): unconditional transfers to labor-scare households including elderly and disabled 2. Other Food Security Programs (OFSP) • Makes available packages of services such as: fertilizer, credit, other inputs or assets 3. Resettlement to other locations with more productive land Page 3
  • 4. How is the PSNP supposed to work? • The objective of the PSNP is to improve food security while preventing households from being forced to sell assets • The objective of the OFSP, combined with the PSNP, is to increase productivity and promote asset accumulation The PSNP seeks to address the malign consequences of chronic poverty in the short term while laying the platform for longer term income and asset growth • The PSNP reaches more than 7 million people and operates with an annual budget of nearly 500 million US dollars. Outside of South Africa, it is the largest social protection programme operating in sub-Saharan Africa. Page 4
  • 5. Impact of the PSNP: Data • Working in partnership with the Central Statistics Authority, the Food Security Coordination Bureau and donors, we collectively designed, and CSA implemented, a longitudinal (panel) quantitative household and community level survey • The survey was fielded in 68 woredas served by the PSNP in 2006; approximately 3,700 households were interviewed. These are found in Tigray, Amhara, Oromiya and SNNPR • These households were re-surveyed in 2008 and the survey was extended to woredas in Amhara covered by USAID contributions to the PSNP. Page 5
  • 6. How well has it worked? Successes • A series of local administrative structures – “Food Security Task Forces” - have been established to assist in the selection of public works projects, to liaise with programme staff, to keep records, monitor implementation and identify households who should receive benefits • There has been a relatively high level of beneficiary involvement in the PSNP; between 20 and 30 percent of households report being involved in the selection of public works activities. • Between 85 and 90 percent of households perceive that their community has benefitted from the construction or rehabilitation of roads, schools and soil and water conservation Page 6
  • 7. Successes: Targeting • Controlling for household location, as household wealth increases, the likelihood of participation in public works declines. – Ownership of two oxen reduces the probability of participation by 10 percent points. – Compared to a household with no land, land holdings of one hectare of land per person reduces the probability of participation by 16.9 percentage points. • Demographic characteristics dominate the likelihood that a household receives Direct Support. – Consider two households. Household A has a female head aged 70; Household B has a male head aged 40. In all other respects, they are identical. – The probability of receipt of Direct Support by Household A is 22.9 percentage points higher than Household B. Page 7
  • 8. Successes: Impact • Using quasi-experimental methods (difference-in-differences matching estimators) we find that program impacts on asset accumulation are greatest when higher levels of transfers are received and when participants have access to both the PSNP and the OFSP. • High levels of transfers and access to the OFSP improved food security between 2006 and 2008 by 0.45 months. • Households receiving high levels of transfers had a 14.3 percent higher growth rate in the value of their livestock holdings. • Growth in yields of maize and wheat was highest when both PSNP transfers and OFSP services were received Page 8
  • 9. Successes: Impact • Payment for at least 10 days work per month in the three months prior to the 2008 survey improved food security, even though food prices were rising dramatically at the time. These households experienced, relative to control households, a 19.2-percent higher growth rate in caloric acquisition and higher growth in livestock holdings. • The PSNP does act as a safety net. Households that received at least 10 days work per month in the three months prior to the 2008 survey and reported being affected by drought had growth rates of caloric acquisition 30 percent higher relative to non-beneficiaries, while increasing livestock holdings by 0.62 TLU. Page 9
  • 10. Challenges • Analysis of the 2006 survey data suggested that there was a considerable problem with wage arrears. • The 2008 data suggests that wage arrears have been reduced. In some parts of the country (SNNPR), timeliness of payments has been impressive. But there is still room for improvement • Apart from Tigray, there was limited overlap with the OFSP in 2006. By 2008, coverage of the OFSP has expanded • Providing cash became problematic during a period of rapidly rising food prices Page 10
  • 11. Ratio of PSNP Cash Wage to Maize Prices, SNNPR 4.50 4.00 3.50 Cash wage: Price of 1 kg, maize 3.00 2.50 2.00 1.50 1.00 0.50 0.00 January, March, 2007 May, 2007 July, 2007 September, November, January, March, 2008 May, 2008 2007 2007 2007 2008 Page 11
  • 12. Summary • Ethiopia’s Productive Safety Nets Program is one of the largest social protection programs in Africa • After several years of implementation, the program has had success in modestly reducing food insecurity, facilitating asset creation and protecting households from price and drought shocks • Further improvements to implementation have the potential to lead to further improvements in these outcomes Page 12