For Protection and Promotion: The Design and Implementation of Effective Safety Nets
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A presentation by Margaret Grosh, Carlo del Ninno, Emil Tesliuc, and Azedine Ouerghi from the 2009 BASIS Conference on "Escaping Poverty Traps: Connecting the Chronically Poor to the Economic Growth Agenda."
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For Protection and Promotion: The Design and Implementation of Effective Safety Nets
- 1. 1 • SSNs have an important role in addressing chronic poverty • Do not create disincentive to work • Spending for SSN is modest, subject to donor funding and inconsistent • Implementation matters. Good targeting and administration are essential
- 2. 2 2 Safety nets are non-contributory transfers targeted to the poor or vulnerable Programs such as: – Cash transfers, targeted or not, conditional or not; – Food or other in-kind distribution – Public workfare jobs – General price subsidies, eg for food or fuel – Fee waivers for essential services such as health or education Also known as social assistance or welfare Does NOT include social insurance, health, education, housing.
- 3. 3 3 Safety Nets provide Protection and Promotion Effect Nature of Benefit Strength of Evidence How good is current practice? Protect Promote 5 star scale Reduce poverty and inequality via redistribution Enable households to invest –In children’s human capital –In their livelihoods Help households to manage risks –Avoid irreversible losses –Allow higher risk/return activities Provide governments room to focus on efficinecy in trade, industrial policy
- 4. 4 In making the case for SSN, the book outlines challenges and rebuttals wrt • Affordability • Various disincentives – The paper from SA clearly shows that there is no disincentive to work • Administrative feasibility
- 5. 5 Spending is modest and getting buy in from the government is difficult • The paper on Uganda shows that there are political and fiscal barriers to the use and introduction of SSN in poor countries • The case of Ethiopia shows that it is possible to introduce a program that has long term vision and financial stability • Pakistan: New government committed • Niger: Trying to do it
- 6. 6 Spending on safety nets is modest Mean 1.7% of GDP; median 1.4% of GDP (n=72) For 1/2 of countries is about 1-2 % of GDP
- 7. 7 Implementation matters • The paper on Indonesia shows that clearly – Income dynamics cause changes in the composition of families – Definition of eligibility might make a difference • Care in the design of processes of programs is essential for reaching the chronic poor and ensure political support
- 8. Safety nets require administrative systems Administrative systems require money, time and managerial acumen
Editor's Notes
- Let me start by defining the topic We look at these programs from multiple points of view: Why do we need safety nets? Whom do they serve? What are the strengths, weaknesses of each program? What does it take to do them well? When is which appropriate?
- More recently the ability of safety nets -- to break cycles of poverty, -- to increase autonomous earnings, and -- to allow government space for efficiency improving policy reforms is being recognized. This is the promotion aspect in the title of our book. And a critical switch. With this understanding, safety nets are an investment needed by all, not a luxury affordable only to the rich. That list of reasons is now familiar, but we take the discussion several steps beyond listing the reasons. First we provide an exhaustive review of the literature on them, and critique it. Then we discuss the design features required achieve each effect. Elaborate a bit on lines 2 and 3. Conclusion: Because evidence on important points is only emerging, and commonly practice is short of what is required to produce each effect, the case for really good safety nets is much stronger than commonly realized And they are therefore underfinanced
- The other reason they are underfinanced is that the challenges are overestimated, so we think about a series of these Possibly one of the most important things in the book is the myth-busting with respect to the importance of labor disincentives, check it out (pages 34-38 and 137-145)
- The other reason they are underfinanced is that the challenges are overestimated, so we think about a series of these Possibly one of the most important things in the book is the myth-busting with respect to the importance of labor disincentives, check it out (pages 34-38 and 137-145)
- (replace this slide with the right color version) Spending on these programs are in the range of 1-2% of GDP, with outliers in both directions – under- and over-spenders. And These programs are only a fraction often a small fraction, of the overall SP or social policy spending. Implies that finding fiscal space is not so hard as sometimes thought.
- The other reason they are underfinanced is that the challenges are overestimated, so we think about a series of these Possibly one of the most important things in the book is the myth-busting with respect to the importance of labor disincentives, check it out (pages 34-38 and 137-145)
- One of the under appreciated ingredients is good implementation, aka administrative systems Look at the list of actors and functions here and realize how complex systems are. It is true that mature programs of scale and generosity don’t have to spend a high share on admin, but there are systems that have to work and that take time and money to build. In the absence of these, the program will under perform on some dimension. This is why countries without good safety nets are having a hard time addressing the current issues of increased food and fuel prices