Presentation of preliminary results of ERD 2010 “Social protection as an integral part of development policy”

1. Presentation of preliminary results of ERD 2010 “Social protection as an integral part of development policy” Giorgia Giovannetti Robert Schuman Centre for Advanced Studies, European University Institute, and University of Florence Johannesburg, 11th October 2010

2. The European Report on Development (ERD): a one year process Financed by EC and 7 member states 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

3. 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 (offering protection against risk and adversity throughout life), social assistance (offering payments to support and enable the poor), and social inclusion efforts (enhancing the capability of the marginalised to access social insurance and assistance).

4. 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)

5. 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….

6. Major obstacles for moving from short term to long term SP policies (in SSA) • Low domestic borrowingand 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…

7. Learning from around the world (also SSA):experiences to support policy recommendations • We evaluated programs through three main criteria: (I) Preconditions (Fiscal sustainability, Administrative capacity, Political commitment); (II) Impact; and (III) Externalities; • 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 thatsocial protection programs are feasible and sustainable and can have large poverty impacts with relatively few disincentive effects.

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

9. 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 sent to 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 respondents: 50 to date The EU questionnaire (EUQ)sent to EU practitioners managing their donors’ social protection portfolio in the field Who: EC, GDC, DFID circulated the questionnaire to their representatives. As for BE, ES, IE, LU, NL we contacted the people in the field directly. Practitioners from 9 EU donors (COM, Germany, UK, Ireland, Luxembourg, France, Spain, Belgium, The Netherlands) have participated in the initiative. Where: The questionnaires cover 11 SSA countries (Burkina Faso, DRC, Ethiopia, Ghana, Kenya, Lesotho, Mozambique, Rwanda, Senegal, Tanzania, Zambia)as well as 6 non-SSA (Afghanistan, Cambodia, India, Indonesia, Nepal, Vietnam). Two questionnaires for a bottom-up approach

10. 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)” 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 .

11. 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.

12. Effectiveness of SP measures

13. 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

14. 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

15. 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 policies and social protection policies now dealt with separately (not only at the EU level) should be integrated in a comprehensive framework. • 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

16. 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

17. Thanks!

18. Where does the EU fit in the growing interest for SP in Africa? Interest in the EU’s SP experience: specific aspects of the EU-SP models or in their lessons (e.g. role of middle class). Demand for financial and technical support, interest in donors’ experience in SSA countries. Yet, EU experiences and support are not necessarily the most relevant. Growing interest in South-South cooperation. EU is relevant, but not unique. EU will be more relevant if it understands its complementary role.

19. EU donor engagement for social protection • Finding out what the EU already does in order to reflect on what it should do. • Mapping shows that EU involvement is diversified, broad range of donor experience and expertise. • But still a lot of EU donors only tangentially involved, or not involved at all. • Activities fragmented and uncoordinated, lack of EU dimension.

20. EU potential comparative advantage • “European social model”, broadly understood as an attempt to combine economic dynamism and social justice notably through high levels of SP. • Commitment to “social dimension of globalisation” and greater role for social protection in development policy. • Wealth and breadth of EU national experiences in designing, implementing and sustaining SP systems. • EU donors mightbe better placed to help developing and SSA countries develop their own systems.

21. Challenges for EU/traditional donors 1: Ownership • “Promotion” of social protection sometimes akin to “policy merchandising”, therefore pushing donor priorities too far removed from partner country preferences. • Very limited impact of donor-driven schemes if not appropriated by local stakeholders. • Examples show that donors ought to: (i) align behind home-grown efforts whenever possible; (ii) foster conditions for government ‘buy-in’ by ensuring long term commitment and support; (iii) find ways to co-operate effectively in the joint design and implementation of SP schemes. • Main lesson: no success without ownership.

22. Challenges 2: Sustainability 3: Efficiency Risk of donors promoting conflicting approaches and programmes, piecemeal approach, “single-issue” donors. Donor fragmentation subverts coherent policy-making and undermines national efforts. Rationalise donor efforts aligning on national priorities and process. • SP requires long-term financial and political commitment. • Shifting donor fads: risk of sporadic support and subsequent withdrawal. • Ownership and sustainability go hand in hand.

23. Challenges for the EU • Commitment challenge: need for comprehensive and cohesive EU framework to promote SP in development policy. • Mapping and sharing challenge: need to know what labour there is to divide, but also to learn from each others’ experiences. • Coordination challenge: considerable scope for improvement, build on successful co-operations. Need to balance EU and donor-wide levels. • Leadership challenge: despite its potential comparative advantage, EU not a leader. Punches below its collective weight.

24. Making the most out of the EU’s strengths& opportunities • Institutionalised multi-level framework for political dialogue, privileged SSA partnerships (Cotonou, JAES)  opportunities to engage. • Tangible progress on DoL, ambitious commitments and Fast Track Initiative. Novel approaches could be envisioned, for example trilateral cooperation involving NMS. • Innovative EU instruments (Food Facility, Vulnerability Fund, MDGs Contract…) • Seize opportunities-implementation of Lisbon Treaty & EEAS, upcoming Green Paper on Modern EU Development Policy, new programming cycle…- that could allow for more concerted EU effort in support of social protection.

25. 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).

26. 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.

27. 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.

28. 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.

29. Developing Social Protection Plans: Vision 2020 Umurenge (VUP) in Rwanda • Included because it offers a comprehensive SP strategy • Precommitment: $ 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 2008/12 • 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)

30. The Sub Saharan Africa Questionnaire (SSAQ) The EU questionnaire (EUQ)

32. Going forward: next steps • Disseminate the questionanires to more countries • SSAQ - One person can open a whole network: assistance from social protection experts working in Africa of additional countries • EUQ - Suggestions from Danish, Italian, Portuguese practitioners in the field.

33. Summary of Preliminary Findings Social Protection impacts on the path to MDGs • Given its potential impact on structural poverty and vulnerability, social protection has a positive impact on most of the MDG indicators. • Respondents to questionnaires have been unanimous in pointing out that social protection is instrumental to achieving MDGs. • SP is especially useful to achieve MDG -1 (eradicate extreme poverty and hunger) , while for the most there is a weak linkage with MDGs 7 and 8

34. Donor interventions: The most popular option is technical assistance, closely followed by sector budget support. Pilot cash transfer initiatives get significant support, while research and political dialogue seem to be perceived as necessary but not crucial. General budget support - the option giving the partner government most leeway - is overwhelmingly discarded.

35. “International donors are helpful when it comes to promoting and implementing social protection measures”

37. Government’s Transparency

38. Eu donors are leading the aid effectiveness effort

39. Key words in defining social protection Out of 31 respondents to the question “How do you define social protection”: • 4 mention both vulnerability and poverty • 5 mention only poverty • 5 mention only vulnerability • 17 mention neither

40. Trends in defining social protection Vulnerability and Poverty in experts’ responses to “what is social protection”:

41. SP in constitution in SSA • 15 countries SSA – some more incisively than others – contain a solemn affirmation of this right, thus imposing on the legislator a right to act, and on the citizens a legitimate expectation of such an intervention to receive access to basic social security. • 21 countries which either do not provide for any specific right to social security; or simply limit themselves to make a rather vague reference to the objective of achieving social justice and protecting those in need;