Group 3 RUBY Q. Is social protection affordable and sustainable for Tanzania? How?

1. Group 3RUBYQ. Is social protection affordable and sustainable for Tanzania? How? Group participants Alejandro Grinspun , Irene Mpessa, William Ghumpi, MaximiLlianMapunda, AmAdeusKamagenge, NicodImusChipfupa, Samwel N. M. S. Mayiku and Ansgar A. Mushi (team leader)

2. Plan for presentation • How much does Tanzania spend now and where is the spending going? (Ans&Alex • How does this compare to other countries? • How much do possible programs cost? (Ans &Alex) • Need to prioritize beneficiaries and determine how much they receive • How can Tanzania pay for these possible programs? (Ans) • Sustainability: social protection can contribute to more economic growth (Mapunda) • Conclusion (Amadeus)

3. How much is Tanzania spending on social protection? • Tanzania currently spends somewhere between 0.3% -0.5% of its GDP in social assistance (transfers) programs • The amount spent annually on transfers and safety nets is approx. $85 million. (WB) • The median for developing countries is about 1.3% of GDP. ThereforeTNZis at the low end of SP expenditures among countries around the world. • Ethiopia and Malawi spend about 4.5% of GDP, which includes some major donor-financed SP. • Tanzania could also mobilise donor aid so long as it clearly articulates its priorities and demonstrates political will to sustain SP over the long term.

4. Where is the spending going?

5. Spending on Social Protection globally Mean 1.7% of GDP; median 1.4% of GDP (n=72) For 1/2 of countries is about 1-2 % of GDP

6. Is it affordable? Hypothetical program costs 2 key questions determine program cost: • Who should be covered / given priority? • How much would they receive?

7. Who should be covered / given priority? • All poor households – 12.7 million people (1 out of 3) – Hmmm, that’s too many! • The very poor (below food poverty line) to relieve the worst of chronic poverty and food insecurity – 6.4 million people – Maybe… • Bottom 10% -- 3.8 million people –more probable… Why? Figure 2 – Differences in Average per capita Consumption among the Poor (2006) Figure 1 – Distribution of income

8. Who should be covered / given priority? • Vulnerable groups – categorical, universal coverage • 1. universal pension above 65 - 1.2 million 65+ (WB study) • 2. universal child grant for under 5 – 9 million (Census) • 3. disability grant - est. 2.4 million, 25% are 65+ • Most vulnerable groups – categorical, poverty targeted • Most Vulnerable Children, including double orphans -- about 900,000. • The elderly, disabled, and those suffering from HIV/AIDS who are not successfully absorbed into households that can support them – 1 million persons (rough estimate). How much would they receive? • MVC estimated shortfall: US$ 38 per child p.a. • 20% of base income of 10% poorest Tanzanians; US$24 p.a. • Amount needed to bring the poorest 10% up to the Food Poverty Line: US$ 34.40 p.a.

9. Costing Total “low” scenario: 2.25% of GDP in 2009 Total “high” scenario: 2.54% of GDP in 2009

10. How can Tanzania increase fiscal space? • Expand the revenue base • Current government spending is about 20% of GDP • Tax exemption is up to 2.3% of national budget which is higher as compared to neighboring countries i.e. Kenya which is only 1% . Tanzania tax exemption in 2010 was about TZS 695 billion which is more than half of 1.3 trillion government borrowing • Mobilize donor aid: there may be room for convincing donors to shift financing to a well designed SP program(s)

11. How can Tanzania increase fiscal space? • Reallocate spending and reorient existing programs

12. Is this too little, too much or…?

13. Sustainability of social protection programs • Both affordability and sustainability are ultimately a question of political will • Close government involvement is necessary for sustainability • Cannot leave social protection provision only to NGO’s and foreign donors: what happens when their projects end? • Government can play an important role advocating for social protection programmes • Need to take the lead to make sure Tanzania moves forward with these programmes • Role explaining programs to citizens

14. The link between growth and affordability/sustainability If the economy is growing,will have more resources to afford Social Protections programs • The cost as a percent of GDP will fall • This assumption is based on past high rates of growth

15. Tanzania’s GDP: Consistent Growth SOURCE: World Bank World Development Indicators GDP in current U.S. dollars. Not adjusted for inflation.

16. Social Protection can result in greater economic growth: feedback mechanisms • Investing in education may increase enrollment, increase uptake of family planning services,create opportunities to participate effectively in economic activities and reduce dependency • Better educated population  more productivity • Interventions for children may also contribute to greater economic growth • Why? Undernutrition has consequences for adult health and human capital • Cash transfers inject liquidity into communities, spurring economic growth • Effects on both consumption and investment

17. In Conclusion Is social protection affordable and sustainable for Tanzania? How? Answer: Yes – if there are clearly articulated priorities and political will. A well-designed social protection program will not only pull people out of poverty, it will contribute to pro-poor economic growth.