HOW CAN SOCIAL SECURITY SCHEMES BE HOW CAN SOCIAL SECURITY SCHEMES BE DESIGNED FOR LOW-INCOME COUNTRIES TO DESIGNED FOR LOW-INCOME COUNTRIES TO EFFECTIVELY PROVIDE FOR THE POOREST?EFFECTIVELY PROVIDE FOR THE POOREST?

Presentation to the International Presentation to the International Conference” Taking Action for the World’s Conference” Taking Action for the World’s

Poor and Hungry People”Poor and Hungry People”

Beijing, ChinaBeijing, China

15th – 20th October 200715th – 20th October 2007

Fezile MakiwaneFezile Makiwane

Objectives of social Objectives of social securitysecurity Protection of the poor and Protection of the poor and

vulnerable;vulnerable; Acceptable standard of living;Acceptable standard of living; Ensure consumption smoothing;Ensure consumption smoothing; Reduce risk; andReduce risk; and Spreading income over a life Spreading income over a life

cyclecycle

Social security context in Social security context in SADC (UNDP Report, SADC (UNDP Report, 2005)2005) High levels of unemploymentHigh levels of unemployment

– 50% unemployment 50% unemployment High levels of povertyHigh levels of poverty

– Up to 60 % of population live below $1 per Up to 60 % of population live below $1 per dayday

– 30 % of population undernourished 30 % of population undernourished – 72.9 % of population in Zambia live below 72.9 % of population in Zambia live below

national poverty line national poverty line Income inequalitiesIncome inequalities

– Income inequality more than 50 in 8 SADC Income inequality more than 50 in 8 SADC countriescountries

CoverageCoverage

Over 2 billion people world-wide are not Over 2 billion people world-wide are not covered by any social security covered by any social security arrangementsarrangements

About 50 million people in low-income About 50 million people in low-income countries not covered against basic social countries not covered against basic social risksrisks

Mostly contributory social insurance for Mostly contributory social insurance for employeesemployees

Social insurance restricted to those in Social insurance restricted to those in formal employment (which is as low as formal employment (which is as low as 10% in some countries)10% in some countries)

Modalities for Modalities for coveragecoverage Enhancing general living Enhancing general living

standards and expanding basic standards and expanding basic human capacityhuman capacity– Access to basic servicesAccess to basic services– HousingHousing– Employment generationEmployment generation– EducationEducation

South Africa social South Africa social security transferssecurity transfers The main objective of social The main objective of social

assistance transfers is to reduce assistance transfers is to reduce poverty and promote social poverty and promote social development, development,

Over 12 million South Africans Over 12 million South Africans receive social assistance through receive social assistance through some form of income grant.some form of income grant.

South Africa- CSGSouth Africa- CSG

The CSG introduced in 1998 as a poverty The CSG introduced in 1998 as a poverty alleviation mechanismalleviation mechanism

Seeks to support income of poor households to Seeks to support income of poor households to enable them to care and provide for basic needs enable them to care and provide for basic needs of the child.of the child.

It is a means tested cash transfer program which It is a means tested cash transfer program which is paid to a primary care giver (PCG) of a child. is paid to a primary care giver (PCG) of a child.

The grant is weighted to rural areas and informal The grant is weighted to rural areas and informal settlements. settlements.

The program currently covers over 8 million The program currently covers over 8 million children up to the age of 14. children up to the age of 14.

The CSG transfers are unconditional cash The CSG transfers are unconditional cash transfers. transfers.

South Africa –CSG South Africa –CSG

The average households receiving The average households receiving CSG were found to derive:CSG were found to derive:– one third of their total income from CSG, one third of their total income from CSG, – a quarter from other transfers and a quarter from other transfers and – One third from employment. One third from employment.

18 % eligible households wholly 18 % eligible households wholly dependent on the CSG, and 36 % dependent on the CSG, and 36 % depend on the CSG and on other depend on the CSG and on other state transfers.state transfers.

South Africa- SOAPSouth Africa- SOAP

The State Old Age Grant provides social The State Old Age Grant provides social assistance to over 2 million South Africans. assistance to over 2 million South Africans.

Coverage- 70 percent of the total adult Coverage- 70 percent of the total adult population. population.

Age of eligibility: 60 for female and 65 for male. Age of eligibility: 60 for female and 65 for male. Means tested program, although presently there Means tested program, although presently there

is a debate on the need for the means test.is a debate on the need for the means test. SOAP initially intended to provide a social safety SOAP initially intended to provide a social safety

net for aged poor, however, its benefits are net for aged poor, however, its benefits are distributed more broadly to all members in the distributed more broadly to all members in the household because the majority of households in household because the majority of households in South Africa live in multi-generational households. South Africa live in multi-generational households.

South Africa- SOAPSouth Africa- SOAP

The SOAP reduces the poverty The SOAP reduces the poverty gap for pensioners by 94 percent. gap for pensioners by 94 percent.

Poor households with pensioners Poor households with pensioners are on average significantly less are on average significantly less poor than households without poor than households without pensioners. (Anne Case, 2000 and pensioners. (Anne Case, 2000 and Committee of Inquiry into Social Committee of Inquiry into Social Security, 2002)Security, 2002)

Social transfers- Social transfers- impactimpact

Poverty MeasurePoverty Measure Household Living Household Living StandardsStandards

Poverty headcount Poverty headcount Individual, % Individual, % reductionreduction

7.2 %7.2 %

Average Poverty GapAverage Poverty Gap

% reduction (Median)% reduction (Median)22.9 %22.9 %

Poverty Gap Ratio, % Poverty Gap Ratio, % point reduction. point reduction.

14.6 %14.6 %

Rand poverty Gap, % Rand poverty Gap, % reductionreduction

28.7 %28.7 %

Uganda- Uganda- Pilot Cash Pilot Cash Transfer ProgrammeTransfer Programme

The Govt is designing a Pilot Cash The Govt is designing a Pilot Cash Transfer Scheme with support from Transfer Scheme with support from DFID;DFID;

Target 20% of the Ugandan population Target 20% of the Ugandan population who are in chronic poverty;who are in chronic poverty;

Initially, the scheme to cover 4 Initially, the scheme to cover 4 districts out of 80 in the country;districts out of 80 in the country;

Program to cover 9,000 households in Program to cover 9,000 households in the lowest 10% quintile and cost US $ the lowest 10% quintile and cost US $ 8.4 million for 3 years.8.4 million for 3 years.

Monthly cash transfer per HH ranges Monthly cash transfer per HH ranges btn US $ 10 – 15 for one person to btn US $ 10 – 15 for one person to maximum five person HH.maximum five person HH.

BrazilBrazil

Brazil has non-conditional old-age Brazil has non-conditional old-age and disability cash transfers and and disability cash transfers and conditional education and health conditional education and health grants (Bolsa Família). grants (Bolsa Família).

Conditional grants alleviate short-Conditional grants alleviate short-term poverty but also provide term poverty but also provide incentives for human capital incentives for human capital accumulation, thereby alleviating accumulation, thereby alleviating long-term povertylong-term poverty

Brazil - BPCBrazil - BPC

The objective of the program is to The objective of the program is to eradicate extreme poverty in targeted eradicate extreme poverty in targeted groupsgroups

no conditionalitiesno conditionalities Monthly transfer, non-contributoryMonthly transfer, non-contributory Targets extremely poor ANDTargets extremely poor AND

- Over age of 65 or with severe disability- Over age of 65 or with severe disability 2,5 million beneficiaries, cost ~=0,4% 2,5 million beneficiaries, cost ~=0,4%

GDPGDP

Brazil-Brazil-Bolsa FamíliaBolsa Família

Alleviate short term poverty by transfers and Alleviate short term poverty by transfers and long term poverty by incentives to human long term poverty by incentives to human capital accumulationcapital accumulation

Conditional: Education and healthConditional: Education and health Targeted at Poor - Differentiation of values Targeted at Poor - Differentiation of values

according to number of school age childrenaccording to number of school age children Supplement incomesSupplement incomes – assumes families – assumes families

can have other sources of incomecan have other sources of income 11 million beneficiaries11 million beneficiaries

Mexico- OportunidadesMexico- Oportunidades

The program is targeted to poor The program is targeted to poor households through a mix of households through a mix of geographical and proxy means geographical and proxy means test targeting. test targeting.

Is the main social assistance Is the main social assistance program of the Mexican program of the Mexican government. government.

Covers over 5 million beneficiary Covers over 5 million beneficiary households in extreme poverty in households in extreme poverty in 2005 in both urban and rural areas2005 in both urban and rural areas

Mexico - Mexico - oportunidadesoportunidades provides currently four types of provides currently four types of

monetary grants: (i) education monetary grants: (i) education grants; (ii) health/nutrition grants; grants; (ii) health/nutrition grants; (iii) “energy” grants; and (iv) a (iii) “energy” grants; and (iv) a “pension” or income support for “pension” or income support for the elderly (above 70 years of the elderly (above 70 years of age) age)

Oportunidades-Oportunidades-ImpactsImpacts Decreased morbidity in children, youth and adults Decreased morbidity in children, youth and adults

(around 20%);(around 20%); Reduced stunting in young (2-6 months old) girls Reduced stunting in young (2-6 months old) girls

by 39.3% and boys by 19.4%;by 39.3% and boys by 19.4%; 11% lower maternal mortality in beneficiary 11% lower maternal mortality in beneficiary

municipalities (15% in municipalities with more municipalities (15% in municipalities with more than 35% of the resident population in the than 35% of the resident population in the program);program);

2% decrease in infant mortality in beneficiary 2% decrease in infant mortality in beneficiary municipalities (6% in municipalities with more municipalities (6% in municipalities with more than 35% of resident population in the program);than 35% of resident population in the program);

Increases school enrollment for children who enter Increases school enrollment for children who enter secondary school, with percentage increases in secondary school, with percentage increases in enrollment over 20% for girls and 10% for boys. enrollment over 20% for girls and 10% for boys.

Oportunidades - Oportunidades - ImpactsImpacts Headcount poverty rate declined Headcount poverty rate declined

by 17% in rural areas by 17% in rural areas Poverty gap and the severity of Poverty gap and the severity of

poverty measures declined by poverty measures declined by 36% and 46%36% and 46%

Other means of social Other means of social protection protection Targeted employment creation Targeted employment creation

programmes, e.g.:programmes, e.g.:– Public works programmes (although with Public works programmes (although with

limited effect)limited effect)– Employment guarantee schemes (India)Employment guarantee schemes (India)

Community-based social insurance (with Community-based social insurance (with possible government co-funding – e.g. possible government co-funding – e.g. Community Health Insurance in Community Health Insurance in Tanzania)Tanzania)

Micro-lending and micro-insuranceMicro-lending and micro-insurance

Other social protectionOther social protection

Welfare funds (e.g. tax/cess imposed Welfare funds (e.g. tax/cess imposed on aggregate output of industry, and on aggregate output of industry, and used for social protection of workers in used for social protection of workers in the industry, and their dependants) the industry, and their dependants) (India)(India)

State-created contributory-based State-created contributory-based social protection schemes for informal social protection schemes for informal economy workers (possible economy workers (possible government co-funding) (India)government co-funding) (India)

ConclusionConclusion

Integrated approach that have Integrated approach that have objectives relating to alleviation of objectives relating to alleviation of both short-term and long-term both short-term and long-term povertypoverty

Development of human capacityDevelopment of human capacity Administrative efficiencyAdministrative efficiency Good governanceGood governance Multi-actor responsibilityMulti-actor responsibility