Closing the Gap: The State of Social Safety Nets 2017 “Safety Nets where Needs are Greatest” April 2017 There is an increasing global focus on social protection. For the first time social protection (SP) is part of a comprehensive Sustainable Development Goals (SDG) agenda. SDGs Goal 1 is to end (extreme) poverty in all its manifestations by 2030, ensure social protection for the poor and vulnerable, increase access to basic services, and support people harmed by climate-related extreme events and other economic, social and environmental shocks and disasters. Target 1.3 (Goal 1) seeks to implement nationally appropriate social protection systems and measures for all, including floors, and by 2030 achieve substantial coverage of the poor and the vulnerable. Target 1.5 (Goal 1), which is related to adaptive SP, aims to build the resilience of the poor and those in vulnerable situations and reduce their exposure and vulnerability to climate-related extreme events and other economic, Figure 1. Number of developing countries with SSN programs social and environmental shocks and disasters. 160 149 As a reflection of this global focus, there has been an 140 explosion of activity in social safety nets programs 120 around the world. 100 The number of developing countries with social safety nets 80 72 (SSN)1 doubled in the last two decades from 72 to 149 countries 60 (Figure 1). This means that almost every developing country 40 in the world has SSN programs. In terms of cash transfers, in 20 particular, 97% of countries in Europe and Central Asia (ECA) 0 and Sub-Saharan Africa (SSA) have them, and other regions are 2000 2017 catching up. Source: ASPIRE database – www.worldbank.org/aspire. There has also been an increasing complexity of SSN In the Latin America and Caribbean (LAC) region, for example, systems/programs in pursuit of greater results. average spending on SSN programs as a % of GDP has increased Most countries have a diverse set of SSN instruments. Globally, from 0.3% of GDP in 2000 to more than 1.5% in 2015 (see Figure 77% and 42% of countries have unconditional and conditional 3). This happened at the same time as the regional GDP has also cash transfers, respectively (see Figure 2). 78% of countries grown, which means that SSN spending has increased in both provide school feeding programs. Public works and various fee relative and absolute terms. waivers are also quite widespread, with 58% and 56% of countries having them, respectively. Globally, developing and transition economies spend an average of 1.6% of GDP on SSN programs. A growing commitment to SSN is also evident in the However, significant variations in spending are observed across fact that countries tend to spend more on SSN over countries and regions. ECA, SSA and LAC are currently at the time. forefront of the SSN spending, with an averages of 2.2%, 1.6% and 1.5% of GDP, respectively (Figure 4). At the same time, 1.  Social safety nets are also often called social assistance (SA). Social assistance Middle East and North Africa (MNA) and South Asia (SA) spend (SA) and social insurance (SI) constitute social protection (SP). 1.0% and 0.8%, respectively. The empirical evidence suggests that 1 Figure 2. Number and share of developing countries with SSN instrument 140 124 122 120 100 95 91 89 86 78 77 80 67 60 58 56 60 54 42 40 20 0 School feeding Unconditional cash Unconditional in-kind Social pensions Conditional cash transfers transfers transfers Public works Fee waivers Number of developing countries Share of developing countries Source: ASPIRE database – www.worldbank.org/aspire. Figure 3. Spending on SSN programs in LAC over time, % of GDP 2.0 6 1.6 Trillions, US $ 1.2 4 %, GDP 0.8 2 0.4 0.0 0 2000 2008 2009 2015 GDP (current US$) SSN spending, LAC average (% of GDP) Source: ASPIRE database – www.worldbank.org/aspire. Figure 4. Spending on SSN programs across the regions, % of GDP 2.5 2.2 2.0 global average (1.6%) 1.6 1.5 Spending, % of GDP 1.5 1.2 1.0 1.0 0.8 0.5 0.0 Europe & Central Asia Sub-Saharan Africa Latin America & Caribbean East Asia & Pacific Middle East & North Africa South Asia Source: ASPIRE database – www.worldbank.org/aspire. many countries still do not spend enough to have a meaningful It is important to keep this positive momentum impact on poverty and shared prosperity. going, as SSN programs directly help millions of people around the world escape poverty. The increase in spending has translated into a According to the estimates based on the ASPIRE database, each substantial increase in program coverage around year, safety nets in developing countries lift 69 million people the world. from absolute poverty; at the same time, 97 million people are For instance, many countries in Africa are introducing “flagship” uplifted from relative poverty (see Figure 6). This represents a SSN programs and are rapidly expanding their coverage. In substantial contribution to a global fight against poverty. Tanzania, the Productive Safety Net program has expanded from covering 2% of population in 2014 to 10% of population in 2016 More needs to be done as significant gaps in (see Panel A, Figure 5). In Senegal, the National Cash Transfer coverage remain around the globe. Program has expanded from 3% to 16% of population in four These gaps are especially pronounced in low-income years (see Panel B, Figure 5). countries (LIC), where only 20% of the poor are covered by 2 The State of Social Safety Nets 2017 “Safety Nets where Needs are Greatest” Figure 5. The expansion of the flagship programs in Tanzania and Senegal Panel A: The Case of Tanzania Tanzania, Productive Safety Net (CCT) 1,200,000 12% Share of beneficiaries, % of total 1,000,000 10% 10% 10% Beneficiaries, hh 800,000 8% population 600,000 6% 400,000 4% 2% 200,000 2% 0 0% 2014 2015 2016 Panel B: The Case of Senegal Senegal, National Cash Transfer Program 350,000 18% 16% Share of beneficiaries, % of 300,000 16% Beneficiaries, hh 14% total population 250,000 10% 12% 200,000 10% 150,000 8% 5% 6% 100,000 3% 4% 50,000 2% 0 0% 2013 2014 2015 2016 Source: ASPIRE database – www.worldbank.org/aspire. Notes: Bars (blue) indicate number of beneficiaries (households); line (orange) indicates % of population covered by the program. Figure 6. Estimated number of people escaping poverty because of SSN, millions 100 97 69 Number of people, million 50 37 27 18 15 15 12 11 11 10 4 4 3 - World EAP AFR SAR LAC ECA MNA relative poverty absolute poverty Source: ASPIRE database – www.worldbank.org/aspire. Notes: Absolute poverty is defined as living below PPP$ 1.25 per day; relative poverty is defined as belonging to the bottom 20% of the country’s per capita income/consumption distribution; the estimated poverty reduction impact is based only on countries found in the ASPIRE database, and hence underestimates global poverty effect. The State of Social Safety Nets 2017 “Safety Nets where Needs are Greatest” 3 SSN (see Figure 7). Even in lower-middle income countries time, in the countries with high income levels the adequacy of (LMIC) less than 40% of the poor have access to SSN programs. SSN benefits for the poor rises to 20-24%. Moreover, very few of the poor are included in social insurance programs. The coverage situation is much better in Upper Why is it important to cover these gaps? It is Middle Income Countries (UMIC) and High Income Countries because countries with low coverage/adequacy (HIC). achieve very little poverty reduction impact. The analysis of the ASPIRE database indicates that only More also needs to be done as significant gaps in countries with substantial coverage/adequacy make a dent adequacy remain. in poverty reduction (see Figure 9). Indeed, countries with Not surprisingly, these gaps are also larger in low-income the highest levels of coverage combined with high adequacy countries, where SSN benefits account, on average, for only 12% achieve up to 50% reduction in the poverty headcount (share of of the poor’s income/consumption (see Figure 8). At the same poor in the population). Similar strong effects are found with Figure 7. Coverage of the poor (bottom 20%) by SSN programs 160 140 Percent of the poor 120 100 80 60 40 72 61 20 36 22 0 LIC LMIC UMIC HIC Social Safety Nets Social Insurance Labor Market Programs Source: ASPIRE database – www.worldbank.org/aspire. Figure 8. Adequacy of SSN programs, % 30 24 25 21 20 20 15 12 12 9 10 10 8 5 0 UMIC LMIC HIC LIC Poorest quintile Total population Source: ASPIRE database – www.worldbank.org/aspire. Notes: Adequacy for the poor is defined as share of SSN transfer/benefit size in the average per capita consumption/income of the poor (%); adequacy for the total population is defined as share of the benefit size in the average per capita consumption/income of the total population (%). respect to reduction in the poverty gap and decline in income/ The World Bank Group’s (WBG) contribution to consumption inequality. enhancing safety nets globally takes many forms. In summary, those include: (i) Growing financing of and There is a clear evidence that SSN investments in engagement in SSN projects; (ii) closing the financing gap coverage and adequacy do pay off. between IDA and IBRD-eligible countries; (iii) using innovative This is evident in terms of an observed greater reduction in financing solutions, such as RSR grants, to leverage resources poverty depth/prevalence and lower income inequality. For for safety nets; (iv) promoting the principles of universal social instance, the ECA region has achieved the highest reduction protection (USP); (v) experimenting with SSN instruments in the poverty depth, largely because of a combination of high to enhance productive inclusion, learning what works, and coverage/adequacy of SSN programs (see Figure 10). spreading the knowledge; (vi) responding to ongoing and 4 The State of Social Safety Nets 2017 “Safety Nets where Needs are Greatest” Figure 9. Average Poverty Headcount Reduction by Coverage and Adequacy, % Low adequacy High adequacy 60 Poverty Headcount Reduction (%) 51 45 42 30 20 16 15 11 10 11 4 1 1 0 Very low Low Medium High Very high Coverage level Source: ASPIRE database – www.worldbank.org/aspire. Notes: Levels of coverage (by quintile of the coverage distribution) are on the horizontal axis, ranked from “very low” to “very high”. Adequacy is defined as low (blue), or high (orange) depending on the ranking of countries. new challenges, such as the famine crisis. Some of the key back in FY 10-12, when it stood at US$ 6.7 billion (see achievements in these areas are highlighted below. Figure 11). The Bank’s financing of social safety nets has been In the last few years, there has been a major shift in constantly growing. lending towards IDA countries. As of April 3, 2017, the Bank’s total net commitment for the For the first time in the Bank’s history, the SPJ lending social protection and jobs (SPJ)2 portfolio 2017 has reached commitment to IDA countries of US$ 6 billion (see Figure 12) US$ 12.5 billion. This it twice the amount of the SPJ portfolio accounts for almost 50% of the total lending portfolio. IDA Figure 10. Higher coverage/adequacy lead to greater reduction in poverty depth, % 100 ECA LAC Coverage of Q1 50 MNA EAP AFR SAR 0 0 5 10 15 20 25 30 Adequacy of Q1 Source: ASPIRE database – www.worldbank.org/aspire. Notes: the size of the bubble indicates the magnitude of the reduction in the poverty. and blend (IDA/IBRD) countries combined account for 60% of Mongolia, Pakistan, Togo, Vietnam, Yemen, etc. In all the the total lending. The IBRD portfolio also remains significant, countries concerned there will be a significant expansion in at US$ 4.7 billion, or 40% of the total lending. coverage (see Figure 13). As a result of ongoing projects, many countries that RSR helps build safety nets where they are most did not have safety nets before would now have a needed by leveraging resources. significant share of the population covered. Small Rapid Social Response (RSR) grants averaging US$ 575,457 A total of 29 lending projects have been planned for FY17, per country/project contributed to leveraging approximately of which 17 have been already delivered. The mix of project US$ 5.6 billion in IDA commitments (see Figure 14). Country- countries is very diverse, including Burundi, Chad, Congo, specific assistance has been rendered to over 85 countries, and 2.  In addition to promoting safety nets, the Bank also supports the creation of jobs. has reached US$ 72.4 million recipients in 2015. There is a The State of Social Safety Nets 2017 “Safety Nets where Needs are Greatest” 5 Figure 11. The size of the Bank’s SPJ lending portfolio, US$ billion 14 12.5 12 10 8 6.7 6 4 2 0 FY10 FY17 Source: SPJ GP Operational team. Figure 12. The size of the Bank’s SPJ lending by country status, US$ billion 7 6 6 4.7 5 4 3 1.8 2 1 0 IBRD Blend (IDA/IBRD) IDA Source: SPJ GP Operational team. continued collaboration with Secure-Nutrition through the RSR- for all people in need. The USP initiative has been put forward Secure Nutrition channel, as well the Global Facility for Disaster in recognition that: (i) access to adequate social protection Reduction and Recovery (GFDRR), through the RSR-Disaster is central to ending poverty and boosting shared prosperity; Response channel. RSR also promotes cooperation and learning (ii) the poorest countries have huge coverage/adequacy gaps, as among practitioners through the South-South Learning Forum empirical evidence presented above clearly suggests; (iii) many initiatives – in partnership with GIZ. elements of the SP system need to be further strengthened, including the links between providing safety net functions and A special effort is taking place to support adaptive promoting productive inclusion/jobs. social protection (ASP) in the Sahel region. A special Multi Donor Trust Fund (MDTF) has been set up Much effort continues to be put into experimenting to support ASP in the Sahel (Burkina Faso, Chad, Mauritania, with new SSN instruments, and learning what Mali, Niger, and Senegal). ASP program activities include works, especially with respect to promoting technical assistance (TA) and capacity building managed by the productive inclusion. World Bank Group. The government-implemented program For instance, a cash transfer program in Niger is supplemented complements more than US$ 252 million in IDA funding for with measures promoting productive inclusion. The program social protection programs in six countries (see photos on aims to support chronic poor and vulnerable households by page 8). providing regular income transfers and encourage investments in human capital. Productive accompanying measures The Bank and its partners promote the principles of encourage the formation of women’s groups and informal saving Universal Social Protection (USP). mechanisms, and seek to facilitate investments in income- The USP initiative was launched by the WBG, ILO, donors and generating activities and diversification. The impact evaluation other partners in September 2016 in order to increase the efforts of the project has shown many positive effects on beneficiary in support of the SDG agenda related to safety nets. The main households, including: (i) increased animal stock; (ii) improved objective of the USP agenda is to join the main international nutrition and food security for kids. agencies, donors and governments in providing social protection 6 The State of Social Safety Nets 2017 “Safety Nets where Needs are Greatest” Figure 13. A projected increase in coverage as a result of the SSN project, % of population 18.0 Tanzania, 2013-2019 16.0 14.0 Malawi, 2013-2019 Uganda, 2015-2020 12.0 Niger, 2011-2019 10.0 8.0 Kenya, 2009-2018 6.0 Nigeria, 2016-2022 Bangladesh, 2013-2017 Pakistan, 2009-2016 Cameroon, 2013-2018 4.0 Mali, 2012-2016 Burkina Faso, 2014-2019 Ghana, 2010-2017 2.0 Afghanistan, 2012-2016 Madagascar, 2015-2020 Mozambique, 2013-2018 0.0 Source: RSR team. Notes: Fragility, conflict and violence (FCV) countries are highlighted in yellow. The years next to a country indicate the project’s implementation period. Figure 14. The transformative power of RSR grants SPL coverage IDA operation (72 million individuals worldwide) $5m-$500m RSR grant (81 IDA Projects: $5.6 billion) $500k-$3.2m (167 RSR Projects: $100 m) Source: RSR Project Data. The World Bank Group is also finding new ways to The Bank is responding to the crisis by supporting respond to emerging new challenges, such as the Yemen’s social safety net programs while adapting famine relief effort. them for conflict-sensitivity and operational As of early April 2017, famine-affected countries include Yemen, feasibility within the complex environment of an Somalia, South Sudan and Northern Nigeria. The current level active conflict. of hunger in Yemen is unprecedented. Devastated by 24 months This is being done in partnership with the UN agencies. The of conflict, eight million Yemenis have lost their livelihoods or Bank is currently funding an Emergency Crisis Response Project are in communities with minimal or no basic services. The UN (ECRP) which is implementing a nation-wide emergency labor predicts famine as a tangible risk, with 18.8 million Yemenis (or intensive works program through UNDP and the Social Fund 78% of total population) considered food insecure. Nearly 3.3 for Development; a nutrition-based cash transfer for mothers million, including 462,000 children under five, are suffering from and children at risk of malnutrition; and support to farmers and severe acute malnutrition, a 57% increase since late 2015. micro-finance institutions. The original ECRP is funded through a US$ 50 million IDA Grant, which was scaled up through a first additional financing of US$ 250 million in January 2017. This is in addition to an emergency health and nutrition project also approved in January and funded by a US$ 200 million IDA Grant. The State of Social Safety Nets 2017 “Safety Nets where Needs are Greatest” 7 Recipients of the Sahel ASP program Source: SPJ Africa Team / World Bank Group Beneficiaries of the Niger’s cash transfer program Source: Niger Project Team / World Bank Group Photo Credits Page 1 Top Photo: Oleksiy Ivaschenko / World Bank Group Bottom Photo: Stephan Bachenheimer / World Bank Group Page 8 Photos: SPJ Africa Team / World Bank Group