Report No. 53222-ML Mali Social Safety Nets January 31, 2011 Human Development Department Social Protection Unit Africa Region FOR OFFICIAL USE ONLY Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS Currency Unit : CFA Franc (CFAF) (as of October 31, 2009) US$1 : CFAF 441.89 GOVERNMENT FISCAL YEAR January 1 to December 31 WEIGHTS AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS ACI Agence de Cessions Immobilières ACF Action Against Hunger (Action contre la Faim) ACT Artemisinin-based Combination Therapy ADS Social Development Agency (Agence de Développement Social) AFD French Development Agency (Agence Française de Développement) AfDB African Development Bank AfDF African Development Fund AGSP Ambassador’s Girls’ Scholarship Program AIDS Acquired immune deficiency syndrome AMADER Agence malienne pour le développement de l'énergie domestique et de l'électrification rurale AMO Mandatory Health Insurance (Assurance Maladie Obligatoire) APEJ Agency for Youth Employment Promotion (Agence pour la Promotion de l’Emploi des Jeunes) ART Antiretroviral Therapy BMS Solidarity Bank of Mali (Banque Malienne de Solidarité) BOP Balance of Payment BVG Bureau du Vérificateur Général CAGCD Coordination of retailers associations (Coordination des associations et groupements de commerçants détaillants) CCA-ONG Conseil de Concertation et d’Appui aux ONG CCT Conditional Cash Transfer CFAF CFA Franc CGA Registered Management Center (Centre de Gestion Agréé) CGC Communal Management Committee (Comité de Gestion Communal) CGE Computable General Equilibrium CGS School Management Committee (Comité de Gestion Scolaire) CGSP Contrôle Général des Services Publics CILSS Permanent Interstate Committee for Drought Control in the Sahel (Comité permanent Inter-Etats de Lutte contre la Sécheresse dans le Sahel) CNDIFE National Center for Documentation and Information on Women and Children (Centre National de Documentation et d’Information sur la Femme et l’Enfant) CNS Aid National Commission (Commission Nationale de Secours) CPI Consumer Price Index CPIA Country Policy and Institutional Assessment CPS Planning and Statistics Unit (Cellule de Planification et de la Statistique) CRDI International Development Research Center (Centre de Recherche pour le Développement International CRS Catholic Relief Services CSA Food Security Commissariat (Commissariat à la Sécurité Alimentaire) CSB Corn Soya Blend CSCRP Strategic Framework for Growth and Poverty Reduction (Cadre Stratégique pour la Croissance et la Réduction de la Pauvreté) FOR OFFICIAL USE ONLY CTCPSA Food Security Policy Coordination Technical Committee (Comité Technique de Coordination de la Politique de Sécurité Alimentaire) DAF Directorate of Administrative and Financial Affairs (Direction Administrative et Financière) DFID United Kingdom’s Department for International Development DGB Directorate General for the Budget (Direction Générale du Budget) DGCOOP Directorate General for International Cooperation (Direction Générale de la Coopération) DHS Demography and Health Survey DNCC National Directorate for Trade and Competition (Direction Nationale du Commerce et de la Concurrence) DNDS National Directorate for Social Development (Direction Nationale du Développement Social) DNEB National Directorate for Basic Education (Direction Nationale de l’Education de Base) DNPSES National Directorate for Social Protection and Economic Solidarity (Directi on Nationale de la Protection Sociale et de l’Economie Solidaire) DNSI National Directorate for Statistics and Computing (Direction Nationale de la Statistique et de l’Informatique) EC European Commission ECHO European Commission Humanitarian Office ECOWAS Economic Community Of West African States ELIM Integrated Light Household Survey (Enquête Légère Intégrée auprès des Ménages) EMEP Malian Poverty Evaluation Survey (Enquête Malienne d’Evaluation de la Pauvreté) FFT Food For Training FFW Food For Work FNEJ National Fund for Youth Employment (Fonds National pour l’Emploi des Jeunes) FSA Food Security Fund (Fonds de Sécurité Alimentaire) FSN National Solidarity Fund (Fonds de Solidarité Nationale) GBS General Budget Support GDL Grand Duchy of Luxembourg GDP Gross Domestic Product GNI Gross National Income GNP Gross National Product GPRSP Growth Poverty Reduction Strategic Paper GTZ German Technical Cooperation (Deutsche Gesellschaft für Technische Zusammenarbeit) HEA Household Economy Analysis HIPC Heavily Indebted Poor Countries HIV Human Immunodeficiency Virus HKI Helen Keller International IDA International Development Association IERGG-MA Institute of Studies and Researches in Geronto -Geriatrics / Aged House (Institut d’Etudes et de Recherches en Géronto-Gériatrie / Maison des Aînés) ILO International Labor Office IMF International Monetary Fund INGO International non-governmental organization INRSP National Institute of Research in Public Health (Institut National de Recherche en Santé Publique) IRD Research Institute for Development (Institut de Recherche pour le Développement) M&E Monitoring & Evaluation MATCL Ministry of Territorial Administration and Local Authorities (Ministère de l'Administration Territoriale et des Collectivités Locales) MDG Millennium Development Goal MDSSPA Ministry for Social Development, Solidarity and the Aged (Ministère du Développement Social, de la Solidarité et des Personnes Agées) MEALN Ministry of Education, Literacy and National Languages (Ministère de l'Education, de l'Alphabétisation et des Langues Nationales) MEF Ministry of Economy and Finance This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. MEFP Ministry of Employment and Professional Training (Ministère de l’Emploi et de la Formation Professionnelle) MESSRS Ministry of Secondary and Superior Education and Scientific Research (Ministère des Enseignements Secondaire, Supérieur et de la Recherche Scientifique) MIIC Ministry of Industry, Investments and Trade (Ministère de l'Industrie, des Investissements et du Commerce) MLAFU Ministry of Housing, Land Issues and Town Planning (Ministre du Logement, des Affaires Foncières et de l'Urbanisme) MoA Ministry of Agriculture MoF Ministry of Finance MoH Ministry of Health MPFEF Ministry of Woman, Child and Family Promotion (Ministère de la Promotion de la Femme, de l'Enfant et de la Famille) MSF Doctors Without Borders (Médecins Sans Frontières) MTEF Medium-Term Expenditure Framework NGO Non-Governmental Organization ODHD Sustainable Human Development Observatory (Observatoire du Développement Humain Durable) ODI Overseas Development Institute OECD Organisation for Economic Cooperation and Development OFDA Office of United States Foreign Disaster Assistance OMH Malian Habitat Office (Office Malien de l’Habitat) OPAM Agricultural Produce Office of Mali (Office des Produits Agricoles du Mali) OVC Orphans and other Vulnerable Children P4P Purchase for Progress PC WAEMU Community Tax (Prélèvement communautaire de la CEDEAO) PCS WAEMU Community Solidarity Tax (Prélèvement communautaire de solidarité de l'UEMOA) PDDSS Ten-Year Social and Health Development Plan (Plan Décennal de Développement Social et Sanitaire) PDES Program for Economic and Social Development (Programme pour le Développement Economique et Social) PEFA Public Expenditures and Financial Accountability PEJHIMO Project for Youth Employment through the Labor Intensive Approach (Projet d’Emploi des Jeunes par l’approche HIMO) PFM Public Financial Management PILE Project of Local Initiatives for Employment (Projet d’Initiatives Locales pour l’Emploi) PNPS National Social Protection Policy (Politique Nationale de Protection Sociale) PPM National Pharmacy of Mali (Pharmacie Populaire du Mali) PRODESS Health and Social Development Program (Programme de Développement Sanitaire et Social) PROMIIER Multisectoral Program for Employment Intensive Investments in Rural Areas (Programme Multisectoriel d’Investissements Intensifs à fort coefficient d’Emploi en Milieu Rural) PRSP Poverty Reduction Strategy Paper RAMED Health Assistance Scheme (Régime d’Assistance Médical) RBC Community-Based Rehabilitation (Réhabilitation à Base Communautaire) RS Statistical Fees (Redevance Statistique) SAP Early Warning System (Système d’Annonce Précoce) SBS Sector Budget Support SCAP Country Assistance Common Strategy (Stratégie Commune d’Assistance Pays) SCCS Supreme Audit Institution (Section des Comptes de la Cours Suprême) SHA Secretariat for Aid Harmonization (Secrétariat à l’Harmonisation de l’Aide) SIE State Intervention Stock (Stock d’Intervention de l’Etat) SNS National Food Security Stock (Stock National de Sécurité) SSA Sub-Saharan Africa SSN Social Safety Net SWAp Sector Wide Approach TB Tuberculosis TB-DOTS Tuberculosis Direct Observed Therapy Short-Term THR Take Home Ration UCW Understanding Children’s Work UNICEF United Nations Children’s Fund USA United States of America USAID United States Agency for International Development VAT Value-Added Tax WAEMU West African Economic and Monetary Union WFP World Food Program WHO World Health Organization Vice President : Obiageli K. Ezekwesili Acting Country Director : Mary K. Hollifield Country Manager : Ousmane Diagana Sector Director : Ritva S. Reinikka Sector Manager : Lynne D. Sherburne-Benz Task Team Leader : Setareh Razmara ACKNOWLEDGEMENTS This report was prepared by the following team: Cécile Cherrier (Consultant); Carlo del Ninno (AFTSP, Senior Economist), Claire Harasty (Poverty Economist, AFTP4), Pascale Kervyn (Senior Economist), Dominique van de Walle (Led Economist, PRMGE), and Setareh Razmara (AFTSP, Task Team Leader). The team received inputs on selected safety net programs from Birama Diakité (Local Consultant). The report draws from recent background papers on poverty prepared on Mali. Peer reviewers were John Elder (Lead Social Protection Specialist, HDNSP) and Kathleen Beegle (Senior Economist, DECRG). Darcy Gallucio provided valuable editorial support and processed the document. Administrative support was provided by Fatoumata Sidibé (Team Assistant, AFMML), Josiane Luchmun (Program Assistant, AFTSP), Southsavy V. Nakhavanit (Program Assistant, AFTSP) and Ana Lukau (Program Assistant, AFTSP). Valuable guidance and suggestions were provided by: Haidara Ousmane Diadie (Health Specialist, AFTHE), Ousmane Diagana (Country Manager, A FMML), Lynne Sherburne Benz (Social Protection Sector Manager, AFTSP), Sybille Crystal (Sr. Operations Officer, AFCSN), Dominique van de Walle (Lead Economist, PRMGE), Quy-Toan Do (Sr. Economist, DECPI), Kalanidhi Subbarao (Lead Social Protection Specialist, SASHD), Verdon Staines (Sr. Economist, AFTSP), Azedine Ouerghi (Lead Economist, AFTSP), and Clara Ana Coutinho de Sousa (Sr. Economist, AFTP4). To prepare this report, the team worked closely with the government counterparts and other Development Partners (particularly UNICEF, WFP, BIT and EC). Valuable support from the Malian counterpart team in the Ministry of Economy and Finance, CSLP, Ministry of Education and Ministry of Health are gratefully acknowledged. Particularly, the team would like to thank Mr. Sékouba Diarra (Coordinator, CSLP), Mrs. Lansry Nana Yaya Haïdara (Commissaire of Food Security, CSA), Mr. Abdoulaye Touré (DGB, MEF), Mr. Ousmane Samaké (Head of HD Division, CSLP), Mr. Adama Barry (Analyst, CSLP) and Mr. Koulou Fane (Ministry of Social Development and Solidarity). Preliminary results of the report were presented in Bamako (December 2009) to government officials as well as to development partners and NGOs, and valuable comments were received from participants. There was consensus on the recommendations and strategic messages of the report during the April mission when the Bank team also presented the findings of the report at the national workshop on Social Protection. This was a great opportunity to share and disseminate the conclusions of the report with sectoral ministries (education, health, agriculture, social development, etc., from central and local departments) as well as wide a range of stake holders (local collectivities, NGOs), and development partners (UNICEF, WFP, ILO, EU, etc.). During this discussion, a preliminary action plan for the development of a social protection system, including an effective social safety net system was developed by the Government in close collaboation of the Technical and Financial Partners. The action plan for the development of safety nets proposed in this report takes into account the government action plan and the discussions. TABLE OF CONTENTS EXECUTIVE SUMMARY ....................................................................................................................... I CHAPTER I: INTRODUCTION............................................................................................................ 1 A. BACKGROUND AND RATIONALE ...................................................................................................... 1 B. WHAT IS THE DEFINITION OF SOCIAL SAFETY NETS USED IN THIS REPORT? ..................................... 1 C. S TRUCTURE OF THE REPORT............................................................................................................ 5 CHAPTER II: POVERTY AND VULNERABILITY IN MALI .......................................................... 6 A. GROWTH AND POVERTY REDUCTION ............................................................................................... 6 B. H UMAN DEVELOPMENT OUTCOMES .............................................................................................. 10 C. POVERTY, SHOCKS AND VULNERABILITY ...................................................................................... 15 D. MAGNITUDE OF POVERTY AND COST OF MAKING A MEANINGFUL DIFFERENCE ............................. 24 E. S UMMARY OF FINDINGS ................................................................................................................ 26 CHAPTER III: OVERVIEW OF THE EXISTING SOCIAL SAFETY NET SYSTEM .................. 28 A. P UBLIC POLICY RESPONSES TO POVERTY AND VULNERABILITY .................................................... 28 B. S TRATEGIC FRAMEWORK FOR SOCIAL SAFETY NETS ..................................................................... 39 C. INSTITUTIONAL FRAMEWORK FOR SOCIAL SAFETY NETS .............................................................. 43 D. FINANCIAL RESOURCES ALLOCATED TO SOCIAL SAFETY NETS ...................................................... 46 E. S UMMARY OF FINDINGS ................................................................................................................ 50 CHAPTER IV: REVIEW OF INDIVIDUAL EXISTING SOCIAL SAFETY NET PROGRAMS . 52 A. CASH AND N EAR -CASH TRANSFERS ............................................................................................. 52 B. FOOD TRANSFERS ......................................................................................................................... 57 C. UNIVERSAL SUBSIDIES : TAX AND DUTY EXEMPTIONS ON FOOD PRODUCTS .................................. 66 D. LABOR INTENSIVE PUBLIC WORKS ................................................................................................ 68 E. FEE WAIVERS FOR HEALTH ............................................................................................................ 74 F. S UMMARY OF FINDINGS ................................................................................................................ 78 CHAPTER V: FINANCIAL FEASIBILITY OF AN EXPANDED SOCIAL SAFETY NET SYSTEM................................................................................................................................................. 80 A. COST ESTIMATES OF AN INCREMENTAL EXPANSION OF THE SYSTEM ............................................ 80 B. OPTIONS FOR INCREASING SOCIAL SAFETY NET BUDGETS ............................................................. 83 C. S UMMARY OF FINDINGS ................................................................................................................ 88 CHAPTER VI: RECOMMENDATIONS FOR A MORE EFFICIENT SOCIAL SAFETY NET SYSTEM................................................................................................................................................. 90 A. S TRENGTHEN THE OVERALL SOCIAL PROTECTION STRATEGIC, INSTITUTIONAL, AND FINANCIAL FRAMEWORKS, INCLUDING SOCIAL SAFETY NETS .......................................................................... 90 B. IMPROVE EFFECTIVENESS OF SOCIAL SAFETY NET INSTRUMENTS ................................................. 99 List of Annexes ANNEX 1: GLOSSARY OF TERMS ................................................................................................. 116 ANNEX 2: POVERTY PROFILE OF MALI’S COMMUNES ........................................................... 118 ANNEX 3: PUBLIC POLICY RESPONSES TO POVERTY AND VULNERABILITY.................... 120 ANNEX 4: KEY NATIONAL STRATEGIC DOCUMENTS FOR SOCIAL ASSISTANCE ............. 137 ANNEX 5: GOOD PRACTICE DESIGN FEATURES FOR DIRECT SUPPORT DRAWN FROM INTERNATIONAL EXPERIENCE........................................................................ 140 ANNEX 6: SOME COUNTRY EXAMPLES OF GOOD PRACTICE IN SAFETY NETS PROGRAMS IN AFRICA .................................................................................................. 144 ANNEX 7: SOCIAL SAFETY NET SPENDING (STATISTICAL TABLES) .................................. 153 ANNEX 8: POTENTIAL SOURCE OF FINANCING FOR SOCIAL SAFETY NET PROGRAMS: PUBLIC EXPENDITURE REALLOCATION ........................................... 156 List of Tables Table 1: Mali - Selected Economic and Financial Indicators, 2003-2012 .................................................. 7 Table 2: Evolution of the Incidence of Poverty, 2001-2006 ...................................................................... 8 Table 3: Dynamics of the Poverty, 2001-2006 .......................................................................................... 8 Table 4: Poverty Incidence by Education Level and Socio-Economic Group of Household Head, 2006 ....................................................................................................................................... 11 Table 5: Infant and Child Mortality Rates by Area, Region, Educational Level of Mother and Welfare Quintiles, 2006 ......................................................................................................... 14 Table 6 : Poverty Incidence According to Demographic Characteristics of Households, 2006 ................ 16 Table 7: Summary of Large-Scale Disasters in Mali, 1900-2009 ............................................................ 17 Table 8: Transfers by Demographic Characteristics and Poverty Level, 2007 (% of Total Household Income) ................................................................................................................ 22 Table 9: Average Aggregate Cost of Bringing All Poor to Poverty Line through Cash Transfers, 2006-2008 .............................................................................................................................. 25 Table 10: Minimum Aggregate Costs of Bringing Selected Categories of Poor to Poverty Line through Cash Transfers, 2006-2008........................................................................................ 26 Table 11: List of Social Safety Net Programs Reviewed, Classified per Type of Pro gram ...................... 36 Table 12: Total Spending on Social Safety Nets by Program .................................................................. 48 Table 13: Comparison of Spending on Education, Health, Other Social Sectors and Social Safety Nets, 2005-2009 (% of GDP) ................................................................................................. 49 Table 14: External and Domestic Financing of Social Safety Net Programs Excluding General Food Subsidies, 2008 (%) ...................................................................................................... 50 Table 15: Potential Numbers of Beneficiaries of SNS and Cereal Banks ................................................ 57 Table 16: Indicative Number of Food Insecure Persons, 2007-2008 ....................................................... 58 Table 17: Public Food Stock Budgets, 2004-2009 (CFAF million) ......................................................... 59 Table 18: Indicative Nutrition Budgets, 2009 ......................................................................................... 61 Table 19: Number of Beneficiaries of UNICEF and WFP Nutrition Programs, 2004-2009 .................... 62 Table 20: School Feeding Budgets, 2009 ................................................................................................ 63 Table 21: Composition of Food Rations in Different WFP Programs ..................................................... 65 Table 22: Conditions of Tax Exemptions Granted on Food Commodities, 2008 ..................................... 67 Table 23: Funding Sources of the Pilot PEJHIMO, 2005-2007 ............................................................... 70 Table 24: Cost of Providing Full Malaria Treatment to Children under 5 in Kangaba Circle .................. 78 Table 25: Cost Estimates of Incremental Option ..................................................................................... 81 Table 26: Options for Increasing Safety Net Budgets: Advantages and Disadvantages ........................... 83 Table 27: Functional Composition of Public Expenditure, Using PRSP Methodology, 2002 -2008 (% of GDP) ............................................................................................................................ 84 Table 28: Central Government Budget, as % of GDP ............................................................................. 87 Table 29: Summary of Key Issues and Opportunities of Each Existing Social Safety Program ............ 105 Table 30: Estimated Maximum Coverage Current Social Safety Net Programs Could Reach ............... 106 List of Figures Figure 1: Position of Social Safety Nets in Larger Development Policy ................................................... 4 Figure 2: Trends in Primary Education and Maternal-Child Mortaility, 1990-2015 ................................. 12 Figure 3: Gross School Attendance Rate by Economic Welfare and Gender, 2006 ................................. 13 Figure 4: Who Spends the Most for Health in Mali? Distribution of Health Expenditures by Groups and Regions, 2004 ........................................................................................................................ 15 Figure 5: Monetary Poverty Incidence by Districts and Communes, 1998-2001 ..................................... 17 Figure 6: Shocks by Regions and Production Systems, 2007-2008 ......................................................... 18 Figure 7: Coping Mechanisms by Area, March 2008 (Percentage of Households) .................................. 21 Figure 8: Poverty Incidence With and Without Transfers, 2006 (%) ....................................................... 23 Figure 9: Poverty Incidence and Public-Private Share of Transfers in Total Income, 2006 (%) .............. 23 Figure 10: Mapping of Key National Strategic Documents Relevant to Social Safety Nets .................... 40 Figure 11: Evolution of Safety Net Spending, 2006-2009 (CFAF million) ............................................. 47 Figure 12: Use of Cash by Beneficiaries of Oxfam GB Emergency Response in Gao, 2009 ................... 53 Figure 13: Proportion of Household Expenditure for Main Cereals, 2006............................................... 68 Figure 14: Impact of Free Malaria Treatment Alone and Full Gratuity for Under 5 on the Use of Health Services in Kangaba Circle, 2004-2008.................................................................................. 76 Figure 15: Rates of Return of Human Capital Investment Initially Setting Investment to Be Equal across All Ages ................................................................................................................................. 93 Figure 16: Indicative Annual Number of Beneficiaries of SSN, 2009 ................................................... 107 Figure 17: Evolution of WFP Budgets and Number of Beneficiaries, 2004-2009 ................................. 107 List of Boxes Box 1: Development of Social Assistance in Mali, 1991-2009 ........................................................ 29 Box 2: “Social Safety Net” Budget Line ...................................................................................... 33 Box 3: Information Issues Related to Social Safety Nets ................................................................ 46 Box 4: Mali Maternal Grants for Education (bourse maman) ........................................................... 54 Box 5: Oxfam GB’s Seasonal Cash Transfer Pilot Project ............................................................... 56 Box 6: Food Distribution Programs and Public Food Stocks ............................................................ 58 Box 7: School Feeding Programs ................................................................................................ 63 Box 8: Transfers In Cash and In Kind: Alternatives or Complements? ............................................. 66 Box 9: Public Works Programs: Elements Required for Reaching the Poor ....................................... 72 Box 10: Targeting Effectiveness of Public Works Programs: International Experience ........................ 73 Box 11: Public Assistance to the Indigent .................................................................................... 75 Box 12: The Debate over User Fees ............................................................................................. 77 Box 13: Fiduciary Issues Associated with Government-Managed Expenditure .................................. 82 Box 14: Principles of Child-Sensitive Social Protection .................................................................. 91 Box 15: Estimated Average Cost Levels in Some Social Safety Net Programs .................................. 98 Box 16: Does and Don’ts of Female-Sensitive Social Protection ................................................... 101 Box 17: Researching Innovative Poverty-Based Targeting ............................................................ 103 IBRD Map No. 33443 .............. ……………………………………….....................................................169 EXECUTIVE SUMMARY A. Motivation and objectives 1. Mali has a high level of poverty and social indicators remain among the lowest in the world. Almost one in two Malians is poor; most of the poor live in rural areas, are illiterate, and earn their living from subsistence farming. Demographic pressure contributes to poverty aggravation and based on various reviews and studies, Mali will not be able to reach the Millennium Development Goals by 2015. Furthermore, similar to other countries in the West Africa, Mali is highly vulnerable to a variety of shocks (environmental, social and economic) and has been hit by rising prices of basic foodstuffs, fuel and the general cost of living following the current economic crisis. 2. The Malian government has articulated its desire to reduce poverty, hunger and food insecurity – especially in rural areas. This can be achieved with an effectively designed Social Protection program and to this end, social safety net programs are of particular importance. The fiscal space necessary to finance extensive Social Protection programs is not available in Mali’s present macroeconomic and fiscal situation and the sustainability of the existing public safety net programs – already dependent on external sources for 50 percent of funding – will present the government with further challenges. Nevertheless, the extent of high levels of vulnerability among the poor population has increased the demand for social safety net measures. 3. The objective of this report is to synthesize existing analysis, review relevant safety net policies and programs in Mali, and provide suggestions for an action plan to help strengthen the existing system and develop an effective and affordable safety net strategy along the lines of the Poverty Reduction Strategy of the Government. B. Main findings of the report 4. This report shows that the size and scope of social safety nets are insignificant compared to needs and suggests an improvement and expansion of the social safety net programs. In 2009, the government allocated about CFAF 19 billions, corresponding to 0.5 percent of GDP, to social safety nets, which is clearly not sufficient to address the most urgent needs of the population (about 27 percent of population is food insecure). There is need for an expansion of the social safety net programs based on a set of cost effective existing and new programs. Of course, any proposed reform/expansion plan must be financially feasible. Therefore, given the limited fiscal space available for safety net programs, the government must allocate its scarce resources to programs that are well targeted and cost-efficient. Creating financing sources for social safety nets will depend largely on political will and commitment. To develop a more efficient and cost-effective social safety net system, the government needs to : (i) strengthen the strategic, institutional and financial frameworks for designing, implementing, and monitoring and evaluating safety nets programs; and (ii) improve the effectiveness of the safety net system by strengthening existing programs and designing new ones. i Poverty and vulnerability 5. Despite progress in poverty reduction, poverty incidence remains high in Mali. Between 2001 and 2006 poverty has decreased (from 55.6 percent to 47.5 percent). This poverty decline is mainly due to the decrease in the rural areas (from 66.8 percent to 57.6 percent), while it slightly increased in urban areas during this period (from 24.1 percent to 25.5 percent). However, caution should be used to estimate the trend in poverty due to different methodologies used for 2001 and 2006 surveys. 6. Demographic pressure is one of the major challenges in Mali and has contributed to aggravating poverty in urban areas. The urban population grew on average by 5 percent per annum between 2001 and 2006, compared to total population growth average of 3.6 percent per annum. Simultaneously, the group “without employment,” which is mainly urban, grew strongly while the share of the self-employed in agriculture fell. This clearly shows a rural exodus as well as an entry in the urban labor market of the rural self-employed. 7. Moreover, the food price crisis led to increases in poverty that could be last over a number of years and worsened by the global recession of 2008-09. The average price of rice in the country increased by about 20 to 25 percent in 2008. Simulations suggest that a 25 percent increase in food prices must have led to an increase in poverty by 1.7 percentage points (this represents close to 300,000 persons falling into poverty). Based on recent analysis, the impact is much stronger in urban than in rural areas, with increases in the poverty incidence of close to 3 percentage points in urban areas and 1.2 percentage points in rural areas. Detailed information remains unavailable to assess the impact of the successive crises on poverty incidence. Nevertheless, since the poor in Mali are clustered around the poverty line and tend to be vulnerable, these shocks are likely to have had a large impact. 8. Human capital and labor market characteristics influence poverty outcomes. Poverty decreases significantly when the education level of the household head improves. Households where the head has a secondary or tertiary education are six times less poor than households where the head is illiterate. Poverty is also much lower when the head of household is a civil servant (12.2 percent), an employer (15 percent) or non-agriculture self- employed (22.8 percent). In contrast, farmers (in particular cotton growers) constitute the poorest households. 9. Poor human development outcomes present many challenges for Mali in moving towards the MDG targets, and disparities in the access to basic services are correlated to area of residence, welfare level and gender. With a GNI per capita of US$500, Mali ranks 168 out of 179 countries in the UNDP’s 2008 Human Development Index. The percentage of literate adults in the country is half the average in Sub Saharan Africa and the child mortality rate was estimated at 191 per 1,000 live births in 2006, the third highest in the world. The objective of universal access to education is still far away, and modest progress in health outcomes leaves Mali unlikely to reach the MDG targets on child and maternal mortality and nutrition. The gross school attendance rate was 60 percent in 2006 with a significant difference between the poorest and the richest (44 percent and 107 percent respectively). Inequalities are also significant between urban and rural areas (88 percent and 49 percent respectively) and between regions, with Bamako and Gao registering higher attendance rates than elsewhere in the country. Inequalities between boys and girls also persist (65 percent and 54 percent respectively) despite recent improvements and catching up of girls. Gender disparities are higher among poorer households than among richer ones (the parity index was 0.74 in the poorest quintile in 2006 and 0.93 in the richest quintile) and also appear between regions, with Mopti, Timbuktu and Gao registering the highest gender parity indices. ii 10. In addition to widespread poverty, Mali is highly vulnerable to a number of shocks and food insecurity plagues about 27 percent of the population. Among the 48 least developed countries, Mali had the twelfth highest frequency of disasters between 1970 and 1998, with 46 large-scale disasters. Shocks affected one-third of all Malian households in 2007-08, with drought (11.6 percent), irregular rains (6.3 percent) and floods (5.9 percent) ranked at the top. In fact, SAP estimates [2009] about 2.8 million (20 percent of the total population) are affected by droughts and can be considered food insecure. 11. The main factors differentiating the vulnerability of households are linked to poverty, education, health, migration and gender equality. With limited access to resources and credit, women and children are more exposed to risk than are men, and carry varying levels of vulnerability. Women are significantly affected by type of risk and area of residence whereas the (lack of) family structure affects children. To mitigate the impact of shocks on these groups, strictly targeted interventions and significant development efforts must be implemented side-by-side to help concentrate efforts on the most vulnerable groups. 12. Risks differs by area, geographic region and production systems. Within the three main categories of shocks (environmental, social and economic), households are subject to different types of risks. In urban areas, households are reported being mainly confronted to economic shocks (26 percent): for instance in 2007/2008 the main risk in urban areas was the increase in food prices, and rarely the environmental shocks (2 percent); while in rural areas households reported environmental shocks as the main risk (25 percent), followed by social shocks (10 percent) and rarely economic shocks (5 percent). 13. Gender is a key poverty correlate. As in many parts of Sahelian West Africa, in Mali women have different, and typically weaker, endowments. In general, they have l ower human capital, and greater illiteracy and lower educational attainments places stronger limitations on women’s access to employment and government services. Moreover, Malian women also have different capacities to cope with risks even within the same household: Women are typically dependent on men; they have different access and control over resources; and legal protection often favors men. Female-headed households in Mali are found to be extremely heterogeneous. Some have remitting adult male migrants, others are headed by poor widows who have no means of livelihood and yet others, by wealthy widows and other single women who have careers or other independent means of support. An analysis of male and female headed households in Mali using data from the 2006 ELIM confirms that there are few differences between female and male headed households, after controlling for various characteristics that affect living standards. An analysis of the 2006 DHS for Mali reveals that widowed, and currently married but previously widowed or divorced women in rural areas may be particularly vulnerable groups in Mali. Since this group is worse off, as well as more vulnerable to downside risk than many other women in rural Mali. Thus, safety net policies should take this into account. 14. Based on available information, the impact of transfers on poverty is significant and overwhelmingly private. A recent study estimated that the percentage of poor households would be 16 points higher – 63.3 percent instead of 47.4 – without social private and public transfers [ODHD, 2008]. The same study also revealed that public transfers (both contributory and non-contributory) represented only 1.7 percent of household income, whereas private transfers accounted for 16.5 percent. Indeed, public transfers are not targeted to the poorest households. For poor households, public transfers amount to 0.7 percent of their total income, while for the non-poor households they correspond to 2.6 percent. The share of iii private transfers, on the other hand, is far greater and more homogenous: 17.7 percent for poor households and 15.4 percent for non-poor households. Government strategy, institutional set-ups and expenditures for social safety nets 15. Although a number of public policies demonstrate the government’s willingness to assist the poor and the vulnerable, poverty alleviation programs may not be effective and the social safety nets remain minimal compared to the needs. With the start of the democratization process in 1991, social considerations gained progressive momentum in Mali. The main public policy responses to poverty and vulnerability and their main concersn are listed below: Human capital development (health and education): Public spending in education and health (6.3 percent of GDP in 2008) need to become pro-poor, and restructured to improve the supply of services and to support the demand for education and health, particularly through efficient and well-targeted social safety nets. Rural development: The lack proper monitoring and evaluation of the actual impact of income-generating schemes and community development activities – and there are many in place – makes it difficult to ascertain whether the programs actually benefit the poorest and most vulnerable in beneficiary communities. Social housing: With one of the largest funding envelopes from the government (about 0.2 percent of GDP), the program has one of the lowest numbers of beneficiaries. It targets households with income and is not designed for the poorest and most vulnerable. Social insurance: The scheme (pensions and health care) is primarily targeted to civil servants and employees of the formal sector, while over 90 percent of the labor force is in the informal sector. Social safety nets: The budget line called Filet Social (about 0.3 percent of GDP) covers small programs. Despite its name, none of its current activities qualifies as social safety net as defined in this report. 16. Consistency is lacking between various Social Protection and Social Development strategic documents and coordinating mechanisms among the programs are weak. Three main sets of national strategic documents provide the framework for the development of social safety nets in Mali: (i) The national policy and action plan related to social protection, including Social Protection Extension Action Plan 2005-2009 (Plan d’Action National pour l’Extension de la Protection Sociale or PAN); (ii) The strategic documents related to social development, in particular the Social Development Component of the Health and Social Development Program (Programme de Développement Sanitaire et Social or PRODESS); and (iii) The Poverty Reduction Strategy Paper 2007-2011 (GPRSP) and the President’s Project for Economic and Social Development 2007-2012 (PDES). This multiplicity of policies andsectoral development programs fails to provide a comprehensive framework for social protection. Their main weaknesses are: an inadequate approach to social assistance, a lack of consideration of economic risks, a weak focus on contributory schemes, a poor harmonization of planning processes, an insufficient gender approach and a lack of common vision. 17. As a result, a weak institutional framework has produced fragmented actions and overlapping agendas. Missing are the economies of scale that result from clear delineations iv of roles and responsibilities and a robust ministry replete with the financial, technical and human capacity necessary to devise and implement social safety net programs. The Ministries of MPFEF and MDSSPA are mandated to carry out social assistance programs for the poor. The MPFEF focuses on Women and Children while MDSSPA is responsible for broader programs. In fact, compared to the needs the two ministries lack sufficient financial resources. Overall there are a variety of small safety net programs in place but most of them are not well coordinated. There is need for a multisectoral approach to integrate social safety nets programs in order to address either the needs of those affected by shocks, the chronic poor or vulnerable groups. Furthermore, neither ministry supervises a significant program that could be classified as a social safety net – defined as a social transfer program directed at the poorest and most vulnerable and aimed at directly increasing household or individual consumption. Other structures (CSA-MoA, DNEB-MEALN, APEJ and MLAFU) and international agencies (UNICEF, ILO, WFP, WB, Swedish Cooperation and EU) act also as the main providers of public social transfers and are engaged in social protection policies and programs. 18. The existing social safety net (SSN) system is not sufficient to constitute an appropriate response to poverty and vulnerability. Based on the definition used in this report, different types of social safety nets programs exist in Mali, such as cash transfers, in- kind food transfers, general subsidies, public works and fee waivers for basic services. However, the programs are small (both in terms of coverage and cost) and are not part of an overall Social Protection Strategy. 19. Resources allocated to social safety nets remain limited (about 0.6 percent of GDP in 2008, excluding general food subsidies) and are heavily dependent on external financing. Although in Mali estimating the level of safety net spending raise a number of challenges due to lack of detailed information, based on existing data, the total spending on SSN programs over 2006-2009 has averaged 0.4 percent of GDP (excluding general food subsidies). In 2008, the SSN budget peaked to 0.8 percent of GDP, illustrating government efforts to respond to the food and fuel price crisis. Compared to safety net programs in developing countries which typically represent about 1 or 2 percent of GDP [Grosh et al., 2008], Mali thus appears to be among countries that spend less on the social safety nets. Based on available information, the government has financed on average about 50 percent of total SSN programs during 2006-2009 (including general subsidies). However, there is increased commitment from Donors: from 2006 to 2009, the donor share in total SSN spending increased from 43 to 53 percent. 20. Lastly, little investment is made on measuring the actual impact of social assistance measures. There is an overall lack of data and evidence to inform policy makers on the characteristics of beneficiaries, costs of programs, mechanisms for targeting, and actual outcomes in terms of helping the poor and vulnerable. A monitoring system to capture programmatic cost-efficiencies and promote evidence-based data on the impact of social protection policies would help the policy makers to make informed policy choices. Existing safety nets programs 21. The review of selected social safety net programs confirms that the existing system is not adequate to tackle chronic poverty. Most programs provide temporary assistance and are mainly introduced during period of shocks. They also share implementation challenges, such as weak targeting mechanisms, lack of monitoring and impact evaluation, weak management capacity, and inadequate financing. Currently, the social safety net v programs in Mali can be classified in four categories: (i) programs that provide transfers in cash and in kind, such as, food distribution, nutritional, and school feeding programs; (ii) programs that provide general subsidies in the form of tax exemptions on food products; (iii) programs that provide income (i.e., public works for food or cash); and (iv) programs that enhance human capital and provide access to basic services (i.e., health fee waivers). Cash Transfers 22. Although Mali has limited experience in cash transfers, interest in this type of instrument is growing among partners, and new pilot programs are planned for the future. The MDSSPA provides cash transfers to individuals only on an exceptional basis. In addition, in recent years a few isolated cash transfer projects have been implemented on a one-off basis or for a limited period of time (i.e., crisis and emergency responses). However, all of these pilots, coordinated by international/non-governmental organizations with donor funding, have limited coverage. For instance, a few cash transfer projects have been implemented on a pilot scale to explicitly test the appropriateness and feasibility of cash transfers in Mali: Oxfam GB piloted a small emergency cash transfer project in the Gao region in 2009; UNICEF supported a pilot cash transfer project entitled Maternal Grants for Education (Bourses Maman) between 2002 and 2007 to test the effectiveness of conditional cash transfers. Although these pilots have shown promising results, further analysis of the results of the program is still needed. Given the potential of cash transfers in Mali, several partners are now considering launching cash transfer pilots (i.e., the European Commission funding Oxfam GB in 2010; UNICEF proposing a three-year program targeted to mothers from the poorest households in the Mopti and Sikasso Regions). Nevertheless, further assessment of the feasibility of implementing a national scale cash transfer program, based on the recent and on going pilots, still needs to be carried out. In this context, robust impact evaluations are needed to facilitate cross-learning from the different cash transfer pilot projects. Food Transfers 23. Food transfers are the main form of social safety nets in Mali. The Government of Mali supports: (i) the free distribution of food rations, via the National Security Stock (SNS), to respond to food crises; and (ii) cereal banks (subsidized sales of cereals to communities) throughout the territory with extra support to the 166 poorest “communes” of the country. The effectiveness of the SNS and cereal banks remains largely unclear due to the lack of actual impact evaluation of the SNS and the cereal banks on the food security situation/poverty level of beneficiaries. Moreover, since those programs are conducted in isolation on an occasional (ad-hoc) basis during lean seasons or in response to shocks, they cannot be considered as a permanent social safety net program. The national public food stock also includes the State Intervention Stock (SIE) (used to stabilize rice prices). Overall, the national public food stock usually amounts to about 40-50,000 MT of mil/sorghum and 20-30,000 MT of rice [CSA, 2009]. Although public food stocks seem to contribute to consumer price stabilization in “normal years”, private stocks may play a greater role. In “crisis years”, these stocks seem to have no effect on stabilization. 24. Transfer programs for nutrition have been developed in recent years with donor support. Nutritional indicators are of particular concern in Mali, as 81 percent of children have some form of anemia and 38 percent of children under 5 years old show significant levels of stunting and wasting. Both WFP and UNICEF run programs to fight malnutrition in Mali. In total, the WFP program aims to assist nearly 900,000 persons over two years (2009- vi 2010) and is mainly targeted to moderately malnourished children, while UNICEF assists severely malnourished children (14,000 children in 2009). Other international organizations also implement nutritional programs, such as the USAID and Christian Aid and Action against Hunger. 25. School feeding is one of the largest social safety net programs in Mali. After public food distribution and tax exemptions, they attract a significant part of State resources allocated to social safety nets (about 20 percent of safety net spending). Over 1,500 primary schools in the poorest areas of the country run school feeding activities, about 56 percent of which are externally supported by the WFP and CRS. Although there is evidences that school feeding can increase school enrolment and attendance rates, lower dropout rates, and lower gender disparity, these programs are costly and they may not reach the poorest. The main reasons for these programs to not reach the poorest are: (i) the poor are less likely to be in school; (ii) it is impossible to target benefits to the poor within a school; and (iii) the program fails to reach younger children whose nutritional needs are substantial. Due to the difficulty of setting up targeted safety nets programs in the short run, a geographically targeted expansion of school feeding may still provide the best option for rapid scale up of safety nets. However, in the medium/long term, the introduction of targeted social transfer programs (e.g., conditionl cash transfers, nutritional programs, etc.) are more desirable to tackle chronic poverty. Universal Subsidies 26. Universal subsidies like tax and duty exemptions are instruments used by the government to mitigate the negative effects of high food prices. These policies are part of a general price stabilization effort by the government. Since 2005, there have been exemptions either on customs duty or on import tax. Following world food price increases in 2007, the government exempted rice import from duties during the lean season and Ramadan period, from July to October. This measure was reinforced and extended in 2008. Tax exemptions were granted on rice, cooking oil and powdered milk over a six-month period, from April to September. In addition, the government temporarily reduced taxation of petroleum products, particularly diesel, and temporarily removed taxes on export of rice, corn, millet and sorghum (lifted in December 2008). Finally, in 2009, the government granted tax exemptions on rice import from March to May. 27. Government food subsidies are expensive and regressive. The cost of the general food subsidy absorbed respectively 4 and 27 percent of total social safety net spending in 2007 and 2008. For 2008, the cost of this general subsidy accounted for close to half (48 percent) of all government-financed social safety nets. Their impact however has proved to be regressive (the non-poor consume the larger share of subsidized goods). Indeed, out of every CFAF of tax cut, only about 11 cents might benefit the poor. Instead of reducing import taxes on rice, subsidizing “cheaper” cereals (millet, sorghum and maize) whose consumption is higher in the poorest quintiles may have led to a more progressive impact. Moreover, reaching the poor may be more effectively met through targeted interventions and interventions that are designed to increase rice productivity and production. 28. Public WorksThe State-supported public works program cannot be considered a safety net program for the poorest. As part of public investment dedicated to infrastructure, the Agency for Youth Employment Promotion (Agence pour la Promotion de l’Emploi des Jeunes or APEJ) launched in 2003 a public works program with the objectives of (i) reorienting investment to infrastructure activities using labor intensive approach, and (ii) vii stimulating the local economy and offering opportunities for local businesses. With a wage level set much higher than both the minimum and the market wage, and a lack of clear targeting (poverty or gender) criteria, however, this program cannot be considered a safety net program. Other experiences of public works include the food-for-work programs managed by WFP and USAID. Building on these current experiences, other types of public works programs that reach the poorest could be introduced. A recent review of international experience shows that well designed and implemented public works programs can help mitigate income shocks and be used as an effective anti-poverty instrument (del Ninno et al, 2009). However, the effectiveness of public works as a safety net instrument highly depends on the ability of the program to provide additional sources of income to the most vulnerable population when most needed. To this end, particular attention would need to be put on the targeting method (particularly self-targeting through wages set below the market rate), length and timing of work, and specific design features that can increase the particpation of women (e.g., task-based payment) and poor communities. Fee Waivers for basic services 29. Some fees are waived for health and education, but their coverage is small. In principle, the elderly and indigent are entitled to fee waivers for medical assistance by applying for an “indigent/elderly card.” However, given that no additional funds have been allocated to the decentralized structures that provide the services, there is no guarantee that card-holders actually have access to free health care. Moreover, eligibility criteria and lack of reliable registration system may exclude the poorest, and it is unclear to what extend people are informed of their rights.While it is clear that user fees must be abolished for the poor, how to implement this policy measure (including financial channels of transfers to compensate health centers/local authorities) requires further works. Research is ongoing on the appropriateness and feasibility of abolishing health user fees (particularly for vulnerable groups). To date, experience has shown that current public partial fee waivers on a few specific health treatments do not sufficiently increase access of the poor to health care and that fee abolition needs to be reviewed in the context of broader health policy reform (including access and health financing). In the education sector, where no national fee waiver program targets the poor and vulnerable specifically, NGOs play an important role in covering school-related costs for destitute families (e.g. in-kind transfers or direct support to schools). These actions nonetheless remain fragmented and highly dependent on external funding. C. Main policy recommendations 30. The results of this report lead to a series of recommendations to start designing and building a social safety net system that can respond to the needs of the poor in Mali. The key recommendations in this report take into account the results of the analysis and are consistent with Mali’s commitment to design the extension of the social protection strategy. The recommendations focus on the concrete measures needed to implement a permanent social safety net system that address the needs of the chronic poor and that can readily be scaled-up during periods of crisis. The priority actions towards the development of a more efficient and cost-effective social safety net system, summarized in the attached policy matrix, focus on two key axes: (i) strengthening the strategic framework and institutional set-ups, including its financial support and sustainability and an effective monitoring and evaluation system; and (ii) improving the effectiveness of the safety net system by reforming existing programs and designing new ones. viii Strengthen the overall social protection strategic, institutional and financial frameworks, including social safety nets 31. Strengthen the strategic framework and the institutional set up for social protection and define role of safety nets. The safety net component (non-contributory transfers) of the social protection instruments as well as the promotion of human capital development have a very important role in addressing the needs of the pooor. In this context, to strengthen the strategic framework, the following actions need to be undertaken: x The Government proposed extension of the Social Protection Strategy and Action Plan recognizes the important role that safety nets have to reduce poverty and improve the life of the poor. . The objectives of the Social Protection Strategy, including social safety nets should maintain its (i) focus on implementing results-oriented sectoral reform and development programs to attack the key areas of vulnerability and the chronic constraints that entrap the poor; and (ii) rely on permanent programs that can be scaled up as a response to an emergency. In this context, it is crucial to ensure consistency of the individual department’s plans and to synchronize strategic planning cycles of various policy documents (PRODESS, GPRSP, Social Development Policy) and ensure that donors funding cycles are adequately translated in a coherent manner into the GPRSP as well as into sectoral budgets. This will support better predictability and reliability of external funding allocated to social protection. x The strategic framework for the development of the social safety net system needs to be specified in more details. Within the broader context of the social protection strategy, the objectives of the social safety net component should be to: (i) directly support the consumption of the chronically poor and vulnerable populations and ensure that they receive permanent support; (ii) ensure access to basic social services to poor and vulnerable populations; (iii) provide temporary support to poor and vulnerable populations affected by shocks; and (iv) pay particular attention to the needs of poor and vulnerable women (i.e. minimize potential negative impact, optimize positive impacts on women and gender equity). x Establish a permanent inter-ministerial committee for social protection, which will be responsible for revisiting the social protection strategy, supervising/coordin ating various initiatives that have been launched (including studies, pilot projects, etc.) and ensuring cross-sectoral dialogue. The work of the committee will be supported by the creation of several subcommittes responsible for Safety Nets monitoring. x The resulting social safety net system should have the following properties: (i) appropriate to best fit the circumstances; (ii) adequate in order to cover the various groups in need of assistance; (iii) equitable to treat beneficiaries in a fair way; (iv ) cost-effective in order to ensure that with the limited resources available the desired impact is achieved and funding is sufficient for well functioning of the programs; (v) sustainable in the context of the public finance management; and (vi) dynamic a nd evolving over time. x The social safety net programs need to be integrated with other social protection programs (namely, labor market programs, pensions, health insurance, policies to ensure macroeconomic stability, rural development, and human capital formation); ix should be used to complement supply-side interventions; and should ensure synergies and coordination with other social policies (food security, education, health, employment, health insurance). 32. Reinforce the institutional framework for social protection and social safety nets. Once the Strategic framework for Social Protection is decided and priority actions for social safety nets are clarified, there is need to define the institutional set-ups. Social protection policies involve several ministerial and its supervision should not be limited to the MDSSPA. Therefore, there is need to establish a permanent inter-ministerial committee for social protection, which will be responsible for revisiting the social protection strategy, supervising/coordinating various initiatives that have been launched (including studies, pilot projects, etc.) and ensuring cross-sectoral dialogue. In this context, it is advisable to follow the following steps: x Clarify the role and responsibilities of the different institutions engaged in social safety nets and ensure any new responsibility is reflected in budget allocations. x Define the appropriate implementation arrangements for social safety net programs. This will include defining who, at an institutional level, will manage the design, implementation and ongoing operation of a social safety net programs. Based on experience in other countries, the institution that possesses the following characteristics will be the best one to manage the program: (i) a durable political commitment to social protection; (ii) the political influence to secure resources and defend the program’s priority; and (iii) the institutional capacity to deliver an administratively intensive program, including social safety nets. However, it is often impossible to find all three qualities in one single institution and often the management of the programs goes to: the relevant social development ministry (i.e., the most committed one); the ministry responsible for finance (i.e., the most powerful one); or a separate agency which reports to a committee of related ministries (i.e., bringing together commitment, influence and capacity). x Ensure a separation of duties. The key to successful design and implementation is to delegate the responsibility of each duty to the formal or non-formal institution for which it is the core activity, and to establish strong control mechanisms. x Provide capacity-building support. Since the concept of social safety nets as a necessary social investment (regular and predictable) is largely new in Mali, awareness efforts and training is required both at the national and local levels. x Increase engagement of local authorities for an effective implementation of national policies: To optimize the involvement of decentralized authorities in policy formulation and ensure that local authorities can take some responsibilities in the delivery of social safety nets, additional financial resources need to be allocated to training of local authorities’ staff and to build institutional capacities both at the central and regional levels. x Explore the role of NGOs and the private sector in the delivery of social safety nets: since the capacity of governmental and local authorities remain somewhat limited on the ground, particularly in remote areas which are most in need of assistance, closer partnership with NGOs and the private sector need to be further explored (e.g, contract based approach). 33. Ensure financing resources and sustainability for social safety nets programs. In the face of the current macro and fiscal uncertainties and given the poverty incidence in Mali, x in the short term, the government needs to ensure that expenditures on social safety nets are kept at least at their current levels (corresponding to around 0.5 percent of GDP in 2009). Nevertheless, additional fiscal resources are needed for promoting or scaling up the most cost - effective social safety net programs. This could imply doubling the amount spent on social safety net programs (around 1 percent of GDP). Since revenues will not be able to create substantial fiscal space and given budget constraints, it is more advisable that new safety nets programs in Mali be financed from any combination of the following sources: (i) reallocations between expenditure programs; (ii) more efficiency in public expenditures management, including better management for creating fiscal space; and (iii) additional external financing (particularly donor support and non-concessional borrowing). To bring this financing onto a more sustainable basis, the following steps could be considered: x First, establish a rigorous classification of social protection expenditures and a comprehensive list of public safety net programs. This is essential to deducing a clear estimate of what level of expenditure is justified and what financing is needed. Reviewing existing public expenditures (current and capital) can also provide some financing room for social safety nets. In particular, careful review of recurrent expenditures on goods and services (G&S) and capital expenditures could help to determine efficiency gains and create some fiscal space. x Second, determine the overall envelop of the government’s budget for safety nets and make adequate full provision each year in the budget. The existing social strategy papers provide a basis for assessing how much it is reasonable and affordable to spend on social protection and safety nets. Particularly, expenditure reallocation seems to be an effective option to increase budget resources for social safety nets. Among these reallocations, it is advisable to consider: (i) reviewing spending on “other social sectors” which is currently about 1 percent of GDP and which does not appear to provide social safety nets targeted to the poor and vulnerable (e.g., housing); and (ii) redirecting social sector spending on education and health (about 6.3 percent of GDP in 2008) towards pro-poor programs and creating synergies with social safety net programs; x Third, establish that the government can seek to obtain funding for safety nets on a non- project basis, for example by seeking budget support in the context of a Poverty Reduction Support Credit from IDA and similar operations from other external partners. Since interest in social protection programming and safety nets is increasing among the development partners, donor funding will remain an important source of financing for social safety nets in the medium term. However, in the past, this financing was mainly cyclical and uncertain. To ensure that in the future Government will play a more active role, this will mean a step-up in the management of the safety net system and an improvement in such aspects as fiduciary arrangements, procurement and audits as w ell as results monitoring and evaluation. 34. Improve Program Monitoring and Evaluation: Systematic monitoring of the overall set of safety net programs is needed to judge how well resources are being used. This is a precondition for the piloting and/or scaling up of any social safety net program. In particular, six systemic actions could be considered: x Establish a rigorous classification of social protection expenditures and a comprehensive list of public safety net programs. xi x Set up minimum reporting requirements for safety net programs to allow evaluation of effectiveness, costs broken down between service delivery and overhead, sources of financing, etc. x Systematically transmit program evaluation reports to the sectoral mini stries responsible for Social Protection and social safety nets and maintenance of a database on programs. x Involve civil society in monitoring and evaluation. x Strengthen the sectoral ministries capacities for monitoring and evaluation. x Provide more training for program managers in monitoring and evaluation techniques coupled with a mechanism for the exchange of experience across programs. Improve effectiveness of the social safety net system 35. Once the policy framework is revisited and institutional set-ups are defined, there is need to improve the effectiveness of the safety net system following the steps below: (i) define appropriate social safety net instruments based on the needs; (ii) improve targeting tools; (iii) improve the efficiency of existing safety net programs; and (iv) introduce new social safety net instruments. 36. Define the appropriate set of social safety net instruments: In this context, first, a detailed poverty analysis will need to be updated to clarify the priority target groups, based on the ongoing household expenditures survey (ELIM 2009) and poverty maps using the recent census. Second, the type, role, scale and frequency of social safety net instruments need to be defined. Considering Mali’s poverty and vulnerability profile, as well as available evidence from past and current social safety net programs, it is proposed to further assess the feasibility and appropriateness of the following programs as potential permanent safety net instrumnets to tackle chronic poverty: (i) nutrition supplement programs for pregnant and lactating women and children under 5; (ii) fee waivers for a package of essential health services targeted to pregnant and lactating women and children under 5; (iii) school feeding programs for children aged 6-14 to increase school enrolment and attendance rates; (iv) regular cash transfers to households living in chronic (extreme) poverty to increase the real income of poor households; and (v) seasonal labor intensive public works to provide a source of income to poor workers and to construct public infrastructure or provide community services. Once an appropriate permanent safety net system is set up, selected mechanisms could be considered to be scaled-up to respond to crisis, complemented by other temporary instruments. The rules for scaling up programs can be incorporated in the national food security system (i.e., early warning system, contingency plans, experience in emergency responses, etc.). 37. Improve Targeting: Effective targeting, at the moment, faces many constraints, including – among others – lack of data on poverty, administrative capacities and quality of governance, which may result in negative perceptions about public programs. In this context, the following approach is necessary: x Ensure that better information is collected to facilitate targeting and assess results. Currently, there is a lack of detailed data on the beneficiaries and costs of the programs. Moreover, information is often not disaggregated enough for fine targeting. xii x Develop effective targeting tools to redirect the flow of resources towards the poor. The government needs to develop and apply common targeting criteria and instruments at two levels: (i) geographical level, to allocate social public expenditures in general and social safety net programs in particular where the largest number of chronic or temporary poor are located and (ii) household level, with the development of proxy means test indicators that can be applied objectively across a range of programs. x Establish appeals and grievances mechanisms. More transparency in program standards is needed and high standards of governance need to be set and maintained. 38. Improve the efficiency of existing programs: Although it is difficult to estimate the extent of coverage of the existing social safety net programs in Mali, the information available points to very low coverage compared to needs. Therefore, once the cost-effectiveness of the different types of safety net programs has been defined, it will be advisable to expand efficient programs. The current program review of the existing programs provides some initial recommendations on how to improve their efficiency: (i) Food transfers: promote local procurement wherever appropriate in food-based programs and consider switching to cash-based programming wherever appropriate; (ii) Cereal banks: review their cost-effectiveness and evaluate their impact on beneficiaries; (iii) Nutrition: strengthen the strategic and institutional framework; and promote the hearth approach whenever appropriate and feasible; (iv) School feeding: evaluate the relative cost-effectiveness of assisted school feeding programs compared to other forms of social safety nets and explore an improved integrated school feeding model to contribute to local development; (v) General tax exemptions: adopt it only as an instrument of last resort in times of crisis; and use commodities that are primarily consumed by the poor; (vi) Public works: assess the feasibility of introducing programs targeted to the poor using wage rate and other possible criteria; and (vii) Fee waivers for health: to establish compensation mechanisms for the effective implementation of fee waivers; and consider user-fee abolition (in particular for children under 5 and pregnant and nursing mothers), further work is needed in the context of broader health financing reforms. 39. Introduce new social safety net instruments: The Government of Mali currently uses a limited set of social safety net instruments. Looking at the international experience, it seems reasonable to consider more innovative forms of social safety net programs. Cash- based programs in particular – such as cash transfers to improve food security and nutrition, and cash-for work – have shown good results in other countries faced with similar challenges. These programs could be used permanently to provide income support for the chronic poor and most vulnerable and be expanded during crises to mitigate the impact of shocks. More xiii specifically, cash transfers could improve access to food in the country by providing transfers to extremely poor families. Integration of incentives for mothers of infants to enroll in supply-side nutrition interventions could also be explored. Cash-for-work program (known as activités HIMO) could become a productive safety net by incorporating good workfare design principles (low wage below market rate, selection of projects, etc.) and could have a direct effect on income generation during seasonal shortages of jobs and in times of shocks). However, further work is needed to test the appropriateness, feasibility and costs of these new programs in the context of Mali. xiv MALI: POLICY ACTION PLAN FOR AN EFFECTIVE SOCIAL SAFETY NET SYSTEM Policy Recommendations Actions and Time Frame Actors Monitoring Indicators 2010-2011 2012-2014 Policy Objective 1: Strengthen Strategic Framework to Design, Coordinate, Manage, and Finance the National Social Protection System, Including Social Safety Nets A national permanent x A permanent SP inter-ministerial x Structures in charge of SP and x MEF (and Ministry x Adoption of national SSN institution involving various committee is set up to design and monitor SSNs are operational in charge of SP) strategy (2011) social sector agencies SP strategy, including SSNs. x Dissemination of national SP leading the inter- x Adoption of national SP providing policy guidance x A sub-committee responsible for strategy including SSNs is ministerial strategy (2012) and dissemination monitoring and evaluation is set up and designed executed and evaluated committee with x Annual reports on results operational representatives of SP including SSNs from sectoral x A sub-committee responsible for social ministries, insurance system is set up to follow up decentralized reforms in health insurance and pension collectivities, civil system society, and the x A sub-committee responsible for SSNs is technical and set up to define the type, role, and financial partners instrument to address the needs of the poor (TFPs) and vulnerable Institutions for SP and SSN x Clarify the role and responsibilities of the x Ensure coordination between the x MEF/ inter- x Institutional capacities are are strengthened different national institutions engaged in state and TFPs ministerial improved SSNs: define roles and appropriate committee for implementation arrangements SP/SSNs x Provide adequate resources in terms of staffing and equipment SP coordinating institutions x Provide capacity-building support xv Policy Recommendations Actions and Time Frame Actors Monitoring Indicators 2010-2011 2012-2014 A sustainable financial x Establish rigorous tracking of SP x Multiyear program budgeting of x MEF and sectoral x Reporting system on framework is set up for expenditures and of public SSNs. SSNs ministries, TFPs spending on SSNs financing SP programs x Determine budget envelop needed for a (including budget and including SSNs comprehensive SSNs external funding) x Identify sources of sustainable financing (budget, development partners, local collectivities, NGOs, and private sector) A robust monitoring and x Develope a program monitoring and x Transmit annual program x MEF/Sectoral x Annual monitoring report evaluation system for SSNs evaluation system to assess cost- evaluation reports to the sectoral ministries and for each SSN program is in place to facilitate effectiveness of SSNs ministries responsible for SP and agencies, FTPs x Impact evaluation of most informed policy decisions x Set up minimum reporting requirements SSNs important programs for SSNs x Strengthen the sectoral ministries x Begin implementing systematic monitoring capacities for monitoring and of SSNs evaluation (training, exchange of experience across programs). x Involve civil society in monitoring and evaluation xvi Policy Recommendations Actions and Time Frame Actors Monitoring Indicators 2010-2011 2012-2014 Policy Objective 2: Reduce Poverty by Supporting Consumption of the Poor and Vulnerable and Increase Their Access to Basic Social Services through Efficient Social Safety Net System Design of effectiveness of x Define priority groups that should benefit x Develop effective targeting tools x Sub-committee x Effective SSN sytem SSNs system is strengthened from SSNs based on the results of the 2010 to redirect the flow of resources responsible for proposed household budget survey toward the poor SSNs (Draft SSN x Criteria for targeting x Define priority instruments to address system) needs of priority groups x Develop a targeting systems Efficiency of current SSNs x Review cost-effectiveness of subsidized x Explore geographical targeting x Sub-committee x Assessment reports programs is improved (In- food sales and targeted food distributions mechanisms for school feeding to responsible for x Monitoring indicators kind programs; School x Review mechanisms for strengthening and ensure that they benefit poor SSNs (prepare TOR x feeding; and fee wavers) expanding nutrition programs children for program x Review feasibility of fee waivers assessment) for health and abolishment of user x Technical ministries fees for the poor in the context of implementing the health financing reforms programs x x TFPs xvii Policy Recommendations Actions and Time Frame Actors Monitoring Indicators 2010-2011 2012-2014 New programs for the most x Prepare feasibility analysis for expanding x Test pilot programs (cash x Sub-committee x Feasibility reports vulnerable are established cash transfers based on recent experience transfers and public works) and responsible for x Evaluation report on the (Cash transfers and Public (cash transfers and food voucher) monitor and assess them SSNs (prepare TOR results of pilot programs works programs) x Prepare feasibility analysis for introducing for feasibility public works targeted to the poor and assessment) based on ongoing experience x Technical ministries implementing the pilot programs x TFPs xviii CHAPTER I: INTRODUCTION 1. This introductory chapter presents the background and rationale for this study, clarifies the definition of “social safety net” as understood in this review and describes the methodology of the study and the structure of this report. A. Background and rationale 2. Mali suffers from extreme poverty and difficult living conditions. Mali is a poor landlocked country with a narrow natural resource base and a rapidly expanding population of 14.6 million in 2009. Approximately 80 percent of the population derives their livelihood from the agricultural sector, while two commodities comprise 90 percent of export revenues, gold and cotton. The terms of trade for cotton like price increases for food and fuel make manifest the high vulnerability of the economy to external shocks, despite sound structural reforms and macroeconomic policies. 3. The country is ranked one of the lowest in the world (168 out of 179 countries in 2008) according to the United Nations Development Program’s (UNDP) Human Development Index. With a 2008 per capita income of US$500, about 47.4 percent of the population lives under the poverty line. Poverty is particularly prevalent in rural areas, where over 90 percent of the poor reside. 4. Despite the government’s efforts to improve living standards, gaps in access to social services, a high demographic growth rate of about 3.6 percent, extreme poverty and high vulnerability to a wide variety of crises continue to plague Mali’s population. The rapid demographic growth has jeopardized the provision of human capital investments and has important consequences for the economy and food security. According to the 2007 World Bank’s Country Assistance Strategy (CAS), Mali is unlikely to reach several Millenium Development Goals (MDGs) by 2015. In addition, like most other Sub Saharan countries, Mali has to contend with severe seasonal fluctuations in rainfall, and associated price (terms of trade) and output shocks impinging harshly on the poor’s consumption (welfare). Though much has been done to promote basic social services, child mortality remains one of the highest in the world and educational attainment one of the lowest in the region. Both covariate shocks induced by fluctuating weather and macro and external environments, and idiosyncratic risks associated in particular with health, render most of the poor and near-poor vulnerable to severe consumption shortfalls. 5. In this context, Social Safety Net (SSN) programs are of particular importance. The extent of high vulnerability among the population has increased the demand for social safety net measures. In fact, a recent World Bank project addressing the food price crisis in Mali exposed the need for more analytical work on the respective safety net programs1 with the aim of assisting the Government of Mali in the development and implementation of a comprehensive safety net system. B. What is the definition of social safety nets used in this report? 6. There is no overall consensus on a universal definition of social safety nets, on 1 See: “Mali: Food Price Crisis Response TF Supplemental Finance for the Second Poverty Reduction Support Credit,” The World Bank, December 2008. 1 what they should address and on how to better tailor safety net programs to local circumstances.2 Some players may use the different terminologies – social protection, social security, social assistance, social safety nets and social transfers – interchangeably. In Mali, like in many other countries, the government defines social protection as “the set of measures through which the society intends to protect citizens against social risks” [MDSSPA, 2002:3]. More specifically, the government distinguishes three components: x Social security (sécurité sociale), defined as the set of schemes ensuring protection of the entire population against social risks such as illness, maternity, disability, old age, death, work-related accidents, professional illnesses, family burdens and unemployment; x Social aid (aide sociale), defined as the set of non-contributory assistance measures provided by the State and public authorities and targeted to people in need and with inadequate resources; and x Social action (action sociale), a set of service provisions, either similar to those of social assistance or social insurance, or complementary, often targeting the same groups, but provided along more flexible criteria – social action does not fall under public services only, unlike social assistance. 7. In the present report, the term “social safety nets” refers to non-contributory transfer programs targeted in some manner to the poor or vulnerable [Grosh et al., 2008]. Defined in this way, one might think that the term “social safety nets” is analogous to the Malian terms of “social assistance” and “social action”. However, in practice, the Malian concepts of social assistance and social action appear to cover a much broader array of activities, including the provision of social services (e.g., support to disabled associations, access to justice, etc.) and income-generating activities. 8. “Social safety nets,” as defined in this report, aim at increasing consum ption – either directly or through substitution effects – of basic commodities and essential services, and not at increasing resources per se. Income-generating activities and other livelihood programs thus fall outside the scope of this study. Such programs are important poverty reduction instruments but cannot ensure a direct increase in consumption, and are not classified as social safety net programs. 9. “Social safety nets” are targeted in some concerted manner at the poor and vulnerable that is, individuals living in poverty and unable to meet their own basic needs or in danger of falling into poverty, whether because of an external shock or socio - economical circumstances, such as age, illness, disability or discrimination. Safety nets may serve one or a combination of the following groups [Grosh et al., 2008]: x Chronic poor, defined as people who lack the assets to earn sufficient income, even in good years; x Transient poor, defined as people who earn sufficient income in good years but fall into poverty, at least temporarily, as a result of idiosyncratic or covariate shocks 2 Annex 1 clarifies key social policies and concepts used in this report to ensure a common understanding of terminology and ideas. 2 ranging from an illness in the household or the loss of a job to drought or macroeconomic crisis; x Vulnerable groups, commonly including – but not limited to – people with disabilities, the elderly, orphans, widows, the displaced, refugees, and asylum seekers; and x Losers in reforms. 10. Policies and programs intended to improve access to basic services for the entire population (e.g., free primary education) thus fall outside the scope of the present report. As do transfer programs targeted at communities and associations for example, to build social assets in vulnerable communities, since they are not directed specifically at poor and vulnerable individuals or households. General subsidy programs like non-targeted rice subsidies may be considered as social safety nets if introduced with the intention of increasing the consumption of vulnerable households (e.g., households affected by globally high food prices). 11. Instruments used to increase consumption include direct transfers, subsidies and fee waivers. Common types of social safety net programs may be classified as follows [Grosh et al., 2008]: x Programs that provide unconditional transfers in cash or in kind: a. Cash transfers (e.g., child benefit, family allowances and social pensions) and near-cash transfers (e.g., food stamps and commodity vouchers); b. In-kind food transfers (e.g., school feeding and take-home rations) and other in-kind transfers (e.g., school supplies); c. General subsidies meant to benefit households, often for food, energy, housing or utilities. x Programs that provide an income: a. Public works in which the poor/vulnerable work for food or cash. x Programs that protect and enhance human capital and access to basic services: a. Conditional transfers that is, transfers in cash or in kind to poor/vulnerable households subject to compliance with specific conditions in relation to education and/or health; and b. Fee waivers for health and education to ensure access to essential public services (e.g., fee waivers for health care services, scholarships). 12. Safety net systems are usually woven of several programs, ideally complementing each other as well as complementing other public or social policies. They can be long-term predictable transfers or short-term emergency transfers. A good safety net system is more than a collection of well-designed and well-implemented programs. Rather, the social protection “systemic effect” can trigger more than the sum of the individual social programs. 3 13. Social safety nets form a subset of broader social protection policies and programs along with social insurance and social legislation, which ensures minimum civic standards to safeguard the interests of individuals (e.g., labor laws and health and safety standards). Social protection is a basic human right that directly tackles poverty and food insecurity and that contributes to economic growth and human development. 14. Social safety nets are part of a broader poverty reduction strategy. Social safety nets interact with and work alongside of social insurance; health, education and financial services; the provision of utilities and roads; and other policies aimed at reducing poverty and managing risk (Figure 1). Poverty reduction requires ensuring people’s access to consumption and food security, health, education, rights, voice, security, dignity and decen t work. It involves a political process and requires dedicated efforts to empower the poor by strengthening their voice and fostering democratic accountability. In recent years, the concepts of “social protection” and “social safety nets” have increasingly become a central component of poverty reduction and food security strategies in developing countries. Figure 1: Position of Social Safety Nets in Larger Development Policy Source: Grosh et al., 2008. 15. At the core of many debates on social safety nets is the question of predictability and sustainability. An increasing number of development actors argue that social transfers should be predictable that is, paid or distributed regularly (or in a predictable manner, e.g., whenever climate conditions inhibit good agricultural production), not as an ad-hoc reaction to a crisis, but as a pre-emptive initiative to allow recipients to prepare for and protect themselves in an effective way against unforeseeable catastrophes . In the past, safety nets were often viewed as simple relief transfers that helped poor people to alleviate the worst effects of shocks. However, now it is increasingly recognized that a social safety net is to be distinguished from individual social projects by the integration of many activities into a predictable, institutionalized social protection system based on a framework of vulnerability and risk, and supported by a rights-based approach. Simple relief transfers proved to have limited long-term benefits and involved the danger of creating dependency. Safety nets, if correctly implemented, have the potential not only to protect but also to significantly promote the livelihoods of poor people. 4 16. Finally, because the main realm of public action transpires through the public sector, the present report concentrates on publicly financed social safety nets that is, those funded by a national or local government or by official international aid. In most developing countries, there are three basic forms of social transfer provisioning: (i) “formal” mechanisms which are provided by governments and are prescribed by law; (ii) “semi-formal” support provided by UN agencies or NGOs; and (iii) “informal” mechanisms supplied by households and communities. The present report does not cover informal social safety nets. C. Structure of the report 17. Aligned with the Poverty Reduction Strategy, and taking stock of the existing information as well as new reviews of Malian safety net programs, the purpose of this report is to: (i) provide a detailed, updated inventory of existing social safety net systems; (ii) identify shortcomings of current safety net systems; and (iii) propose suggestions, based on international experience, for improving the coverage, efficiency, relevance and financial sustainability of the safety net system of the most relevant programs. Based on the results of this report, further work could be launched to: (i) link the current safety net system with the needs of the vulnerable populations and identify gaps in coverage; (ii) support the design and implementation of appropriate pilot programs for protecting the assets and consumption levels of the poor and reducing poverty; and (iii) provide Technical Assistance to support the government in policy reform implementation and setting up a monitoring and evaluation system for existing/new safety net programs. 18. This report relies on several primary and secondary sources of information. The report is based on existing administrative data and household survey data. Specifically, existing household budget surveys for various years (2001 and 2006) were used, and include the results of the recent poverty analysis. In addition, administrative and financial data from various ministries, the government budget and other development partners (i.e., UNICEF, WFP, and NGOs) were used to prepare the inventory and stock taking of the existing safety net programs. 19. The rest of this report is organized as follows: Chapter II presents the nature and magnitude of the problem with a profile of the poverty and vulnerability, and estimates the financial cost of closing the poverty gap. Chapter III investigates the scope and role of government policies and strategies in response to poverty and vulnerability in Mali, reviewing the strategic framework guiding the development of social safety nets and the institutional set-ups, and estimating the total cost of existing social safety net programs as well as their funding sources. Chapter IV reviews the performance of individual existing social safety net programs, considering in particular their adequacy, equity, cost- effectiveness and sustainability. Chapter V explores fiscal space potentially available to finance safety nets. Finally, Chapter VI considers challenges and opportunities to expand the social safety net system, looking at technical and administrative constraints, and makes key policy recommendations to design an effective safety net system. 5 CHAPTER II: POVERTY AND VULNERABILITY IN MALI Despite progress in poverty reduction from 2001 to 2006, poverty incidence remains high in Mali. Poverty incidence – the proportion of people falling below the poverty line – decreased from 55.6 percent in 2001 to 47.4 percent in 2006. Understanding the fundamental sources of this decline remains difficult, but it is safe to say that sustained high economic growth over the period, at an average of over 3 percent on a per capita basis, was a major contributor to this eight-point decrease in poverty incidence. However, the increase in population over the same period implies that the number of poor people has barely changed. Gender, age and household size are key correlates of poverty. Poor households and particularly farmering households in rural areas and marginalized populations in urban areas are the main vulnerable groups in Mali. Moreover, poor households are often unable to invest in human capital. Inequalities in health and education are the result of State failure to provide equitable access, both in terms of supply of services across regions/areas and affordability for all. Based on the available information private transfers have significant impact on poverty levels but public transfers often favor the non-poor. Since the number of poor in Mali is large, the target population for social safety nets, which are meant to protect the vulnerable against shocks and to help the chronic poor climb out of poverty, is substantial. On the basis of available poverty data, the financial cost of closing the poverty gap ranges between 4.8 to 5.6 percent of GDP.3 However, given the budget constraints, there is need for a sensible strategy for safety nets that aims at reducing the most extreme forms of destitution and food insecurity and targeting the poorest and most vulnerable population. Moreover, pro- poor public expenditures through well-targeted social safety nets could provide the resources for the poor to make the necessary investments in human capital development. 20. A good understanding of the population groups that need safety net programs on a permanent basis is crucial to guide policy makers in defining an appropriate mix of safety net policies. This chapter thus takes stock of existing data available on poverty and vulnerability in the country. The objective of sections A and B is to get a sense of t he size of poverty and its evolution over time and social indicators. Section C aims at picturing the target groups; Section D provides a review of the main causes of poverty and vulnerability; and finally, Section E presents a rapid assessment of the financial dimensions of poverty alleviation. A. Growth and poverty reduction 21. Prudent macroeconomic policies led to broadly favorable outcomes in the period 2004-08 (Table 1). From 2004 to 2008, growth rates varied between 2.2 percent and 6.1 percent, reflecting Mali’s vulnerability to climatic conditions and commodity price fluctuations (primarily of cotton, oil and gold). In this period, gross domestic product (GDP) growth averaged 4.6 percent a year and average inflation was contained below 3 percent, except in 2005 and 2008, due to the food and fuel crisis. After deteriorating from 6.5 percent of GDP in 2004 to 7.9 percent in 2007, the overall fiscal deficit (on a payment order basis excluding grants) improved to 5.7 percent of GDP in 2008. Gains from improved tax administration were more than offset in 2008 by exemptions in response to the oil and food crisis. Tax revenues decreased from 14.9 percent of GDP in 2004 to 13.3 percent in 2008. Moreover, to ensure fiscal sustainability, the government adjusted 3 Based on food intake method the cost closing the poverty gap is around 2.8 percent of GDP. 6 spending: in 2008, total expenditure and net lending corresponded to 19.3 percent of GDP, against 22.4 percent and 24.1 percent in 2004 and 2007 respectively. Nevertheless, the basic fiscal balance deteriorated in 2008 with a deficit of 1 percent of GDP due to increases in the price of food and fuel.4 Preliminary estimates indicate that real GDP growth in 2009 was 3.9 percent, about half a percent higher than projected in April 2009. 5 Private consumption growth remained relatively robust, against weakness in overall investment and net exports. After the turmoil in 2008, inflation was maintained around 3 percent in 2009. Table 1: Mali - Selected Economic and Financial Indicators, 2003-2012 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Prel. Proj. proj. Real GDP 7.4 2.2 6.1 5.3 4.3 5.0 3.9 4.3 5.2 5.1 Consumer price -1.3 -3.1 6.4 1.5 1.4 9.1 3.3 1.9 2.5 2.5 inflation (average) Overall fiscal -5.7 -6.6 -7.1 -7.6 -7.9 -5.6 -9.5 -9.5 -8.1 -7.6 balance1 1 Payment order basis, excluding grants. Sources: Malian authorities’ and IMF estimates and projections. 22. Despite pro-poor economic growth, the profile of poverty remains largely the same. Almost one in two Malians was poor in 2006 (47.4 percent). Most of the poor living in rural areas are illiterate and live from subsistence farming. According to the Cost of Basic Needs method, poverty increased in urban areas during this period (25.5 percent), while it significantly decreased in rural areas (57.6 percent). Poverty also decreased in all the regions, except Sikasso, where it stagnated at over 80 percent, against less than 50 percent in the other regions (Table 2). However, caution should be used to estimate the trend in poverty due to different methodologies used for 2001 and 2006 surveys. 6 4 The basic fiscal balance is given by the total revenue less current non -interest spending and net lending, excluding grants, externally financed expenditures and HIPC financed spending. 5 Agriculture grew by 6 percent in 2009, with cotton showing a growth rate of 17 percent in the year. Good performance in agriculture was due to favorable weather, high farm gate prices and policies supporting food production. A rebound in cotton production also contributed to the good performance in agriculture . Cotton output is estimated to have increased by 17.3 percent in 2009, after the average decline of 26.5 percent in the previous three years. Growth also reflects good performance of some secondary sub-sectors, notably agricultural processing, energy and construction , and public works. 6 The 2001 household survey is based on the daily collection of households’ expenditures and consumption over a number of representative days in the year. The 2006 survey is based on the retrospective estimation by households of their expenditures on a selected number of products over the past 12 months. 7 Table 2: Evolution of the Incidence of Poverty, 2001-2006 7 8 Food-energy intake method Cost of basic needs method 2001 2006 2001 2006 National 68.3 64.4 55.6 47.4 Urban 37.4 31.8 24.1 25.5 Rural 79.2 79.5 66.8 57.6 Kayes – Koulikoro 76.2 61.5 65.1 44.7 Sikasso 81.8 81.7 80.1 80.8 Ségou – Mopti 71.4 75.2 51.9 48.7 Timbuktu – Gao – Kidal 51.3 57.9 30.8 29.0 Bamako 27.5 11.0 17.6 7.9 Wage employee – public 15.2 17.3 7.1 12.2 Wage employee – private 30.8 39.0 26.0 29.5 Employer 39.7 29.5 17.0 16.1 Self-employed – agriculture 83.4 80.4 70.1 59.2 Self-employed – outside agriculture 43.2 33.7 27.8 22.7 1 Other employees 72.2 78.2 61.7 70.2 Unemployed 55.9 65.4 48.4 49.4 1 Family helpers, apprentices, house employees, etc. Notes: The poverty line for the food energy intake method was estimated at CFAF 144,022 in 2001 and CFAF 157,920 in 2006. The same poverty line is used for all the regions. The poverty line for the cost o f basic needs method was estimated separately for each region and for rural and urban areas. See DNSI, 2007c for details. Source: DNSI, 2007c. 23. Living conditions are improving in rural areas but not in urban areas. To test the robustness of poverty trends, the poverty of living conditions in Mali was analyzed on the basis of housing characteristics and durable household equipment .9 The results, shown in Table 3, indicate a decrease of poverty incidence independently of the method used. This confirms a decrease of poverty in rural areas between 2001 and 2006 and point to a slight increase in urban areas. Table 3: Dynamics of the Poverty, 2001-2006 Poverty incidence (%) Food energy intake method Cost of basic needs method 2001 2006 2001 2006 National 64.4 58.1 55.9 50.7 Urban 32.9 32.0 24.0 24.6 Rural 75.7 70.1 67.3 62.7 Source: DNSI, 2007c. 7 The food-energy intake method defines the poverty line by finding the consumption expenditures at wh ich a person’s typical food energy intake is just sufficient to meet a predetermined food energy requirement. 8 The Cost of Basic Needs method values an explicit bundle of foods typically consumed by the poor at local prices first. To this, a specific allowance for nonfood goods, consistent with spending by the poor, is added. 9 The poverty of living conditions refers to the difficulty of satisfying a large number of basic needs such as food (nutritional disequilibrium), health (non-access to primary care), education (non-enrolment), housing and household equipment, hence all things that impact individual living conditions. 8 24. Demographic pressure is a major challenge in Mali and contributes to aggravating the poverty problem in urban areas. The urban population grew by 5 percentage points between the two surveys.10 Simultaneously, the group “without employment,” which is mainly urban, grew strongly while the share of the self-employed in agriculture fell. This clearly shows a rural exodus as well as an entry in the urban labor market of the rural self-employed. This demographic pressure probably contributed to aggravating poverty in the households where the head was unemployed and to weakening the other categories that were less poor in 2001. 25. Lower growth in 2007 and 2008 and uncertainty for 2009 has jeopardized the attainment of the poverty reduction targets. In 2007, growth was only 4.3 percent, lower than the trend growth rate of the period 2001-2006 (5.1 percent p.a.), the main reasons being the counter-performance of the cotton sector and the lower production of gold. In 2008, growth is believed to have been around 5 percent due to good rains and a 50 percent increase in rice production. High uncertainty marks 2009 with growth projected at 3.9 percent (4.3 percent in 2010). Given population growth of 3.6 percent, this means that GDP per capita only grows at around 0.3 to 1.4 percent, which challenges the capacity of the country to sustain poverty reduction over the next few years. 26. Moreover, the food price crisis led to increases in poverty that could last over a number of years. Detailed information remains unavailable to assess the impact of the successive crises on poverty incidence in Mali. Still, some assessment can be made, based on simulations of the impact of shocks on the income or the purchasing power of the poor. A global World Bank study, for example, estimates that, as a result of the economic crisis, an additional 89 million people across the world will live in extreme poverty (below US$1.25 a day) at the end of 2010. In Mali, since the poor are clustered around the poverty line and tend to be vulnerable, these shocks are likely to have had a large impact. The average price of rice in the country increased by about 20 to 25 percent in 2008 . Some simulations suggest that without policy responses, the share of the population in poverty would have increased by 0.7 percentage points, and the increase would have been even larger if the CFA Franc had not been appreciating versus the US Dollars [Nouve at al., 2008]. Others suggest that a 25 percent increase in food prices must have led to an increase in poverty by 1.7 percentage points (this represents close to 300,000 persons falling into poverty). According to these simulations, the impact is much stronger in urban than in rural areas, with increases in the poverty incidence of close to 3 percentage points in urban areas and 1.2 percentage points in rural areas. This follows expectations since urban dwellers are clearly net consumers of food and hence are directly impacted by a food price increase. The rural population is either not affected (auto-consumption, so no price effect) or positively affected if there is a production surplus that can be sold on the market [Josef et al., 2008]. A recent UNICEF study on the impact of the food crisis in 2008 [Bibi et al., 2009] shows that child poverty (based on food intake) increased from 41 to 51 percent between 2006 and 2008.11 27. The global recession of 2008-09 is also likely to have worsened poverty incidence in Mali. Remittances constitute one of the main channels of transmission of the 10 The population of the District of Bamako grew by 5.4 percent per annum between 1998 and 2009, while the total population of Mali grew by 3.6 percent per annum during the same period. 11 Calculations by UNICEF are based on food intake. Detailed assumptions of the UNICEF report have not been reviewed, but their results show significant differences from the calculations presented in th is report. 9 global crisis on Mali, and one that is likely to have had the most widely distributed impact on the poor. The IMF estimates that remittances will decline from 4.5 percent in 2008 to 3.6 percent of GDP in 2009. This decline of 0.9 percent of GDP, a loss of roughly 1 percent of average household revenues, amounts to an estimated CFAF 38 billion in 2009. To compare with social sector program spending, this loss would correspond to the average public spending in 2007-08 on “other social sector spending” based on the PRSP methodology (this category of spending is different from SSN as the following chapters will discuss). B. Human development outcomes 28. Mali's social indicators remain among the lowest in the world. With a GNI per capita of US$500 [Atlas method, 2007], Mali ranks 168 out of 179 countries in the UNDP’s 2008 Human Development Index. The percentage of literate adults in the country is half the average in Sub Saharan Africa and the child mortality rate was estimated at 191 per 1,000 live births in 2006, the third-highest in the world. 29. Mali faces many challenges in its efforts to move towards the MDG targets. While the Growth and Poverty Reduction Strategy Framework (GPRSF) targets for education were all achieved in 2007 (Figure 2), the objective of universal access is still far away. Progress in health outcomes was modest and Mali is unlikely to reach the MDG targets on child and maternal mortality and nutrition (Figure 2). Maternal mortality in Mali remains one of the highest in the world, despite all progress (464 deaths per 100,000 births according to EDSM IV). The HIV/AIDS prevalence rate has declined significantly and this MGD goal is likely to be achieved by 2015: the prevalence rate declined 0.4 points among the total population from 1.7 percent in 2001 to 1.3 percent in 2006. Nevertheless further efforts are needed particularly for sex professionals. In addition, substantial progress has also been made with regard to access to safe drinking water, and the objective of reduction by half of the population without access to potable water has already been achieved. According to the statistics from the Direction of hydraulique access to potable water has reached 73.1 percent o the population in 2009 compared to 717 percent in 2008. In addition, the number of vilages with a modern water source has slightly increased from 10 349 in 2008 to 10 503 in 2009. Although other MDGs indicators have registered limited progress,it will be difficult to reach the targets by 2015 in respect to gender equality, civil society participation and decentralization. 30. In respect to MDG 3 “Equality of sex and autonomy of women”, although the rate of women representatifs among decision makers has increased (electifs and nominations positions), participation rates of women is low compared to men (among electifs positions the rate has increased from 6 percent to 8 percent, while it has remained stable at around 12 percent for nominatif positions). In political engagement, there is progress: such as adoption of the National Gender Policy (PNG); action plan (2010-2012) to forbid excision; action plan to forbid women and young girls trade, and action plan against violence to women; signature of 40 local conventions to forbid excision; and incorporation of gender in public finance of political parties. 31. There is also more emphasis on civil society participation. Among various measures are: a better understanding of the civil society concept, identification of their strengths and weaknesses, understanding of their role and responsibilities in the context of Mali, and the establishment of the National Council of Civil society (CNSC). Nevertheless further efforts are needed to better monitor and evaluate their role in development projects. 10 32. The review of the implementation process of decentralisation with the establishment of local collectivities since 1999 and 2000 shows also progress as well as difficulties. The main issues are related to the slow transfer of development responsibilities from local and regional entities to local collectivities. Despite the political engagement and legislative reforms, the paste of decentralization is maily impede by lack of transfer of skills and resources (humane and financial). 33. Human capital and labor market characteristics influence poverty outcomes. Poverty decreases significantly when the education level of the household head improves. Households where the head has a secondary or tertiary education are six times less poor than households where the head is illiterate. Poverty is also much lower when the head of household is a civil servant (12.2 percent), an employer (15 percent) or non -agriculture self-employed (22.8 percent). In contrast, farmers (in particular cotton growers) constitute the poorest households (Table 4). Table 4: Poverty Incidence by Education Level and Socio-Economic Group of Household Head, 2006 Population Poverty (%) Contribution to poverty (%) share (%) P0 P1 P2 P0 P1 P2 National 100.0 47.4 16.7 8.0 100.0 100.0 100.0 Education level Illiterate 78.6 53.0 18.9 9.2 87.8 89.1 90.0 Primary 1 9.1 42.5 14.1 6.5 8.1 7.7 7.4 Primary 2 5.4 23.4 6.5 2.6 2.7 2.1 1.8 Secondary 4.1 9.7 1.8 0.5 0.8 0.5 0.3 Higher 2.8 8.8 3.9 1.8 0.5 0.7 0.6 Socio-economic group Cotton producers 13.7 77.8 3.3 1.4 22.5 1.2 1.1 Other self-employed in agriculture 41.1 53.0 9.1 3.4 45.9 2.6 2.0 Unemployed 16.1 49.4 4.9 2.2 16.8 0.4 0.3 Self-employed outside agriculture 15.1 22.7 33.1 17.9 7.2 27.3 30.8 Wage employee - private 4.7 29.5 17.0 7.6 2.9 41.9 38.9 Wage employee - public 6.1 12.2 6.3 2.8 1.6 5.7 5.3 Other employees 1.8 70.2 25.0 11.6 2.7 2.7 2.6 Employer (except cotton) 1.3 15.0 18.8 9.4 0.4 18.2 19.0 Note: FGT indices P0 – Incidence; P1 – Depth; and P2 – Severity; poverty incidence calculated with the cost of basic needs method. Source: DNSI, 2007c. 11 Figure 2: Trends in Primary Education and Maternal-Child Mortaility, 1990-2015 Gross School Enrolment Rate Boy-to-Girl Ratio in Primary School Maternal Mortality Rate Child Mortality Rate Notes: in green, the trend to achieve the MDG targets; in red, the current trend. Source: ODHD, 2009. 34. Disparities in the access to basic services are correlated to area of residence, welfare level and gender. Measured in terms of children effectively attending school (as opposed to school enrolment, which measures how many children were signed up for school), the gross school attendance rate was 60 percent in 2006 with a significant difference between the poorest and the richest (44 percent and 107 percent respectively). The higher the level of living, the higher the school attendance rate (Figure 3). 35. Figure 3 Inequalities are also significant between urban and rural areas (88 percent and 49 percent respectively) and between regions, with Bamako and Gao registering higher attendance rates than elsewhere in the country. Inequalities between boys and girls persist (65 percent and 54 percent respectively) despite recent improvements and catching up of girls. Gender disparities are higher among poorer households than among richer ones (the parity index was 0.74 in the poorest quintile in 2006 and 0.93 in the richest quintile) and also appear between regions, with Mopti, Timbuktu and Gao registering the highest gender parity indices (Figure 3). The sharp improvement in the Gender Parity Index in the Mopti Region between 2001 and 2006 is explained by the successful implementation of cash transfer and school feeding programs in favor of girls in the region [DNSI and UNICEF, 2008]. 12 Figure 3: Gross School Attendance Rate by Economic Welfare and Gender, 2006 111.3 120 103.3 boys 100 1.2 2001 1.04 1.03 80 68.9 1 0.92 0.870.85 0.8 0.81 0.81 0.81 0.81 50.3 53.7 54 54.2 0.72 0.75 0.75 0.75 60 41.3 45 0.8 0.65 0.66 37 0.6 0.62 40 0.6 20 0.4 0 0.2 0 Source: DNSI and UNICEF, 2008. 36. The high level of child mortality observed at the national level hides wide disparities according to area of residence, region, education level of the mother and welfare level. The highest infant mortality rates are recorded in rural areas and in the Sikasso and Segou Regions (Table 5). It also appears that the higher the education level of the mother, the lower the mortality rate and similarly, the poorer a household, the higher the mortality rate. Disparities in infant mortality rates appear, nevertheless, more marked between regions than between poverty quintiles; hence inequalities in child survival do not strictly depend on levels of living but also on exogenous factors, such as the decision to go to a health center. 13 Table 5: Infant and Child Mortality Rates by Area, Region, Educational Level of Mother and Welfare Quintiles, 2006 Infant mortality rate Child mortality rate Area of residence Urban 83 158 Rural 122 234 Region Kayes 105 186 Koulikoro 114 222 Sikasso 132 237 Ségou 131 262 Mopti 108 227 Tombouctou 229 Gao 371 136 Kidal 83 Bamako 66 108 Mother’s education level None 115 223 Primary 97 176 Secondary or more 71 102 Welfare quintile First 124 233 Second 121 241 Third 114 226 Fourth 114 227 Fifth 80 124 All 96 191 1 The three regions of Timbuktu, Gao and Kidal were computed together (very few observations, especially in Kidal). Source: DNSI and UNICEF, 2008. 37. Across the country, access to good quality health services is inequitable and among poor households, out-of-pocket costs of health care are high. Public health services are scant in areas where the poorest households reside; therefore the uptake of services is low. Where concentrations of wealth are found – for example Bamako has the majority of households in the fifth quintile – public and private services are available and used equally. Health expenditure is 54 percent out-of-pocket, meaning individuals largely pay for their care (Figure 4) and explaining in great part the observed inequalities in access. In brief, these factors are at the source of inequality in the survival rates of children and mothers. 14 Figure 4: Who Spends the Most for Health in Mali? Distribution of Health Expenditures by Groups and Regions, 2004 Other private Public 18% 24% Househol ds 57% 100% 90% 80% Autres 70% Etat 60% 50% Ménages 40% 30% 20% 10% 0% Zone 1: Mopti, Sikasso, Zone 2: Kayes, Zone 3: Bamako (la plus Segou, et Koulikoro (la Tombouctou, Gao, et Kidal riche) plus pauvre) Note: other private = health mutuals, private enterprises, etc. Source: Marek, 2007. C. Poverty, shocks and vulnerability 38. Poverty incidence is influence by demographic characteristics of households. Similar to other countries, poverty incidence is linked to the size of Malian households. The poverty incidence for a four-person household is four times lower than for a household with over 10 members (Table 6). Since the family size increases as the head of household grows older, it is not surprising that the older the head of household, the higher the poverty rate. The main activity being subsistence agriculture, this is explained by the fact that insufficient capital is accumulated to allow increasing incomes for the growing family. However, the correlation between household size and poverty needs to be treated with care. 15 Table 6 : Poverty Incidence According to Demographic Characteristics of Households, 2006 Population Poverty incidence Contribution to poverty share (%) (%) % P0 P1 P2 P0 P1 P2 National 100.0 47.4 16.7 8.0 100.0 100.0 100.0 Gender of household head Male 94.2 48.7 17.1 8.3 96.5 96.8 97.1 Female 5.8 28.1 9.0 4.0 3.5 3.2 2.9 Age of household head -24 0.8 57.3 6.0 1.5 0.9 2.9 0.1 25-39 18.4 38.2 12.2 5.4 14.8 13.4 12.5 40 49 28.1 46.4 15.7 7.4 27.5 26.5 26.0 50-59 24.7 49.5 18.0 8.7 25.8 26.7 26.9 60+ 28.1 52.4 19.6 9.8 31.0 33.1 34.4 Household size 1 to 3 persons 3.3 14.1 2.7 8.0 1.0 0.5 0.3 4 to 7 persons 26.8 30.0 8.1 32.0 17.0 13.1 10.7 8 to 10 persons 25.4 44.0 13.9 61.9 23.6 21.2 19.6 More than 10 persons 44.4 62.4 24.4 12.5 58.5 65.2 69.3 Note: P0 – Incidence; P1 – Depth; and P2 – Severity. Source: DNSI, 2007c. 39. Geographic disparities are important and regional characteristics influence poverty outcomes (Table 2 and Figure 5). The concentration of amenities and services found in a capital city applies to Bamako and contributes to the lowest incidence of poverty among Malian metropolitan areas. For example, a household in the City of Sikasso has a level of living 46 percent below that of Bamako. In the context of geographic contrasts, the Timbuktu Region has the highest non-monetary poverty rate (over 92 percent) while the Sikasso Region has the highest monetary poverty rate. The latter is the main cotton- producing region and even though climatic and external factors are correlated to poverty, systemic inefficiencies inculcate pervasive and structural poverty.Mopti Region is the poorest and most vulnerable in Mali: this region has the highest incidence of extreme poverty, the worst access to infrastructure and institutions, highest HIV/AIDS prevalence rate, and worst chronic food insecurity (Annex 2). 16 Figure 5: Monetary Poverty Incidence by Districts and Communes, 1998-2001 Source: DNSI, 2007a. Review of risks and of who is affected 40. Environmental shocks are the primary risk for this extremely vulnerable country, where food insecurity plagues 27 percent of the population. Among the 48 least developed countries, Mali had the twelfth highest frequency of disasters between 1970 and 1998 [Simonsson 2005], with 46 large-scale disasters (Table 7). Shocks affected one- third of all Malian households in 2007-08, with drought (11.6 percent), irregular rains (6.3 percent) and floods (5.9 percent) ranked at the top. In fact, SAP estimates [2009] about 2.8 million (20 percent of the total population) are affected by droughts and can be considered food insecure. Over a longer time span (Table 7), the shocks with the highest frequency and largest numbers of people affected were epidemics, floods and droughts.12 Table 7: Summary of Large-Scale Disasters in Mali, 1900-2009 Nature of the disaster Number of disasters Number of people Number of people killed affected Drought 9 - 2,827,000 Epidemic 17 3,870 26,999 Flood 15 61 163,506 Insect infestation 5 - - Note: In order for a disaster to be entered into the database at least one of the following criteria has to be fulfilled: 10 or more people reported killed, 100 people reported affected, a call for international assistance, declaration of a state of emergency. Source: EM-DAT: The OFDA/CRED International Disaster Database www.em-dat.net - Université Catholique de Louvain - Brussels – Belgium (downloaded on July 14, 2009 – Data version v12.07). 12 According to CSA-SAP, households could report up to three main shocks. Of the reporting households, over two-thirds were affected by an environmental shock, 30 percent by a social shock and 21 percent by an economic shock. 17 41. Risks reflect geographic locale and production system s. The first order of risk is similar in scope among urban (26 percent) and rural (25 percent) areas, yet the former reported economic and the latter environmental shocks. In Kidal and among herders, environmental shocks in 2007-08 were 82 and 69 percent, respectively. Concurrently, economic shocks hit Bamako (39 percent), cash crop farmers (28 percent) and employees/traders (26 percent) (Figure 6). Figure 6: Shocks by Regions and Production Systems, 2007-2008 0 82 Kidal 8 13 shepherds 0 7 12 69 48 11 67 Koulikoro 25 44 agro-onion 12 7 26 agro-rent 28 46 53 3 4 Kayes 3 3 26 10 Environneme agro-migration 4 11 22 23 Mopti 7 ntal shock agro-livestock 5 2 24 0 12 22 Sikasso 19 16 Social/huma agro-cotton 25 2 19 1 18 10 n shock agro-cotton-fruit 02 Gao 0 1 58 6 7 Economic agro-shepherd 9 8 6 Segou 5 4 shock culture de decrue 125 0 3 4 Other shocks Flooded rice 01 5 Tombouctou 3 2 9 1 1 Wage earning/business 1 26 1 2 6 Bamako 8 Irrigated rice 1 39 0 5 0 20 40 60 80 100 0 20 40 60 80 Source: CSA-SAP, 2009. 42. Gender is also a key poverty correlate. Studies around the world have shown that individuals within the same household do not always have the same standard of living: income and resources are not necessarily pooled and members do not share in them equally. Differentiation within the household is typically most pronounced by age and gender. As in many parts of Sahelian West Africa, there are reasons to believe that some groups of women may be particularly poor and vulnerable. In Mali women have different, and typically weaker, endowments. For example, they have lower human capital: 12 percent of girls 15 and older are literate compared to 28 percent of men. Far fewer attend school: the rate of girl to boy attendance is 75 percent at the primary school level and only 35 percent at the secondary school level. Greater illiteracy and lower educational attainments generally, places stronger limitations on women’s access to employment and government services. Malian women also face pronounced health risks associated with repeated child bearing. A woman has 6 to7 births on average, and these are associated with high rates of maternal mortality and morbidity. Rates of IMR at 250 per 1000 births are also extremely high. DHS surveys indicate significant rates of anemia. On the whole, women are li kely to suffer from lower physical resilience to shocks. 43. Since men and women are exposed to different risks both in terms of the type and extent of the risks, they also have different capacities to cope with risks even within the same household. In Mali, as in many Sahelian West African countries: x Women are typically dependent on men. They marry very young (legally as young as 11 if parents consent) and typically marry much older husbands. In 2004, 50 percent of girls aged 15 to 19 were legally married. More than 45 percent of Malian families are polygamous (Wing 2008). Women are much more constrained than men by social norms about who does what within the household. Husbands have 18 the right to restrict their allocation of time, their mobility, labor market transactions and occupations. They can also monopolize the labor of wives for instance for work on their plots but this right is not reciprocal. These many restrictions limit the development of own account enterprises and other opportunities for women. x Women have different access and control over resources. Women’s access to property is limited and primarily achieved through their husbands. For example, land use rights can only be obtained though husbands but are contingent on marital status. In the case of divorce or widowhood, the rights are typically lost. As a result, women have fewer assets and lower capacity for mobilizing resources. They also have lower access to credit and to most public and private services which tend to favor men: extension agencies, credit, institutions allocating agricultural inputs & outputs, marketing boards, fertilizer programs, contract farming schemes etc. However, access to private transfers and informal networks may be less differentiated across gender. For example, in a study of northern Mali, Christiaensen and Boisvert (2000) find that female-headed households are less vulnerable to drought shocks in part due to community solidarity. Official food aid and family food transfers are found to provide significant insurance mechanisms. x Legal protection often favors men. Inheritance and marriage are controlled by customary law under which individual rights and particularly women’s rights are often denied in favor of preserving tradition (Wing 2009). This has left women’s rights largely unprotected. Traditional law as practiced in Mali, dictates that daughters inherit only half of what sons inherit and husbands are the sole owners of family property. Single women have no rights. Marriage accords them protection and some rights such the use of land. Yet, as noted these are contingent on marital status and lost through divorce and widowhood. Given the large age gap between spouses, many young women find themselves widows with few rights once the husband is no longer there to protect them. Almost all widows remarry often into worse circumstances as they have fewer choices than for their first marriage. Levirate marriage, whereby a widow marries someone in the husband’s lineage, traditionally provided support to a spouse and her children by ensuring a male provider was responsible for them. Yet, the levirate practice is slowly being undermined without adequate opportunities for women to support themselves otherwise. 44. Unfortunately household consumption surveys do not collect individual-level data detailing the intra-household allocation of resources, consumption, work, and time allocation. Thus, the poverty status or vulnerability of individual household members cannot be directly calculated from household surveys. One often-used approach is to compare female- and male-headed households to infer effects of an individual’s gender on welfare. However, as in many countries, female-headed households in Mali are found to be extremely heterogeneous. Some have remitting adult male migrants, others are headed by poor widows who have no means of livelihood and yet others, by wealthy widows and other single women who have careers or other independent means of support. An analysis of male and female headed households in Mali using data from the 2006 ELIM confirms that there are few differences between female and male headed households, after controlling for various characteristics that affect living standards. However, Demographic and Health Surveys (DHS) do contain information on individuals including some individual level welfare indicators. They have drawbacks for such an analysis given their focus on health and reproduction: they survey many more women than men and only collect detailed 19 information on individuals aged 15 to 49. 45. An analysis of the 2006 DHS for Mali reveals that widowed, and currently married but previously widowed or divorced women may be particularly vulnerable groups in Mali. Based on available information, widows and divorced women typically remarry in Mali, often into polygamous households as third or fourth wives. However, given the large age gap at marriage between men and women in Mali, statistics show that only 48 percent of women 60 and above are married compared to 90 percent of men (Commission on Population and Development, 2000). Unfortunately, the DHS cannot shed light on the large group of widows and other single women who are older than 49. However, we can examine a few individual welfare indicators for women aged 15 to 49 by their marital status. Controlling for age, in rural areas, widows and previously widowed but currently married women are an especially vulnerable group compared to women who are once married, currently divorced or divorced and currently married. In rural Mali, they have significantly lower body mass indices than these other women, although no such differences are apparent in urban Mali. The data also indicate that current and previously widowed women also have more dependent children, and that their children are less likely to be in school than the children of women of other marital status. Therefore some strong indications in the data that widows and women who have been widowed in the past may be significantly worse off, as well as more vulnerable to downside risk than many other women in rural Mali. Thus, safety net policies should take this into account. How do the chronic poor cope with shocks? 46. Coping mechanisms are a function of the intensity of the shock, life strategies and household resources; important differences thus appear between households in their coping strategies. Reducing the quantity of food during meals, reducing the number of parents’ meals in favor of children, selling livestock, solidarity and credit are the main coping mechanisms reported by shock-affected households. In the irrigated rice zones, sending children to work, consumption of seeds and credit are used significantly more than in other zones. In the pastoral zone, most households sell livestock. Differences also appear between urban and rural areas (Figure 7). 20 Figure 7: Coping Mechanisms by Area, March 2008 (Percentage of Households) Sell animals (livestock) Reduce the total quantity of the meal No coping mechanism used Reduce the adults meal in favour of the children's meal Solidarity Buy food on credit Reduce the number of meals a day Depend on help from friends and relatives Les preferred and cheaper food Early harvest Sell productive goods Sell non productive goods Consumption of seeds Sell wood Send the children to work Depend on humanitarian aid Spend days without food Leave school urban Early marriage rural Inacceptable work Send household members to eat elsewhere Consumption of wild food Send household members to beg Consumption of food found in the waste 0 5 10 15 20 25 30 35 40 % Source: CSA-SAP, 2009. 47. Based on available information, the impact of transfers on poverty is significant and overwhelmingly private (Table 8).13 Within the thirty percent of Malian households reporting at least one shock, one in four sought solidarity for relief while, one in five were dependent on family and friends [CSA-SAP, 2009]. Total transfers to rural areas represented 20 and 22 percent of poor and non-poor household income, respectively. Indeed, a recent study estimated that the percentage of poor households would be 16 points 13 Public transfers are defined as State pensions and social security benefits, veteran and disability benefits, and other public transfers such as, cash or in nature transfers to elders during special events. They can be given by the State or by civil society organizations (e.g., NGOs, associations, and foundations). Private transfers are defined as divorce pensions, transfers sent by a family member (either living in or outside the country) and transfers sent by a non-family member (either living in or outside the country). 21 higher – 63.3 percent instead of 47.4 – without social private and public transfers [ODHD, 2008]. The same study also revealed that public transfers (both contributory and non- contributory) represented only 1.7 percent of household income, whereas private transfers accounted for 16.5 percent. In the Kayes Region, where remittances loom large, transfer levels are the highest in the country at 31 percent of household income. Figure 8 elucidates rural areas, women, the elderly, the agriculture self-employed, the unemployed and households with more than eight children as the primary beneficiari es or simply stated, transfers have a positive impact on the most vulnerable groups. Table 8: Transfers by Demographic Characteristics and Poverty Level, 2007 (% of Total Household Income) Public transfers Private transfers Received Given Total 1.70 16.49 1.51 Gender of household head Male 1.28 15.92 1.57 Female 8.75 25.89 0.47 Age of household head Adult 0.85 14.24 1.74 Elder 3.85 22.19 0.91 Area of residence Urban 4.08 13.44 1.64 Rural 0.65 17.84 1.45 Number of children Less than 5 2.38 14.59 2.09 5 to 7 1.9 16.77 1.69 8 to 12 1.16 17.38 0.89 13 to 18 0.21 18.77 0.6 More than 18 0.68 21.66 0.88 Poverty status Poor 0.68 17.73 1.23 Non-poor 2.58 15.42 1.75 Source: ODHD, 2008. 22 Figure 8: Poverty Incidence With and Without Transfers, 2006 (%) 0 10 20 30 40 50 60 70 80 90 total 47.4 63.3 men 48.7 64.2 women 28.1 48 urban 25.5 29.6 rural 57.6 78.1 elders 52.4 70.2 civil servant 12.2 15 with transfers private wage earner 29.5 without transfers 32.6 employer 16.1 33.6 self-employed (agriculture) 59.2 77.1 self-employed (non agriculture) 22.7 33.8 other workers 70.2 85 unemployed 49.4 70.8 Source: ODHD, 2008. 48. Public transfers do not go to the poorest households. The ODHD analysis showed that the larger part of public transfers (both contributory and non-contributory) reaches non-poor households. For poor households, public transfers amount to 0.7 percent of their total income, while for the non-poor households they correspond to 2.6 percent. The share of private transfers, on the other hand, is far greater and more homogenous: 17.7 percent for poor households and 15.4 percent for non -poor households. Clearly, vulnerable households alone bear the burden of protecting themselves against shocks: Private social safety nets in the form of solidarity and family and/or social capital benefit poor Malians (Figure 9). Figure 9: Poverty Incidence and Public-Private Share of Transfers in Total Income, 2006 (%) share of public transfers in total income 70 68.5 69.1 70 share of private transfers in total income 63.6 60 60 poverty incidence 50 48.5 50 40 40 30 30 28.2 21.66 17.38 18.77 20 16.77 20 14.59 10 10 2.38 1.9 1.16 0.68 0.21 0 0 % % Source: ODHD, 2008. 23 D. Magnitude of poverty and cost of making a meaningful difference 49. In assessing the financial dimensions of poverty alleviation, a first question to ask is how much it would cost, at a very aggregate level and on an annual basis, to make a meaningful financial difference for the poor by closing the gap between their current income and the poverty line. For illustrative purposes, the cost of bringing the income of all the poor to the poverty line is estimated in this section, based on the Poverty Profile [World Bank, 2006] and using the Basic Needs method. The Food Intake method has a lower poverty line and therefore a lower poverty gap. The numbers below are built on a series of very simple assumptions, and quantify only the total amount of benefits needed to close the poverty gap. These calculations thus ignore issues such as administrative costs and efficiency losses due to behavioral responses such as, working less in response to public transfers. They also assume away the costs of targeting problems, giving only a rough baseline for the costs of fully effective cash transfers. 50. Based on 2006 household survey data, the financial cost of closing the poverty gap (through cash transfers) fell in a range of 4.8 to 5.6 percent of GDP in 2008 based on the Basic Needs method, (Table 9) and around 3 percent of GDP based on the Food Intake method. Under the Basic Needs method, which offers more disaggregate data, two sets of calculations are used based on the ELIM survey [2006]. The first calculation estimates the cost of closing the poverty gap line of 4.8 percent of GDP and is based on national averages. It uses the Cost of Basic Needs methods, with a national poverty incidence of 47.4 percent in 2006 assumed constant until 2008 when 300,000 new urban poor raised the poverty incidence to 49.5 percent. Poverty depth is assumed constant between 2006 and 2009. At the national level, the poverty line in 2006 was CFAF 157,290 [Wodon, 2006], and it is assumed to be CPI-indexed the following years. The second calculation yielding a gap of 5.6 percent of GDP uses the breakdown between rural and urban poverty. Similar assumptions on the evolution of poverty lines and poverty depth are made. This calculation yields a bigger poverty gap given the relative weight and poverty depth of the rural poor. 51. Because they rely on the 2006 survey alone and are very imperfectly adjusted for the impact of the successive 3-F crises (food, fuel and financial) on the Malian economy, these cost estimates are fairly stable over the three-year period of 2006-08. The impact of recent shocks on poverty appears to have been sizable: for example, UNICEF simulations estimated in 2008 that to offset the impact on the poor of rising food prices and to bring the poor back to their 2006 income levels, 2.2 percent of GDP would be needed in cash transfers [Bibi et al., 2009]. 52. Similar estimates can be made for transfers targeting various categories of the poor. Poverty incidence is uneven among various groups such as urban and rural, young and old, or children. As discussed in this chapter, while economic growth has been associated with a decrease in poverty at the national level, some methods show an increase in poverty in the urban sector. Demographic characteristics also show that households with a head over 60 years old (28 percent of the population) have a poverty incidence of 52.4 percent (2006), well above the national average. This group represented about a third (31 percent) of all the poor. It is also possible, using data provided in the UNICEF report [Bibi et al., 2009], to estimate the cost of a transfer program targeted at all children aged 0 -14 years, with a distinction between the urban and rural children. 24 Table 9: Average Aggregate Cost of Bringing All Poor to Poverty Line through Cash Transfers, 2006-2008 2006 2007 2008 Financial gap based on national average In billion current CFAF(1) 153 159 187 As percentage of GDP (3) 4.8% 4.7% 4.8% Financial gap based on urban/rural breakdown In billion current CFAF(2) 184 192 219 As percentage of GDP (3) 5.7% 5.6% 5.6% Sources: (1) ELIM 2006, national average, Basic Needs method ( Table 2). (2) ELIM 2006, Urban/rural breakdown, Basic Needs method ( Table 3). (3) Staff estimate, 2008. 53. Even for somewhat narrower categories, the cost of cash transfer programs could be substantial. Table 10 below shows the pure benefits cost of various cash transfer programs aimed at these three large target groups,14 namely the urban poor, households headed by a poor person over 60 years old, and all children between 0-14 years of age. These estimates show that providing cash transfers to the urban poor would cost about 0.5 percent of GDP, about 10 percent of the total costs (Table 10). In the same vein, transfers to all members of poor households headed by an old person would cost about 1.7 percent of GDP per year. This is also the order of magnitude of the 2006 benefits costs of a cash transfer program targeting all poor children below the age of 14, which form a much larger group of the total population. These calculations illustrate that the costs of these programs can vary sizably from year to year: with the estimated increase in child poverty (based on food intake) from 41 percent to 51 percent between 2006 and 2008, the cost of a transfer program targeted at this group would have increased by about 36 percent in nominal terms over this short period, from about 1.7 percent of GDP in 2006 to 2.3 percent of GDP in 2008. 14 No data is available for targeting children under 5 years of age. 25 Table 10: Minimum Aggregate Costs of Bringing Selected Categories of Poor to Poverty Line through Cash Transfers, 2006-2008 2006 2007 2008 Rural/Urban breakdown (1) Estimated gap (current CFAF billions) Urban 11.7 12.2 17.7 Rural 172.0 179.3 200.9 In percent of GDP Urban 0.4% 0.4% 0.5% Rural 5.4% 5.2% 5.1% Households with heads over 60 years old Estimated gap (current CFAF billions) (2)(3) 55.7 58.1 65.1 In percent of GDP 1.7% 1.7% 1.7% Children 0-14 years old (4) Estimated gap (current CFAF billions) Urban 5.5 n/a 6.3 Rural 47.4 n/a 66.1 National 53.0 n/a 72.4 In percent of GDP Urban 0.2% n/a 0.2% Rural 1.5% n/a 2.1% National 1.7% n/a 2.3% Sources: (1) Computed from Table 3, assumptions by staff. (2) Assumptions by staff. (3) Per individual in the household. (4) Bibi et al., 2009. 54. Viewed in relation to existing budgetary numbers, these costs would amount to significant financial commitments by the government. For example, the 5.7 percent of GDP cost of fully closing the poverty gap is roughly equal to 22 percent of the total budget in 2008 – an amount also equivalent to the entire government wage bill in 2008 (5 percent of GDP) or to total spending on basic education and health (5.6 percent of GDP for the two sectors). The 0.5 percent of GDP benefits cost estimate of targeting the urban poor is roughly equivalent to the whole budget of the MDSSPA. The magnitude of public spending needed to close the poverty gap of poor households headed by an old person – 1.7 percent GDP – would be roughly equivalent to total spending on health in 2008. E. Summary of findings 55. Poverty remains widespread and is mainly a rural phenomenon. Economic growth has been pro-poor, but income inequality is increasing in urban areas and very strong demographic pressure and the continuing impact of the food crisis threaten to reverse recent progress in poverty reduction. Particularly, the rural population is highly vulnerable to epidemics, floods and droughts, while the urban population is vulnerable to economic shocks (such as food price fluctuations, loss of employment, decreasing revenues) and the frequency of these shocks is very high. 56. Poor households do not have the possibility to invest in human capital and supply constraints and financial constraints are the roots of inequalities in human development. Inequalities in education and survival remain widespread in Mali. Access to education is very unequal across income levels, rural and urban areas, regions and gender; similarly, significant inequalities in child survival are observed between rural and urban areas, across regions, depending on the mother’s education level and on the income level . Inequalities in health and education are the result of State failure to provide equitable 26 access, both in terms of supply of services across regions/areas and in terms of affordability for all. Therefore, most households have to pay for healthcare themselves. In this context, pro-poor public expenditures through well-targeted social safety nets could provide the resources for the poor to make the necessary investments in human capital development (as in the case of school stipends and other similar programs) or physical capital (through public works). 57. Private transfers have significant impact on poverty levels while public transfers benefit mainly the non-poor. Without transfers, poverty in Mali would be 16 percentage points higher than it is today. The positive impact of transfers on poverty is particularly significant in rural areas, for women and elderly persons, for the self-employed in agriculture, the unemployed and for households with more than 8 children. The share of public transfers in total households’ income, however, is very small and the poorest households do not receive public transfers. Thus, vulnerable households bear alone the burden of protecting themselves against shocks and have to rely on “private social safety nets” (solidarity and family and/or social capital-based), which often traps them into poverty. 58. Since the number of poor in Mali is large, the size of the population that should benefit from social safety nets, which are meant to protect the vulnerable against shocks and to help the chronic poor climb out of poverty, can be substantial. However, given the budget constraints, there is need for a sensible strategy for safety nets that aims at reducing the most extreme forms of destitution and food insecurity and targeting the poorest and most vulnerable population. 59. Based on available poverty data, the financial cost of closing the poverty gap could range between 4.8 and 5.6 percent of GDP. Viewed in relation to existing budgetary numbers, these costs would amount to significant financial commitments by the government. For example, the 5.7 percent of GDP cost of fully closing the poverty gap is roughly equal to 22 percent of the total budget in 2008 – an amount also equivalent to the entire government wage bill in 2008 (5 percent of GDP) or to total spending on basic education and health (5.6 percent of GDP for the two sectors). However, to make a financial impact on the poor’s income in Mali requires a detailed review of all possible sources of fiscal space. These issues are discussed in more details in Chapter V. 27 CHAPTER III: OVERVIEW OF THE EXISTING SOCIAL SAFETY NET SYSTEM There is a strong political will in Mali to assist the poor and the vulnerable. However, the social protection programs are mainly focused on contributory schemes, and social safety nets remain minimal compared to the needs. Moreover, there is a lack of consistency between various social protection and social development strategic documents, and weak coordination mechanisms among programs. Overall, the existing social safety n et (SSN) system appears too limited and fragmented to constitute an appropriate response to poverty and vulnerability. Overall, programs providing non-contributory social transfers directed to the poor and vulnerable are mainly food-based and provide transfers on an ad-hoc basis. Excluding the temporary cost of general food subsidies, total spending on SSN programs over 2006-2009 averaged 0.4 percent of GDP. In 2008, the SSN spending peaked to 0.8 percent of GDP, illustrating government efforts to respond to the food and fuel price crisis. Based on available information, almost half of SSN spending is covered by the government and there is increased commitment from donors. Nevertheless, both government and donor funding go primarily to food-based social safety nets. While the government primarily supports free distribution of food rations via the national food stocks and cereal banks, donor funds are mostly directed at nutrition programs. To make the system more efficient, the government needs to play a greater role in the organization, consolidation and perpetuation of the different components of the social safety net system. 60. Following the poverty and vulnerability diagnostic, this chapter explores whether the existing social safety net system constitutes an appropriate response to poverty and vulnerability. Section A investigates the scope and role of government policies and strategies in response to poverty and vulnerability, looking at their interaction and complementarities. Section B reviews the strategic framework guiding the development of social safety nets, and Section reviews the existing institutional arrangements for implementation. Finally, Section estimates based on financial considerations, the total cost of existing social safety net programs as well as their funding sources. A. Public policy responses to poverty and vulnerability 61. A number of public policies demonstrate the government’s willingness to assist the poor and the vulnerable. With the start of the democratization process in 1991, social considerations gained progressive momentum in Mali (Box 1). Annex 3 presents a brief review of the different public measures that are in place to assist the poorest and most vulnerable, sweeping over relevant social policies and major social actors, and putting in perspective the main social safety net programs. Looking at their objectives and target groups, the main public policy responses to poverty and vulnerability can be classified in five broad categories: (i) human capital development (health and education); (ii) rural development; (iii) social housing; (iv) social insurance; and (v) social safety nets. In this report, the focus is on the last, social safety nets. 28 Box 1: Development of Social Assistance in Mali, 1991-2009 With the start of the democratization process in 1991, social considerations gained progressive momentum and resulted in the development of a proper trans-sectoral Poverty Reduction Strategy in 1998 (Stratégie Nationale de Lutte contre la Pauvreté or SNLP) along with a Ten-Year Health and Social Development Plan (Plan Décennal de Développement Sanitaire et Social 1998-2007 or PDDSS). During the first implementation phase of the PDDSS through the PRODESS I ( Programme de Développement Socio-Sanitaire), programs related to social development received little attention under the Ministry of Health. To remedy the situation, the Ministry of Social Development, Solidarity and the Aged ( Ministère du Développement Social, de la Solidarité et des Personnes Agées or MDSSPA) was created in 2000. Since then, Mali initiated a process aimed at progressively extending social protection to the entire population. For the development of PRODESS II, the second Five-Year Health and Social Development Program (2005-2009), two separate documents were created, one focusing on health and one focusing on social development. Milestones in the development of social assistance in Mali, 1990-2009: 1990 Adoption of the Health and Population Sectoral Policy 1993 Adoption of the Solidarity Policy 1994 Creation of the Social Safety Net (FS) to mitigate the negative effects of the devaluation on the poorest and most vulnerable Establishment of the Social Development Agency (ADS) to implement poverty reduction and social development activities 1995 Adoption of the global 20/20 Initiative aimed at boosting social services provision 1996 Establishment of the Sustainable Human Development Observatory (ODHD) 1998 Adoption of the Poverty Reduction National Strategy (SNLP) – with the ODHD in charge of monitoring its implementation Adoption of the Ten-Year Health and Social Development Plan (PDDSS) and the PRODESS I (1998-2002, extended until 2004) 2000 Establishment of the Ministry of Social Development, Solidarity and the Aged (MDSSPA) 2001 First National Workshop on Social Protection First Social Development Conference Completion of a study on legal and regulative measures for social protection in Mali 2002 Adoption of the Statement of National Social Protection Policy in Mali Establishment of the National Solidarity Fund (FSN) to replace the ADS Establishment of the Solidarity Bank of Mali (BMS) Creation of the Solidarity Month Completion of three diagnostics studies on social protection – public, private and informal 2004 Adoption of the PRODESS II with a specific Social Development component Adoption of the National Action Plan for the Extension of Social Protection 2005-2009 Establishment of the Food Security Commissariat (CSA) 2005 Adoption of the Social Development Plan 2008 Series of UNICEF-commissioned studies on social protection 2009 National Forum on Child Poverty and Social Protection in Mali Development of the extended PRODESS II Social Development Component 2010-2011 Source: Authors’ estimates. 29 Human capital development 62. Trends in education and health spending show that the government has placed human capital development at the heart of its strategy for reducing poverty (Table 13). Between 2002 and 2009, public expenditures in education grew significantly in nominal terms and as percentage of GDP while public expenditures in health more than doubled in nominal terms. In 2008 alone, education and health as a percentage of GDP were 4.5 percent and 1.8 percent respectively. 63. However, access to education is costly for the poor. Overall, primary education remains unequal even though it has been “free” since 1991. 15 A difference of 22 percentage points remains between the wealthiest 20 percent of the population and the poorest 40 percent. According to household data, it is estimated that out of pocket spending for the poorest two quintiles is about CFAF 2,810 per year on primary education for registration, schooling materials and teachers’ salaries [EMEP 2001, cited in MEALN, 2008]. In respect to secondary education, as a means of shaping the future workforce, the MEALN provides scholarships to students who attend specific institutions and study designated curricula, such as, agriculture and teacher-training. Nevertheless, since most of the poor children do not complete the primary schooling, there are concerns that assistance in secondary education is not reaching the poor. 64. Although there are subsidized health services initiatives, this does not ensure a significant increase of the use of health services by the poor and the vulnerable. Civil servants and their family benefit from free medical evaluation (CFAF 1 billion in 2008) and hospitalization. Two health care services are available to the formal and informal sector free of cost: cancer treatment at Point G Hospital in Bamako (CFAF 250 million in 2009) and caesarian sections. For the 12.5 million people comprising the informal sector, a list of 107 medicines and a series of campaigns are available, in theory, free of charge. 16 A supply chain was established to support these services: The national pharmacy (Pharmacie Populaire or PPM) provides the subsidized medicines to the health centers; and, regional health structures request reimbursement from the health centers for medicines on the list and for additional costs (e.g., staff costs for caesarian sections). A recent evaluation of the “free caesarian section” initiative [INRSP, 2009] revealed positive though unsustainable results. Issues common to all initiatives for public health services seem to be: poor financial contribution from the decentralized authorities; irregular supply of medicines and materials; and lack of awareness among the population – particularly among the poor and the vulnerable. 65. In brief, both education and health expenditure remain highly skewed towards the richest quintiles. The 10 percent most educated children (those who stay the longest at school) absorb 50 percent of public resources.17. A total of 16.3 percent of public expenditures in education was spent on the primary and lower secondaryconstituting 66.5 15 In 1991, Mali committed to provide free primary education for all, implying no student fees and teaching materials are free. 16 The designated medicines include: HIV testing and ARV treatment; DOTS for TB treatment; mosquito nets and ACT to prevent and treat Malaria for pregnant women and children under 5; contraception; and enriched flour to treat acute malnutrition (CFAF 100 million). Campaigns cover: regular immunization (CFAF 1.5 billion); immunization during epidemics and disasters (CFAF 980 million); Vitamin A distribution; and treatment for leprosy, schistosomiasis, and bilharziasis. 17 For in-depth analysis, see Chapter V. 30 percent of the school cohort. Public expenditures in education also favor the urban over the rural population and boys over girls. Similarly, public expenditures in health reach primarily the richest quintiles. According to a study by Marek [World Bank, 2008], only 17 percent of the poorest 20 percent of the population in Mali use the public health system (as opposed to other providers). Extrapolating from these numbers, public health services reach 240,000 out of the 1.4 million in the poorest quintile. Rural development 66. Mali has numerous income-generating programs targeted at the poorest and most vulnerable. The Solidarity Bank of Mali (Banque Malienne de Solidarité or BMS) was established in 2002, based on the Tunisian experience, to provide access to credit for the underprivileged categories. While the coverage of micro-credits is small, there has been no rigorous evaluation to determine what the real impacts of this financing have been. The evidence from other countries indicates that (i) micro-credits work for only a small subset of the unemployed population, (ii) targeting is critical, and (iii) deadweight and displacement effects can be large. The Government needs to carefully evaluate these schemes in order to see whether the priority given to them is justifiable. Moreover, the Ministry of Women, Children and Family Promotion (Ministère de la Promotion de la Femme, de l'Enfant et de la Famille or MPFEF) aims at assisting women by providing access to microfinance and income-generation activities, and the MDSSPA supports projects that develop income-generating activities for the disabled. Finally, numerous NGOs run income-generating programs in poor areas of the country, but there is no information on the impact of the programs on the poor. 67. In addition, a significant part of the government’s “social activities” aims at supporting the development of community social services and promoting community- based solidarity. The National Solidarity Fund (FNS) supports activities centered on social infrastructure (e.g., basic rehabilitation of schools, community health centers, and water supply) and productive community assets. It aims to assist any of the 166 communes identified as the most vulnerable or any needy community that can bring its own contribution to the proposed project (e.g., community project supported by a Malian living abroad). The MDSSPA may also support community projects (e.g., development of public or community social services such as schools, health centers, and water supply) on a discretionary basis. And numerous NGOs run community development programs. Since 2002, the government has run the Month of Solidarity and Fight against Exclusion, in October of each year, as a demonstration of the political will to reinforce the solidarity culture. This is primarily a communication and visibility event that provides an opportunity for discussion (e.g., conference on the protection of the elderly) and visible donations to associations that support the disabled, the elderly, women or communities. 68. Overall community development activities appear fragmented and poorly coordinated with the government (central) structures. Lack of proper monitoring and evaluation of the actual impact of community development activities, make difficult to demonstrate that programs actually benefit the poorest and most vulnerable in beneficiary communities. Nevertheless, targeted programs such as safety nets may efficiently complete existing rural development programs. Social housing 69. The President Amadou Toumani Touré launched a social housing program in 31 2003 recognizing that low and medium income households had difficulties accessing decent housing, and that the production of local construction materials was limited while the price of most imported construction materials was increasing. The National Social Housing Program is now a flagship program in the president’s PDES, and the government has committed to allocating an average of CFAF 8.18 billion a year (0.22 percent of GDP) to support the construction of an average of 1,080 houses a year benefiting about 6,200 persons. 70. Thus, the social housing program appears to be one of the social programs with one of the largest funding envelopes from the government, and at the same time one of the lowest numbers of beneficiaries. In addition, the social housing program is targeted at households that have a revenue and can afford to pay rent. It is not a program designed for the poorest and most vulnerable. The construction program generated nearly 13,290 jobs per month and paid over CFAF 9 billion throughout the country. However, neither the beneficiaries of the program nor the workers in the public works were among the poorest and most vulnerable Malians. Moreover, as discussed in Annex 3, the design and implementation arrangements of the program raise concerns. Social insurance 71. Social insurance schemes primarily target civil servants and employees of the formal sector, for pensions and health care. In January 2009, Mali adopted measures for the institutionalization of (i) Mandatory Health Insurance (Assurance Maladie Obligatoire or AMO) to be developed eventually for both the formal and informal sectors, and (ii) the voluntary Health Assistance Scheme (Régime d’Assistance Médicale or RAMED) for the indigent, which aims to cover 600,000 indigents a year (i.e., 7 percent of the population li ving under the national poverty line). However, these contributive transfer programs are not yet operationalized. Social safety nets 72. In addition to the above policies and programs, a few non-contributory social transfer programs are directed to poor and vulnerable households or individuals, and qualify as social safety net programs. It is crucial to note that these social safety net programs do not refer to programs funded by the budget line called “Social Safety Net” (Filet Social). Indeed, despite its name, none of the current activities funded by this budget line qualifies as social safety net as defined in this report (Box 2). 32 Box 2: “Social Safety Net” Budget Line Despite its name, current activities funded by the budget line do not qualify as social safety net programs as defined in this report. The Government of Mali created the budget line named “Social Safety Net” ( Filet Social) back in 1994 to mitigate the negative effects of the CFAF devaluation on its poorest and most vulnerable citizens. The Social Development Agency (Agence de Développement Social or ADS) established under the Prime Minister’s Office, was entrusted to manage this line, until its restructuration in 2001 . While the ADS used to manage the entire Social Safety Net budget, this budget line is now spread between various ministries and unrelated programs, and the FSN (that took over the ADS’s mission in 2001) only manages a part of it . The restructuration of the ADS into the FNS marked a shift from an emergency management-type approach to a more programmatic approach looking at sustainability and repeatability of development and poverty reduction actions. Yet, none of the FSN programs is directly targeted at individuals or households with the objective to directly increase consumption. The budget line amounts to about 1 percent of the government budget. Most of it (about 75 percent) is allocated to different ministries and organizations (through “mandates”) as shown in table below. The MDSSPA receives a mandate on an amount (e.g., CFAF 2.8 billion in 2008). However, part of this mandate is removed from the responsibility of the MDSSPA (through délégations de crédits) and allocated to budget users, namely, the National Solidarity Fund and more recently the Mopti Poverty Project. As a result, the credits managed by the MDSSPA have decreased continuously since 2006, from CFAF 2.3 billion to about CFAF 1.5 billion in 2008. About 25 percent of the budget line remains in “common expenditure” and is unallocated. This sum is then spent on an ad-hoc basis during the year for a wide variety of activities and expenses, most of which are unrelated to supporting the poor and vulnerable. Breakdown of Expenditure under Filet Social (CFAF million) Credit Credit Credit Credit Beneficiaries 2006 2007 2008 2009 Ministry of Housing (for the Housing Program) 3,250 3,500 3,500 5,100 MDSSPA (gross) 2,300 2,800 2,800 2,300 Less credit to the National Solidarity Fund 950 1,050 n/a Less credit to the Mopti Program 294 n/a MDSSPA(net) 2,300 1,850 1,456 n/a Solidarity Bank of Mali 500 500 500 0 Common Expenditures (Charges Communes) 3,950 3,200 3,200 2,600 Total 10,000 10,000 10,000 10,000 Source: MDSSPA. One of the largest activities funded by the “Social Safety Net” budget line is the housing program, at CFAF 5.1 billion in 2009. And as a result of the decision by the government to scale up the program, the social housing program has absorbed an increasing share of the Filet Social, from 35 percent in 2008 to an estimated 50 percent in 2009. However, because its target beneficiaries are home-buyers with incomes that can support reimbursements of housing costs, the housing program does not target the poor or most vulnerable. Thus, none of the programs funded by the Social Safety Net budget line qualifies as a social safety net, as defined in this report (see Chapter I). Source: Authors’ estimate. 73. Key features of the main social safety net programs (as per this report’s definition) currently in place in Mali are summarized in Table . Based on the definition used in this report, different types of social safety nets programs are reviewed individually in greater detail in Chapter IV. These social safety net programs are meant to act in conjunction with other social protection programs, notably, labor market programs and 33 pensions, and policies to ensure macroeconomic stability, rural development, and human capital formation. In principle, social safety nets programs are typically used to fill in where other policies cannot deliver sufficient results in the short run, and they can prove particularly useful to ensure that education and health spending become pro-poor. Cash transfers 74. Only a few isolated cash transfer pilot projects have been implemented in Mali. Under the MDSSPA, social assistance may be provided directly to individuals but only on an exceptional basis and following a request submitted to the ministry at the central or decentralized level. NGOs may provide cash transfers to individuals or households but often as one-off transfers. Moreover, Oxfam GB and Save the Children US are running as of 2010 a small seasonal cash transfer pilot project in the Gao and Sikasso Regions. 75. Only a few scholarship programs have been piloted. The USAID-funded Ambassador’s Girls’ Scholarship Program (AGSP) was implemented with World Education in 109 primary schools in Gao, Kidal and Timbuktu between 2003 and 2008 (under different names); and the UNICEF-supported scholarship program called Bourse Maman was piloted in 9 primary schools in Kayes and Mopti between 2002 and 2007. The MDSSPA and a few NGOs also provide scholarships, although on a very limited scale and often not in a systematic manner. Food transfers 76. Food transfers and in-kind food programs are the main form of social safety nets. The Government of Mali supports (i) the free distribution of food rations, via the National Security Stock (SNS), to respond to food crises; and (ii) cereal banks (subsidized sales of cereals to communities) throughout the territory with extra support to 166 poorest “communes” of the country, through the public food stocks. Supplementary feeding and nutrition programs are implemented in most vulnerable areas, largely due to external support (WFP, CRS, USAID, UNICEF, ECHO, etc.). In addition, the government, WFP and CRS support school feeding programs. Moreover, numerous NGOs mention in their programs in-kind transfers to poor and vulnerable individuals (e.g., school materials, clothes, etc.). These actions are conducted in isolation on an ah-hoc basis, and cannot be considered as a significant formal social safety net program. General subsidies 77. Tax and duty exemptions were introduced in 2005 to mitigate negative effects of high food prices. These policies are part of a general price stabilization effort by the government. Since 2005, there have been exemptions either on customs duty or on import tax. In response to the food crisis in 2004-05, the government introduced a VAT exemption on 110,000 MT of rice and 100,000 MT of maize. Following world food price increases in 2007, the government exempted rice import from duties during the lean season and Ramadan period, from July to October. This measure was reinforced and extended in 2008. Tax exemptions were granted on rice, cooking oil and powdered milk over a six-month period, from April to September. In addition, the government temporarily reduced taxation of petroleum products, particularly diesel, and temporarily banned the export of rice, corn, millet and sorghum (not comprehensively applied and lifted in December 2008). Finally, in 2009, the government granted tax exemptions on rice import from March to May. 34 Public works 78. The Office of the President has placed public works among its priorities in the Program for Economic and Social Development. With a large part of public investment dedicated to infrastructure, the Agency for Youth Employment Promotion (Agence pour la Promotion de l’Emploi des Jeunes or APEJ) launched in 2003 a public works program with the objectives of (i) reorienting investment and creating a large number of jobs for the poor, and (ii) acting on investments able to stimulate the local economy and offer opportunities for local businesses. Inititally, two main public works programs were created: one for the rural areas of Kayes, Koulikoro and Segou (Programme Multisectoriel d’Investissements à Fort Coefficient d’Emploi en Milieu Rural or PROMIIER) and the second for Bamako (Projet d’Initiatives Locales pour l’Emploi dans le District de Bamako or PILE). Later, they were merged into the Project for Youth Employment through the Labor Intensive Approach (Projet d’Emploi des Jeunes par l’Approche HIMO or PEJHIMO). The World Food Program (WFP), USAID and NGOs run food-for-work and food-for-skills programs in areas suffering from chronic food insecurity. Fee waivers for health or education 79. Decentralized health centers are expected to provide fee waivers for the indigent. In addition to health services subsidized for all, decentralized structures (i.e., hospitals, communes, etc.) are expected to provide the indigent with free emergency treatment and additional subsidized health services. But, if such assistance is expected, it is not imposed by law, and no additional funds are allocated to decentralized structures for them to provide fee waivers for the indigents. . 80. Attempts also have been made to provide fee waivers for the aged. The medical center for the aged in Bamako (Institut d’Etudes et de Recherches en Géronto-Gériatrie called Maison des Aînés or IERGG-MA) offers free medical consultations for the (registered) aged. In 2007, the measure benefited approximately one thousand individuals [MDSSPA, 2007]. 81. Research is ongoing on the appropriateness and feasibility of user-fee abolition, particularly for vulnerable groups. Since 2005, the international NGO Médecins sans Frontière (MSF) has been collaborating with Malian health authorities in the Kaganba Circle in the Koulikoro Region to improve access to efficient malaria treatment. Evidence from this initiative directly feeds the national debate on user-fee abolition, as an essential strategy to roll back malaria, in particular for vulnerable groups such as children under 5 and pregnant women. 82. There is no national fee waiver program targeted at the poor and vulnerable in the education sector. NGOs play an important role in covering school-related costs for destitute families in their respective intervention areas, often through in-kind transfers or direct support to schools, which in return do not charge the destitute families. Nevertheless, this program remains fragmented and highly dependent on NGO funding. 35 Table 11: List of Social Safety Net Programs Reviewed, Classified per Type of Program Number of Indicative Funding Implementation Geographical beneficiaries annual source(s) Program title, Year(s) Target group(s) agency(ies) area(s) spending (2008-2009) CASH TRANSFERS World Education All girls in 4-5-6th grade in Gao, Kidal Approx. n/a USAID Girls’ Scholarship Program 2003-2008 with 3 local NGOs 109 primary schools Timbuktu 7,000 girls/year UNICEF with 4 Girls and boys in 1st cycle Kayes, Mopti Approx. 500 n/a UNICEF “Bourses Maman”, 2002-2007 local NGOs in 9 pilot primary schools mothers/year Approx. CFAF 557 EC Food Launching social safety nets from North to Oxfam GB, Save the Very poor households Gao, Sikasso 7,000 m (2010 ) Facility South, 2010-2011 Children US persons/year Oxfam GB Drought-affected persons Gao 3,000 n/a DFID Emergency response to the drought, 2009 households FOOD TRANSFERS Targeted Subsidised Sales Food Security Farmers not able to ensure National with n/a CFAF 1.5bn State Commissariat with self-sufficiency during the focus on the Cereal banks, since 2005 local lean season 166 authorities/associati communes ons Targeted Food Distributions Food Security Victims of catastrophes National n/a CFAF 3.9 State, Donors National Food Security Stock-revived 2005 Commissariat bn Food distributions (6-month intervention), ACF-E Persons vulnerable to Gao n/a CFAF 318m DFID 2009/2010 food insecurity Nutrition Ministry of Health Malnourished children, National n/a CFAF 591m State Nutrition program, since 2009 pregnant and lactating (2008 only) mothers 36 Number of Indicative Funding Implementation Geographical beneficiaries annual source(s) Program title, Year(s) Target group(s) agency(ies) area(s) spending (2008-2009) UNICEF Severely malnourished National 14,000 CFAF 2.2bn Bilateral, children under 5 severely Multilateral, Nutrition program, since 2007 malnourished UNICEF children WFP with partner Children under 5, Kayes, Mopti, Approx. CFAF 3.7 Multilateral Fighting/controlling malnutrition in food- NGOs and local malnourished pregnant Gao, Kidal, 127,000 bn insecure areas in Mali (PRRO 10610.0), authorities and lactating mothers, Segou, persons/year (2009 only) 2009-2010 ART and TB patients Timbuktu, Koulikoro CRS, Save the Children under 5, Mopti, Gao Approx. n/a USAID Children, HKI pregnant and lactating 2,800 Project ‘NEMA’ (SO 2), 2008-2011 mothers persons/year (49,000 indirect) Food security, child nutrition & disaster Christian Aid Children under 5 Mopti n/a CFAF 262m ECHO preparedness project in Dogon plateau, 2008-2009 ACF-E Children under 5 Gao Approx. CFAF 243m ECHO Project to strengthen local capacity to treat 5,700 acute malnutrition, 2007-2008 malnourished children School Feeding (And Take-Home Rations) WFP with local and All pupils in 721 primary Kayes, Gao, Approx. CFAF Multilateral School feeding and take-home rations (CP international NGOs [and 5 pre-primary] Mopti, 190,000 1.796bn 10583.0 component 1), 2008-2012 schools Timbuktu pupils/year Catholic Relief All pupils in 120 primary Mopti n/a CFAF 860.75 USAID (96%) Food for Education, since 2008 Services schools m CRS (4%) Catholic Relief All pupils of 12 primary Mopti Approx. CFAF 99.5m WFP (51.5%), Pilot project “local purchases”, 2009-2012 Services schools 7,280 (2009 only) CRS (47%), pupils/year Local (1.5%) DNEB (MEALN) Pupils in 708 primary The 166 n/a CFAF 1.7bn State Integrated school feeding, since 2008 schools communes 37 Number of Indicative Funding Implementation Geographical beneficiaries annual source(s) Program title, Year(s) Target group(s) agency(ies) area(s) spending (2008-2009) FOOD SUBSIDIES Universal, Indirect Price Support for Food Import tax exemptions, intermittently since DNCC The entire population National n/a CFAF 7.8bn State 2005 (2008 only) OPAM The entire population National n/a CFAF 3.9 State, State Intervention Stock, since 2005 bn donations PUBLIC WORKS APEJ with ILO Youth (15-40 years old) Bamako, n/a CFAF Duchy of PEJHIMO (PROMIER in rural areas and PILE Kayes, 758.2m Lux., in urban areas), since 2004 Koulikoro, (2008 only) State Segou WFP with partner Chronic food insecure Kayes, Gao, Approx. CFAF Multilateral Food for Work (CP 10583.0 component 2), NGOs and local Mopti, 180,000 2.18bn 2008-2012 authorities Timbuktu persons/year CRS, Save the Children under 5, Mopti, Gao Approx. n/a USAID Project ‘NEMA’ (SO 3), since 2008 Children, Helen pregnant and lactating 25,000 Keller International mothers persons/year FEE WAIVERS FOR HEALTH Fee waivers for the elderly, since 2006 MDSSPA Persons over 60 National n/a n/a n/a Fee waivers for indigents, since the 80’s Local authorities All indigents National n/a n/a n/a MSF with CSCOM Under 5 and pregnant Koulikoro Approx. CFAF 197 Luxembourg Malaria project, since 2005 women 30,000 m persons/year Note: This list does not mean to be exhaustive. There are many initiatives run by small NGOs or local authorities throughout the country that provide social transfers to poor/vulnerable households. While most were too small to be considered, some were included because they appear to be innovative and interesting initiatives worth looking at. Still, all major social safety net programs currently in place in Mali are included here. ÂThis symbol indicates programs taken into account in the estimate of social safety net spending, and considered in the review of individual programs. Other programs are limited in time and in space, and are presented for information only. Source: Authors’ estimates 38 B. Strategic framework for social safety nets 83. Three main sets of national strategic documents provide the framework for the development of social safety nets in Mali (Figure 10 and Annex 4): x The national policy and action plan related to social protection: Statement of National Social Protection Policy (Déclaration de Politique Nationale de Protection Sociale or PNPS) adopted in 2002, and Social Protection Extension Action Plan 2005-2009 (Plan d’Action National pour l’Extension de la Protection Sociale or PAN); x The strategic documents related to social development, in particular the Social Development Component of the Health and Social Development Program (Programme de Développement Sanitaire et Social or PRODESS); and x The Poverty Reduction Strategy Paper 2007-2011 (GPRSP) and the President’s Project For Economic and Social Development 2007-2012 (PDES). 84. This multiplicity of policies and action plans, absent cross sectoral consistency, fails to provide a comprehensive framework for social protection. The policies reveal a number of weaknesses, including: an archaic charity-based approach to social assistance, a lack of consideration of economic risks, a focus on contributory schemes, a poor harmonization of planning processes, a mistaken gender approach and a lack of common language. Charity-based vision of social assistance 85. In Mali, since social assistance is premised on solidarity, social assistance programs are developed with the idea of strengthening solidarity mechanisms. As noted in Chapter II, solidarity is a major coping mechanism and the level of private transfers and their impact on poverty are significant. Acknowledging the importance of informal solidarity mechanisms, national social policies and programs are designed to promote community solidarity mechanisms, rather than provide direct assistance to households and individuals. 86. Such an approach may actually exclude those who need public support most. The solidarity-based approach promoted in Mali raises three main concerns. First, while informal solidarity mechanisms may indeed help mitigate crisis impact, they are weak in times of crisis (e.g., high food prices affected almost everyone) when poor people need them most. Second, informal solidarity is necessarily ad-hoc and does not encourage poor households to take greater risks for greater incomes. Finally, the level of assistance people receive is likely to depend on the level of connections they have. Thus, the very poorest groups or the marginalized may be left out. 39 Figure 10: Mapping of Key National Strategic Documents Relevant to Social Safety Nets Growth Poverty Reduction Strategic Paper PDES 2007-2011 2007-2012 Strategic Orientation 1: Strategic Orientation 2: Strategic Orientation 3: Development of infrastructures Pursuance and consolidation of Strengthening of the social and the productive sector structural reforms sector Education Health Other Social Sectors Vocational training Employment Social Development PDDSS PRODESS Social Development Component 1998-2007 2005-2009 [MoHealth, 1998] [MDSSPA, 2004] Sub-component I: Sub-component Sub-component Sub-component V: Strengthening of Sub-component II: III: IV: Human Resources solidarity and fight Poverty Reduction Reinforcement of Institutional Development against exclusion Social Protection Development ? National Social Action Plan for the Extension of Social Protection Protection Policy 2005-2009 [MDSSPA, 2002] [MDSSPA, 2004] Source: Staff estimates. 87. Social protection in Mali is yet to be seen as necessary social investments. Currently, national policies include no mention of long-term social transfers. Existing social assistance programs – already limited in terms of funding and scope – are provided on an exceptional basis and focus on solidarity handouts to vulnerable groups (e.g., the disabled and elderly), community assets and income-generating activities. Therefore, these non-contributory social transfers are neither permanent nor predictable. 88. However, the government recognizes the need for long-term assistance for the chronic poor. If in national policies and in practice, social transfers are yet to be predictable and sustainable, the social sector staff suggests considering social assistance as a redistribution mechanism rather than charity [DNDS, 2004:1]. Moreover, in a recent workshop, it was mentioned that a category among the poor and the vulnerable, namely the indigent (defined as people who rely on charity alone), require long-term/permanent assistance [DNDS, 2009]. Such a vision is yet to be translated into policy, legislative documents and operational programs. 40 Lack of consideration to economic risks 89. While the Statement of National Social Protection Policy provides a useful broad definition of social protection – encompassing social security, social assistance and social action – neither the PNPS nor the PRODESS social development plan considers economic risks in addition to social risks. 18 As discussed in Chapter II, this appears to be a critical issue in a country such as Mali that is constantly exposed to external shocks that impact on the economy, both at the country and at the household levels (e.g., exposure to a drought or market price increases) – particularly those in rural areas and the poorest, who have less capacity to implement coping strategies at the household level – and the population are very vulnerable to risk. Internal shocks, such as prolonged illness, can also cause economic vulnerability within the household and would require distinct social protection responses. Thus an integrated approach within the social protection and social development strategies is needed to address the preventive and protective needs of vulnerable populations in a more comprehensive manner, avoiding chronic manifestations of poverty and vulnerability. Focus on contributory schemes 90. The Malian social protection strategy focuses mainly on contributory schemes and therefore excludes most of the population, including the poorest groups. The Social Protection National Action Plan gives priority to social insurance, which in principle is targeted at the formal sector. The estimated budget for social assistance and social action represents only 20 percent of the total estimated budget of CFAF 19,743m. Although labeled “social protection,” sub-component III of the PRODESS II is actually narrowly limited to social insurance (i.e., contributory forms of social protection). This sub-component aims at protecting populations in both the formal and informal sectors, as well as those who are unemployed or destitute against specific health- and age-related social risks – old age, death, illness, work-related accidents, disability and maternity. In line with this, the MDSSPA’s DNPSES has been limiting its work to contributory social protection. In this context, the contributive nature of the mutual insurance system significantly reduces its actions towards those unable to pay contributions, the poor and the indigent. Contributory schemes cover the ten percent of the population comprising the formal sector, effectively excluding 12.15 million Malians. Poor consistency in timeframe and objectives among various policy documents 91. Moreover, the different government strategic documents suggest slightly different focuses for social assistance activities. Overall, there is inconsistency in the focus of various government policies. When considering non-contributory social assistance to households and individuals, the Social Protection Action Plan suggests focusing on subsidized access to health for the elderly and on assistance to the disabled. The PRODESS social development component suggests focusing on humanitarian action during shocks and social assistance for the destitute and victims of catastrophes, and on access of the poorest to essential social services and housing. The PRSP suggests focusing on assistance to the disabled. The Project for Economic and Social Development (PDES) 18 The Health and Social Development Program (Programme de Développement Sanitaire et Social or PRODESS) has two components: a health development plan managed by the Ministry of Health, and a social development plan under the responsibility of the MDSSPA. 41 suggests focusing on social housing and public works. Furthermore, the MDSSPA’s planning instruments follow different policy frameworks and timeframes: x 2005-2009: Health and Social Development Program (PRODESS) (informed by Ten-Year Social and Health Development Plan (PDDSS), extended to 2011); x 2005-2009: Social Protection Action Plan (informed by National Social Protection Policy (PNPS)); x 2007-2011: Growth Poverty Reduction Strategic Paper (GPRSP); x 2007-2012: Program for Economic and Social Development (PDES); and x 2008-2011: Medium-Term Expenditure Framework (MTEF) (informed by PRODESS). 92. In early 2008, the PRODESS Steering Committee decided to extend the PRODESS II period (2005-2009) until 2011 in order to harmonize the planning process with the GPRSP. This extension will enable more thorough consideration of the social aspects of the PDES 2007-2012, and will synchronize the PRODESS and MTEF processes. However, the Social Protection Action Plan timeframe is yet to be harmonized with other planning processes. The MDSSPA recently decided to launch the consultation process for the development of a new national Social Protection Action Plan 2010-2014: Developing a new plan rather than extending and refining the existing one is questionable. 93. Social protection and social development strategic documents do not clearly relate to one another. Although, social protection is meant to be one component of social development, the PRODESS sub-component labeled “social protection” does not refer to the Social Protection Action Plan, and is limited to one aspect of social protection only. Moreover, non-contributory aspects of social protection appear in a fragmented manner under other PRODESS sub-components. The need for having two separate documents is unclear and it may be more appropriate to simplify the policy framework. Mistaken gender approach 94. There is no clear strategic vision to promote the empowerment of women. The third strategy of sub-component I of PRODESS II, promotion of “the socio-economic reintegration of women and children living in difficult circumstances,” can be seen as an initiative aimed at promoting social equity measures. The promotion of literacy for women, primarily in rural areas, is presented as the main mechanism for reducing inequality and empowering women to become decision makers. As discussed in the World Bank strategic evaluation of gender issues, “The gender issue is often presented as a women issue dealt by women” [World Bank, 2005:72]. Women are often perceived as victims, weak and destitute, and consequently activities mainly focus on promoting women, where the target group approach prevails over the sectoral approach. Even within the MPFEF, Pereznieto and Diallo [2008] did not see “a clear strategy to link actions to promote women’s empowerment and child well-being – what UNICEF has dubbed the “double dividend” – which could lead to social protection measures at the household level that could usefully be assessed through a gender-sensitive lens.” 42 Lack of common language 95. Finally, the lack of common language for social protection-related issues is a major problem. The concepts of social protection adopted in the National Social Protection Strategy and the PRODESS are inconsistent. The PNPS adopted a relatively broad definition of social protection, encompassing social security, social assistance and social action; why sub-component III of the PRODESS Social Development was labeled social protection and not social security (contributory schemes), is not clear. The concepts of, among others, indigence, vulnerability, and destitution are also very vague. Within the MDSSPA alone, different people refer to different definitions. Globally, most of these terms do not have an agreed definition: It is essential that the Malian government come up with a social protection glossary common to all ministries. An evaluation of the gender strategies and interventions also revealed a lack of clarity in the understanding of the concepts of equality, equity and gender [World Bank, 2005]. 96. Consequently, current national policies do cover components of social protection and some aspects of social assistance, but fail to provide an integrated approach to address the preventive and protective needs of the most vulnerable populations in a comprehensive manner. Overall, based on inconsistency in definitions, programs and timeframes, the social assistance strategy appears fragmented among the sub-components of strategic documents. The Social Protection National Action Plan appears to be limited to MDSSPA’s scope of activities, reflecting an overall limited cro ss- ministerial coordination on social assistance issues. C. Institutional framework for social safety nets 97. Over the last decade a number of national bodies were created and tasked with dealing with aspects of social protection, but in the absence of an integrated social protection policy and effective coordination mechanisms, the result is fragmented actions and overlapping agendas. Several studies described weaknesses in the social safety net institutional system of Mali, highlighting: an absence of a satisfactory organization for the management of social assistance; poor resources and services offered; poor human resources within administrations in charge of social assistance; and absence of legal acts on social protection for special groups such as the disabled and the elderly [ILO, 2003; Pereznieto and Diallo, 2009; DNDS, 2009]. Blurred roles and responsibilities 98. No ministerial department masters the entire spectrum of social protection work in Mali, and cross-departmental coordination is weak. The MDSSPA’s National Directorate for Social Protection and Economic Solidarity (DNPSES) supervised the recent forum on child poverty and social protection organized with the three key ministries: MDSSPA, MPFEF and MEF. Although called “National Directorate for Social Protection and Economic Solidarity”, the DNPSES sees its responsibilities limited to contributive social protection. The DNDS (Direction Nationale du Développement Social) is the MDSSPA’s directorate in charge of social assistance. And the MPFEF is in charge of social services for women and children. The different structures show difficulties in promoting effective synergies to maximize their program outcomes. In addition, many of the concrete measures of a strong social protection system are being developed by other ministries such as health, education, agriculture and justice. The MDSSPA and the MPFEF have limited political weight, budget and guiding policy framework, to efficiently alert 43 sector ministries on specific social protection issues and promote horizontal interventions. As Pereznieto and Diallo outline: “Developing an integrated social protection system will require the political will to promote coordination; an evidence base that can guide the best approaches to focus interventions on different populations; strong institutional structures to ensure delivery at the national and local levels; promotion of collaboration between government and non-government actors; and the securing of resources from different funding partners, including the government, donors and NGOs.” [2008]. The Strategic Orientation Council for Social Protection (Conseil d’Orientation Stratégique de la Protection Sociale), which was created to supervise the expansion of social protection, focused its attention on contributory social protection instruments, which today exclude the poor and the vulnerable, and failed to meet regularly. The Council is pretty non -functional today. 99. Despite being tasked with dealing with social assistance, neither the MDSSPA nor the FSN supervises a significant program that could be classified as a social safety net – defined as a social transfer program directed at the poorest and most vulnerable, and aimed at directly increasing household or individual consumption. Most of their programs are directed at communities or associations, and focus on social services (Annex 3). The main providers of public social transfers include the CSA under the Ministry of Agriculture, the DNEB under the MEALN, the APEJ and the MLAFU. International actors play a major role in the provision of social assistance; UNICEF, the ILO, the World Food Program, the World Bank, the Swedish Cooperation, USAID and the European Union are particularly engaged in social protection policies and programs. 100. Economies of scale are not realizable less a mechanism to coordinate roles, responsibilites and programs. Currently, different structures provide similar types of services: for example, support to community health services provided by the FSN, the MPFEF, and the MDSSPA; support to school enrolment of children of destitute parents provided by the MDSSPA’s DNDS and the MPFEF. Different structures may be involved in similar issues with little interaction like, social protection for children discussed both at MPFEF and MDSSPA levels. Both the MDSSPA and the MPFEF have some capacity to coordinate decentralized programs through their regional directorates. At the grassroots level, the MDSSPA representative oversees actions for both ministries but is not accountable to the MPFEF. Thus, programs may not reach the intended beneficiaries or implementation may diverge from the plans [Pereznieto and Diallo, 2008]. Poor capacity of national bodies in charge of social assistance 101. The financial, technical and human capacity of the primary ministry responsible for developing social protection strategies remains poor. The budget of the MDSSPA represented respectively 0.9 and 1.3 percent of the total government budget in 2007 and 2008. Even including resources under the Filet Social allocated to the MSSDPA, the total budget resources managed by the ministry amounted to only about 0.4 percent of GDP in 2008. While higher in 2008 than 2007, these resources have remained very limited and are heavily dependent on external financing. On average, domestic financing represents only 40 percent of the budget. In addition, domestic financing is shown to be constant in nominal terms in these two years, so the increase is attributable only to external financing. In terms of technical capacity, since the split from the Ministry of Health to create the MDSSPA in 2000, the newly transferred staff have received little training and guidance. The present capacities in social transfer programs, social protection and social 44 development remain limited, and human resources at both central and decentralized levels are limited. 102. The FSN is to channel social assistance, but the structure suffers from limited resources. The National Solidarity Fund (Fonds de Solidarité Nationale or FSN) is aimed at fighting poverty and unemployment and was established in 2001, based on the Tunisian experience, to replace the Social Development Agency (Agence de Développement Social or ADS). The restructuration of the ADS into the FNS marked a shift from a disaster management-type approach to a more dynamic approach looking at sustainability and repeatability of development and poverty reduction actions. The governing body of the FSN is made up of 14 representatives from public authorities and civil society, and its president is an NGO representative. However, the FSN capacity remains quite weak. It has no guaranteed funding, no decentralized structures and a relatively limited scope. FSN activities are implemented and coordinated at the regional level by an Orientation Regional Committee, which is composed of decentralized technical services and any other relevant technical structures. While the ADS used to manage the entire budget called the “Social Safety Net,” aimed at assisting the poor and the vulnerable, this budget line is now broken down between different ministries, and the FSN only manages a part of it. It appears that other ministerial structures use a significant part of their “Social Safety Net” budget to respond to grievances and requests on a discretionary basis. 103. At decentralized levels, the effective transfer of powers and resources for social assistance from the State to local authorities suffers delays. The decentralization process initiated over a decade ago has the potential to greatly improve living conditions through the development of local social services and the promotion of better governance. It can support economic, social as well as democratic and political development. Under the decentralization process, some social assistance responsibilities were transferred to local authorities, but this is yet to be effective [Republic of Mali, 2008c]. Lack of investment for the rationalization and strengthening of the system 104. Monitoring and Evaluation has been sparse to non-existent, since assistance is still largely seen as solidarity-based handouts and not as a social investment. Currently, there is no adequate monitoring system in place to inform policy makers on the characteristics of the beneficiaries, the cost of the programs, the targeting mechanisms and the outcomes in terms of helping the vulnerable. The MDSSPA manages a research and statistics center supported by decentralized structures in the regions and districts (“cercles”) circles, and the MPFEF supervises the CNDIFE (Centre National de Documentation et d’Information sur la Femme et l’Enfant). However, efforts are yet to be made to develop a monitoring system on the cost-efficiency of the programs and to promote evidence-based data on the impact of social protection policies. 105. No investments have been made in either legal or administrative mechanisms to promote the predictability of social protection. Legal acts regulating are not enforced, and the national relief provision system is largely ineffective. Such a situation challenges the recommendation to provide predictable social transfers to encourage greater risk-taking and higher-return activities. 45 106. In parallel, the institutional framework for food security management has been developing over the years with the support of regional CILSS initiatives, with efforts to improve information systems, refine strategies to respond to acute and chronic food insecurity, and evaluate the impact of some key interventions. The Food Security Commissariat (Commissariat à la Sécurité Alimentaire or CSA) established in 2004 is responsible for the coordination of food security activities. The food security management system includes: the Food Security Commissariat; the National Food Security Committee; the Food Security Policy Coordination Technical Committee (Comité Technique de Coordination de la Politique de Sécurité Alimentaire or CTCPSA); and Regional, Local and Communal Food Security Committees. Given the close relationship between food insecurity and poverty, it might be pertinent to build on the existing food crisis management systems in order to develop effective social protection mechanisms. D. Financial resources allocated to social safety nets 107. Quantifying spending on safety nets is difficult. As mentioned, the conceptual definition used in this report does not fit within a single ministry’s mandate, so the most easily and regularly obtainable sets of numbers on government spending are not useful for tracking spending on safety nets. This lack of detailed data raises challenges in estimating the respective level of spending (Box 3). Box 3: Information Issues Related to Social Safety Nets Overall data on social safety nets (SSN) is incomplete. Any attempt to cost out existing SSN programs confronts serious problems of data availability and reliability. Specifically: ƒ Data on extra-budgetary expenditure by donors and NGOs may at times not be in a comparable format. In particular, data on some non-governmental spending cannot be annualized, thus making it hard to conduct any time series analysis. The multitude of donors in the sector is also striking and complicates data collection and analysis. As a result, government spending, which is presented on an annual budget basis, may be over-represented relative to other contributors. Moreover, even for donor-financed programs, it is likely that spending appears smoother than it is in reality. ƒ For budgeted expenditure, as with social protection expenditure, it is apparent that the budget classification system is not well adapted to any decision making in social safety nets. For example, no estimate is available for free health care for the poor or for the amounts spent on the indigent. These expenditures are not budgeted, and unless a specific reporting is organized, financial information on the amounts represented by the subsidy and cash transfers are not available. ƒ Whenever possible, amounts are presented in a net basis that is, the actual amount of the benefits paid to target beneficiaries. In some cases, however, program costs cannot be broken down between benefits and other costs (management costs, transport costs, etc.). In this case, data is mostly provided on a gross basis, which may lead to overestimating actual benefits. ƒ While targeting issues will not be specifically discussed here, the cost per beneficiary has been assessed to the extent possible to help determine the most cost-effective programs. This is, however, a perilous exercise as similar programs can bear very different costs depending on how they are managed, and the number of actual beneficiaries among the poor of the main government programs – the food banks and the food security stock – is not known. Source: Staff estimates. 46 Safety net spending levels 108. Excluding the temporary cost of general food subsidies, total spending on SSN programs over 2006-2009 averaged 0.4 percent of GDP (Table 12). A recent global study concluded that safety net programs in developing countries typically represent about 1-2 percent or less of GDP [Grosh et al., 2008]. Mali thus appears to be among countries that spend less on social safety nets. At around 0.4 percent of GDP, spending on SSNs thus corresponds to less than 10 percent of the illustrative amounts needed to bring all the poor to the poverty line through cash transfers (Table 9) – equivalent to the amount required to bring the urban poor alone to the poverty line (see Table 10). 109. However, spending on SSN has not remained constant over the period (Table 12 and Figure 11). Spending on SSN increased in 2006 and 2007 from about 0.4 to about 0.5 percent of GDP, but peaked in 2008 to 0.6 percent of GDP excluding general food subsidies, and about 0.8 percent of GDP including general food subsidies. Tax exemptions on various food imports implemented in response to escalating food prices cost about 0.2 percent of GDP in 2008. The cost of the general food subsidy thus absorbed 27 percent of total SSN spending in 2008. For 2008, the cost of these general food subsidies accounted for close to half (48 percent) of all government-financed SSNs.19 Figure 11: Evolution of Safety Net Spending, 2006-2009 (CFAF million) 35,000 30,000 4. PUBLIC WORKS 25,000 3. GENERAL FOOD SUBSIDIES 20,000 2.3 SCHOOL FEEDING 15,000 10,000 2.2 NUTRITION 5,000 2.1 TARGETED FOOD DISTRIBUTION 0 2006 2007 2008 2009 Source: Staff estimates. 19 For 2009, since we did not get any figures, the general food subsidies spending are estimated to fall to zero. To be verified with the Government and IMF. 47 Table 12: Total Spending on Social Safety Nets by Program 2006 2007 2008 2009 1. Cash transfers - conditional n.a. n.a. n.a. n.a. 2.1 Targeted food distribution 4,795 8,141 5,495 5,701 2.2 Nutrition 1,985 3,063 7,790 7,536 2.3 School feeding 1,964 1,284 4,623 4,232 3. General food subsidies 0 685 7,822 0 4. Public works 2,174 2,555 3,738 1,650 5. Fee waivers health n.a. n.a. n.a. n.a. TOTAL 10,918 15,728 29,468 19,118 Percent financed by government 48.7% 59.7% 54.9% 41.7% Percent of GDP 0.30% 0.50% 0.80% 0.50% Percent of GDP (excluding general food subsidies) 0.30% 0.48% 0.59% 0.50% Source: Government, donor and staff estimates. 110. Spending on SSN is dwarfed by spending on health and education combined (Table 13). Even as numbers are approximate, particularly owing to double counting, spending on health and education combined in 2008 was over ten times spending on SSNs, including food subsidies. Without food subsidies, SSN spending reached on average only 8 percent of spending on health and total education between 2006 and 2008. Over the past years, public expenditures in education (ministries in charge of education) have grown significantly in nominal terms from an estimated 3.6 percent of GDP in 2002 to 4.5 percent of GDP in 2008, or over eight times the amounts spent on SSNs between 2006 and 2008. At around 1.8 percent of GDP in 2008, public health expenditures were more than three times the amount spent on social safety nets.20 Per capita expenditure on SSN was an estimated CFAF 1,588 in 2008 (in nominal terms including food subsidies). 111. Comparatively, spending on other social sectors was equivalent to about 1 percent of GDP per year over 2002-2008. Allocations to other social sectors amounted to about CFAF 35 billion in 2007 and CFAF 38 billion in 2008, or around 2-3 percent of the budget. In 2007, the government employees’ pension fund made up the lion’s share of other social sectors spending. The other two largest budget lines were the Filet Social and the MDSSPA budget (Table 13). Unlike education and health spending, spending on other social sectors does not include any social safety net program, as defined in this report. 20 There may be some double counting for SSN programs that are under the management of the MOH, for example, nutrition. 48 Table 13: Comparison of Spending on Education, Health, Other Social Sectors and Social Safety Nets, 2005-2009 (% of GDP) 2005 2006 2007 2008 2009(1) Education 4.0 4.7 4.9 4.5 4.6 Health 1.7 2.0 1.8 1.8 1.8 Other social sectors (2)(3) 1.1 0.8 1.0 0.8 n/a Filet Social n/a n/a 0.29 0.29 n/a Pension fund (Caisse de Retraite) n/a n/a 0.62 0.28 n/a MDSSPA budget n/a n/a 0.30 0.41 n/a FNS (Fonds National de Solidarité) n/a n/a 0.04 0.04 n/a Subsidies to non-public organizations n/a n/a 0.03 0.02 n/a Emergencies n/a n/a 0.01 0.01 n/a (4) Social Safety Nets (incl. food subsidies) n/a 0.4 0.5 0.8 0.5 (1) Projections based on MTBEF Health and Education. (2) Sources for 2007 data: Filet Social: credits; others: budget allocations. (3) Sources for 2008 data: Filet Social: credits; others: budget proposals. (4) There may be double counting as some SSN programs are included in Health and Education spending (e.g., nutrition and school feeding programs). Source: Staff estimates. Safety net funding patterns 112. Correcting for the 2007-08 general food subsidy, it is striking that financing for SSN programs is largely – yet decreasingly – financed by the government. From 2006 to 2009, the donor share in total SSN spending increased from 43 to 53 percent. Government spending increased in 2007 and 2008 as a share of GDP, but its 2009 levels are roughly equivalent to 2006 at 0.2 percent of GDP. The increase in government spending as a percentage of GDP in 2007 and 2008 is thus mainly explained by the food subsidies. 113. Donor financing has shown important variation but the trend is clearly towards increased commitments to SSN. Even as some assumptions built into the numbers result in a smoother donor series, the increase in donor financing has been large (as shown in the above numbers) from about 0.2 percent of GDP in 2006 to 0.3 percent in 2009. If a complete and fully reliable series of annual donor disbursements could be prepared, the variations and the increases would probably be even wider. 114. Both government and donors funding go mainly towards food-based social safety nets. Targeted food distributions (including cereal Banks), nutrition and school feeding programs represented over 90 percent or more of the total safety net spending level in 2006, 2007 and 2009. In 2008, they still represented more than 70 percent of the total SSN spending. 115. However, financing of these programs reveals differing priorities among the government and donors. Government contributions to the Food Security Stock show the priority given to this program. Nutrition programs, on the other hand, are essent ially managed by donors. The financing of school feeding programs shows a serious commitment by the government, particularly since 2008. Table 14 below shows the 49 distribution of financing by program based on source of financing for 2008 (ignoring the general food subsidy). The distribution and subsidized sale of food through the national Food Security Stock and cereal banks are the main programs largely financed by the government, and constituted around three quarters of total domestic financing of SSN programs over the period 2006-2009. Table 14: External and Domestic Financing of Social Safety Net Programs Excluding General Food Subsidies, 2008 (%) Type of Social Safety Net Program External Domestic Cash transfers - conditional 0.0% 0.0% Targeted food distribution 0.3% 33.6% Nutrition 54.1% 3.7% School feeding 21.2% 11.1% General food subsidies 0.0% 48.4% Public works 24.4% 3.2% Fee waivers health 0.0% 0.0% Total 100.0 100.0 Source: Government, donor, and staff estimates. 116. Other, smaller, programs do not seem to have benefited from continuous support from either donors or the government. This is the case, for example, of scholarships for mothers, high labor intensity programs, and food-for-work programs. E. Summary of findings 117. The will to assist the poor and vulnerable has strong government support. Attempts have been made to provide free primary education and free access to basic health services. A number of institutions were created to provide social assistance, and the country adopted a national social protection policy. 118. However, the impact of social protection programs remains minimal, impeded by a lack of consistency between social protection and social development strategic documents, weak coordination mechanisms and an extension of social protection largely focused on contributory schemes (especially health insurance and mutuals), which exclude the poorest and most vulnerable. Many assistance programs are centered on income- generating activities, which cannot guarantee a secured source of income; promotion of community solidarity, which is likely to be weak in times of covariant shocks when the poorest individuals need assistance; and community-based social services, which are important supply-side programs but inadequately balanced with demand-side measures (social protection). 119. Only a few programs provide non-contributory social transfers directed at poor and vulnerable individuals or households, and most of them are food-based and many provide transfers on an ad-hoc basis. Comparatively, informal social transfers appear to ensure a greater social safety net – although precarious – than public transfers. The State continues to view social transfers as charity rather than as a necessary social investment. 120. Excluding the temporary cost of general food subsidies, total spending on SSN programs over 2006-2009 averaged 0.46 percent of GDP. In 2008, the SSN budget peaked to 0.8 percent of GDP, illustrating government efforts to respond to the food and 50 fuel price crisis. Spending on SSN is dwarfed by spending on health and education combined. Correcting for the 2007-2008 general food subsidy, it is striking that financing for SSN programs is largely – yet decreasingly – financed by the government. Donor financing has shown important variation though clearly trending towards increased commitments to SSN. Both government and donor funding go primarily to food-based social safety nets. The two streams nevertheless complement one another: the government primarily supports cereal banks and national food stocks and donors funds are mostly directed at nutrition programs. 121. Overall, the existing social safety net system appears too limited and fragmented to constitute an appropriate response to poverty and vulnerability. The State needs to play a greater role in the organization, consolidation and perpetuation of the different components of the social safety net system. 51 CHAPTER IV: REVIEW OF INDIVIDUAL EXISTING SOCIAL SAFETY NET PROGRAMS Most existing SSN programs in Mali provide temporary assistance and are mainly introduced during periods of shocks, which makes them less appropriate to tackle chronic poverty. They also share implementation challenges such as: weak targeting mechanisms, lack of monitoring and impact evaluation; weak management capacity, and inadequate financing. Food and other in-kind transfers programs are the main type of social safety net program currently in place in Mali. The effectiveness of food distributions and cereal banks remains largely unclear. Nutrition programs have been developed in recent years with donor support. But there is still poor recognition of nutrition problems and lack of understanding of adequate policy responses. School feeding programs are supported by both the government and development partners in most vulnerable areas of the country. Government universal food subsidies contribute to consumer price stabilization but are very expensice and regressive and target products mostly consumed by the richest households. The State-supported public works program provides employment and training opportunities and promotes the labor intensive approach, but the program is not designed as a safety net for the poorest . Implementation of national health subsidy/fee waiver is limited by the lack of clear targeting criteria and the lack of financial compensation for health centers/local authorities. Finally, Mali only has limited experience in cash transfers. However, since cash transfers have a great potential to tackle chronic poverty, interest in this type of instrument is growing mainly among partners and new pilot programs are planned for the future. 122. Following the overview of the social safety nets system concluding that the system needs to be improved and expanded, this chapter reviews and assesses individual programs. The design and performance of each program type is discussed, considering international good practices and a set of key performance criteria, such as appropriateness, adequacy (coverage, benefit level, duration), equity, cost-effectiveness (efficiency and effectiveness, adequate funds for administrative costs), efficiency and sustainability (fiscal, political, administrative) [Grosh et al. 2008]. Recommendations are made about possible programs improvements and expansion. A. Cash and Near-Cash Transfers 123. Mali has a very limited experience in social cash transfers. The government runs a social pension program but it is contributory and targeted only to civil servants. The MDSSPA and other actors may provide non-contributory cash support to those in need, either on a one-off basis or for a limited period of time (Annex 3), but as outlined by Pereznieto and Diallo [2008], the benefits provided and beneficiaries targeted are poorly structured. Overall, the existing number of cash transfer beneficiaries remains very limited. A few cash transfer projects have been implemented on a pilot scale to explicitly test the appropriateness and feasibility of cash transfers in Mali. However, those pilots were introduced as an emergency temporary scheme coordinated by international/non- governmental organizations with donor funding. Their coverage is limited and no data has been gathered on their impact on poverty. 52 124. Evidence from a recent cash transfer pilot shows that beneficiaries use cash transfers appropriately. In 2009, Oxfam GB provided a one-off cash transfer, along with food and fodder, to 3,000 households affected by drought in the Gao Region (CFAF 10,000 in pastoral sites and CFAF 6,000 in agro-pastoral sites). The monitoring exercise carried out two weeks after the end of the distribution indicated that the money had been used appropriately and mainly to purchase food and other basic necessities, repay debts and access health care (Figure 12) [Oxfam GB, 2009a]. Figure 12: Use of Cash by Beneficiaries of Oxfam GB Emergency Response in Gao, 2009 Use of cash by no. of households 80 70 67 60 No. of HHs 50 40 30 19 21 20 17 11 10 7 6 5 4 3 0 Fo o d Fo o d & B asic Fo o d & B asic Repay debts Fo o d, basic Fo o d, P urchase Other repay debts necessities basic necessities necessities health care animals necessities and repay & repay & repay debts debts debts Use Note: The other category is a series of other combinations of uses by single households that d id not fall in the most common categories mentioned in the graph. The responses were based around primarily food, basic necessities and repaying debt. Source: Oxfam GB, 2009a. 125. A small conditional cash transfer pilot had good results, but it is yet unclear whether similar results could be achieved on a larger scale. Between 2002 and 2007, UNICEF supported a pilot cash transfer project entitled Maternal Grants for Education (Bourses Maman). It was designed to test the effectiveness of conditional cash transfers, namely (i) to increase school enrolment, retention until the end of the first cycle and attendance, and (ii) to improve the support parents provide at home to improve their children’s opportunities. The mid-term evaluation (conducted after two years) revealed positive impacts with a reduction of absenteeism, number of children repeating a grade and drop-out. It also reported that the program had strengthened the links between mothers, children and schools for better learning conditions, and contributed to long-term poverty reduction. Immediate positive effects on the local economy were also identified, with the revitalization of local markets, income-generating activities and an improvement of the health care and nutrition of children (Box 4). Nevertheless, further analysis of the results of the program is still needed. 126. A number of recent studies and forums acknowledged the enormous potential of cash transfers in Mali to reduce poverty in a sustainable manner, and new cash transfer pilot projects are envisioned. International evidence shows that social cash transfers can have a positive impact on education, health, nutrition, food security and 53 overall poverty reduction [Grosh et al. 2008]. In Mali, two recent studies [Bibi et al. 2009, and Pereznieto and Diallo 2008] document the high potential of national cash transfer programs for the reduction of poverty and vulnerability. A recent feasibility study in two areas of the Sikasso Region confirmed that a cash transfer pilot would be appropriate and feasible [Cipryk, 2010]. Moreover, the development of social cash transfers (e.g., family allowances and social pension) was a key recommendation of the national forum on social protection held in May 2009 [UNICEF, 2009a]. Several partners are now consideri ng launching cash transfer pilots. And the European Commission is funding Oxfam GB to implement a small pilot seasonal cash transfer project in two areas of the country in 2010 (Box 5). Box 4: Mali Maternal Grants for Education (bourse maman) Characteristics of the program: The project was inspired by the successful Brazilian scholarship program. The “Bourse Maman” project was designed to test the effectiveness of conditional cash transfers to increase school enrolment, retention until the end of the 1 st Cycle, and attendance, as well as to improve the support parents provide at home for better results of their children. The project targeted both girls and boys of poor families already enrolled in primary school (1 st to 6th grade) in nine pilot schools located in poor areas of Kayes and Mopti where school services exists but demand remains poor. A cash transfer of C FAF 5,000 (US$12) a month was allocated to beneficiary pupils’ mothers over 8 to 9 months – October to May. This benefit level is an arbitrary lump sum, which does not consider the number of school age children of the beneficiary mother. This amount is meant to cover child’s education needs such as stationary and any other education costs, but also to compensate if possible, for the renunciation of services for which the child will no longer be requested to provide. Targeting mechanisms: UNICEF implemented the project with four local ONGs (Stop Sahel and Guamina in Kayes, OMAES and Amprode in Mopti) and with local school authorities (“Centre d’Animation Pédagogique” or CAP). Between 2002 and 2007, a total of 1,908 scholarships were granted in 36 villages, benefiting 5,427 children, half of which girls. Beneficiary selection criteria differed from one NGO to the next. Both community-based targeting and proxy means testing were used. In Nia-Ouro for instance, the NGO decided to select 42 beneficiary pupils out of 57 randomly. Mothers subsequently decided to share the transfers among all pupils. In some other places, NGOs excluded mothers with less than two children at school, or gave priority to destitute girls in 4 th -6th grade. Exclusion errors appeared to be quite significant, firstly due to funding constraints, and due to poor targeting methods. Conditionalities: Transfer recipients should be in deep poverty, have school -aged children and be willing to enroll their children at school and support their education. By contract, beneficiary mothers committed to: enroll in school all their school-age children; maintain their children at school for the whole school year; control and ensure that their children attend school every day, except when sick; ease learning conditions at home, especially for girls, by avoiding to overload them with housework; encourage their children’s learning; and take part in parents association’s meetings. School directors and teachers were responsible for monitoring pupils’ attendance. Any unjustified absence of more than two days a month of one of the mother’s children would lead to scholarship suspension. Very few cases of suspensions were reported. Delivery of transfers: Partner NGO staff would provide the cash transfer directly to beneficiary mothers at the end of each month in the presence of school and parents representatives. Delay s in payment were reported, with three months payment provided at once in some cases. Monitoring and evaluation: UNICEF Mali commissioned an external mid-term review of Bourse Maman in 2005. It concluded that the program significantly increased both school enrolment and attendance. Major issues arose due to confusion over targeting, coordination failures with NGOs, and opposition from local Muslim leadership. Significant payment delays also occurred. Program expansion and increased communication helped to resolve some of these issues (UNICEF 2009). x The independent evaluation documented reduction of absenteeism, number of children repeating a grade, and dropout. It also strengthened the links between mothers, children and schools for better learning conditions. The program also contributes to long-term poverty reduction. Educating children from destitute families may break the intergenerational transmission of poverty. The evaluation also reported immediate positive effects on the local economy, with the revitalization of local markets, income - generating activities, and an improvement of children health care and nutrition. Indeed, in a village with 54 50 beneficiary mothers for instance, the project would inject the significant amount of CFAF 250,000 in the local economy every month. Positive effects were greater in the Kayes region, where the project operated in synergy with other positive actions supported by the Diaspora. In contrast, progress was slower in Mopti, a region where Muslims and nomads are reluctant to send their children to public schools. Still, the mid-term review reported interesting positive effects, e.g. the enrolment of 21 nomadic children including 19 girls, migration of children from Koranic schools to public schools, initiative of beneficiary mothers to support teachers’ salary in one village and school feeding activities in another, etc. x The evaluation also stressed on the need to improve targeting through better participatory processes, to improve data collection and monitoring, to improve payment regularity by subcontractin g CGS or microfinance institutions, and to ensure the sustainability of the system. Experience from Latin America showed that scholarship programs needed to be maintained over 12 to 15 years in communities to ensure sustainable behavioral change. Of course, conditional cash transfer programs can only be expanded to areas where education services are available. And the low availability and/or quality of education remain an issue to respond to the demand generated by a scholarship program. The UNICEF pil ot project could not collect evidences on the added value of hard conditionality. But it seems clear that the approach contributed to improve parents’ interest in their children’s education, and interaction with teachers and education authorities. This in turn can contribute to the improvement of education services. Perspective: UNICEF suggested that the program be expanded further given the high poverty levels and low school attendance prevailing in the area. But the program ended in 2007 with the end o f the French UNICEF National Committee funding. UNICEF is willing to launch an improved version of the “ Bourse Maman”. A proposal was developed to expand the project over the period 2008 -2012, and provide by 2012 a total of 5,809 scholarships for the education of 17,427 children (half of them girls) in 116 villages among the poorest in the regions of Segou, Kayes, Mopti and Koulikoro where school enrolment rates are among the lowest. Funding is yet to be secured – the proposal budget amounts CFAF 1,183m (i.e. US$2,365,508) including 87 percent for cash transfers, 12 percent for salaries and 1 percent for administrative costs. 127. A more ambitious cash pilot program could be desirable, with direct ownership of national authorities. Building on its positive experience with the maternal grants for education, UNICEF recently developed a proposal for a three-year program (2010-2012) of cash transfers to 715,000 mothers from the poorest households reaching 1.5 million very poor children aged 0-14 in the Mopti and Sikasso Regions. The proposed project, yet to be funded, includes explicit activities to gather solid evidence, build the capacity of national stakeholders, disseminate findings and advocate for more innovative social protection [UNICEF, 2009b]. Further assessment of the feasibility of implementing a national scale cash transfer program, based on the recent and on going pilots, still needs to be carried out. In this context, robust impact evaluations are needed to facilitate cros s- learning from the different cash transfer pilot projects and compare the impact and cost - effectiveness of monthly small cash transfers (as in the UNICEF design) versus larger and less frequent ones (as in the Oxfam GB design). 21 Experience with cash transfers in other countres shows that well designed and implemented program can help mitigate income shocks and be used as an effective anti-poverty instrument (see Annex 5) 21 The Save the Children-commissioned cash transfer feasibility study recently conducted in the Sikasso region also recommended providing three seasonal cash transfers, although with smaller amounts, no conditionality, and over a period of three to four years [Cipryk, 2010]. 55 Box 5: Oxfam GB’s Seasonal Cash Transfer Pilot Project Late 2009, Oxfam GB received EC funding (under the Food Facility) for a 22 -month “social safety net” project (January 2010-October 2011) to be implemented jointly with Save the Children U.S. in two regions of the country: Gao (Temera and Tarkint Communes in the Bourem Circle) and Sikasso (Fakola Commune in the Kolondieba Circle). The cash transfer component of the project will target 1,000 very poor households in both regions (400 in Gao and 600 in Sikasso). Households will receive cash transfers of CFAF 95-110,000 in three installments throughout one seasonal calendar year: Each transfer will have a specific purpose in relation to the season for which it is given (see below figure). Transfers will be conditional to households’ participate in savings and in vestment training and community health promotion workshops. Such predictable cash transfers are expected to: (i) enable very poor households to purchase enough food in markets allowing them to better meet their food needs throughout the year; (ii) enable them to purchase essential non-food items and pay off some existing debt, which will minimize their need to resort to harmful coping strategies and therefore allow them to better protect the few livelihood assets they have; and (iii) give them the ability to use some portion of their cash transfers to make small investments that will contribute to developing a source of income (such as gardening tools or chickens for rearing), thus providing further livelihood protection through asset building [Oxfam GB, 2009b]. Seasonal Purpose of Cash Transfers in Oxfam GB Seasonal Cash Transfer Project Source: Oxfam GB, 2009b. The program has an obvious learning objective to test the appropriateness and feasibility (and promote the use) of cash-based safety nets in Mali. Yet, a number of factors may limit the extent to which the program will allow to adequately inform the development of a national social safety net program. The targeting system is based on the Households Economic Analysis (HEA) approach which requires su bstantial technical and financial resources, time and community mobilization. In Gao, the project is likely to enrol all the households classified as very poor in the intervention area – nearly 30 percent of households (40-50 percent of individuals). Such a coverage rate might prove financially unsustainable at the national level. If it is planned to have national and decentralized authorities closely involved in the supervision of the project, NGOs will directly manage the implementation of the project, potentially limiting the national bodies’ ownership of the program. The size of the project is very limited, and the envisioned evaluation method, which is expected to be based on observations and beneficiary reviews (with no control group), may not bring solid evidence on the impact of the intervention. Source: Staff estimates. 56 B. Food Transfers 128. Food transfers represents one of the largest components of the social safety net currently implemented in Mali. Mali has a long experience in targeted food distributions done as (emergency) free food distributions through the National Food Security Stock (SNS), or with donor/NGO support. They build on the existing food security management system, which among other attributes put in place early warning systems and incorporated gender considerations (Box 6). 129. Implementing food distributions requires specific targeting capacities. Local authorities are responsibe for targeting the food distributions from the SNS, and little information is available on targeting criteria and mechanisms adopted. Targeting efficiency likely depends overwhelmingly on the capacity of the local authorities and NGOs that assist with the distribution. 130. Cereal banks have been established in all the communes in Mali but may not reach the poorest. The government has been providing support in the form of cereals to local associations to help them establish and maintain local food security stocks. A Cereal Bank Management Committee organizes sales at a subsidized price during the lean season (June-September), and procures a new stock on the local market after the harvest. However, the replenishment rate has been slow, prompting the government to continue to provide direct support to the 166 most vulnerable communes – with an estimated budget of CFAF 136m over the period 2009-2015. However, cereal banks may not reach the poorest, because they may simply not have the financial resources to access and purchase the subsidized cereals. 131. The coverage of cereal banks is insufficient compared to needs, and although in principle the coverage of SNS may be sufficient compared to needs, there is no evidence that SNS distributions are reaching the extreme poor. A rough comparison of the potential number of beneficiaries of the SNS and the cereal banks (Table 15) to the estimated number of people in food insecurity (Table 16) indicates that the tonnage of cereal banks is not sufficient to assist all the persons in moderate food insecurity , that is, needy persons who may still be able to afford a subsidized bag of cereals. The latest Food Security and Nutrition Baseline (EBSAN) recommended the strengthening of the cereal banks as part of a strategy to improve food availability – along with improved village irrigated perimeters and subsidized seeds and fertilizers [CSA-SAP, 2009]. Table 15: Potential Numbers of Beneficiaries of SNS and Cereal Banks Number of Number of Number of individual individual household Tonnage (MT) monthly rations quarterly rations quarterly rations (*) (*) (**) National Food Stock (SNS) 35,000 3,000,000 1,000,000 83,000 Cereal Banks 22,000 1,800,000 600,000 50,000 Total 57,000 4,800,000 1,600,000 133,000 (*) considering a daily ration of 400 g of cereals. (**) considering an average household size of 12 members. Source: Staff estimates. 57 Box 6: Food Distribution Programs and Public Food Stocks The Government of Mali’s public food stock includes three programs: the State Intervention State (Stock d’Intervention de l’Etat or SIE, and the community-based cereal banks, and the National Food Security Stock (Stock National de Sécurité or SNS): ƒ The SNS is composed of mil, sorghum and maize procured on the national market, and is used to provide free food rations to households affected by shocks, as recommended by the SAP. The SNS is co-managed by donors. Local authorities are responsible for beneficiary selection, while the CSA and the MDSSPA are responsible for logistical matters. ƒ The cereal banks that are now present throughout the territory: A total of 759 cereal banks were established throughout the territory in 2005/2006, one in each of the 703 communes of Mali and one for 56 associations. Initial donations to cereal banks were made of mil and sorghum until 2008 and of rice in 2009. A Cereal Bank Management Committee organizes sales at a subsidized price during the lean season (June-September), and procures a new stock on the local market after the harvest . A review conducted in 2009 reported very diverse replenishment rates: 67.86 percent in Segou, 50.5 percent in Timbuktu, and only 4 percent in Bamako. The CSA now focuses its support to the cereal banks located in the 166 most vulnerable communes – with an estimated budget of CFAF 136m over the period 2009-2015. ƒ The SIE focuses price stabilization in urban centers, and the regulation of rice price. The stock is composed of cereal and rice. Unlike the SNS, the SIE is solely managed by the Government of Mali. The OPAM (Office for Agricultural Produce Marketing) is responsible for selling SIE cereals to retailers at prices below the market price, expecting the price difference will be passed on to consumers. The SIE is actually hampered by the lack of funds andaccess to credits leading to often late purchases of food. Source: Authors’ estimate. Table 16: Indicative Number of Food Insecure Persons, 2007-2008 July 2007 March 2008 (lean season) (pre-lean season) Share of households in food insecurity 28% 26% Share of households in severe food insecurity 11% 8% Share of households in moderate food insecurity 17% 18% Number of households in food insecurity (*) 341,000 316,300 Number of households in severe food insecurity (*) 134,000 97,300 Number of households in moderate food insecurity (*) 207,000 219,000 Number of individuals in food insecurity (*) 4,092,000 3,796,000 Number of individuals in severe food insecurity (*) 1,608,000 1,168,000 Number of individuals in moderate food insecurity (*) 2,484,000 2,628,000 (*) Indicative only: This is a very rough estimate considering a total population of 14.6 million and an average household size of 12 members. Source: EBSAN; Staff estimates. 132. The effectiveness of the SNS and cereal banks as social safety net remains largely unclear. No robust evaluation on the actual impact of the SNS and the cereal banks on the food security situation/poverty level of beneficiaries could be found . The 2009 review reported positive impacts of the cereal banks – availability of and accessibility to cereal by the most vulnerable during the lean season; reduction and stabilization of market prices during periods of sale; reduction of seasonal migration, among others, – but without supporting data to back this statement up. At the national level, the CSA has no information on the actual number of beneficiaries from the SNS and the cereal banks. Neither the cereal bank local supervisors nor the national monitors look at this aspect, but concentrate on the number of kilograms purchased (should it be by the same person or by different persons) to see whether collected funds suffice to replenish the initial stock, the storage conditions, etc. There is no pre-established list of cereal bank beneficiaries, or 58 request form to fill out in order to purchase cereals at the subsidized price. The communal authorities warn the population that the cereal bank is about to sell, and interested people are to come to the cereal bank to be served. It is unclear whether cereal banks sales are done on a first-come first-serve basis, and to what extent vulnerable criteria are respected. In the absence of strong monitoring and evaluation, and with the lack of arrangements for the effective identification of vulnerable households, it is not possible to appreciate the effectiveness of the SNS and the cereal banks to support the food consumption of the poor. National public stock 133. The national public stock also includes the State Intervention Stock (Stock d’Intervention de l’Etat or SIE) 22. The SIE, together with the cereal banks (both established in 2005), has the explicit objective to stabilize prices – keep producer prices high enough after the harvest, and consumer prices low enough during the lean season. In total, the public food stocks usually amounts about 40-50,000 MT of mil/sorghum and 20- 30,000 MT of rice [CSA, 2009]. The level of SNS was established at 35,000 MT to respond to cyclical shocks and disasters, and is not meant to be used to regulate markets (except for technical stock rotations, which represent about 10,000 MT a year). 134. The level of budgets allocated to public food stocks demonstrates the importance the State has given to these activities (Table 17). Public funds allocated to cereal banks alone constituted around 25 percent of total domestic financing of social safety net programs in 2009. Table 17: Public Food Stock Budgets, 2004-2009 (CFAF million) 2004 2005 2006 2007 2008 2009 National Food Security Stock (SNS) 3,353 2,199 3,393 5,670 3,323 4,561 Cereal Banks n/a n/a 543 1,603 2,051 1,018 State Intervention Stock (SIE) n/a 555 10,203 2,247 2,051 6,930 Total n/a 2,754 14,139 9,520 7,425 12,509 Note: Executed budgets (including both State and donor funds). Source: CSA, 2009. 135. In “normal years”, the public food stocks may reduce consumer price seasonality – although private stocks may actually play a more crucial role. Attempting to establish the role of the public stocks in price stabilization, Galtier et al. [2009] observed that in “normal” years seasonality is minimized for consumer prices. The authors estimated that all purchasing and selling operations by public stocks may generate a significant increase of the offer during the lean season (of about 10 percent), but also suggested that private stocks may actually play a more crucial role in the smoothing of consumer price seasonality. Because it is possible to rely on private (traders) stocks to stabilize consumer prices, and producer price seasonality appears much less minimized than consumer price seasonality in normal years, Galtier et al. recommend paying more attention to producer price stabilization and facilitatig cereal storage at the producer or producer association level (e.g., through an easier access to credit, possibly through the development of inventory warranty systems). 22 Note that, because the SIE provides market interventions they are not included in the list of safety net programs. 59 136. In time of crisis, the public food stocks have very limited effects on reducing price peaks. Galtier et al. observed that in years of “crisis”, price peaks appear during the lean season for both consumer and producer prices, and explain them by the weak inter- annual storage, both by private actors and the State. The authors propose put ting in place measures to boost production (e.g., subsidized agricultural inputs) when prices are high, along with preliminary measures to stabilize process (e.g., tax exemptions on rice imports or public stocks) in order to motivate private actors to invest in production. Galtier et al. recommended setting up an analysis unit for price stabilization policies. This could reduce costs and improve the efficiency of public food stock measures. Nutrition programs 137. International players support the Ministry of Health in providing nutritional support to children under 5, pregnant and nursing women, and HIV and TB patients. The WFP runs a program to fight malnutrition in food insecure areas of Mali, whereby people living with HIV and TB patients receive food rations for a period of six months, children 6-24 months receive food rations over the three-month lean season, and moderately malnourished children receive supplementary feeding. In total, the program aims to assist nearly 900,000 persons over two years (2009-2010). While the WFP assists moderately malnourished children, UNICEF assists severely malnourished children – 14,000 children assisted in 2009. UNICEF supports the Ministry of Health for activities including: training of health workers, awareness campaigns on exclusive breast feeding, supply of health centers in equipment, consumables and medicines, etc. Other organizations also implement nutritional programs. The USAID-funded “NEMA” project includes an integrated set of community-based activities to fight childhood malnutrition and illness. In particular, implementing agencies propose establishing a screening system at the community level for acute malnutrition in children 6-59 months, provide enriched food products and complementary food for severely malnourished children, and promote the use of the positive deviance/hearth approach to rehabilitate moderately malnourished children. Christian Aid and Action Against Hunger also run nutrition programs. 138. Among national policy makers, there is poor recognition of nutrition problems and lack of understanding of adequate policy responses. Nutritional indicators are of particular concern in Mali, as 81 percent of children have some form of anemia, and 38 percent of children under five years show significant levels of stunting and wasting (15 percent) [DHS, 2006]. Yet, undernourishment has still to be recognized as a major problem by the national authorities. Among policy makers, lack of understanding of the importance of investing in nutrition to achieve development and poverty reduction goals is widespred and the policy discourse on nutrition is strongly biased towards food security. Current policy responses to nutrition problems focus mainly on import subsidies, food distribution, measures to boost agricultural production (credit, equipment and formation of cooperatives) and to improve grain storage. Overall, nutrition has no clear leaders to champion its cause. Fragmented responsibilities for nutrition within the government –four different ministries have units that work on nutrition: Health, Agriculture, Education and Social Development/Solidarity/Elderly – results in no accountability for nutrition improvements. It is virtually impossible to trace the funding to nutrition actions. Although the Ministry of Health is emerging as the focal point for nutrition, the Nutrition Division created in 2000 within the National Health Directorate was dissolved in 2007. 139. Nutrition programs are heavily donor dependent, often through vertical donor support and with little policy dialogue (Table 18). Given the lack of government 60 engagement in nutritional programs, and using malnutrition as the justification, many donors have shown a strong preference for supporting food security projects (see upcoming World Bank study). Particularly donors have rallied behind specific health issues, such as HIV/AIDS, malaria, family planning, and tuberculosis, and as a result the development partners in nutrition (mainly technical agencies) have failed to advocate for: (i) a better understanding of the malnutrition problems; and (ii) a better positioning of nutrition as a public sector priority. Overall, donor communities, following their own agenda and regardless of national policies, plans and priorities, have most often worked separately with different departments and narrowly focused on the expertise of each department. Table 18: Indicative Nutrition Budgets, 2009 State budget Donor budget Data source (CFAF thousand) (CFAF thousand) MoH program n/a - MoH, 2009 WFP-supported programs 7,300,000 WFP, 2009 UNICEF-supported programs - 2,300,000 UNICEF, 2009 Other NGO programs - 843,000 ECHO, 2008 (*) Total spending on nutrition n/a 10,443,000 Total spending on social safety nets 31,467,500 21,117,900 incl. food subsidies (*) This amount is indicative only, as the list of budgets allocated to nutrition presented here is not exhaustive. Source: Staff estimates. 140. Whereas food transfer programs require substantial logistical capacities and, thus, are expensive to implement, further investigation is needed to assess their impacts on nutrition and poverty in Mali. Food transfers represent only 48 percent of the WFP nutrition program budget [WFP, 2008]. In addition to the direct costs, administrative burdens are placed on health centers, as well as the logistical difficulties of moving large quantities of food around the country. The community-based “hearth approach” presents greater potential for a desirable national scale-up. In this context, both UNICEF and the WFP have commissioned a study to evaluate the impact of different strategies to treat moderate acute malnutrition: (i) the attendance of children in the program, (ii) physical growth, (iii) nutritional rehabilitation, and (iv) changes in micronutrient status. The different models that will be compared include two imported fortified products, one locally produced product and nutritional education on the use of fortified flour available at home, as recommended by the national protocol when specialized products are not available. 141. The national forum on social protection, which took place in 2009, called for an intensification of cost-effective nutritional interventions targeted at malnourished children. Since 2008, significant donor efforts were made to better assist malnourished children (Table 19). In that regard, Napon [2008] stresses that the Hearth concept, which is based on local expertise and local food resources, appears as an effective model to rehabilitate malnourished children and strengthen the capacity of mothers to deal with 61 142. potential cases of moderate chronic malnutrition.23 Beyond that, the Hearth approach promises to have an impact on food production and on population behaviors. However, Napon notes that sustainability of the model remains subject to several conditions, including the improvement of the income of mothers (along with other nutritional initiatives such as the “Essential Nutrition Actions” to reach infants 0-6 months). This suggests complementing Hearth activities with income-generating activities or social cash transfers. Such an approach could efficiently prevent malnutrition. Yet, as deplored in a recent report, current top-down planning and poor implementation capacity does not support broad-based action at the community level [World Bank, upcoming]. Overall, in Mali, investing in nutrition appears particularly crucial to achieve development and poverty reduction goals. In particular, nutrition programs need to be developed with stronger State engagement, which requires strengthening of the strategic and institutional framework for nutrition. Table 19: Number of Beneficiaries of UNICEF and WFP Nutrition Programs, 2004-2009 2004 2005 2006 2007 2008 2009 Number of children treated for severe malnutrition in n/a n/a n/a 2,499 10,955 14,000 UNICEF-supported structures Number of beneficiaries of 43,037 205,813 106,221 167,638 161,148 127,356 WFP nutrition programs Source: UNICEF, 2009; WFP, 2009. School feeding 143. School feeding is one of the most developed social safety net program s in Mali. After public food stocks and tax exemptions, school feeding programs attract a significant part of State resources allocated to social safety nets. Over 1,500 primary schools in the poorest areas of the country run school feeding activities, about 56 percent of which are externally supported – 841 schools assisted by the WFP and CRS, others are supported by the State through an “integrated” model (Table 20 and Box 7). As stated in the national policy, school feeding programs aim at contributing to: the increase of school enrolment and attendance rates, particularly for girls, children living in food-insecure areas and vulnerable children at school; the improvement of school performance; the improvement of nutritional, hygiene and health status of pupils; the creation of jobs [MEALN, 2009]. 23 This came out of an evaluation of the USAID/CRS food security program in Gao and Mopti, which included the nutritional rehabilitation of moderately malnourished children aged 0 -36 months through the Hearth/Positive Deviance approach, and referral of severe and acute moderately malnourished children to district Health Centers. For more information on the hearth approach, refer to McNulty (2005). 62 Box 7: School Feeding Programs There are three main providers of school feeding programs, which operate under th e same national strategy and in a concerted manner, but with their own program specificities: ƒ The World Food Program (WFP) assists 721 primary schools in the regions of Kayes, Gao, Mopti and Timbuktu. The WFP program to support basic education aims at providing lunch to 120,000 pupils annually in 721 primary schools in the Sahelian zone. In addition, quarterly take-home rations are provided to any girl attending school at least 80 percent of the time . Communities are requested to contribute with condiments, wood and labor. ƒ Catholic Relief Services (CRS) with U.S. funding assists 120 primary schools in Mopti. The CRS program is quite similar to the one run by WFP, although take-home rations are provided to girls of the 5 th and 6th grade, since it appears that the gender gap has been bridged in the other grades, at least in the areas CRS works in. ƒ The State assists 708 primary schools in the 166 poorest communes not covered by the WFP and CRS with an “integrated” school feeding model. The State’s “integrated” school feeding program aims at promoting local communities’ ownership of school feeding, which should lead to a progressive withdrawal of the State and other partners. The approach relies on the integration of the school feeding activities in local development, for example, with small farmers supplying the local school and/or women’s associations preparing school meals. Source: Authors’ estimate. 144. School feeding appears as a priority program for both the State and donors. In 2009, it absorbed over 20 percent of donors’ total spending on social safety nets, and about 20 percent of domestic spending on social safety nets. Table 20: School Feeding Budgets, 2009 Number of State budget Indicative Donors’ Communities’ budget beneficiary (CFAF budget (CFAF thousand) schools thousand (CFAF thousand nominal) nominal) MEALN program 708 1,700,000 - n/a WFP program 721 - 1,457,000 n/a CRS program 120 - 860,750 n/a WFP/CRS pilot 12 - 192,000 2,900 Total spending on school feeding 1,700,000 2,509,750 n/a Total spending on social safety nets 31,467,500 21,117,900 n/a (incl. food subsidies) Source: Staff estimates. 145. The demand for school feeding programs is immense. Currently the school feeding programs only cover 49 percent of schools in Timbuktu, 41 percent in Gao, and 18 percent in Mopti, some of the most vulnerable regions of Mali. The expansion of school feeding activities was a major recommendation of the recent national forum on social protection. However, the MEALN identified a number of human, financial and technical constraints in the expansion of school feeding [MEALN, 2009]: (i) local authorities and decentralized MEALN structures need to demonstrate strong engagement; (ii) the capacity of the school management committees remains weak; (iii) monitoring and evaluation mechanisms and consistent targeting criteria are lacking; (iv) financial resources remain insufficient, especially from decentralized authorities in vulnerable areas; and (v) the MEALN noted a lack of mechanisms to ensure school feeding sustainability. Therefore, 63 the new national school feeding policy includes concrete measures to mitigate thes e constraints, such as: clarified targeting criteria; clarified roles and responsibilities; monitoring and evaluation mechanisms; promotion of strong community engagement; promotion of local purchasing; a proposal to create a national solidarity fund for school feeding, etc. 146. Mali’s efforts to transition from externally-supported school feeding projects to a national program are to be supported. Like most food transfer programs, assisted school feeding programs require substantial logistical capacities – food transfers represent only 54 percent of the WFP school feeding budget [WFP, 2007]. Considering these costs, an expansion of assisted school feeding programs to other parts of the country appears unaffordable. An integrated school feeding model presents more potential for a desirable national scale-up. The State is developing an integrated school feeding model, with the idea to eventually hand-over all responsibilities and costs to local authorities and beneficiaries themselves. The MEALN is considering working in partnership to set up a micro-credit scheme enabling women’s associations to start income-generating activities so that meals can be distributed to children in selected schools. 147. The integrated school feeding approach may show limits in chronically food insecure areas, where communities have very limited resources. But it is interesting to note that some beneficiary mothers of the UNICEF cash grant program spontaneously contributed to start school feeding activities. This illustrates the great potential of social cash transfers to operate in synergy with other initiatives and literally boost local development and community empowerment. Mali could also greatly benefit from the successful experience of Ivory Coast, where school feeding programs are the cornerstone for sustainable local development. Such a program supports community ownership, resilience, empowerment, women entrepreneurship, children nutrition, etc, while remaining affordable to the State. The school feeding pilot project CRS launched in 2008 is in line with such an approach as it aims at empowering local committees for them to purchase cereals and pulses on local markets. 148. Despite the global evidence on the positive impact of school feeding, further research is required to assess the longer-term relative merits of in-school feeding versus take home rations or other social safety net instruments, for example, conditional cash transfers. School feeding programs may increase school attendance, cognition and educational achievement, particularly if supported by complementary actions such as de-worming and micronutrient fortification or supplementation [Bundy et al., 2009]. In discussing the effectiveness of school feeding modalities, Bundy et al. [2009] recognize a particular need for better data on the cost effectiveness of the available school feeding approaches and modalities. Very few studies compare in-school feeding with take- home rations in similar settings, and the few that have gone further with this suggest that both programs lead to similar improvements over having no program at all. 149. School feeding programs may not reach the poorest and most vulnerable. In the poorest areas, where school enrolment is low, school feeding may not reach the poorest people. First, the poor are less likely to be in school than the non-poor. Second, it is impossible to target benefits to the poor within a school – except with take-home rations which are not that different from conditional cash transfers. Third, school feeding activities are expensive and need to be geographically targeted, but then the program does not provide benefits to the majority of the poor who live in areas not covered. Conversely, alternative safety net options may be still be not reach the poorest due to the difficulty of 64 targeting, for instance, and geographically targeted expansion of school feeding may still provide the best option for rapid scale up of safety nets. While confirming the great potential of school feeding to tackle child poverty, Bibi et al. [2009] also warn that such a policy would fail to reach younger children whose nutritional needs are even more acute, or poorer children who cannot afford to attend school. These are major exclusion errors calling for alternative or complementary measures like nutritional programs and/or cash transfers. Making in-kind food assistance more effective 150. Food assistance could be better linked to local production. Increasingly, local purchasing has been promoted and better linkages between food assistance programs and support programs to small farmers established. Globally, local procurement is being actively evaluated as a means to achieve sustainable programs and, at the same time, to use the purchasing power of the program as a force multiplier and a stimulus for the local agricultural economy [Bundy et al., 2009]. Yet, in USAID-funded programs, food is provided in kind from the United States. This approach does not contribute to support local, national or regional markets. In contrast, the WFP, whose programs represent about 18,300 MT a year, now purchases cereals on national or regional markets. So far, CSB and good-quality vegetable oil are not available on the Malian market, and still need to be imported. But the school feeding pilot project, which is to be launched with CRS, aims to empower local committees to purchase cereals and pulses on local markets. The WFP also introduced the Purchase for Progress (P4P) program, which aims to procure a significant part of the food from associations of small farmers. An initial assessm ent recommended targeting 1,500 MT of cereals for P4P procurement in year 1 of the project, culminating at 3,100 MT in year 5 (i.e., over 60 percent of WFP annual needs) – approximately 4,800 MT of cereals [WFP, 2008a]. 151. No systematic linkages between individual food needs and food rations have been identified. Currently, the benefit level varies significantly from one program to the next, and food rations are defined as much for their nutritional value as for their economic value (Table 21). This is particularly true for FFW and FFS activities, where participants are provided only with cereals and with the ration set irregardless of the actual household size. Table 21: Composition of Food Rations in Different WFP Programs Cereals Pulses Oil CSB Sugar Nut. Value Household Activity (g/day) (g/day) (g/day) (g/day) (g/day) (kcal/pers./day) ration FFW 400 - - - - 1,340.0 5 rations FFS 400 - - - - 1,340.0 3 rations School meals 150 30 10 - - 729.0 n/a School cook 150 30 10 - - 729.0 5 rations School THR 4 L of vegetable oil a n/a n/a quarter HIV/TB patients 100 30 20 150 - 1,182.5 n/a Children 6-59 25 250 20 1,251.0 n/a Nut. education 25 250 20 1,251.0 n/a Source: WFP, 2007; WFP, 2008b. 152. Often little justification exists for providing (internationally procured) food rather than cash (Box 8). Food transfers may undermine local markets, and further 65 impede the development of private traders. Food is often provided due to a generally higher probability of control over food being retained by women, which is expected to result in a greater impact on family welfare. Whether these benefits are real or whether they are worth the extra costs remains questionable. It is clear that food aid may still be needed in drought years if the market fails to react efficiently, but food aid is often cost - ineffective and poorly efficient in responding to chronic food insecurity and poverty. Finally, programs should consider switching to cash whenever possible, especially in response to chronic food-insecurity/poverty. The WFP is considering adopting the cash- for-work approach whenever appropriate and feasible. Box 8: Transfers In Cash and In Kind: Alternatives or Complements? When are food transfer programs appropriate? What are the criteria to keep in mind when deciding how much to distribute in the form of rations and how much as cash. Program designers should keep the following four key considerations in mind when deciding if food transfer programs are ap propriate or necessary: x The functioning of food markets, including access, transport, and storage, and how this is reflected in the prices of staples. If markets are well integrated across regions, cash transfers have an advantage because of the private sector’s superior ability to move food and other goods more efficiently than the public sector. Furthermore, some argue that providing cash can have a positive impact on smaller trade and other economic activities (Devereux 2000). However, if markets are thin, poorly integrated across regions, or monopolistic, the provision of cash may increase prices, which reduces the value of the transfer and may cause additional hardship to those poor households that do not receive any transfers (Devereux, Mvula, and Solomon 2006). A close monitoring of prices, not of production, is needed to assess the situation. x The level of transaction costs for the program and for beneficiaries. Most of the argument about transaction costs refers to the high cost of distributing food provided by donors compared with the relatively lower cost of distributing cash. Food distribution takes time to organize, requires storage and transport, and is subject to losses and pilferage; and the public sector tends not to be efficient at keeping costs down. However, in some places where marketing and transport channels are not developed, only the public sector can provide adequate supplies in local markets. Beneficiary transaction costs also need to be taken into account. These costs include the time and expense of going to local markets, which might increase if places are far or unsafe. x The impact of the form and size of the transfer in determining the level of food consumption. Poor households are more likely to consume food and to eat good food if they receive a small transfer. Some claim that men might use cash transfers to purchase such commodities as cigarettes or alcohol, and the literature indicates that small food transfers result in higher food consumption than cash transfers (del Ninno and Dorosh 2003; Fraker 1990). Moreover, Hoddinott and Islam (2007) and Jacoby (2002) show that households are more likely to stick (the so -called flypaper effect) to consumption patterns and intra-household distributions that have a positive impact on the nutrition of children if they have access to small transfers of good food. x The preferences of the beneficiaries. Beneficiary preferences may vary depending on circumstances. Even though beneficiaries may prefer cash simply because it is more flexible, they still want to maximize the level of the transfer and their control over it. This is why women in certain circumstances might prefer food to cash (see Ahmed, Quisumbing, and Hoddinott 2007 on Bangladesh and Sharma 2006 on Sri Lanka). Source: Grosh et al., 2008. C. Universal subsidies: Tax and duty exemptions on food products 153. Tax exemptions have been introduced periodically since 2005. Along with State Intervention Stock (SIE), the government uses tax exemptions in the attempt to stabilize food prices. In 2005, the government introduced VAT exemption on 110,000 MT of rice 66 and 100,000 MT of maize to mitigate negative effects of the food crisis induced by natural disasters and subsequent low production. Following world food price increase in 2007, the government granted tax exemptions again on rice import from July to October to reduce the price of rice price when demand is high – during the lean season and Ramadan. This measure was reinforced and extended in 2008 in response to a particularly sharp increase of food prices. Tax exemptions were granted on rice, cooking oil and powdered milk over a six-month period, from April to September (Table 22). In addition, the government temporarily reduced taxation of petroleum products, particularly diesel, and temporarily banned export of rice, corn, millet and sorghum (not comprehensively applied and lifted in December 2008). In 2009, despite the Rice Initiative and its subsidies on agricultural inputs, prices increased, and the government introduced rice subsidies again from March to May 2009.24 Table 22: Conditions of Tax Exemptions Granted on Food Commodities, 2008 Commodity Tax exemption period Ceiling wholesale price Ceiling retail price Rice 01 April to 30 Sept. 2008 300,000 CFAF/MT 310 CFAF/Kg Oil 01 August to 30 Sept. 2008 162,970 CFAF/200L barrel 815 CFAF/L Powdered milk 01 August to 30 Sept. 2008 72,970 CFAF/25Kg bag 2,906 CFAF/Kg Source: Ministry of Economy, Industry and Commerce, 2008. 154. Tax exemptions seem to have a positive stabilization effect on prices of rice – as well as dry cereals. The objective of the 2008 tax and duty exemptions was to lower the consumer prices: it was expected to see a price reduction for imported rice first and then by substitution effect, for the local rice and perhaps even for dry cereals – mil, sorghum and maize. Reviewing the stabilization effect of tax exemptions since 2005, Galtier et al. [2009] found that the stabilization effect on the local rice price was relatively low, indicating that local rice substitutes poorly for imported rice. On the contrary, an early stabilization of the price of dry cereals was observed, probably due to substitutions with imported rice. The authors thus concluded that tax exemptions on imported rice were an adequate stabilization instrument not only in situation of “imported” instability (e.g., increase of the world rice price) but also when high food prices come from a poor harvest. However, they also noted that tax exemptions had a depressive effect on producer prices. Overall, this type of policy measure appears to be effective to stabilize prices – as long as traders pass on the price difference to consumers. Still, as a safety net measure, it poses a series of potential problems. Moreover tax and duty exemptions are costly and not sustainable given Mali’s financial constraints. IMF estimated the total cost in foregone revenue of the 2008 food subsidies to about CFAF 7.8 billion. 155. The impact of subsidies was regressive, benefiting the non-poor, who consume more of the subsidized goods, than the poor. In Mali, rice represents 10.7 percent of household expenditures on average, but only 6.9 percent for the poorest quintile, and 11.1 percent for the richest quintile (Figure 13). 156. The share of rice consumption of the bottom 40 percent of the population is 11 percent. This means that out of every CFAF of tax cut, only about 11 cents might benefit the poor. Subsidizing “cheaper” cereals such as mil, sorghum and maize, whose consumption is higher in the poorest quintiles, may have led to a more progressive impact. 24 Figures for 2009 need to be checked with the authorities. 67 Figure 13: Proportion of Household Expenditure for Main Cereals, 2006 Rice 10 20 Mil/sorghum Maize 20 0 0 0 Quintile Quintile Quintile Quintile Quintile Quintile Quintile Quintile Quintile 1 2 5 1 2 5 1 2 5 Source: Bibi et al., 2009 based on ELIM 2006 data. 157. Tax and duty exemptions can also penalize local producers, if depress the prices of locally produced rice. Moreover it is not always guaranteed that tax exemption will benefit consumers. Middlemen may make the most profits, especially if markets are dominated by a few traders – about fifteen importers share the rice market with the four largest, representing 72 percent of the market [Bibi et al., 2009] and the total supply of food is not increased. 158. Overall, food subsidies are very expensive and appear to be poorly efficient. Bibi et al. [2009] estimated that such a measure benefited predominantly the urban population. In addition, it would only reduce the food poverty increase that was induced by 2008 crisis from 10.3 to 10.0 percentage points for the total population and reduce the caloric deficiency increase from 8.5 to 8.3 percentage points. The authors also stress the fact that this measure encourages a substitution towards products that have a higher cost per calorie than millet or sorghum for instance, and that such a policy can tend to increase caloric deficiency in urban areas. Bibi et al. also estimated that food subsidies had almost no impact on the enrolment rate of children in school– with only 0.04 percentage point reduction of the high food prices crisis impact and almost no impact on access to health care – with a reduction of the impact of the crisis of 6 percent. 159. High food prices justified emergency compensatory measures, but targeted programs and policies to boost agricultural production are likely to be more efficient in mitigating the impact of high food prices in the long run. In 2008, Joseph and Wodon estimated that the expected increase in the price of the various cereals of 25 percent would lead to a substantial increase in poverty, with an increase by at least 1.7 percentage points of the share of the population in poverty – representing close to 300,000 persons falling into poverty. Joseph and Wodon thus agree that the food price crisis justified the implementation of compensatory measures to protect the most vulnerable households. However, they argue that measures such as a broad import tax or value added tax cuts or food subsidies would probably fail to reach the poor. Moreover, they indicate that targeted interventions would probably be more effective in reaching the poor, as would interventions designed to increase rice production in the country. Increasing rice productivity also appears more pro-poor than reductions in the import taxes on rice. D. Labor intensive public works 160. The PEJHIMO implemented by APEJ with ILO technical assistance and Luxembourg financial support is one of the flagship programs of the president. Althogh the program was launched in 2004 in the Segou Circle as a pilot, it has now been 68 expanded for the period of 2007-2011. The SAP [2009] also recommended the introduction of public works (remunerated in cash) in urban areas between March and June 2009, and FFW in the Sahel (especially to prevent locust invasions). 161. The PEJHIMO was primarily designed as a bridge to employment. The program promotes the use of local labor force and local materials through activities such as reforestation, pond improvement, rural trails and most interestingly, paved roads. Paving stones are extracted in Mali, and youth are trained as stone cutters and layers. A paved road costs significantly less than an asphalt road, uses only local materials and is significantly more labor intensive: when 6,000 m 2 of asphalt road would only require 50 men.day, the proposed paving technique employs 6,000 man.day [ILO, 2007]. Considering the huge needs to improve infrastructure in the Mali, this approach may offer interesting job opportunities. 162. The PEJHIMO wage is much higher than both minimum and market wages. Stone cutting is a hard and technical job, and trainees are paid between CFAF 3,000 and 3,500 a day, which is much higher that the monthly legal minimum wage of CFAF 28,465. Even in other types of projects, participants would be paid above the minimum salary rate . Thereby, unlike most public works programs, this program does not rely on self-targeting mechanisms (wages below market rates) and the beneficiaries are not the poor. 163. In the selection of beneficiaries, no strict poverty or gender criteria were considered. The PEJHIMO was developed to offer direct employment to the youth, as well as to offer training opportunities that could support job creation in rural areas. Moreover, Mali adopted a broad definition of the “youth” to include people aged 15 to 40 (i.e., most of the active population), given that adults over 40 represent only 35.2 percent of the active population. Local authorities are then responsible for selecting beneficiaries, with no specific criteria set nationally other than the age limits. The PEJHIMO is run in poor and vulnerable areas with the primary objective to provide training, local development and new employment opportunities and contribute to poverty reduction : there has been no attempt to enrol the poorest individuals in the program. The PEJHIMO is run throughout the year, and trainees are kept in the program as long as req uired to learn the job, for period of up to 90 days. 164. The PEJHIMO builds on public-private donor partnership in the financing and running of the program. The government (with HIPC funds) supports infrastructure costs, and the Grand Duchy of Luxembourg (GDL) provides financial support for ILO technical assistance (Table 23). Local authorities are the infrastructure contractor and are responsible for beneficiary selection; the private sector is also engaged in the program; and local communities are involved in infrastructure maintenance. This supports the establishment of a dialogue between communes and local groups to create a community dynamic for better project ownership. However, financially the program remains dependent on external funding, and currently faces difficulties expanding beyond the GDL’s intervention area. 69 Table 23: Funding Sources of the Pilot PEJHIMO, 2005-2007 Contribution Amount (CFAF) Share (%) Investment (HIPC funds) 1,044,000,000 64 Technical assistance (Luxembourg contribution: US$1.150m 557,750,000 34 Technical assistance (APEJ contribution) 33,000,000 2 Total 1,634,750,000 100 Source: ILO, 2007. 165. The PEJHIMO also has the direct positive effect of providing employment and training opportunities in poor areas. During the pilot phase, the share of investments allocated to manpower was 54-59 percent in rural track projects and 57 percent in paved road projects, while the average cost of assets remained competitive (e.g., the cost of improving rural tracks was almost 20 percent lower than similar programs implemented in the region) [ILO, 2007]. The program also has numerous indirect positive effects on the local economy, including the valorization of agricultural production, the reduction of transport costs, the multiplying effects of cash transfers, community mobilization and population awareness of infrastructure maintenance. For paved road projects, local expenditures approached 80 percent of total costs during the pilot phase [ILO, 2007]. After a few years of implementation, the project and APEJ have developed a real implementation capacity that could support a nationwide program: The 2007 evaluation concluded with the recommendation to expand the project nationally. The approach is particularly interesting since it contributes to the development of infrastructure as well as supports the decentralization process. The APEJ is actively promoting labor intensive approaches – especially for the paved road model – among decision makers involved in infrastructure projects, with some success. In addition, it could provide the basis for donor support to initiate scale-up. 166. WFP provides food-for-work and food-for-skills activities to mitigate soil degradation and to support initiatives aimed at setting and developing agriculture lands in food-insecure areas (e.g., market gardening-based on small-scale irrigation and bottomland development). In 2010, the program is expected to enroll a total of 50,000 participants and provide a daily ration of 400 g of cereal (1,340 kcal) over 30 to 90 days to the participants and their families (210,00 beneficiaries in total). The Communal Management Committees (comites de gestion communaux or CGC) are responsible for facilitating the participation of beneficiaries. WFP gives priority to programs that are aimed at responding to the needs of women. In fact, 50 percent of participants are to be women – a figure that should gradually increase to 70 percent by 2012. 167. USAID also supports food-for-work activities through its Food for Peace program, including the five-year “Nema” project 2008-2013 implemented jointly by Catholic Relief Services, Save the Children and Helen Keller International. An evaluation of CRS FFW projects questioned the continuation of FFW activities without the distribution of food. In the regions of Mopti and Gao, which are suffering from a chronic food deficit, the population begins to count on distribution of food and could fail to show motivation if this is interrupted. Furthermore, the final evaluation notes that the “life span of the infrastructures created is limited because of the lack of a higher level of technical expertise in their design/implementation. Though in some FFW sites (Agsha, Lobou, Djebock, Tafdite, etc.) the willingness of the population to maintain the works undertaken in 2007 was noted, there is no clear indication (concrete plan, schedule, etc.) aimed at ensuring the maintenance of the infrastructure after project closeout.” [Napon, 2008:27]. 70 168. Building on the PEJHIMO and the food-for-work programs (WFP and USAID) experiences and capacities, other types of public works programs could be introduced as effective social safety net instruments. A recent review of the experience with public works programs in several countries shows that well designed and implemented public works programs can help mitigate income shocks and be used as an effective anti-poverty instrument (Box 9). However, the effectiveness of public works as a safety net instrument highly depends on the ability of the program to provide additional sources of income to the most vulnerable population when it is most needed. Moreover, further attention would need to be put on the targeting methods, length and timing of work, specific design features that can increase the participation of women, and community participation (Box 10). Particularly the choice of the remuneration method can affect the targeting and outcomes of the public works program. Task-based payment provides flexibility and may attract more women to worksites. In addition, community involvement in the selection of public works projects is crucial to ensure the most-needed assets and to create ownership. 71 Box 9: Public Works Programs: Elements Required for Reaching the Poor Self-targeting by setting the wage rate at an appropriate level. In a context where poverty targeting appears particularly challenging, and where financial and administrative capacities remain limited, relying o n self-targeting is attractive. However, this will only be possible if the market wage is above the minimum wage. Indeed, the publicly funded program wage cannot be lower than the minimum wage and would hence be higher than the local wage for unskilled labor, thus likely to attract the n on-poor to the public works program. So if the minimum wage is equal or above the market wage and restrictive employment laws prevent setting the wage below the minimum level, the possibility of using self-targeting is hindered and other targeting mechanisms need to be introduced. The use of pure self-selection might also be insufficient in reaching vulnerable groups in poor areas or when demand for participation is very large and some form of employment rationing is needed. The fact that youth aged 15 to 24 represent a third of the unemployed – with young women even hit harder than young men – may also suggest adopting targeting methods to reach these categories specifically. In addition, setting the program wage too low also presents the risk of excluding poor households that have higher opportunity costs of labor – if the program wage is below the reservation wage or the risk of missing program objective (e.g., nutrition objective if the program wage is far below the cost of the minimum basket). It is crucial to ensure the program wage is set in relation to the project goals. Provision of quality public goods is crucial. Based on international experience, public works should only be promoted as a social safety net instrument if the public goods generated have a positive impact on the community and are built at a cost similar to that charged using hired contracting procedures. It should not be introduced as strategies to provide social transfers to ‘deserving’ poor. Public works projects may include traditional infrastructures or public environmental improvement projects (e.g., sanitation projects to roll back malaria, natural disaster risk reduction projects), but also social activities (e.g., South Africa’s home-based care workers and early childhood development workers) or economic activities (e.g., small businesses and cooperatives). The public goods produced if relevant, well executed and maintained, could have an important role in alleviating constraints to higher returns for poor people, regardless of th eir participation in the program. Since 2004, the WFP has promoted synergies between FFW programs and school feeding and nutrition programs (e.g., building classrooms, storage rooms, latrines, etc.). The WFP is also giving priority to community projects benefiting women. To address chronic poverty, public works programs should run throughout the year with varying degrees of intensity. A program run during agricultural slack seasons only, when the opportunity cost of labor is low, would provide “consumption-smoothing” for poor households but no insurance to find a job whenever it is needed. A program operating throughout the year with varying degrees of intensity will provide both “insurance” and “consumption-smoothing” for poor households. In countries with widespread levels of unemployment and underemployment, standard short-term public works programs proved unable to lift the chronic poor out of poverty. Brazil, Argentina, India and Bangladesh represent some good practice examples of countries where the program served the functions of insurance, consumption -smoothing and poverty reduction. To ensure additional coverage, the number of days worked can be rationed and a rotation system applied. For instance, India provides a legal guarantee of one hundred days of employment a year to any rural household willing to do public work for a statutory minimum wage, and Ethiopia assists over seven million chronically food-insecure people – about 10 percent of the population – through its Productive Safety Net Program’s employment schemes and food or cash transfers. This being said, high labor intensive public works projects can also be effectively used in the aftermath of natural disasters, for the rehabilitation and reconstruction of damaged or destroyed infrastructures. Source: Grosh et al., 2008; del Ninno et al., 2009. 169. Community involvement and ownership is a crucial element of a successful public works program. Seasonal FFW projects also revealed the risk of dependency and disincentives. An evaluation of CRS FFW projects questioned the continuation of project activities without the distribution of food. In the regions of Mopti and Gao, which were suffering from chronic food deficits, the population counted on the distribution of food. Furthermore, the evaluation of existing programs has raised some concerns in respect to required maintenance for the infrastructure created, particularly due to the lack of a higher level of technical expertise in their design/implementation by the communities. Even though in some FFW sites (Agsha, Lobou, Djebock and Tafdite) the willingness of the 72 population to maintain the work undertaken in 2007 was noted, no clear indicat ors (concrete plan, schedule, etc.) were established to ensure maintenance of the infrastructure after project closed [Napon, 2008:27]. Box 10: Targeting Effectiveness of Public Works Programs: International Experience While there is a need to keep in mind the ultimate objectives of static and dynamic poverty reduction, targeting effectiveness clearly remains an important factor in assessing cost effectiveness of public works programs. In general, targeting performance has been good relative to other targeted public interventions. x In Chile, almost 100 percent of participating households were poor. x In Argentina’s Trabajar program, around 80 percent of households were from the poorest quintile, and 60 percent from the poorest decile. In addition to the low program wage rate, this outcome was achieved by including the local level poverty rate in the scoring formula for determining program allocations. x Various researchers have found positive targeting outcomes on the India’s Maharashtra Employment Guarantee Scheme (MEGS), at least prior to the 1988 increase in minimum (and hence program) wages. A dedicated survey of MEGS participants from 1978-79 found 90 percent of workers living below poverty line, even including EGS earnings in the calculation, at a time when the poverty headcount similarly calculated was 49 percent. A later survey in 1985-86 found mean incomes of participating MEGS households to be around 20 percent below the poverty line. The positive targeting outcomes are confirmed by other analysis for 1979-85. There is also evidence that the scheme’s targeting performance deteriorated when the wage rate rose substantially in 1988. x In Bangladesh, targeting of the Food-for-Work Program was also found to be good, with program participants coming from poorer households than the rural population as a whole, and the total number of person days of work created even more pro-poor. While around 25 percent of all rural households had incomes below 1500 taka in 1981-82, around 60 percent of FFWP participants had incomes below this level. Equally, around 70 percent of program employment went to the 25 percent of rural households with income below this level. x Under the Bolivia Social Investment Fund, 77 percent of participants came fr om the poorest 40 percent of the population. Assessments of other SIFs in Honduras, Nicaragua and Peru have also found pro -poor incidence of SIF benefits. x In Philippines, most public works participants were from marginally poor and non-poor households rather than the very poor. This outcome was largely driven by program compensation which provided for official MW in cash plus in-kind benefits which took the total compensation package above the market wage. x In Indonesia, assessment of safety net programs introduced after the Asian crisis found that public works schemes which relied on self-targeting were much more likely to reach households which had suffered large shocks than programs which relied on administrative targeting methods, including subsidized rice, scholarships and health subsidies. x Analysis from all-India NSS data on public works schemes for 1993-94 indicates pro-poor targeting performance, but that inclusion errors remained significant. Targeting performance was also better in comparison to both PDS (then untargeted) and micro finance program (IRDP). Sources: K. Subbarao (2003) and Carlo del Ninno, K. Subbarao and A. Milazzo (2007). 170. Overall, based on international experience, well-designed and implemented public works can be an effective anti-poverty instrument, and their role as an effective element of the social safety net could be further supported. Building on the PEJHIMO experience as well as on other experiences in food-for-work projects throughout the country it is possible to design effective public works programs. However, they will have to be combined with other targeted safety nets in order to create an effective safety net system that can provide the necessary support to poor and vulenerable households. 73 E. Fee waivers for health 171. According to the government, the indigent and the elderly are entitled to fee waivers. In line with the Bamako Initiative seventh principle, Mali expects the indigent to benefit from fee waivers. Fee waivers for the elderly are specified in the national action plan for the elderly. The MDSSPA [2008] estimates that in 2007, 35.6 percent of the destitute, 62 percent of elderly and 21 percent of women with no resources benefited from fee waivers. The MDSSPA expects these percentages to rise to at least 53.6 percent, 80 percent, and 39 percent respectively by 2011. However, further information is required on the accuracy of both baseline and target figures. 172. Vague eligibility criteria and the lack of a reliable registration system could exclude the poorest. In Mali, the elderly and indigent are required to present a government-issued cards to receive the fee waivers for health services. With no clear definition of “indigent”, the criteria to meet background checks remain very subjective and the card expires after one year (Box 11). The distribution centers are in Bamako for the elderly and among MDSSPA decentralized locations for the indigent: in each case, travel is likely. The extent to which individuals are informed of their rights – free health services, possibility to get an elderly/indigent card – is not clear. 173. There is no guarantee for elderly/indigent card-holders to actually access free health services. Free medical consultations are only accessible to the elderly at the medical center for the aged in Bamako (Institut d’Etudes et de Recherches en Géronto- Gériatrie called Maison des Aînés or IERGG-MA). Elsewhere, elderly card-holders are not guaranteed free medical assistance. It is the responsibility of decentralized structures (e.g., hospitals and communes) to provide the indigent with free emergency treatment in health centers and subsidized health services to the elderly and card-holders, with no specific funds transferred to them. So fee waivers are not guaranteed even for card-holders, and it depends on the good will of health structures. 174. In addition, the implementation and efficiency of general health subsidies have some issues. A number of specific health treatments are provided for free, but serious issues prevent these measures from being fully effective. The national pharmacy (Pharmacie Populaire or PPM) supplies health centers with subsidized consumables; regional health structures submit requests for reimbursement for any additional consumables to be provided for free purchased by health centers or any other additional costs (e.g., staff costs for caesarian sections). The system has, among others, problems like delays in supply and reimbursement, lack of information on the beneficiaries, etc. A recent evaluation of the “free caesarian section” initiative [INRSP, 2009] revealed that while the initiative had shown positive results, challenges needed to be overcome if the initiative was to be sustained, including: poor financial contribution from decentralized authorities, irregular supply of kits, and lack of awareness of the program among the population. 74 Box 11: Public Assistance to the Indigent The “indigence certificate” is an administrative document delivered by the sub-prefect, the prefect, the mayor, or the police captain for homeless cases found on the public highway. To obtain an indigence certificate, one must direct a request to one of the above-mentioned authorities. The request is transferred to the Social Service for inquiry. Inquiry results are sent in a confidential envelope to the requesting authority, who then decides whether to deliver the certificate or not. The certificate is valid for a year. The provision of care to the indigent is supported either by State budget or by the communal budget, or by other budgets stemmed from different types of solidarity. Authorities involved are: the authority signatory of the indigence certificate, MDSSPA’s services, and specialized social services. The signatory authority holds overall responsibility and is to mobilize necessary funds. Social Development services (national, regional and sub-regional) assist the indigent as per their solidarity mission. Various bodies provide assistance/rescue (e.g., civil defense, red cross, etc.), but the provision of assistance (assistance-secours) is a core responsibility of the MDSSPA’s DNDS. Assistance may be granted following a decision of the Aid National Commission (Commission Nationale de Secours or CNS). The DNDS prepares and submits requests to the CNS which is responsible for allocating aid stemmed from the Aid Fund allocated by the State (Decree N°44/PG of 22 February 1968). The DNDS may also provide assistance on an ad-hoc basis to persons in need (secours d’urgence). Specialized social services – hospital social services, school and university services, court social services, prison social services – also assist the indigent. Stable resources available in these specialized social services remain State resources. Hospital social services also receive private donations. In 2004, the DNDS observed the following weaknesses in the system: lack of a special registry for the registration of indigents by authorities that deliver certificates; inability of signatory authorities to honor their commitment after the delivery of the certificate; inexistence of reliable statistics on the situation of the indigent in Mali; insufficient functional relations between signatory authorities and Social Development structures in charge of indigents’ monitoring; inadequacy of amounts allocated to indigents’ care; and no meeting of the Aid National Commission held in spite of the Decree N°44/PG of 22 February 1968 [DNDS, 2004]. Since then, no improvement has been made to the system. Source: MDSSPA; Staff estimates. 175. Partial health subsidies seem to be ineffective at increasing access to health services. Evidence collected by the international NGO Médecins sans Frontière (MSF) in the Kangaba Circle (Koulikoro Region) on access to malaria treatment revealed that the State’s current partial subsidy – free ACT for under 5 but no waiver on user fees – is inefficient in increasing the use of health services. Figure 14 shows that the provision of free malaria treatment after 2005 had little impact on the use of health services. Additional fee waivers meant to protect the indigent reached less than 2 percent of households coming to the CSCOM and not necessarily the poorest. In contrast, the provision of full gratuity (removal of user fees and provision of other medicines for free) for under 5 and pregnant women with fever in 2007 – on top of free malaria treatment – translated into an immediate sharp increase of the number of consultations and malaria treatment. 75 Figure 14: Impact of Free Malaria Treatment Alone and Full Gratuity for Under 5 on the Use of Health Services in Kangaba Circle, 2004-2008 3.5 Number of new consultation per year 3 All 2.5 <5 year-old 2 >5 year-old Pregrant women 1.5 1 0.5 0 2004 2005 2006 2007 2008 no intervention free malaria treatment free malaria treatment full gratuity for under 5 full gratuity for under 5 for under 5 for under 5 & gratuity for pregnant & gratuity for pregnant women with fever women with fever Source: Staff estimates based on MSF data. 176. Research is ongoing on the appropriateness and feasibility of user-fee abolition, particularly for vulnerable groups. To date, national health subsidy/waiver experiences meant to mitigate the negative effects of cost recovery systems for the most vulnerable groups did not prove efficient. In the context of widespread poverty, this type of mechanism does not seem appropriate and other alternatives – including free essential health services – need to be further explored if health services are not to be enjoyed solely by the privileged populations. Globally, the use of user fees is increasingly questioned (Box 12). While it is clear that user fees must be abolished, how to implement this policy measure needs further investigation. 76 Box 12: The Debate over User Fees Globally, user fees have increasingly come into question. Research in Mali, Burkina Faso and elsewhere showed that user fees reduced the access of vulnerable populations to health services, leading to a reduction in service use, particularly among women and the poorest [James et al., 2006 cited in Ridde and Haddad, 2009]. In its 2008 annual report, the World Health Organization (WHO) urged countries to “resist the temptation to rely on user fees” [2009:26]. User fees were successfully abolished in Uganda, Ghana, South Africa, Madagascar, and Niger. In Uganda, abolishing fees doubled the number of people going to clinics, and more than doubled immunization rates for children. James et al. [2005] estimated that more than 230,000 children’s lives could be saved each year if fees were abolished in twenty African countries. An increasing number of donors support governments willing to abolish user fees for basic health services [DFID, 2006; Ridde and Haddad, 2009]. Now, while it is clear user fees must be abolished, how to accomplish this is not really known . A recent study on the effect of removing direct payment for health care on utilization and health outcomes in Ghanaian children [Ansah et al., 2009 cited in Ridde and Haddad, 2009] showed that pre-payment schemes are not pro- poor, because the worst-off are rarely enroled. And Ridde and Haddad [2009] stress that local health insurance systems have shown limits in Africa, where the penetration rate, after more than 15 years of promotion by their organizations, remains very low (5 percent). They also point out the considerable gap between “the enthusiasm generated by pre-payment schemes and the scientific evidence to support their use”. Still, as long as there is no evidence that health insurance schemes are ineffective, they call for the protection of families against catastrophic health care costs and the removal of financial barriers to health care as a health system priority. Recent and ongoing studies of the abolition of user fees may shed light on the debate . Studying the effects of operating the Bamako Initiative in one district of Burkina Faso, Ridde [2003] found that the study district was in a position to bear the financial cost of taking care of the poor and that the community was able to identify such people. He thus recommended the State introduce incentives so that the communities agree to enforce a more equitable health system. A 3-year follow-up study launched in 2008 will test the feasibility and efficiency of different models aimed at ensuring health care to the poorest (community -based targeting with and without a set percentage of beneficiaries, endogenous/exogenous financing, etc.). This study is to lead to the drafting of a practical guide for the implementation of fee exemptions in other parts of the country. And in June 2009, a three-year research program (funded by the CRDI and the AFD) was launched to document policies on the abolition of health user fees in Mali, Niger and Burkina Faso following an interdisciplinary approach (anthropology, political sciences, epidemiology, and public health). Source: Staff estimates. 177. Fee waivers on health services will not be a sufficient measure to increase access of the poor to health care. A number of studies that are about to be launched may shed light on the debate. They include the monitoring of subsidized health services, and an estimation of the financial impact on community-based public and private health structures (esp. CScom and CSréf) of the introduction of consultation, diagnostic and medicine fee waiver (full financial support) for all children under 5. The Kangaba experience suggests that providing free health services to children under 5 would be affordable (Table 24). Indeed, an increase in the use of health services translates into a reduction of user fees due to economies of scale and the optimization of staff and administrative costs. In the Kangaba Circle, the cost per patient went down by 20 percent between 2005 and 2007 [MSF, 2009]. These low fees for all patients lead to a significant increase in the use of community health services. In fact, user fees are only one part of the expenses incurred by the sick. Financial burdens like indirect costs and access barriers (e.g., transport and opportunity costs) must also be considered. In that regard, the MSF experience provides invaluable lessons. In July 2007, MSF and the CSCOM organized a network of community malaria workers (agents palu) to provide, in remote areas during the high transmission season, free treatment to children under 10 affected by a simple case 77 of malaria.25 This reduction of the access barrier translated into an even higher percentage of cases treated and a sharp reduction of the mortality rate. Table 24: Cost of Providing Full Malaria Treatment to Children under 5 in Kangaba Circle Low malaria transmission High malaria transmission Cost of health services (January-June) (July-December) Cost per consultation of under 5 (CFAF) 1,384 1,273 Use of health services by under 5 (new consultation/inhabitant/year) 0.93 1.92 Cost per child under 5 per season (CFAF) 1,246 2,427 Average cost per child under 5 3,674 (CFAF) Note: Original data in EUR converted in CFAF using exchange rate of CFAF 656 for EUR 1. Source: MSF, 2009. 178. The question of fee waivers/abolition needs to be reviewed in the context of broader health policy and health financing debates, such as, under the framework of “Compact IHP+ Santé” or “PRODESS” (to be revised in 2010). Lack of access to quality health services is a crucial issue in Mali, where social indicators remain particularly low: the under five mortality rate is 196 per 1,000 live births, meaning that more than 300 children under 5 years old die every day (or one every five minutes) [DHS, 2006]. This mortality rate borders an emergency situation. In Kangaba, MSF reported an extremely high exclusion rate: 23 percent of the sick do not seek treatment even when the family considers it necessary. This rate is higher than those collected in other African context, even in post-conflict situations. This situation, which is mainly linked to lack of availability and access to quality health services, is unacceptable in a stable environment and when the main causes of mortality are infectious diseases that are treatable in a context of functional and accessible health services offer [MSF, 2006]. F. Summary of findings 179. Mali only has limited experience in cash transfers. Interest in this type of instrument is quickly growing (primarily among partners) and new pilot programs are envisioned. Cash transfers have a great potential particularly to tackle chronic poverty, and a large pilot program with strong State engagement is desirable. 180. Food transfers and in-kind programs are the main type of social safety net program used in Mali. There are efforts to promote local procurement, and some partners are considering switching to cash-based responses whenever appropriate (e.g., WFP considering moving to cash-for-work). 181. Nutrition programs have been developed in recent years with donor support. In Mali, investing in nutrition appears particularly crucial to achieve development and poverty reduction goals. Nutrition programs are to be developed with stronger State engagement, which requires the strengthening of the strategic and institutional framework for nutrition. 25 Unlike existing voluntary relais communautaires, the agents palu are chosen by communities, trained and closely supervised by the CSCOM, and paid CFAF 25,000 a month. 78 182. School feeding programs are supported by both the government and partners in most vulnerable areas of the country. The demand for school feeding remains high, and an integrated model, vector of local development, is being promoted and should be further developed. 183. State-supportes food distribution through the SNS and cereal banks. But their coverage is insufficient compared to the needs. The general food subsidies through tax and duty exemption seem to contribute to consumer price stabilization. However private stocks may actually play a greater role in price stabilization, and little impact on producer stabilization was observed. Overall, there is no evidence to appreciate the actual impact of these measures on the poorest and most vulnerable. Moreover, similar to other countries’ experience, general food subsidies are regressive because they target products mostly consumed by the non-poor. 184. The State-supported public works program provides employment and training opportunities in poor areas, and contributes to promote the labor intensive approach in Mali. The program was not designed as a safety net and does not intend to target the very poorest. Many food-for-work projects are implemented in rural areas, largely with the support of development partners. None of these programs use self-targeting. 185. National health subsidy/fee waiver experiences meant to mitigate the negative effects of cost recovery systems for the most vulnerable groups did not prove efficient. The implementation of fee waivers for the indigent is impeded by the lack of targeting guidance, and the lack of financial compensation for health centers/local authorities. Partial general health subsidies also proved inefficient as they do not lift the financial barrier to health access. There is ongoing research to feed to debate on user-fee abolition particularly for vulnerable groups such as children under 5 and pregnant and nursing women. 79 CHAPTER V: FINANCIAL FEASIBILITY OF AN EXPANDED SOCIAL SAFETY NET SYSTEM Previous chapters showed that budgets allocated to social safety nets are insignificant compared to needs, and suggest an increase of social safety net budgets – along with an improvement and expansion of the social safety net programs. Of course, any proposed reform/expansion plan must be financially feasible. This chapter focuses on the financial sustainability issues and attempts to identify and quantify the sources of fiscal room that could support safety net programs. Several policy options are open to the authorities to tackle poverty, but, in part because of their managerial and financial resource implications, they entail trade-offs. The Government of Mali, while committed to social protection, must ponder the possible trade-offs for long-term growth and poverty reduction involved in financial arbitrages among different programs and policies. Within the constraint of its budget profile, the government must allocate limited resources among programs that, say, support the current income of the poor, promote education for girls, or expand the still limited stock of public physical capital, such as roads. In a larger debate, these considerations have to be borne in mind, particularly in the context of the current economic crisis where spending on human capital may be threatened, due to pressures on financial resources. This chapter starts from the premise that supporting the current income of the poor is a sensible policy choice, as the previous chapters of this report have demonstrated. This chapter, however, will not discuss the main policy trade-offs per se, but focuses on the financial dimensions of the problem and its possible solutions. Section A discusses possible options for developing a Social Safety nets system and provides some indicative cost estimates for an expanded program. Section B reviews different alternatives for increasing social safety net budgets. A. Cost estimates of an incremental expansion of the system 186. The first option is “option zero” which consists in leaving the SSN programs unchanged from their current levels (about 0.5 percent of GDP in 2009). The main, and perhaps the only, advantage of this option is that it entails zero additional cost in the short term. However, longer-term economic and social effects may be very costly. 26 In the face of the current macro and fiscal uncertainties (both on the government and the donor side), this may be the most tempting option in the short term. In that case, the focus of the fiscal policy would be to preserve expenditure in social sectors at their current levels as percentage of GDP. Arbitrage should focus on promoting or scaling up the most cost- effective programs. 187. The second option would be the “incremental option” which would consist of gradually expanding some effective and complementary SSN programs such as nutrition programs, public works), as well as introducing new social safety net programs (Table 25). An indicative increase in SSN spending for this option could be, for 26 Indeed, as a World Bank report recently noted [Background paper prepared by World Bank Group staff for the G-20 Leaders’ Meeting, Pittsburgh, USA, September 24 -25, 2009]: “Even mild downturns can have costly and long-lasting effects on human welfare, as families with few alternative employment opportunities and little or no access to credit are forced to reduce food intake, even for very young children, or pull children out of school. Evidence s from past crises shows that children who experience short-term nutritional deprivation can suffer long-term harm. Such possible adverse outcomes highlight the importance of protecting core spending, including on health and education, in the face of sharply declining revenues.” 80 example, doubling of amount (as percent of GDP) spent on SSN programs in the medium term, which would bring total spending at around 1 percent of GDP. The benefits of that option is that costs of SSN financing would remain controlled, their manageability would be better secured, while fiduciary risks associated with large scale programs would be contained. The disadvantages are that this option would not make a significant dent in poverty alleviation, and may remain vulnerable to the stop-go approach (to mitigate the stop-go approach risk, a choice could be made to build and expand existing programs). Below are some examples of programs that could be financed under this option. Costs could be reduced by selecting the more cost-effective programs among the programs shown below. It is important to remember that the amounts estimated are the net benefits, which means they exclude all of the costs associated with programs management. A margin should thus be added to them to estimate their operational costs. Table 25: Cost Estimates of Incremental Option Type of Social Safety Net program Value (*) Public works, providing minimum wage to all the unemployed Benefit eq. 100 working days for 15-24 yrs at min. wage, in CFAF million 4,140.3 Benefit eq. 100 working days for 25-39 yrs at min. wage, in CFAF million 3,132.9 Indicative total annual cost, in CFAF million 7,273.2 Indicative total annual cost, as % of GDP (2009, nominal) 0.17% Public works, providing 2/3 of minimum wage to all the unemployed (*) Benefit eq. 100 working days for 15-24 yrs at 2/3 min. wage (1), in CFAF million 2,760.2 Benefit eq. 100 working days for 25-39 yrs at 2/3 min. wage (1), in CFAF million 2,088.6 Indicative total annual cost, in CFAF million 4,848.8 Indicative total annual cost, as % of GDP (2009, nominal) 0.12% Conditional cash transfers (scholarships) (*) Number of beneficiary mothers 50,000 Scholarship annual benefit (on a 10-month basis), in CFAF 50,000 Indicative total annual cost, in CFAF million 2,500.0 Indicative annual cost, as % of GDP (2009, nominal) 0.06% School feeding programs, targeting all children in poor areas (**) Indicative total annual cost, in CFAF million 7,100.0 Indicative total annual cost, as % of GDP (2009, nominal) 0.20% Nutrition (*) Average cost/capita/year, in CFAF 12,000 Number of new beneficiaries 500,000 Indicative total annual cost, in CFAF million 6,000.0 Indicative total annual cost, as % of GDP (2009, nominal) 0.20% (1) A change of law may be needed if publicly-funded workers are to be paid below minimum wage. Sources: (*) Staff estimates; (**) Bibi et al., 2009. 188. The third option would be a more aggressive approach to poverty alleviation through national-scale programs. The obvious benefits of this approach would be to address poverty in a significant manner. The challenges are numerous and significant, including financing and fiduciary issues (Box 13). Overall, this option is not realistic and raises the need for a better-targeted safety nets program that reaches at least a portion of the poorest. 81 Box 13: Fiduciary Issues Associated with Government-Managed Expenditure While the government has made strides in strengthening Public Financial Management, important challenges remain. Some of these risks are highlighted below. ƒ Information constraints on expenditure remain significant (Box 3). This difficulty would make it difficult to monitor the expenditure and evaluate the programs. ƒ Internal control is weak. While most ministries have an inspection unit in charge of internal control, the inspection unit from the MoF (Inspection des Finances) has a broader mandate to control all public institutions receiving public funds. This function overlaps with that of the “Contrôle Général des Services Publics” (CGSP) created in 2000. In principle these units control and supervise different aspects of budget implementation (administrative, financial, compliance etc). In practice, their mandates tend to overlap and they are underfunded in relation to their mandates, thus limiting their effectiveness. In addition, coordination between them and with other control units remains weak. Final reports from the Inspection des Finances and CGSP are transmitted to the MoF, the Prime Minister’s Office and the Presidency. The Prime Minister’s Office is in charge of requiring implementation of reports’ recommendations by the audited structures. Enforcement of recommendations appears uneven. In addition, each ministry has its own control unit ( e.g., Inspection des Affaires Sociales in the MDSSPA). In theory, internal control of social protection mechanisms should be guaranteed by the different structures of national, regional and sub -regional services charged with its implementation. ƒ External controls remain limited (less than 50 percent of State resources are audited in 2005). External control is exercised by two institutions: the Supreme audit Institution, (Section des Comptes de la Cours Suprême or SCCS); and the Bureau de Vérificateur Général or BVG). The BVG created in 2005 is meant to be an autonomous administration. The institution is better endowed than the SCCS and benefits from some external support. However, due to an unclear legal definition, its position vis-à-vis other control units is ambiguous, which leads to some questions on its mandate, the status of its inspectors, and the legal value of its reports. Capacity constraints limit the number of audits performed by the SCCS, who focuses on the audit of UN institutions-financed projects, discharge of the State’s budget, and audit of the political parties benefiting from State support. ƒ Legislative oversight is minimal, as follow-up of audit recommendations by the Legislative branch has not yet become organized. The legislature is, however, more focused on budget preparation, and scrutinizes extensively the proposed budget law, including policies and budget’s medium-term perspective. ƒ Monitoring and Evaluation of Programs remains very insufficient and thus cannot inform the allocation decisions of the government. This is hardly surprising given information weaknesses mentioned above. As well, where social assistance programs are concerned, the absence of targeting in favor of personal decisions on granting benefits makes monitoring and evaluation mechani sms redundant. ƒ Anecdotal evidence supports this diagnosis. Informal reports on some food distribution programs as well as food banks suggest that controls are very weak, and accountability for the use of funds is low. The MSDPPA reports no known control reports on benefits allocations. This has also been documented in unpublished studies in the education and health sector [ CEDREF, 2006; Bah, 2007]. Further anecdotal evidence from previous reports [Pereznieto and Diallo, 2008; Bibi et al., 2009] underlines the obligations of the MSSDPA to report and evaluate its programs. In practice, however, the lack of M&E mechanisms in place to provide evidence as to the most cost -effective and results- oriented approaches to achieving effective social protection, so that there is little to no hard evidence about the impact of the social protection programs already in place and how they need to be improved. ƒ The weak accountability environment and the limited capacity of the control institutions raise questions to the ability of the government to implement large scale programs to individual beneficiaries. As the number of transactions between the central government and the ultimate beneficiaries multiply, so do the risks fiduciary risks as has been documented in other social sectors. Source: Authors’ estimate. 82 B. Options for increasing social safety net budgets 189. The Government of Mali basically may consider four options or combination of options for increasing social safety net budgets: (i) reallocations of expenditure; (ii) increased taxation; (iii) increased donor funding; and (iv) borrowing (non-concessional). Table 26 presents a brief overview of these financing options, their advantages and challenges, and this section will focus particularly on the three first options. Table 26: Options for Increasing Safety Net Budgets: Advantages and Disadvantages Financing methods Advantages Challenges Reallocation of ƒ Finances programs within ƒ No additional funds relative to the budget expenditure budget constraints ƒ Depending on the amounts to be freed ƒ Increases overall productivity up, this option could require significant of government outlays commitment from the government to ƒ Efficiency gains by cutting implement trade-offs into unproductive expenditure ƒ Can be difficult to implement if large ƒ Feasible in the short term on a scale reallocations are necessary – that small scale basis particularly if option would require a detailed analysis “low hanging fruits” can be of public expenditure programs and identified for cuts medium-term commitment by government Increased taxation ƒ May be more sustainable than ƒ Economic costs – may have direct and other options indirect effects on the economy, which ƒ Need to be trough improved could harm economic growth and tax management ultimately the poor; needs tax incidence ƒ Provide secured financing in analysis the short-term ƒ Limited return given Mali’s narrow fiscal ƒ May have redistributive effect base and low revenue to GDP ratio (e.g., 10 percent increase in excise tax return = 0.09 percent GDP) ƒ Politically unpopular Donor financing ƒ Concessional financing or ƒ Budget support required for more flexible grants use of funds ƒ Increases the overall envelope ƒ Cyclicality of funding ƒ Donor coordination issues ƒ Needs significant increase in fresh budget support – based on 2010 projections, budget support (loans and grants) would reach only 2.9 percent of GDP ƒ Needs a significant and durable donor commitment towards harmonization and continuity, for gradual or larger scale programs Borrowing ƒ Is no longer a hard constraint ƒ Difficult management (witness 2008) – – started in 2008 in line with currency mismatch in balance sheet developments in WAEMU ƒ High debt service burden; debt overhang ƒ Finances temporary expansion impact on growth – may put Mali at risk of programs during crisis of debt unsustainability ƒ Less reliance on donors ƒ More expensive than concessional financing ƒ Source: Staff estimates. Adapted from Grosh et al., 2008. 83 Option 1: Expenditure reallocation 190. This section concentrates on the “expenditure reallocation” option and attempts to identify and quantify the sources of fiscal room that could support safety net programs in Mali. Several policy options are open to the authorities to tackle poverty, but, in part because of their managerial and financial resource implications, they entail trade-offs. The Government of Mali, while committed to social protection, must ponder the possible trade-offs for long-term growth and poverty reduction involved in financial arbitrages among different programs and policies. This section, however, will not discuss the main policy trade-offs per se but it focuses whether fiscal room could be found through reallocation of selected expenditures in the existing programs, namely (i) social sectors expenditures; and (ii) the overall fiscal situation. Annex 6 provides more detailed review of expenditures reallocation options. Table 27: Functional Composition of Public Expenditure, Using PRSP Methodology, 2002-2008 (% of GDP) 2002 2003 2004 2005 2006 2007 2008 actual As percentage of GDP actual actual actual actual actual actual (prov) SOCIAL SECTORS EXPENDITURES 5.8 5.8 7.0 6.8 7.5 7.8 7.1 Basic education 2.4 2.5 3.2 2.9 3.5 3.8 3.4 Secondary higher education & scientific 1.2 1.2 1.1 1.1 1.2 1.2 1.1 Health 1.6 1.4 1.6 1.7 2.0 1.8 1.8 Other social sectors 0.6 0.7 1.1 1.1 0.8 1.0 0.8 OTHER EXPENDITURES 21.0 19.5 18.1 21.0 19.3 18.7 18.5 Public authorities & general administration 2.4 2.7 2.6 3.2 3.3 3.2 3.2 Diplomacy and foreign affairs 0.5 0.5 0.5 0.5 0.5 1.1 0.5 National defense and internal security 2.1 2.1 2.1 2.2 2.1 2.2 1.9 Culture, youth and sports 0.3 0.3 0.4 0.4 0.4 0.4 0.4 Employment 0.0 0.1 0.1 0.2 0.2 0.2 0.2 Agriculture 3.9 2.7 2.8 4.1 3.0 2.8 3.3 Mining, water resources and industry 1.0 0.8 0.6 1.0 1.3 1.3 1.8 Town planning and public works 3.0 3.3 2.4 3.1 2.9 2.5 3.0 Transport 0.5 0.2 0.7 0.3 0.3 0.3 0.4 Communication 0.2 0.4 0.5 0.3 0.3 0.3 0.3 Domestic debt 0.4 0.3 0.0 0.0 0.0 0.0 0.1 Foreign debt 2.6 1.7 1.4 2.1 1.3 0.7 0.9 Interest foreign debt 0.0 0.0 0.4 0.6 0.4 0.3 0.3 Unallocated funds 4.3 4.4 3.8 3.0 3.1 3.1 2.0 Total 26.8 25.3 25.1 27.8 26.8 26.5 25.6 Source: Government of Mali, Ministry of Finance. Social Sectors Expenditures 191. As mentioned in Chapter III, in the authorities’ PRSP, “Social Sector” refers to “education,” “health” and “other social sectors.” In 2009, total spending in social sectors was around 7.1 percent of GDP, which included 4.5 percent of GDP on education, 1.8 percent on health and 0.8 percent on other social sectors (see Table 27). Looking at social sector spending (specifically health and education) to find fiscal room raises questions: what percentage of public resources are going into social safety net programs 84 versus health and education; and how does the level of resources on SSN programs compare to the government’s policy commitments to protect the poor and vulnerable, particularly in the context of the economic crisis? Overall, a significant proportion of spending classified as social spending does not appear to be targeted at the poor, yet some fiscal space could be created by reorienting part of these expenditures towards poor- targeted safety net programs. 192. Although health expenditures have more than doubled in nominal terms between 2002 and 2009, given the population growth, expenditures are under pressure and they need to be directed towards pro-poor programs. Public health expenditures are around 1.8 percent of GDP in 2008, which is about three times the amount spent on social safety nets, and about 25-30 percent is financed by external sources. Although there is no incidence analysis, a large share of this spending is benefiting the non-poor: only 17 percent of the poorest (or 20 percent of the population in Mali) use the public health system (as opposed to other providers). Extrapolating from these numbers would mean that health expenditure would only serve about 240,000 people out of the 1.4 million in the poorest quintile. Spending on health is about US$5-6 per capita, which is well below the US$15 per capita recommended by the World Bank. However, public health expenditure could be directed towards explicitly pro-poor programs, such as nutrition programs covered under SSNs. For example, based on costs of nutrition programs discussed in the previous section, 27 an increase in nutrition programs to another 500,000 beneficiaries would be of the order of CFAF 6 billion, or about 9 percent of the health budget in 2008. 193. Over the past years, public expenditures in education have also grown significantly in nominal terms and as percentage of GDP, but they are highly skewed towards the most educated population. The education expenditures have reached about 5 percent of GDP in 2008, or over eight times the amounts spent on SSNs. This trend shows that the government has placed education squarely as a priority, at the heart of its strategy for reducing poverty. A growing portion of expenditures are financed by external support, amounting to about one third of total expenditure over the period 2004-2008. However, as discussed earlier overall access to education is highly unequal in Mali. Gender, location, and especially living standards explain inequalities. According to recent review of the sector (RSN), public expenditures in education are highly favorable to the richest quintile and it favors the urban over the rural population and boys over girls. The 10 percent most educated children absorb 50 percent of public resources and a total of 16.3 percent of public expenditures is spent on the first two cycles, constituting 66.5 percent of the school cohorte. Based on available information, the cost of enrolling all unschooled children in Quintile 1 and Quintile 2 would be roughly around CFAF 24 billion, corresponding to about 19 percent of the 2008 education budget, or about 0.6 percent of GDP, which is roughly the equivalent to spending on SSNs in 2008. The analysis of the poverty profile and the RSN suggest that spending in education needs to become pro-poor. Restructuring spending towards improving supply of education is not enough. Demand for education also needs to be supported. To boost demand for education, SSNs raising parents’ income, e.g., through transfers in cash or in kind, and programs supporting school enrolment could be important. 27 This is based on a ssuming an average cost of CFAF 12,000/year per beneficiary for nutrition programs of children less than 5 years old and mothers. 85 194. Finally about 1 percent of GDP is spend on “other social sectors” that covers a range of small programs that cannot be considered as social safety net based on the definition used in this report. Spending on “Other Social Sectors” includes mainly: (i) the Pension Fund (a contributory scheme) (0.6 percent of GDP); and (ii) the budget line called Filet Social (0.3 percent of GDP). The Filet Social covers a range of programs such housing subsidies, income generating activities (Solidarity Bank of Mali), the budget of the MDSSPA, and the National Solidarity Fund (FNS). Overall a significant proportion of this spending does not appear to be targeted at the poor. The pension fund is a contributory scheme for employees in the formal sector. One of the largest components of the Filet Social is the housing program (0.1 percent of GDP) which is not targeted towards the poor because its target beneficiaries are home-buyers with incomes. Other spending include various items that suggest limited effectiveness, efficiency or equity, unclear targeting practices or high administrative costs. For instance, there is room to reallocate expenditure under the Filet Social, by reallocating a significant portion of “common expenditure” and freezing allocations in nominal terms to the housing subsidy program. Freed-up resources could reach up to CFAF 4.0-5.0 billions, or about 0.1 percent of GDP, equivalent to half the estimated cost of transfers to bring urban children under 14 to the poverty line (see Annex 6). On the other hand, the total budget resources managed by the MDSSPA remains very limited (about 0.4 percent of GDP). Nevertheless, between 30 and 40 percent of this budget is devoted to expenses for the administration and the remaining resources go to a number of activities, including strengthening local communities, communication, and transfers in cash or in kind to associations and individuals. Although the Ministry budget is very small and it is heavily dependent on external financing, a significant portion of its allocation under Filet Social is spent on unspecified activities. Therefore, some scope for efficiency gains and improved targeting in the domestic resources managed by the MDSSPA is possible, although this can free-up not much more than 0.01-0.02 percent of GDP, which would remain substantially insufficient compared to social spending needs. Overall fiscal situation 195. The review of existing public expenditures (current and capital) provides also some financing room for SSN. Current expenditure amounted to about 13 percent of GDP from 2002 to 2006 and declined slowly after 2005 to 11.7 percent in 2008. Although the review of the public expenditures is beyond the scope of this report, among current expenditures, Goods and services (G&S) need careful review to determine efficiency gains in that budget category by cutting into unproductive expenditures. Moreover, a detailed review of capital expenditures (which ranges between 9 to 11 percent of GD) could also identify low-return projects and programs worth closing. Nevertheless, while following a prudent fiscal policy, if the government is really committed to develop an efficient SSN system, there is room to increase financing to SSNs from the general budget. Option 2: Increased taxation 196. As mentioned previously, Mali’s narrow domestic revenue is susceptible to shocks. Projections shown in Table 28 are based on sustained GDP growth —albeit below the PRSP objectives—and a strong recovery of Mali’s revenue. However, only in 2010 Mali’s domestic revenue would surpass the 2005 levels as percentage of GDP. Tax buoyancy would be positive during the period (for 2009-2010, projections show tax collection increases superior to GDP growth by 10 percent) which would indicate strong efficiency gains in revenue management and/or a continued boom in the mining sector. By comparison, on average between 2006 and 2008, increases in tax collection was below GDP growth by 1 percent. 86 Table 28: Central Government Budget, as % of GDP 2005 2006 2007 2008 2009 2010 (Est.) (Proj.) Total Revenue 17.9 17.3 16.6 15.5 16.7 18.3 Grants 4.1 5.0 4.7 3.4 5.0 4.4 Total expenditure and net lending 25.2 24.9 24.7 21.2 23.8 22.2 Overall balance (payment order basis, excl. grants) -7.3 -7.6 -8.1 -5.6 -9.1 -6.8 External financing (loans, net) 4.2 5.1 2.9 2.1 3.9 3.5 Source: IMF. 197. Under a sustained economic growth scenario, the increase in Mali’s domestic revenue should not be expected to create significant fiscal space. New programs in Mali are likely to be financed from any combination of these sources: (a) additional external financing; (b) trade-offs between expenditure programs; (c) more efficiency in expenditure management. 198. The multisectoral committee in charge of the elaboration of the new Social Protection Action Plan 2010-2014 calls for a substantial increase of the budget allocated to social protection through a diversification of financing sources, and is suggesting (i) setting up a targeted taxation system (e.g., on mobile phone communications, transport, etc) in the course of 2010; (ii) increasing the share of donor funding allocated to social protection; and (iii) ensuring a regular financial contribution to social protection from decentralized authorities [MDSSPA, 2009b]. 199. Of course, any new tax should not become an additional burden for the poorest the tax aims to assist. The HEA recently conducted in the Sikasso Region revealed that paying taxes was a major burden for some of the poorest households both in terms of the amount of money they have to pay, but also in terms of the coping strategies they are forced to employ in order to get the money to pay [Cipryk, 2010]. Many countries, developed and developing, exempt the poorest households from paying taxes. Tax exemption for the poorest could actually be a useful measure to support poor households’ consumption. But of course, this brings again the issue of targeting capacity. Option 3: Donor funding 200. Even as foreign assistance (loans and grants, net) declined from 8.3 percent in 2005 of GDP to 5.5 percent in 2008, it is likely Mali will remain dependent on external resources in the mediumterm. On average, external financing has provided about one third of total public resources over the past four years (in addition, as shown in previous sections, some of the foreign assistance is not captured by the budget or the BOP). This ratio seems in line with ratios in similar countries.28 Based on IMF projections, the trend would pick up again in 2009 and 2010. 201. Interest in social protection programming is starting to increase among the donor community. The World Bank and UNICEF have started to work closely with the Government of Mali to support the development of social protection in the country – a number of studies in this emerging sector were supported since 2008, financial support was 28 For example, the ratio of foreign assistance in Burkina Faso is projected to be at 34 percent of total resources (defined here as domestic revenue and gross foreign financing) in 2009. 87 provided for the organization of a social protection forum, technical support is provided for the revision of the social protection action plan, etc. The European Commission Food Facility funding for a cash transfer program demonstrates tangible interest and support to this emerging sector. Main donors present in Mali recently adopted the Country Assistance Common Strategy (Stratégie Commune d’Assistance Pays or SCAP) which aims at ensuring a coherent funding strategy of the GPRSP. The SCAP makes no mention of social safety net, and only refers to contributory social protection instruments to improve health access. This may be because the document was actually drafted before the recent increased interest in social safety nets to respond to the high food prices-induced crisis. 202. Issues with external financing include the fact that foreign aid is still dominated by projects as opposed to budget support. This ratio would tends to point to aid fragmentation which makes it more difficult to envisage sector reforms in any sector largely dominated by foreign aid. In addition, the share of project grants and project loans as total of external financing has increased over the past years. In 2005, they constituted 59 percent of total external financing against 65 percent projected in 2009. 203. Another concern with external financing has been the low levels of disbursements. From 2002 to 2006, the disbursement of external funds corresponded to about 65 percent of projected amounts and disbursed domestic contributions represented 85 percent of the projected resources. Constraints related to donor financing were captured by the PEFA exercise, which rated donor practices D, reflecting poor predictability, insufficient financial information for budgeting and reporting and the limited use of national procedures. 204. While donor financing may be more available in the future as the recession eases in industrialized countries, it remains volatile. Donor financing is highly susceptible to business cycles. As a result, unpredictability of external financing may increase in the coming years. This volatility may further aggravate the stop-and-go approach issuing from unpredictable funding. C. Summary of findings 205. In the short term, the government needs to ensure that expenditures on social safety nets are kept at least at their current levels (around 0.5percent of GDP). To bring this financing onto a more sustainable basis, the following steps can be considered: (i) establishing a rigorous classification of social protection expenditures and a comprehensive list of public safety net programs; (ii) determining the overall envelop of the government’s budget for safety nets and to make adequate full provision each year in the budget; and (iii) seeking to obtain funding for safety nets on a non-project basis to support the government poverty reduction strategy (i.e., PRSCs from IDA, budget supports from external partners). 206. In the medium term, the government may consider four options or combination of options for increasing social safety net budgets: (i) reallocations of expenditure; (ii) increased taxation; (iii) increased donor funding; and (iv) borrowing (non-concessional). Among these options, increased taxation can be a sustainable way to secure financing for SSN and can have positive redistribution effects. However, under a sustained economic growth scenario, the increase in Mali’s domestic revenue should not be expected to create significant fiscal space. Therefore, since revenues will not be able to create substantial fiscal space, and given budget constraints, new safety nets programs in Mali may be financed from any combination of the following sources: (a) reallocations between 88 expenditure programs; (b) more efficiency in public expenditure management; and (c) additional external financing (donors support and external borrowing). 207. Reallocation between expenditures: Expenditure reallocation seems to be an effective option to increase budget resources for SSN. Among these reallocations we can consider: (i) reviewing spending on “other social sectors”; and (ii) redirecting spending on health and education towards pro-poor programs. x Currently spending on “other social sectors” is equivalent to about 1 percent of GDP per year over 2002-2008. However, since most of the programs classified in this category do not appear to provide social safety nets targeted the poor and vulnerable, some fiscal space could be created by reorienting part of these expenditures towards poor-targeted safety net programs. For instance, among these expenditures, one of the largest components of the Filet Social, is the housing program (absorbing between 30-50 percent of the Filet Social) that is not targeted towards the poor. Moreover, the Filet Social under MDSSPA is not qualified as social safety nets as defined earlier in this report. Therefore, some fiscal room could be found through reallocations under the Filet Social such as freezing housing subsidies at 2008 levels in real terms and reallocating charges communes could yield about 0.1 percent of GDP. Assuming efficiency gains of 20 percent in the MDSSPA would yield also an additional 0.03 percent of GDP. Still insufficient, these savings amounting to about 0.2 percent of GDP could contribute provide some contribution to targeted social safety net programs. ƒ Looking at social sector spending (specifically health and education corresponding to 6.3 percent of GDP in 2008) there is also some room to find fiscal space for financing SSN, particularly through creating synergy with health and education policies. In respect to public health expenditures, they could be directed towards explicitly pro-poor programs, such as nutrition programs covered under SSNs. Spending in education needs also to become pro-poor. In respect to education, while restructuring spending towards improving supply of education, demand for education also needs to be supported through transfers in cash or in kind, and programs supporting school enrolment. 208. Efficient public expenditure management: The review of existing public expenditures (current and capital) provides also some financing room for SSN. Particularly, while following a prudent fiscal policy, if the government is really committed to develop an efficient SSN system, there is room to increase financing to SSNs from the general budget. 209. External Financing: This can be achieved either through donor funding or external borrowing. Donor funding will remain an important source of financing for SSN in the medium term particularly since interest in social protection programming and safety nets is starting to increase among the donor community to respond to the high food prices-induced crisis. However, donor financing remains volatile and is highly susceptible to business cycles. As a result, volatility of external financing has the risk to further aggravate the stop-and-go approach issuing from unpredictable funding. External borrowing is also an option to finance SSN. This has the advantage of providing temporary financing for expansion of programs during crisis and less reliance on donors supports. However among the disadvantages are higher debt service burden; and debt overhang impact on growth that may put Mali at risk of debt unsustainability. 89 CHAPTER VI: RECOMMENDATIONS FOR A MORE EFFICIENT SOCIAL SAFETY NET SYSTEM The analysis presented in previous chapters leads to the conclusion that the existing social safety net system is largely inadequate to respond to the widespread poverty and vulnerability present in Mali. Coverage of existing programs is limited and interventions are small in scale and mainly designed as temporary programs. Yet, it recognizes Mali’s commitment to building its social protection base and particularly it raises the need for translating existing policy documents, based on a few existing initiatives, into a broad - based social safety net system, as part of the on going Social Protection strategy extension process. The analysis of poverty and public expenditure suggest that spending in education and health needs to become pro-poor. However, restructuring spending towards improving the supply of services is not enough. Demand for education and health also needs to be supported. And existing universal education and health policies need to be complemented with programs targeted at the poorest and most vulnerable such as social safety nets. The primary financing source to increase the social safety net budget and ensure its sustainability, is expenditure reallocation among existing safety nets and other social sectors programs. Such exercise will require a clear strategic vision, evidence on current programs cost-effectiveness, and dynamic cross-sectoral dialogue. This chapter suggests a few priority actions towards the development of a more efficient and cost-effective social safety net system: (i) strengthening the strategic, institutional, and financial framework for designing, implementing, managing, monitoring, and evaluating safety net programs to create the culture of informed policy choices among decision-makers; and (ii) developing a plan for improving the effectiveness of the safety net system by reforming existing programs and designing new ones. Developing such a system will require further work to assess the feasibility, the potentional coverage, and the costs of current and proposed programs. 210. The results of this report lead to a series of recommendations to start designing and building a social safety net system that can respond to the needs of the poor in Mali. The recommendations focus on the concrete measures needed to implement a permanent social safety net system that address the needs of the chronic poor and that can readly be scaled- up during periods of crisis. The priority actions towards the development of a more efficient and cost-effective social safety net system focus on two key axes: (i) strenghening the strategic framework and institutional set-ups, including its financial support and sustainability and an effective monitoring and evaluation system; and (ii) improving the effectiveness of the safety net system by reforming existing programs and designing new ones. A. Strengthen the overall social protection strategic, institutional, and financial frameworks, including social safety nets Revisit the overall social protection strategic framework and define role of safety nets 211. Improve the social protection policy to provide a comprehensive strategy which gives priority to an efficient social safety net component (non-contributory transfers). Where pervasive poverty touches all corners of a country, it is crucial that a comprehensive social protection strategy is developed, which focuses on both contributory and non-contributory schemes. In this context, given the huge needs in health and education, the social protection instruments should directly contribute to human capital development. For instance, since nearly half of the population (46 percent) is 15 years old 90 or younger, 29 the needs of children become acute when revisiting the social protection strategy (Box 14). Moreover, the safety net component (non-contributory transfers) of the social protection policy should be strengthened and appropriate instruments based on needs should be identified to address both chronic and transitory poverty. Box 14: Principles of Child-Sensitive Social Protection The following principles should be considered in the design, implementation and evaluation of child - sensitive social protection programs: ƒ Avoid adverse impacts on children, and reduce or mitigate social and economic risks that directly affect children’s lives. ƒ Intervene as early as possible where children are at risk, in order to prevent irreversible impairment or harm. ƒ Consider the age- and gender-specific risks and vulnerabilities of children throughout the life-cycle. ƒ Mitigate the effects of shocks, exclusion and poverty on families, recognizing that families raising children need support to ensure equal opportunity. ƒ Make special provision to reach children who are particularly vulnerable and excluded, including children without parental care and those who are marginalized within their families or communities due t o their gender, disability, ethnicity, HIV and AIDS or other factors. ƒ Consider the mechanisms and intra-household dynamics that may affect how children are reached, with particular attention paid to the balance of power between men and women within the household and the broader community. ƒ Include the voices and opinions of children, their caregivers and youth in the understanding and design of social protection systems and programs. Source: DFID UK et al., 2009. 212. Revise the social protection action plan. The action plan for the extension of social protection needs to provide a common strategic framework for the development of the different instruments of social protection: social safety nets, social insurance, social services, and policies, legislation and regulations. The new action plan must clearly set the priorities for the years to come and focus on the actual delivery of social assistance. Consistency with other social development strategic plans – especially PRODESS – must be improved. The revision of the PRODESS in 2010 is an opportunity to do so, and currently the Government, with the support of development partners, has started to define a concrete action plan that address social insurance, social safety nets and income generating programs. 213. Promote synergies and economies of scale. In a context of limited financial resources, synergies and economies of scale need to be promoted between the different social protection instruments and other social policies like education, health and employment, through joint targeting approaches and safety net programs directly supporting the demand for education and health. 214. Clarify the objectives of the social safety net system. Within the broader social protection strategy, the objectives of the social safety net component are: (i) to directly 29 In 2006, poverty incidence among children (under 18) was estimated at 50 percent against 47 percent for the overall population of the country [DNSI and UNICEF, 2008]. 91 support the consumption of the chronically poor and vulnerable populations; (ii) to ensure access to basic social services to poor and vulnerable populations, in order to promote human investment; and (iii) to provide temporary support to poor and vulnerable populations affected by shocks. Therefore, in Mali, the priority principles of the social safety net system should be to: (i) ensure that the chronically extreme poor and vulnerable populations receive regular and predictable support along with complementary programs to escape poverty traps and break the intergenerational transmission of poverty; (ii) provide temporary income to vulnerable groups in case of shocks; (iii) pay particular attention to the needs of vulnerable children (e.g., nutrition, education and conditional cash transfers) and the needs of poor and vulnerable women (i.e., minimize potential negative impacts, optimize positive impacts on women and gender equity); 30 and (iv) facilitate access of the poor and the vulnerable to basic social services. 215. Develop a shared vision. A shared national vision of a good social safety net system is essential to work towards an efficient social safety net system that is, a system woven of several programs, complementing each other as well as complementing other public social policies, and meeting the following criteria [Grosh et al., 2008]: ƒ Appropriate: customized to best fit with the circumstances; ƒ Adequate: covering the various groups in need of assistance; ƒ Equitable: treating beneficiaries in a fair and equitable way; ƒ Cost-effective: running efficiently with the minimum resources required to achieve the desired impact, but with sufficient resources to carry out all program functions well; ƒ Incentive compatible: not causing disincentives (e.g., labor participation); ƒ Sustainable: pursued in a balanced manner with other aspects of government expenditure, and both financially and politically sustainable; and ƒ Dynamic: evolving over time. 216. Establish a permanent inter-ministerial committee for social protection. Social protection consists of cross-ministerial issues and its supervision should not be limited to the MDSSPA. The Social Protection Strategy Orientation Committee established a few years back has been focusing its work on contributory social protection instruments, and is today largely not functional. In parallel, a couple of other inter-ministerial committees were established on an ad-hoc basis, for specific tasks: committee for the drafting of the new social protection action plan, steering committee for the supervision of the present study. A permanent Social Protection Committee would be responsible for revisiting the 30 Food transfer and scholarship programs are the only type of social safety net in place in Mali clearly integrating gender aspects. In FFW programs, the WFP requires Communal Management Committees to ensure that 50 percent of beneficiaries are women – a figure that should gradually increase to 70 percent by 2012. The WFP also gives priority support to partners’ programs based on FFW and FFS that are aimed at responding to the needs of women (e.g., to enhance the capacities of the populations in agricultural production, anti-erosion and women’s literacy). And take-home rations are provided in addition to school feeding to encourage girls to attend school. 92 social protection strategy, supervising/coordinating the various initiatives – studies, pilot projects, etc – that have been launched or are expected to be launched in 2010/2011, and ensuring the required dynamic cross-sectoral dialogue. Inter-, intra- and extra-ministerial coordination mechanisms need to be strengthened. The reasons of the limited impact of social protection initiatives in Mali underline the priority to ensure sectoral consistency between the various departments involved, as well as the need to promote policy impact evaluations and evidence-informed policy decisions. 217. Agree on priority actions. The different strategic documents tend to refer to the whole spectrum of people in need, without clearly setting priorities. The primary social protection documents highlight a focus on the indigent (people living in extreme chronic poverty), the handicapped and senior citizens, with a lesser focus on children and women. Given financial constraints, it is necessary to agree on shared priorities if any sig nificant impact is to be seen. As mentioned above, it is recommended to prioritize investment in human capital. This, along with the concern to invest in the most cost -effective activities, suggests prioritizing actions that support early childhood development (Figure 15).31 Figure 15: Rates of Return of Human Capital Investment Initially Setting Investment to Be Equal across All Ages Source: Carneiro and Heickman, 2003. 218. Clarify links with other policies. Social safety net programs are meant to act in conjunction with other poverty reduction programs, notably, labor market programs, pensions, health insurance, policies to ensure macroeconomic stability, rural development, and human capital formation. Social safety nets are typically used to complement supply- side interventions and fill in where other policies cannot deliver sufficient results in the short run. In Mali, they could prove particularly useful to ensure education and health spending become pro-poor. Complementarities and synergies with other social policies – 31 “Ceteris paribus the rate of return to a dollar of investment made while a person is young is higher than the rate of return to the same dollar made at a later age. Early investments are harvested over a longer horizon than those made later in the life cycle. In addition, because early investments raise the productivity (lower the costs) of later investments, human capital is synergistic.” [Carneiro and Heickman, 2003:7]. 93 food security, education, health, employment, health insurance, etc. – need to be made clear to support coordinated efforts. 219. Agree on a common vision. Today the lack of common language and vision for issues related to social protection is a major problem, and renders cross-ministerial dialogue difficult. It seems crucially important for the Malian government to come up with a social protection glossary common to all ministries. 220. Synchronize strategic planning cycles. Currently, the main strategic documents guiding social development follow different planning cycles – e.g., ten-year MDG plan 2006-2015, GPRSP 2007-2011, PDES 2007-2012. The PRODESS 2005-2009 was extended to 2011 to get in line with the GPRSP. But the new social protection action plan (PAN) is being developed for the period 2010-2014. This is likely to make ministerial planning difficult, with the risk to see PAN’s activities not adequately translated into budgets (e.g., the MDSSPA’s MTEF is informed by the PRODESS over 2008-2011). This multiplicity of strategic documents and lack of synchronization also increase the frequency of required strategic planning consultations. 221. Synchronize donor funding cycles and increase aid efficiency. The donor coordination dynamic initiated in 2002 led to an aid efficiency action plan in 2007 – in line with the Paris Declaration – and to the adoption of the SCAP (Country Assistance Common Strategy) – in line with the Accra Actions Program [Republic of Mali, 2009]. Among other measures, the SCAP aims to align donor funding cycles with the GPRSP cycle, and proposes to setup a Secretariat for Aid Harmonization. These efforts towards coherent funding of the GPRSP, and overall better aid efficiency and faster reforms, may also support better predictability and reliability of external funding allocated to social protection. Reinforce the institutional framework for social protection and social safety nets 222. Clarify the role and responsibilities of the different institutions engaged in social safety nets. Once the Strategic Framework for Social Protection is defined and priority actions for Social Safety Nets are clarified, there is need to focus on the institutional set-ups. In this context, the respective functions of the main structures created to provide social assistance – particularly the DNPSES, DNDS and FNS at the central level32 – need to be redefined to avoid gaps and duplication, and come up with a more cost- efficient setup. The roles and responsibilities of the decentralized structures providing social assistance also need to be clarified, as well as coordination mechanisms with the various sectoral ministries. Of course, the definition of any new responsibility will need to be reflected in budget allocations. 223. Define the appropriate implementation arrangements for new social safety net programs. Defining who, at an institutional level, will manage the design, implementation and ongoing operation of a social transfer program is a crucial first step upon adoption of a social safety net program. The institution that gathers the following characteristics will be the best one to manage the program [Samson et al., 2006]: (i) a durable political 32 For instance, UNICEF proposed to have DNPSES at MDSSPA as the co-coordinating body of the envisioned cash transfer project. To date, the work of this unit (and thus skills of its staff) has been focused on contributory schemes. And one could argue that DNDS is the directorate currently responsible for providing social assistance in Mali, or even FNS. 94 commitment to social protection; (ii) the political influence to secure resources and defend the program’s priority; and (iii) the institutional capacity to deliver an administration - intensive program, including social safety nets. However, it is often impossible to find all three qualities in one single institution. The choice of the managing institution often goes to: the relevant social development ministry (i.e., the most committed one); the ministry responsible for finance (i.e., the most powerful one); or a separate agency that reports to a committee of related ministries (i.e., bringing together commitment, influence and capacity). A reassignment of responsibilities over time is also possible as observed in South Africa (from provincial governments to a national social security agency), Bangladesh (from the Ministry of Social Welfare to the Ministry of Women and Children Affairs), Namibia (from the Ministry of Labor to the Ministry of Health and Social Services). In India, a share of responsibility is in place where the Ministry of Labor supervises pensions and the National Family Benefit Scheme administers the grants. Each of these models presents advantages and disadvantages and institutional arrangement s need to be informed by a review of relevant institutions, the primary objective of the program (e.g., poverty reduction versus education), and any longer-term vision for social protection in Mali. 224. Ensure a separation of duties. Institutionalized program does not mean that all duties will be performed by one single national institution or by national institutions only. The key to a successful design and implementation is to delegate the responsibility of each duty to the formal or non-formal institution for which it is the core activity, and to establish strong control mechanisms. For instance, cash transfer delivery is the core business of banks, and traditionally it is civil society’s role to ensure people’s rights are respected. Such an implementation strategy (along with an appropriate design) will contribute to minimize fiduciary and corruption risks, which remain a major concern for aid efficiency [Republic of Mali, 2009]. 225. Provide capacity-building support. The concept of social safety net as necessary social investment (regular and predictable) is largely new in Mali. Awareness efforts and training is required both at national and local levels. Other initiatives may be useful to increase understanding, interest and capacities in social safety nets and social protection in general – for example, on-the-job training and study tours. 226. Engage more with local authorities for an effective implementation of national policies. In recent years, efforts to develop social protection and social assistance programs concentrated mainly on the development of policy papers at the central level – sometimes without carefully considering field realities, costs and implementation challenges. Moreover, the involvement of decentralized authorities in policy formulation has not been optimal. While local authorities are expected to take up some responsibilities in the delivery of social assistance, there are no sufficient financial resources allocated to train the staff of local authorities and to build institutional capacities both at the central and regional levels. 227. Further explore the role of NGOs and the private sector in the delivery of social safety nets. The capacities of governmental and local authorities remain somewhat limited on the ground, particularly in remote areas that are most in need of assistanc e. NGOs and the private sector may be useful partners to intervene in these areas, and a 95 contract-based solution needs to be further explored. 33 Strengthen Financial Framework 228. With a per capita income of US$500 equivalent in 2008, the surplus available to redistribute under any sustained safety net program is relatively small. The large proportion of the poor in Mali means that: (a) any program large enough to have a substantial impact would be extremely costly; and, (b) affordable options will likely only be able to reach some fairly limited portion of the population in need, and/or to have a limited effect on household incomes. Under these conditions the challenge for Mali is to carefully consider the options for public policy, and to be highly selectiv e in choosing interventions that are cost-effective in delivering benefits to the poorest. Central questions to be asked are: (i) what are the realistic objectives of a publicly funded safety net – given the nature and characteristics of the poor; and revealed political and social preferences? (ii) which groups (or sub-groups) among the poor should benefit? and (iii) what choice of safety net programs is most cost-effective in terms of achieving the desired objectives? Therefore, to assess the feasibility of expanding social safety nets, the government needs to consider the role safety nets should play in the development strategy of the country, how much it makes sense to spend on them, and what the best choice of programs might be – looking at poverty and vulnerability profile, performance of existing programs, international experience, and national institutional capacity. 229. Through better targeting, efforts to streamline costs, and public expenditure reallocation, it seems reasonable to expect a gradual increase of coverage and therefore spending for social safety nets in the next two to three years. Since revenues will not be able to create substantial fiscal space, it seems more realistic to expect the increase in SSN spending from a combination of (i) reallocation between expenditures from less efficient programs, and (ii) more efficient public expenditure management. The previous analysis of the poverty profile and the public expenditure review suggest that gradually expanding some effective and complementary SSN programs, such as nutrition programs, public works, and better targeted school feeding will be an appropriate policy choice. Increasing SSN coverage and spending raises the issue of fiscal space and requires an in-depth analysis of expenditure allocations and effectiveness. In this context, within priority sectors, like education and health, spending needs to become more efficient and pro-poor. Moreover efficiency gains can be obtained through gains in discretionary expenditures. Based on international experience, spending on SSN in Mali could be around 1 percent of GDP. The efficiency of expenditures allocated to social safety nets needs to be strengthened through better targeting of beneficiaries, and a relative reduction in management costs. In addition, design and piloting of potential flagship programs, like cash transfers and public works, may change the relative priority of programs and call for a reconsideration of the expenditure mix and overall amounts. 230. Moreover, fiscal arbitrage is needed to focus on promoting or scaling up the most cost-effective social safety net programs. To bring the financing of social safety net programs onto a more sustainable basis, the following steps could be considered: 33 The contract-based solution currently being developed in Burkina Faso under the PADS may bring useful lessons and capacity for the Government of Mali. 96 x Establishing a rigorous classification of social protection expenditures and a comprehensive list of public safety net programs coverage. This is essential to deducing a clear estimate of what level of expenditure is justified and what financing is needed to achieve the objectives of the system (Box 15). x Determining the overall envelope of the government’s budget needed for the desired level of safety nets coverage and making adequate full provision each year in the budget. In this context, there is need for assessing how much it is reasonable and affordable to spend on social safety nets. x Establishing that the government can seek to obtain funding for safety nets on a non-project basis, for example by seeking budget support in the context of a Poverty Reduction Support Credit from IDA and similar operations from other external partners. This will mean a step-up in the management of the safety net system and an improvement in such aspects as fiduciary arrangements, procurement, and audits as well as results monitoring and evaluation. 97 Box 15: Estimated Average Cost Levels in Some Social Safety Net Programs Estimated average cost per head varies sharply among programs. The table below reports the average cost, estimated number of presumed beneficiaries, and average cost per head for seen different programs. Preliminary estimates show variations in average cost per head ranging from CFAF 1,560 to close to CFAF 21,000. The benefit (that is: the value of the transfer to the beneficiary) is most cases a portion of the cost and this portion varies between programs depending, among others, on overhead costs. These benefit estimates, which could help identify the more cost-effective programs, remain to be estimated by establishing a common basis for program cost estimates—that is, identify overhead costs, compare them, and identify “net benefit per head” for all programs—, and compare the options in terms of costs and benefits. Comparisons of Selected Social Safety Net Benefits Program Agency Target group Average Average Cost per responsible annual cost annual head per of programs number of year (CFAF) 2008-2009 beneficiaries (CFAF (thousand) million) Food distribution Food-for-work – WFP Chronic food insecure 358.0 105.0 CP19583 3,410 National food security CSA Victims of catastrophes 3,900.0 2,500.0 1,560.0 stock School feeding Integrated school Pupils in 708 primary MEALN 1,617.0 78.0 20,731.0 feeding schools, 166 communes (1) Pilot project local All pupils of 12 primary CRS 99.5 7.3 13,627.0 purchase (2009 only) schools School feeding/Take All pupils in 721 primary home ration (10583, WFP 1,962 127.0 16,353 schools comp1) Nutrition Fighting/controlling Children under 5, malnutrition in food- malnourished pregnant WFP 3,696.0 127 29,102 insecure areas in Mali and lactating mothers, PRRO 10610.0 ART and TB patients SC-US, Children under 5, pregnant NEMA (S SO2) HKI, 793 49.0 16,184 and lactating mothers CRS (1) Assumed number of beneficiaries. Source: Government, donor and staff estimates. 231. Savings can be achieved through better targeting, streamlining costs, and public expenditure reallocation by reducing very small or inefficient programs, while strengthening a few viable programs with better targeting and outcomes. In this context, spending needs to become more efficient and pro-poor in general, scaling down poorly targeted subsidies, and focused on high-priority sectors like health and education. Gains in discretionary expenditures, furthermore, can produce efficiency gains. Improve program monitoring and evaluation 232. Promote robust and independent program process and impact evaluations and evidence-informed policy decisions. The monitoring and evaluation (M&E) function is particularly critical to inform an evidence-based policy development. The specific objectives of the M&E system are to: inform the implementation of the program and any necessary adjustments in a timely manner; demonstrate program impact to policy-makers, 98 development partners and general public; and feed into the global lessons of experience. As raised throughout this report, very little solid evidence on the actual characteristics of the beneficiaries, the costs and the impact of existing social safety net programs has been collected. This lack of evidence impedes a greater mobilization of political and financial support to these programs. 233. Therefore a systematic monitoring of the overall set of safety net programs is needed, to judge how well resources are being used. This is a precondition for the piloting and/or scaling up of any social safety net program. In particular five systemic actions can be considered: x Establish a rigorous classification of social protection expenditures and a comprehensive list of public safety net programs (see Chapter V). x Set-up minimum reporting requirements for safety net programs to allow evaluation of the effectiveness, costs broken down between service delivery and overheads, the sources of financing, etc. In this context, it is important to clarify monitoring and evaluation mechanisms of social safety net programs under a common framework. The monitoring and evaluation system will need to monitor several indicators: gender, health, education, poverty, nutrition, economic growth, social cohesion, etc. Working under a shared framework will ease program cost-efficiency as well as comparisons among programs. x Broaden evaluation to incorporate rigorous impact measurements, emphasizing the piloting during the introduction of new interventions and/or the expansion of extension of existing interventions to new categories of beneficiaries. x Involve the civil society in monitoring and evaluation. Civil society is currently left out of the process of monitoring and evaluating safety nets provided by the State and its partners. Efforts should be made to support civil society engagement in the monitoring of the programs, for example, supporting engagement with the National Assembly or community budget-tracking. x Transmit systematically program evaluation reports to the sectoral ministries responsible for Social Protection and social safety nets and maintenance of a data base on programs. This will help better informed decision making for policy makers. x Strengthen the sectoral ministries capacities for monitoring and evaluation and provide training for program managers in monitoring and evaluation techniques coupled with a mechanism for exchange of experience across programs. B. Improve effectiveness of social safety net instruments 234. Once the policy framework is revisited and institutional set-ups are defined, there is need to improve the effectiveness of the safety net system following the steps below: (i) define appropriate social safety net instruments based on the needs; (ii) improve targeting tools; (iii) improve the efficiency of existing safety net programs; and (iv) introduce new social safety net instruments. 99 Define the appropriate set of social safety net instruments 235. Establish the need for safety nets programs and its instruments. First, a detailed poverty analysis will need to be updated to clarify the priority target groups, based on the ongoing household expenditures survey (ELIM 2009) and poverty maps using the recent census. Second, the type, role, scale and frequency of social safety net instruments need to be defined. 236. Update poverty analysis to clarify the priority target groups. Available data on poverty is outdated, based on ELIM 2006. This data might not reflect the actual conditions prevailing after the 2008 crisis induced by high food and fuel prices. Data of the ongoing ELIM 2009 are expected to be made available late 2010. The poverty analysis will need to be updated based on this data and poverty maps can be constructed based on the recent census. Meanwhile, a number of recent studies may shed additional light on the current poverty and vulnerability situation, for example, HEA and cost of diet studies. 237. Define appropriate instruments for each priority target group. Type, role, scale and frequency of social safety net instruments need to be defined for each of the set priorities. Safety net programs also need to be sensitive to gender (Box 16). Based on the available poverty analysis, it is proposed to consider the following set of instruments as a basis for discussion and further feasibility studies on the appropriate mix of programs to be implemented on a permanent basis to tackle chronic poverty: (i) Nutrition supplement programs for pregnant and lactating women and children under 5 to ensure nutritional needs of these particularly vulnerable groups are covered; (ii) (Universal) fee waivers for a package of essential health services, in priority for pregnant and lactating women and children under 5; (iii) Targeted school feeding programs for children aged 6-14 to increase school enrolment and attendance rates for poor children, incluing the children of current and ex-widows;34 (iv) Regular cash transfers to households living in chronic (extreme) poverty to increase the real income or poor households; and (v) Seasonal labor intensive public works to provide a source of income to poor workers and to construct public infrastructure or provide community services. 238. Even when they are not explicitly targeted to women, safety net programs should ensure that they do not reinforce gender disparities and biases in society. Box 16 outlines some clear does and don’ts. 34 This comes in addition to ongoing efforts towards free primary education for all that needs to be sustained. 100 Box 16: Does and Don’ts of Female-Sensitive Social Protection Exact policy details will vary a lot depending on circumstances and objectives. However, there are some clear principles that should guide thinking about social protection policy from a gender perspective. The key overall policy objective should be to help poor and vulnerable women, whether they are explicitly targeted by a policy or not. In order to meet this policy objective, policies should: x Not assume a unitary model of the household and be mindful that the beneficiary of a transfer matters: in most circumstances transfers should go to women. x Not be limited to heads of households, men, or the unemployed; x Look for feasible mechanisms for targeting the poor as individuals without undue costs in reaching them. x Not be biased against women – do not exacerbate inequities. x Try to compensate for any pre-existing biases against women. x Consider the form of transfer: Share of wages or transfers paid in kind is often preferred by women since cash is more easily expropriated by male household members; conditionality may often be desirable for this same reason. x Take account of transaction costs: women may face higher time constraints, lower mobility. x Not forget about the many social constraints faced by women. x Provide childcare. x Do not forget that responses to policies may differ by gender: for example, foregone incomes and incentive effects may differ. x Remember that programs can have unintended consequences: transfers impact labor supply but differently by gender; they may cause re-allocations of work within the household to children. x Do not assume that equality in the law is enough. Affirmative action may be needed for both efficiency (potential externalities, for example, through benefits to children from targeting women: gender of transfer recipient matters to household welfare) and equity arguments: (when women are poorer or more vulnerable). Source: van de Walle 2010 . 239. Improve mechanisms to scale-up and -down programs in case of shocks. Once an appropriate permanent safety net system is set-up, selected mechanisms could be considered to be scaled-up to respond to crisis, complemented by other temporary instruments. The rules for scaling up programs can be incorporated in the national food security system (i.e., early warning system, contingency plans, experience in emergency responses, etc). Improve and Harmonize Approaches to Targeting 240. Agree on general targeting principles. Policy makers may take into consideration the following principles: 241. Consider mixing multiple targeting methods. There is evidence showing that the use of multiple targeting methods – geographical, community-based, categorical, etc – makes the identification of the neediest more accurate and comprehensive, improving the targeting performance. x Agree on priority geographic areas. Geographical targeting appears appropriate 101 in view of (i) the significant differences between urban and rural areas, and between regions, and (ii) the cost of a national program. Regardless, the design of programs should lend easily to national coverage. Most of the current State programs target the 166 most vulnerable communes, and donor-supported programs focus on a few vulnerable regions, like Timbuktu, Sikasso and Mopti (Figure 5). While poverty reduction programs might be implemented in all regions, when looking strictly at social safety nets, the Sikasso Region does not appear to be covered. x Consider self-targeting. In view of the targeting challenges, promoting instruments that support self-targeting is tempting, e.g. public works, subsidies of inferior goods. However such programs would still need to be complemented by targeted social safety nets. A targeted social transfer program would reach the vulnerable Malians that a public works program would not – specifically the disabled poor, the elderly and children in labor-constrained household. x Consider simplistic but practical and transparent targeting mechanisms. The development of a fair, transparent, scalable and efficient poverty targeting system in Mali is crucial and particularly challenging given political and administrative difficulties. Poverty targeting aims to economize on program resources by directing cash transfer benefits only to the poor. The savings in cash transfers must be balanced against the costs of the targeting processes – which include not only the direct costs to the government from administering the targeting mechanisms, but also the private costs to program participants they incur in complying with the targeting requirements, as well as a range of social, political, and other costs. 242. Work towards a common registry. The identification of chronically poor individual/households should (eventually) inform different social safety net programs like cash transfers and fee waivers as well as the envisioned RAMED. It could also inform other initiatives such as, tax exemptions. This will greatly contribute to ensure better synergies and economies of scale within the social protection system. 243. Clarify eligibility criteria for each type of program (and exit criteria). Currently there are many constraints to effective targeting, including lack of information about poverty, administrative capacities, political choices, and quality of governance. . Despite the fact that the term “indigent” is often mentioned in policy documents in Mali, there is no common understanding of what describes an indigent person.35 Currently most government programs adopt a form of “simple means test targeting” based on the assessment of social workers regarding household needs, in the absence of clear guidelines and parameters for selection. Given existing concerns about transparency and good governance in the operationalization of programs in Mali [Kaufmann et al. 2006; Republic of Mali 2002], more transparency and systematization is required. Eligibility criteria should be set narrowly enough to limit exclusion error due to lack of funding and/or coupled with more general criteria/methods (e.g., geographical targeting, conditionality, etc.). To ensure that targeting mechanisms adequately address the Malian context, further research is needed. In this context, the following approach is necessary: 35 In Mali the operational definition commonly used is the following: “Is considered as indigent, any person who does not own anything, who does not expect anything, and who lives on charity alone ” [DNDS, 2004:1]. It seems to match the concept of “person living in extreme chronic poverty.” 102 x Ensure that better information is collected to facilitate targeting and assess results . Currenlty there is a lack of detailed data on the beneficiaries and costs of the programs. Moreover, poverty information is often not disaggregated enough for fine targeting. x Develop effective targeting tools to redirect the flow of resources towards the poor. Currently the approach adopted in most national programs may exclude some of the neediest population groups because it requires beneficiaries to approach the relevant authorities for help, which might prove difficult for the most marginalized, especially when approaching authorities at the regional and/or central level entails significant costs (Box 17). The government needs to develop and apply common targeting criteria and instruments at two levels: at the geographical level to allocate social public expenditures in general and social safety net programs in particular where the largest number of chronic or temporary poor and are located; and at the household level with the development of common proxy means test indicators that can be applied objectively across a range of programs. x Establish appeals and grievances mechanisms. A program without a way to address targeting issues runs the risk of wrecking its reputation. Establishment of appeals and grievances mechanisms can ensure that programs are accessible, simple, transparent, fair and prompt. Therefore, more transparency in program standards is needed and high standards of governance need to be set and maintained. Box 17: Researching Innovative Poverty-Based Targeting 1. Carry out targeting efficiency evaluations: Today, it is not possible to conclude whether targeting methods adopted in Mali are efficient or not. Although the DNDS deplores a lack of capacity and knowledge to identify the indigent, no program ever made significant effort to research on targeting and measure inclusion and exclusion errors. 2. Research innovative poverty-based targeting methods:It seems particularly difficult to target in an efficient manner the poorest given huge similarities in observable characteristics. Oxfam GB and Save the Children US are introducing the use of an HEA-based targeting approach in their cash transfer pilot project (i.e., community- based targeting using criteria determined based on HEA wealth group data as primary targeting criteria). It will be important to explore the feasibility of such an approach for a national program, and compare its results with proxy-means tests. Yet, it appears clear that where there are more eligible households than the program is able to support, using HEA alone will not be advisable. In this case, it should be used in conjunction with community knowledge of the most vulnerable and deserving households in order to ensure the fewest inclusion errors, or any other criteria (e.g., categorical). Still, community-based mechanisms may be difficult to implement on a large scale [Coady et al., 2004; Save the Children UK et al., 2005]. These challenges call for further research on the efficiency of community-based (e.g., HEA-based) and (proxy-means test) household surveys. 3. Research social dynamics potentially impacting targeting efficiency: More research is needed to better understand intra and inter-household redistribution mechanisms, which may be common and strongly rooted in the culture in some communities, and how they may impact targeting e fficiency and overall program impact. Also, since polygamous households are common in Mali, a common approach needs to be defined on how to approach these households (as one or several households). Finally, more research on the most appropriate targeting unit (household or individual) is needed. An ongoing research in Burkina Faso reported that community-based targeting (to identify indigents eligible to fee waivers) led to the identification of poor individuals living in non-poor households. These are elements that would be missed in a proxy-means test (household-based) approach. Source: Staff estimates. 103 Improve the efficiency of existing programs and scale up some of them 244. Improve cost-effectiveness of existing programs. Improving targeting criteria and mechanisms as well as monitoring and evaluation mechanisms are recurrent issues in all existing programs. An in-depth critical review of each program (largely lacking in Mali) will better inform necessary adjustments. Based on the current program review presented in this report (Table 29), initial recommendations on how to improve their efficiency are: (i) Food transfers: promote local procurement whenever appropriate in food-based programs and consider switching to cash-based programming whenever appropriate; (ii) Cereal banks: further review is needed to assess their cost-effectiveness and evaluate their impact on beneficiaries. (iii) Nutrition: strengthen the strategic and institutional framework and promote the hearth approach whenever appropriate and feasible; (iv) School feeding: evaluate the relative cost-effectiveness of assisted school feeding programs compared to other forms of social safety nets – considering costs, social cohesion impact, human development, etc. – and explore an improved integrated school feeding model (e.g., based on the Ivory Coast experience) to contribute to local development through better ownership and local procurement, for example; (v) General tax exemptions: adopt it only as an instrument of last resort in time of crisis and target commodities which are primarily consumed by the poor; (vi) Public works: assess the feasibility of introducing programs targeted to the poor using low wage rate and other possible targeting criteria; (vii) Fee waivers for health: establishing compensation mechanisms for the effective implementation of fee waivers and considering user-fee abolition ( in particular for children under 5 and pregnant and nursing mothers) should be carefully reviewed in the context of broader health strategy and health financing reforms; 104 Table 29: Summary of Key Issues and Opportunities of Each Existing Social Safety Program Program Type Key Issues Key Opportunities Cash transfers Limited experience Great potential to tackle chronic poverty Growing interest A few pilot projects Food distributions Unclear targeting mechanisms Growing interest in cash-based (SNS) alternatives when appropriate Logistical constraints Initiatives to resort to local purchases Cereal banks Not appropriate to reach the poorest Locally-managed Only provide assistance during the lean season Unclear targeting mechanisms Lack of M&E mechanisms Weak management Difficult local procurement in remote/most vulnerable areas Nutrition Lack of funding Great potential to improve health Donor-dependent indicators School feeding May exclude poorest children not at Can be a vector of local school development International procurement Political support Domestic funds Initiatives to resort to local purchases Food import tax exemptions Regressive impact Potentially useful (with improved Very costly, not sustainable design) as an instrument of last resort, in time of crisis only Public works No poverty-based targeting Political will (PEJHIMO) Country experience Fee waivers Poor targeting mechanisms Great potential to improve health No financial compensation indicators Poor reporting Pilot project Poor medicine stock management Source: Staff estimates. 245. Reinforce links between social safety nets and social services. The following investments are important for an improved coverage, efficiency and impact of social transfers: (i) Social welfare services (for which the role of the civil society is important): community-based social workers to assist households access their entitlements and create opportunities to connect households with other available services (e.g., income-generation activities); communication and public education on eligibility criteria and entitlements; parenting support programs; and quality community-based health and education services to enable beneficiaries to effectively invest in human capital; and 105 (ii) Capacity-strengthening measures: for national data management system (e.g., civil registry) and for decentralized government social services to ensure supervision and coordination of the different NGOs engaged in social protection activities. 246. Expand efficient existing programs. Based on existing information it is very difficult to estimate the coverage of safety net programs in Mali. Based on few available information, the current coverage of existing social safety net programs remain minimal compared to needs (Table 30 and Figure 16). Therefore, once the cost-effectiveness of the different types of safety net programs has been defined, it will be advisable to expand efficient programs. Table 30: Estimated Maximum Coverage Current Social Safety Net Programs Could Reach Program Number of Beneficiaries National Needs Coverage Cash transfers n/a n/a n/a (1) (2) National food security stock 1,000,000 persons 1,608,000 persons 62% Cereal banks 600,000 persons (3) 2,484,000 persons (4) 24% (7) (8) Nutrition 14,000 children 35,000 children n/a School feeding 1,561 primary schools (5) 9,816 primary schools (6) 16% Public works n/a n/a n/a Fee waivers n/a n/a n/a (1) Number of individual quarterly rations of cereals the SNS could potentially distribute ( Table 15). (2) Estimated number of persons in severe food insecurity (Table 15). (3) Number of individual quarterly rations of cereals the cereal banks could potentially distribute ( Table 15). (4) Estimated number of persons in moderate food insecurity (Table 15). (5) Actual number of schools supported by the MEALN, the WFP and CRS in 2009. (6) Total number of primary schools in 2006/2007. (7) Total number of severely malnourished children treated with UNICEF support in 2009. (8) Estimated number of severely malnourished children based on EBSAN. Note: Only directly targeted programs are considered. Coverage figures are indicative only. They represent the maximum coverage the program could reach if targeting was perfect. Source: Staff estimates. 106 Figure 16: Indicative Annual Number of Beneficiaries of SSN, 2009 Indicative Annual Number of Beneficiaries of SSN in 2009 1,000,000 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 - Note: These figures are indicative only and to be treated with caution. Figures for ‘targeted subsidized sales’ and ‘targeted food distributions’ represent the maximum coverage (considering quarterly rations are provided) of the available tonnage in cereal banks and SNS respectively. Source: Staff estimates. Figure 17: Evolution of WFP Budgets and Number of Beneficiaries, 2004-2009 900,000 18 WFP Annual Executed Budget (US$ 800,000 16 Number of WFP Beneficiaries 700,000 14 600,000 12 500,000 10 million) 400,000 8 300,000 6 200,000 4 100,000 2 0 0 2004 2005 2006 2007 2008 2009 Total WFP budget executed School feeding Nutrition Food for work Food for training Total number of WFP beneficiaries Note: The WFP increased its budget in 2005 and 2008 to respond to particularly severe food crises. The share of nutritional interventions in WFP’s portfolio was increased which resulted in higher average cost per beneficiary. Indeed, feeding ration is made of imported and expensive commodities (CSB, sugar, oil). In addition, the WFP has to spend relatively more in 2008 to provide food rations due high world food prices. Source: Staff estimates; WFP, 2009. 107 Introduce new social safety net instruments 247. The Government of Mali currently uses a limited set of social safety net instruments. Looking at the international experience, it seems reasonable to consider more innovative forms of social safety net programs. Cash-based programs in particular – such as cash transfers for food security and nutrition, and cash-for work – have shown good results in other countries faced with similar challenges. These programs could be used permanently to provide income support for the chronic poor and most vulnerable and be expanded during exogenous crises to mitigate the impact of shocks. 248. Test the appropriateness and feasibility of cash transfers for food security and nutrition. The piloting of regular and predictable cash transfers to poor households needs to be done through a multi-annual approach (allowing for successive program adjustment and learning), reaching a large enough population (to collect solid evidences) in close collaboration with national authorities to reflect on design and implementation arrangements in particular. A cash transfers for food security program could focus on addressing access to food in the country by providing transfers to extremely poor families. Integration of incentives for mothers of infants to enroll in supply-side nutrition interventions can also be explored. As in any pilot program, monitoring and evaluation will have to be a key component. 249. Test the appropriateness and feasibility of cash for work (known as activités HIMO). This type of program has proved particularly appropriate in situations of high vulnerability to support regional development and community-based structures. A cash for work program could become a productive safety nets by incorporating good workfare design principles (low wage below market rate, selection of projects, etc.) and could have a direct effect on income generation during seasonal shortages of jobs and in times of shocks). 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Geneva, Switzerland. 114 ANNEXES Annex 1: Glossary of Terms Annex 2: Poverty Profile of Mali’s Communes Annex 3: Public Policy Responses to Poverty and Vulnerability Annex 4: Key National Strategic Documents for Social Assistance Annex 5: Good Practice Design Features for Direct Support Drawn from International Experience Annex 6: Some Country Examples of Good Practice in Safety Nets Programs in Africa Annex 7: Social Safety Net Spending (Statistical Tables) Annex 8: Potential Source of Financing for Social Safety Net Programs – Public Expenditure Reallocation 115 ANNEX 1: GLOSSARY OF TERMS For many specific terms used in this report, there is no overall consensus on a universal definition. In order to avoid misunderstanding, definitions used in this report are presented below, along with, when available, definitions commonly used in Mali. Poverty and vulnerability Chronic poverty As defined by the World Bank: poverty that endures year after year, usually as a result of long-term structural factors faced by the household, such as low assets or location in a poor area remote from thriving markets and services. Transient poverty As defined by the World Bank: poverty among households who are poor in some years but not all. They may be poor in some years due to idiosyncratic or covariate temporary shocks ranging from an illness in the household or the loss of a job to drought or macroeconomic crisis. Vulnerability The likelihood or probability that a household will pass below the defined acceptable threshold of a given indicator and fall into poverty [Grosh et al., 2008]. Social protection Social protection As defined by the World Bank: the set of public interventions aimed at supporting the poorer and more vulnerable members of society, as well as helping individuals, families, and communities manage risks. Social protection includes safety nets (social assistance), social insurance, labor market policies, social funds, and social services. Social action (“action sociale”) As defined by Mali’s Ministry of Social Development: a set of service provisions, either similar to those of social assistance or social insurance, or complementary, often targeting the same groups, but provided along more flexible criteria – social action does not fall under public services only, unlike social assistance. Social aid (“aide sociale”) As defined by Mali’s Ministry of Social Development: the set of non-contributory assistance measures provided by the State and public authorities and targeted at people in need and with not enough resources. Social assistance As defined by the World Bank: synonymous to “social safety net”. 116 Social safety net As defined by the World Bank: noncontributory transfer programs targeted in some manner to the poor and those vulnerable to poverty and shocks. In Mali, the term “social safety net” also refers to the homonymous budget line created to support programs targeted at the poor and vulnerable. Social insurance As defined by the World Bank: contributory programs designed to help households insure themselves against sudden reductions in income. Types of social i nsurance include publicly provided or mandated insurance against unemployment, old age (pensions), disability, the death of the main provider, and sickness. Social security (“sécurité sociale”) As defined by Mali’s Ministry of Social Development: the set of schemes ensuring protection of the entire population against social risks such as illness, maternity, disability, old age, death, work-related accident, professional illnesses, family burden and unemployment. Program evaluation Effectiveness The extent to which the program objectives were achieved, or are expected to be achieved, taking into account their relative importance. Efficiency An economic term which signifies that the intervention is using the least costly resources possible to achieve the desired results. Efficiency measures qualitative and quantitative outputs in relation to results. Impact Long-term effects, positive or negative. Sustainability Continuation of benefits after the end of the intervention. Probability to obtain benefits in the long term. 117 ANNEX 2: POVERTY PROFILE OF MALI’S COMMUNES 1. The Observatory of Sustainable Human Development in Mali produces data on poverty by communes. A survey was conducted in 2003 and in 2006 (and is underway in 2009) and a composite index of poverty constructed to enable comparison of poverty levels between communes. There are 703 communes in Mali ranked according to this index, which estimates the level of satisfaction of the population’s needs in terms of habitat, education, health, etc. The results show that most communes (68 percent) have a negative poverty index and the median is -0.29. 2. When poverty quintiles are constructed, it appears that all the poorest communes are rural and all the richest communes are urban. By regions, it appears that Kidal and Mopti have the highest proportion of very poor communes (54.5 percent of communes in Kidal and 35.2 percent of communes in Mopti are very poor) as shown in Figure 1. Figure 1: Distribution of Communes by Poverty Quintiles within Regions, 2006 Note: Communes are grouped in quintiles of poverty, estimated with a composite index of assets such as habitat, education, health, etc. The five quintiles are: very poor, poor, almost poor, less poor, non poor. Source: ODHD 2007a. 3. When the first two quintiles are grouped, it appears that Kidal and Mopti still have the highest share of poor communes (Figure 2). As far as communes that are vulnerable to poverty (third quintile) are concerned, Ségou comes first (24.6 percent), followed by Koulikoro (21.3 percent). Mopti and Sikasso come third ex aequo (20.4 percent). So clearly, Mopti is the poorest and most vulnerable region in Mali. As far as chronic poverty is concerned, Kidal requires particular attention, while in terms of vulnerability to fall into poverty, the regions of Koulikoro, Segou and Sikasso are of particular concern, especially in the current context of falling production and revenues from cotton. 118 Figure 2: Distribution of Communes by Poverty Groups within Regions, 2006 (%) Note: Communes are distributed in three groups of poverty, estimated with a composite index of assets such as habitat, education, health, etc. The three groups are not identical in size: chronic poor = first 2 quintiles, vulnerable to poverty = third quintile, almost poor, less poor, non poor = last 2 quintiles. Source: computed from ODHD 2007a. 119 ANNEX 3: PUBLIC POLICY RESPONSES TO POVERTY AND VULNERABILITY 1. Different considerations motivated the introduction of concrete measures to assist the poorest and most vulnerable, including: ƒ Solidarity – today under the supervision of the Ministry of Social Development, Solidarity and the Aged; ƒ Access to food – under the Ministry of Agriculture’s supervision; ƒ Access to health care – under the Ministry of Health’s supervision; ƒ Access to education – under the supervision of the ministries in charge of education; ƒ Access to employment – under the Ministry of Employment and Professional Training’s supervision; and ƒ Access to housing – under the supervision of the Ministry of Housing, Land Issues and Town Planning. 2. This review considers the different focuses in turn. It enables to sweep over relevant social policies and major social actors, and put in perspective the main social safety net programs (as per the definition considered in this report) currently in place in Mali. Solidarity 3. Following the Solidarity Policy adopted in 1993, the Government of Mali adopted a number of instruments to promote a culture of solidarity in the country. It created the budget line named “Social Safety Net” (Filet Social) back in 1994 to mitigate the negative effects of the CFAF devaluation on the poorest and most vulnerable. The Ministry of Social Development, Solidarity and the Aged (Ministère du Développement Social, de la Solidarité et des Personnes Agées or MDSSPA) was created in 2000 and is primarily responsible for the promotion of national solidarity. The National Solidarity Fund (Fonds de Solidarité Nationale or FSN) and the Solidarity Bank of Mali (Banque Malienne de Solidarité or BMS) were also established in 2001 and 2002 respectively, on the former president’s initiative, based on the Tunisian experience (Box 1). Both structures aim at fighting poverty and unemployment. The FNS was created to take over the former Social Development Agency’s (Agence de Développement Social or ADS) mission to fight poverty and promote social development through non-contributory assistance programs, and the BMS was set up to provide access to credit for the underprivileged categories. In addition, the former president introduced in 2002 the Month of Solidarity and Fight against Exclusion as a demonstration of the political will to reinforce solidarity culture. Overall, the MDSSPA supervises three forms of social assistance activities: activities implemented under the Month of Solidarity, activities funded under the Social Safety Net budget line and implemented by the FSN, and other social assistance activities funded under the MDSSPA budget and implemented by MDSSPA’s central and decentralized structures. Month of Solidarity and Fight against Exclusion 4. The Month of Solidarity and Fight against Exclusion is primarily a communication and visibility event. Organized in October of each year since 2002, activities are structured 120 around one annual theme, and four weekly focuses: the elderly, health care, the disabled, social and solidarity-based economy. The theme of the 14 th edition in October 2008 was social justice. It is an opportunity for discussions (e.g., conference on the protection of the elderly) and visible donations to associations of disabled, elderly, women, etc or communities. It is worth noting that in 2008, only 25 percent of the CFAF 175m allocated to the organization of the Month of Solidarity went to activities outside Bamako. Box 1: National Solidarity Fund Established in 2001 on the former president’s initiative and based on the Tunisian experience, the FSN is a public structure with financial autonomy, under the supervision of the MDSSPA. Its governing body is made of 14 representatives from public authorities, civil society and personnel. Its obj ectives are i) to channel voluntary contributions from citizens and businesses in order to implement programs directed at populations living in difficult circumstances and at underdeveloped areas; and ii) to contribute to poverty eradication and human promotion, with the overall mission to contribute to disparities and poverty reduction. The FSN intervenes in the following areas: execution of social infrastructures; support to micro -projects and training in sectors such as agriculture and handicraft; and contribution in the funding of programs to fight poverty and exclusion presented by national institutions or NGOs. The FSN’s activities are implemented and coordinated at the regional level by an Orientation Regional Committee composed of decentralized technical services and any other relevant technical structures. FSN’s activities are centered on social infrastructure (basic rehabilitation of schools, community health centre, water supply, etc.) and productive community assets. Beneficiary communities are either one of the 166 most vulnerable communes, or a community in need that can bring its own contribution to the proposed project (e.g. community project supported by a Malian living abroad). Each year, a specific theme guide communication and fundraising activities for specific visible actions (e.g. drinking water supply, children with heart disease, mental illness, Ivorian refugees, etc). Source: FNS. “Social Safety Net” budget line 5. Despite its name, current activities funded by the “Social Safety Net” budget line do not qualify as social safety net programs as defined in this report. The Government of Mali created the budget line named “Social Safety Net” (Filet Social) back in 1994 to mitigate the negative effects of the CFAF devaluation on the poorest and most vulnerable. The Social Development Agency (Agence de Développement Social or ADS) established under the Prime Minister’s Office, was entrusted to manage this line, until its restructuration in 2001. While the ADS used to manage the entire Social Safety Net budget, this budget line is now broken down between different ministries, and the FSN (that took over the ADS’s mission in 2001) only manages a part of it. The restructuration of the ADS into the FNS marked a shift from a disaster management-type approach to a more dynamic approach looking at sustainability and repeatability of development and poverty reduction actions. However, none of the FSN programs is directly targeted at individuals or households with the objective to directly increase consumption, and no FSN program qualifies as a social safety net, as defined in this report. Other MDSSPA’s social assistance and social action work 6. About 60-70 percent of the MDSSPA’s resources are used to support a number of activities, including strengthening local communities, communication, and cash or in -kind transfers to associations and individuals. Part of these funds is used to allow Senior Officials (e.g., Prime Minister) to respond to grievances raised during official visits in 121 regions. This is often used to build or rehabilitate social community assets such as schools, health centers, water supply systems, etc. Another part is used to respond to project proposals submitted by associations to the MDSSPA, usually for social community assets too. These funds are also used to respond to individual cases, referred to as solidarity actions (action de solidarité), as per the Minister’s decision. 7. The MDSSPA’s National Directorate for Social Development is directly engaged in the provision of social assistance and social action, as defined in the national social protection policy. The Directorate (Direction Nationale du Développement Social or DNDS) is responsible for developing policies and coordinating activities in the following fields: improvement of the populations’ living conditions; materialization of the national solidarity principle; fight against poverty and exclusion; assistance and relief; protection and promotion of the disabled, the elderly and underprivileged groups in general. For the first quarter 2009, the DNDS received a subsidy of CFAF 41,687,500 from the budget line “subsidy” granted to the MDSSPA, 40 percent of which is to be used on humanitarian actions (Table A3.1). Under the decentralization process, some powers were transferred to local authorities. And the budget lines allocated to the Regional Directorates for Social Action (Directions Régionales de l’Action Sociale) appear on region’s budgets. 8. Social assistance support, which should be agreed by national or regional commissions for social development or the ministry itself, can be any of the following [Pereznieto and Diallo, 2008]:- - Emergency aid, between CFAF 50,000 and 100,000, to be granted in case of disasters, accidents or significant losses. - Immediate aid, up to CFAF 100,000 awarded in cases of momentary need, which need to be approved by national or regional commissions. - Temporary aid: in case of a longer lasting situation, for a period up to three years, for an amount not exceeding CFAF 200,000 in total. - Aid for illness: reimbursement of medical expenses in a measure that corresponds to the needs of the beneficiary. 122 Table A3.1: Breakdown of the Subsidy Allocated to the DNDS for 1 st Quarter 2009 Action Budget (CFAF) % Humanitarian actions 16,750,000 40% Emergency aid 2,500,000 Temporary aid 1,625,000 Aid for food 1,500,000 Aid for illness 6,625,000 Promotional assistance 3,750,000 Triplets allocation 500,000 Operation HADJ 250,000 Social insertion 13,937,500 34% Income generating activities 10,000,000 Various prosthesis 3,937,500 Community promotion 6,000,000 14% Institutional support 5,000,000 12% Total 41,687,500 100% Source: DNDS, 2009. 9. Considering the type of activities supported and their coverage, MDSSPA’s solidarity-based activities cannot be considered as significant social safety net programs, as defined in this report. Under the MDSSPA, social assistance is provided on a one-off basis either in cash or in-kind to communities, associations or individuals, often following requests submitted to the ministry. The number of beneficiaries of the DNDS interventions remains very low compared to needs, probably due to both scarce resources and weak program design and implementation that does not enable scale-up (Table A3.2). Table A3.2: Social Assistance and Social Action Interventions Coordinated by the DNDS, in 2007 Indicators Achieved in 2007 Number of handicapped children enrolled in school 500 Number of women household heads provided with support 50 Number of children in difficult circumstances provided with assistance 3 Support provided to children infected with HIV/AIDS 50 Number of destitute provided with free health care support 1,500 Number of income generating activities financed 68 Number of handicapped people accessing micro finance 40 Number of community associations supported 20 Source: DNDS, 2008 cited in ODI, 2009. 10. In regard to assistance targeted at some specific vulnerable groups, little information is available on actual achievements. The recent evaluation of the Social Protection Action Plan 2005-2009 reports, under the “social assistance and action” component, the organization of workshops, the completion of a few relevant studies, the drafting of policy papers and laws (e.g. for the protection of the disabled), and the adoption of a few of them, but no quantified information on actual numbers of beneficiaries of the State’s social assistance [MDSSPA, 2009]. Subsidized medicines and operation for caesarian sections and subsidized health care for the aged are the only assistance measures actually implemented to date cited. 11. Assistance to the elderly is framed in the National Action Plan for the Promotion of the Aged 2006-2010 developed by the MDSSPA. The plan identifies five priority intervention areas – health and food, fight against poverty, rights and duties, promotion of equity, and promotion of research – and was considered in the development of PRODESS 123 II. In the mid-term review conducted after two years, the MDSSPA [2007] lists among other achievements: provision of free medical consultations at the medical centre for the aged in Bamako (Institut d’Etudes et de Recherches en Géronto-Gériatrie called Maison des Aînés or IERGG-MA) that benefited a thousand of individuals; introduction of health records for the elderly which enable better health monitoring as well as access to free and subsidized services; setup of 20 cereal banks benefiting the elderly; decentralization of contributory social pensions’ payment; etc. These interventions come in addition to numerous communication and awareness activities to promote the role of the elderly in the Malian society, and solidarity with this vulnerable group. 12. In regards to the assistance to children, Mali adopted a national program for combating the worst forms of child labor. The program 2006 -2010 includes measures to prevent the involvement of children in actions identified as one of the worst forms of labor, as well as measures intended to withdraw, protect and ensure the socio-economic reintegration of children. The program seeks to establish a link between the strategic orientations of the fight against child labor, PRSP II and various sector policies, such as those for education, health and justice. Projects include: support to street children (e.g. with Aide et Action), support to children infected or affected by HIV-AIDS (e.g. with Plan Mali), SOS Children’s Village’s activities, etc. Mali also subsidizes a few health services for children under 5 (e.g. malnutrition, malaria). But overall, Pereznieto and Diallo [2008] regret the absence of social protection intervention targeted at children and t he absence of main social protection programs whose children directly or indirectly benefit. 13. The Ministry of Women, Child and Family Promotion is responsible for promoting assistance to women. Focus seems to be the development of income-generating activities, and the Ministry does not coordinate any social safety net program. 14. Finally, programs are designed to specifically assist HIV-affected persons. The Ministry of Health provides free HIV testing and ARV treatment. The MDSSPA developed a project to support children infected or affected by HIV, however the project seems quite small since DNDS reported only 50 children assisted in 2007. 15. Overall, despite being seen as one of the main provider of social assistance in Mali, the MDSSPA does not supervise any significant program which can be classified as social safety net – social transfer directed at the poorest and most vulnerable, and aimed at directly increasing households or individuals’ consumption. Most of its programs are directed at communities or associations, and focus on social services. Access to food 16. The 2004-2005 food crisis led to a strengthening of the food security management system. In Mali, chronic food insecurity (caused by demographic pressure, poverty, poor natural resource management, etc) and transient food insecurity triggered by natural risks (e.g. drought, locust, etc.), economic risks (e.g. high food prices), health risks (e.g. illness), etc are closely interlinked. And nowadays, food insecurity affects both rural and urban areas. In 2006, the National Food Security Seminar made the following recommendations: rebuilding of the National Food Security Stock, the Food Security Fund, and the Intervention Stock; setup of a seed stock; trade reinforcement of cereal other produce; support to food security decentralization; and strengthening of the food security system management. 124 17. Today, food security is given good consideration in national development policies. The main strategic documents guiding food security interventions in Mali incl ude: the Growth Poverty Reduction Strategic Paper (GPRSP), in which food security is one of the 14 priority intervention areas; the National Food Security Strategy (Stratégie Nationale de Sécurité Alimentaire or SNS) developed in 2002 whose third specific objective is to improve sustainably structural access conditions of vulnerable groups and areas to food and basic social services, and fourth specific objective is to improve crisis prevention and management; the CILLS’s Regional Food Security Operational Strategy (Stratégie Opérationnelle de Sécurité Alimentaire Régionale or SOSAR) and Five-year Food Security Program from a poverty reduction in the Sahel standpoint (Programme quinquennal de sécurité alimentaire dans une perspective de lutte contre la pauvreté au Sahel or PQSA); the Food Aid Charter adopted by the CILSS (Permanent Interstate Committee for Drought Control in the Sahel) Heads of State in 1990; the Agricultural Steering Law adopted in 2006, including chapters on the country food sovereignty and the prevention and management of major risks and agricultural calamities; and the N ational Food Security Program (Programme National de Sécurité Alimentaire or PNSA) developed for the period 2006-2010. The third component of the PRODESS Social Development also includes the development of insurance against natural risks in the agricultural sector. 18. The Food Security Commissariat is responsible for the coordination of food security activities. The institutional framework for food security management includes: the Food Security Commissariat (Commissariat à la Sécurité Alimentaire or CSA) established in 2004; the National Food Security Committee; the Food Security Policy Coordination Technical Committee (Comité Technique de Coordination de la Politique de Sécurité Alimentaire or CTCPSA); and Regional, Local and Communal Food Security Committees. The CSA supervises two major programs: the PRMC and the PNSA. The Cereal Market Restructuring Program (Programme de Restructuration du Marché Céréalier or PRMC) was created in the 80’s with the objective to reduce the deficit of the public and semi - public sector engaged in cereals production and trade, as well as the deterioration of the balance of payments. Designed to respond to structural food insecurity, the PRMC showed limitations to prevent and respond to cyclical food crises. Following increases in the incidence of climate shocks, other instruments were introduced including the Early Warning System (Système d'Alerte Précoce or SAP), the Observatory of Agricultural Markets (Observatoire des Marchés Agricoles or OMA) and the Malian Agricultural Produce Commission (Office des Produits Agricoles du Mali or OPAM) responsible for the management of the SNS. This stock is complemented by the Food Security Fund (Fonds de Sécurité Alimentaire or FSA), which is mobilized in acute food crisis situations exceeding the capacity of the SNS. Another fund, the Joint Compensation Fund (Fonds Commun de Contrepartie or FCC) may be used for diverse food security activities such as reconstitution of the SNS, SAP, free distributions, etc. Both funds are supplied by external aid or national budget, and managed jointly by the supervising ministry and the donor coordinator (the World Food Programme). While the level of the SNS was satisfactory in May 2009 – 34,000 MT against an objective of 35,000 MT, levels of both FSA and FCC were very low: CFAF 1,105m against an objective of CFAF 5.5 billion for the FSA, and CFAF 46m against an objective of CFAF 2.5 billion for the FCC. In June 2009, the CSA sent the government a request of CFAF 6.85 billion either in cash or in kind. 19. Nowadays, the Government of Mali has three instruments at its disposal to respond to food crises: cereal banks (sale at subsidized price), National Food Security Sto ck (free distribution of food rations), and Intervention Stock (general subsidies). The National Food Security Program’s (PNSA) sub-program VI focuses on monitoring, alert and 125 response to food crises. In its initial 5-year phase, the PNSA gives priority to the 166 most vulnerable communes, with the objectives to diversify rural producers’ activities, limit rural exodus, generate employment and reduce poverty. It represents 12 percent of the PNSA total budget (i.e., CFAF 13.25 billion). Besides activities to strengthen institutions and improve early warning systems, this sub-program encompasses a component for the decentralization of crisis management through the development of local and communal food security plans covering in priority the 166 communes identified as most vulnerable. Another component covers emergency food assistance through the constitution of the National Food Security Stock. 20. The CSA established 759 cereal banks throughout the territory in 2005/2006, one in each of the 703 communes of Mali and one for 56 associations. Communes are now expected to create a budget line to ensure the sustainability of their cereal bank. The CSA will now support the 166 most vulnerable communes in priority, for an estimated budget of CFAF 136m over the period 2009-2015. The cereal bank management committee organizes sales at a subsidized price during the lean season (June-September), and procures a new stock after the harvest. A review conducted in 2009 reported very diverse replenishment rates, e.g. 67.86 percent in Segou, 50.5 percent in Tumbuktu, and only 4 percent in Bamako. 21. The SNS of 35,000 MT is composed of mil, sorghum and maize, and is used to respond to food crisis through free food distributions. Local authorities are responsible for beneficiaries’ selection, while the CSA and the MDSSPA is responsible for logistical matters. After several years as a contributor to the SNS, WFP is gradually withdrawing. The 500 MT of cereals WFP provided in 2009 marked the end of this contribution. 22. The OPAM manages the State’s Intervention Stock to control the rice market. Commodities are sold at subsidized prices to retailers, mainly in urban areas. 23. The World Food Programme (WFP) acts as the lead technical and financial partner in Mali’s food security. The basic cooperation agreement between the government and the WFP was signed back in 1968. The National Directorate for WFP Projects (Direction Nationale des Projets PAM or DNPP) created in 1997 is responsible for managing administrative and financial issues of food aid provided by WFP for the socioeconomic development in Mali. The current WFP country program 2008-2012 (US$17.8m) aims at assisting 411,200 persons in the regions of Mopti, Timbuktu, Gao and the northern parts of Kayes and Koulikoro, through three components: support for basic education, support for rural development and support for food security [WFP, 2007]. WFP activities are implemented with decentralized structures and partner NGOs. WFP activities to support basic education are developed under the administrative supervision of the Ministry of Education, Literacy and National Languages (Ministère de l'Education, de l'Alphabétisation et des Langues Nationales or MEALN) and will be discussed in the section “access to education” below. Activities to support food security include capacity- building and contribution to the SNS in 2008 and 2009 only. WFP’s other program PRRO 10610.0 was developed for the period 2009-2010 and aims at fighting malnutrition. It aims at assisting 896,324 persons, with a budget of US$32,748,374. These activities are developed under the Ministry of Health’s supervision and will be discussed in the section “access to health care” below. Finally, the WFP, through a Japanese bilateral project, assists rural villagers to improve rice production by constructing small scale irrigation fields through food for work, transferring agricultural techniques, and building the capacity of beneficiaries as well as local technicians and government officials. 126 24. WFP’s program component “support for rural development” aims at “enabling communities facing chronic food insecurity to create sustainable assets and reduce their vulnerability to natural disasters” [WFP, 2007:10]. It relies on Food for Work (FFW) and Food for Skills (FFS) activities to mitigate soil degradation in cultivated and potentially arable areas and to support initiatives aimed at settling and developing agricultural lands in food insecure areas – e.g. market gardening based on small-scale irrigation, bottomland development. The program is expected to enroll a total of 50,000 participants, and provide to participants and their families (210,000 beneficiaries in total) a daily ration of 400 g of cereal (1,340 kcal) over 30 to 90 days. 25. USAID, with its Food for Peace program, also supports food assistance interventions, including the 5-year ‘Nema’ project 2008-2013 implemented jointly by Catholic Relief Services, Save the Children and Helen Keller International. The second strategic objective of this project aims at preventing and treating infant malnutrition and the third strategic objective focuses on assisting chronic food insecure through Food for Work activities in particular. 26. In 2005, general subsidies were introduced to mitigate negative effects of high food prices. Since 2005, there have been exemptions either on customs dut y or on import tax. The National Directorate for Trade and Competition (Direction Nationale du Commerce et de la Concurrence or DNCC) under the Ministry of Industry, Investments and Trade manages these tax exemptions. In response to the 2004-2005 food crisis, the government introduced VAT exemption on 110,000 MT of rice and 100,000 MT of maize. And following world food price increase in 2007, the government exempted rice import from duty during the lean season and Ramadan period, from July to October. This measure was reinforced and extended in 2008. Tax exemptions were granted on rice, cooking oil and powdered milk over a six-month period, from April to September. In addition, the government reduced temporarily taxation of petroleum products, particularly diesel, and temporarily banned export of rice, corn, millet and sorghum (not comprehensively applied and lifted in December 2008). And in 2009, the government granted tax exemptions on rice import from March to May. 27. On top of measures to stabilize prices, Mali adopted structural policies to stimulate local demand and strengthen the institutional capacity for cereal stock management in response to high food prices. The operation named “Rice Initiative” started with the agricultural campaign 2008-2009 with the objective to produce 1.6 m MT of rice, i.e. 50 percent more than the previous campaign. It was expected that 1 m MT would arrive on the market – 90 percent on the national market. Planned activities include inputs seed and fertilizer subsidies, support to a water pumping station, provision of harvesting and transformation equipment accessible on credit by farmer associations, and community- based technical support. The total estimated cost of the initiative is CFAF 42.65 billion. 28. The third measure adopted in response to high food prices was the strengthening of the Food Security Commissariat’s activities around the management of the National Food Security Stock, the Early Warning System. The government and development partners strengthened targeted programs to protect the most vulnerable groups by releasing food banks and creating new school feeding programs in poor areas. 29. Overall, four large-scale social safety net programs are in place with the primary objective to improve access to food for the poorest and the most vulnerable: cereal banks’ 127 subsidized sales, SNSA’s free food distributions, FFW and FFS projects, and general food subsidies. Access to education 30. Only 23 percent of Malian adults – and only 29 percent of Malians aged 15 to 24 – can read and write. This is the lowest adult literacy rate anywhere in the world. With (at least) four in ten of the children aged 7 to 12 out of school Mali has still one of the lowest enrolment rates in the world. And only 54 percent of those who do begin primary education complete it – down to 35 percent in the northern Tumbuktu Region [MEALN, 2008]. The problem is particularly acute for girls, which represent 60 percent of the children officially out of school. Urban parts of Mali are closer to achieving gender parity, but there are great disparities and only 33 percent of girls attending primary schools in the northern region of Kidal. 31. There are also serious concerns about the quality of education: not enough teachers, particularly well-trained ones; very low salaries of teachers; poor teacher management; weak infrastructure; lack of materials; confusion over curriculum policy; etc. The gap in trained teachers was estimated to 45,350 – well over double the number of trained teachers now in school [Pearce et al., 2009]. Almost 7 percent of primary school students have to travel more than 5km to reach their school – up to 12 percent in Segou. And only 14 percent of schools in the country have separate latrines for girls. The huge expansion of community schools in the 1990’s helped reduce the supply gap but the next challenge will be to bring community schools into the public system. 32. The public sector remains the largest provider of education in Mali with 60 percent of all primary school pupils enrolled in public schools, 18 percent in community schools (90 percent of them in rural areas), 12 percent in Koranic schools, and 10 percent in other private schools (mainly in urban areas). In 1993, Mali recognized education as a constitutional right, and successive governments gave it priority since then. The Ten -Year Education Development Program (Programme Décennal de Développement de l’Education or PRODEC) provides the strategic framework for all aspects of education. The PRODEC has been implemented through successive multi-year plans, the Education Sector Investment Programs (Programmes d’Investissement Sectoriel de l’Education or PISE). PISE III runs from 2009 to 2011. In 1991, Mali committed to provide free primary education: no fees should be charged; the State should support teachers’ salaries and provide teaching materials. But in practice, families are still paying for education: registration fees, fees for books and materials, fees for additional teachers, etc. Even among the poorest 40 percent of households, average household spending on primary education was estimated to CFAF 2,810 a year [EMEP 2001, cited in MEALN, 2008]. And there is a difference of 22 percentage points in access to primary education between the poorest 40 percent of the population and the wealthiest 20 percent. 33. In order to increase enrolment and completion, a number of programs were introduced. As mentioned above, solidarity-based programs support the building of public or community schools in most vulnerable areas – with a significant support from INGOs and donors; school feeding programs are expanding; and some scholarship programs were introduced – often with a specific focus on girls. School feeding and scholarship programs are important social safety net programs. 128 34. There are three main providers of school feeding programs, which operate under the same national strategy and in a concerted manner, but with each their own program specificities:- ƒ World Food Programme, which assists 721 primary schools in the regions of Kayes, Gao, Mopti and Tumbuktu; ƒ Catholic Relief Services with US funding, which assists 120 primary schools in Mopti; and ƒ State, which assists 708 primary schools in the 166 poorest communes not covered by the WFP and CRS. 35. The WFP program to support basic education aims at providing lunch to 120,000 pupils annually in 721 primary schools in the Sahelian zone. In addition, quarterly take- home rations are provided to any girl attending school at least 80 percent of the time. Communities are requested to contribute with condiments, wood, and labor. The CRS program is quite similar, although take-home rations will be provided to girls of the 5 th and 6th grade, since it appear that the gender gap has been bridged in the other grades, at least in the areas CRS works in. In total, “assisted” (i.e. with external support) school feeding is in place in 838 schools. 36. The National Directorate for Basic Education (Direction Nationale de l’Education de Base or DNEB) within the MEALN coordinates all school feeding activities, and directly manages the national program to support ‘integrated’ school feeding. The program aims at promoting local communities’ ownership of school feeding, which should lead to a progressive withdrawal of the State and other partners. The approach relies on the integration of the school feeding activities in local development, e.g. with small farmers supplying the local school and/or women association to prepare school meals. By 2011, 3,000 primary schools are expected to have integrated school feeding activities (out of 9,816 in 2006-2007) reaching 900,000 pupils. The program currently focuses on the poorest 166 communes, and covered 500 schools in 2008 -2009. A budget of CFAF 1.6 billion was executed in 2008 and a budget of CFAF 1.7 billion allocated in 2009. The program 2009-2010 should reach another 1,000 schools. Based on needs assessment, the ministry transfers budgets to the decentralized structures (Direction d’Académie) for them to transfer appropriate amounts to each beneficiary school. Each school then manages its own local procurement – as per administrative and financial procedures. In urban areas, communities are expected to cover all related costs from year 1, while in rural and semi- urban areas, a phased hand-over is planned, from 90 percent of the costs covered by the State in 2008-2009 down to 40 percent in 2010-2011, and 0 percent in 2011-2012. As mentioned in the national program for integrated school feeding, decentralized authorities are expected to take over school feeding costs in the mid-term by integrating them into local development programs [MEALN, 2008b]. The long-term vision is to see all school feeding costs supported by beneficiaries. 37. In September 2009, CRS and WFP will launch a pilot project to promote local purchases for school feeding activities. The shift from WFP supply to local purchase is expected to be operated over four years. The WFP will continue to provide vegetable oil throughout because no suitable enriched oil is currently available on the Malian market. Local committees will gradually be empowered to purchase cereals and pulses on the local market. CRS will be responsible for the local purchases but will transfer this responsibility 129 to local school committees in a phased approach. In 2009-2010, 10 percent of the funds allocated for local purchases will be transferred, and up to 40 percent the fourth year. 38. The MEALN provides scholarship to students of a number of specific institution s. This assistance is not targeted at poorest students, but rather at specific subjects (e.g. agricultural schools, teacher schools, etc). Various structures (mainly from the civil society) provide assistance to support the enrolment of children from destitute parents. Activities often consist of payment of destitute children registration fees to the school and in-kind transfers to households (e.g. clothes, notebooks, etc.). The MDSSPA also aims to provide such assistance. Sponsorship of children of destitute parents was launched in June 2004 with the objective of contributing to school attendance and permanent education of children living in difficult circumstances. A year later, the MDSSPA reported that over 250 children had been sponsored for a total amount of CFAF 6m. And in its 2008-2011 MTEF, the MDSSPA reported 71 percent of disabled children and 59 percent of children of destitute parents at school in 2007. These percentages appear surprisingly high. Especially considering that in its 2007 report, the DNDS reported only 50 children sponsored. The MDSSPA’s targets to see over 78 percent or disabled children and over 90 percent of children of destitute parents at school by 2011 seem pretty unrealistic. 39. Two well developed scholarship programs include: the USAID-funded “Ambassador’s Girls’ Scholarship Program” (AGSP) implemented with World Education in 109 primary school in Gao, Kidal and Timbuktu between 2003 and 2008 (under different names); and the UNICEF-supported scholarship program called “Bourse Maman” piloted in 9 primary schools in Kayes and Mopti between 2002 and 2007. Both are cash transfer program conditional to children attendance to school. The AGSP project was directed at all girls in the 4 th, 5th and 6th grade (most at risk of living school) and reached approximately 7,000 girls a year. The Bourse Maman” project targeted mothers of both girls and boys attending any of the first cycle grades and reached approximately 500 mothers per year. There is willingness to restart the Bourse Maman project which had to stop due to lack of funding. 40. Overall, two types of social safety net programs are in place with the primary objective to improve access to education for the poorest and the most vulnerable: school feeding and scholarship programs. Access to health care 41. The PRODESS Health Component provides the strategic framework for all health activities. A number of specific treatments are provided for free: consumables for HIV testing and ARV treatment; DOTS for TB treatment; medicines and operation for caesarian sections; mosquito nets and ACT to prevent and treat Malaria for pregnant women and children under 5; means of contraception; enriched flour to treat acute malnutrition (CFAF 100m); Vitamin A distribution campaigns; regular immunization campaigns (CFAF 1.5 billion); immunization during epidemic and disasters (CFAF 980m); treatment for leprosy, schistosomiasis, bilharziasis, etc. In addition, cancer treatment (only available at the Point G hospital in Bamako) is subsidized since 2007 (CFAF 250 millionin 2009). Hospitalization is free for civil servants, and civil servants and their family may benefit free medical evacuation (budget of CFAF 1 billion in 2008). And set prices were defined for 107 medicines. The national pharmacy (Pharmacie Populaire or PPM) supplies health centers with subsidized consumables, and regional health structures submit request for reimbursement for any additional consumables to be provided for free purchased by health 130 centers or any other additional costs (e.g. staff costs for caesarian sections). A recent evaluation of the ‘free caesarian section’ initiative [INRSP, 2009] revealed that while the initiative had shown positive results, several challenges needed to be overcome is the initiative was to be sustained, including: poor financial contribution from decentralized authorities, irregular supply of kits, and lack of awareness of the measure among the population. All these measures were introduced for public health reasons, and are not specifically targeted at the poorest and most vulnerable individuals. They represent important social policies, but cannot be considered as social safety nets, as defined here. 42. There are attempts to offer fee waivers for the aged and the indigents. The national action plan for the promotion of the aged includes the provision of subsidized health services for the aged. And the indigents are expected to receive free emergency treatment in health centers and subsidies health services. In both cases, decentralized structures (hospitals, communes, etc.) are expected to provide this assistance. However, if such assistance is expected, it is not always imposed by law, and in all cases no additional funds are allocated to decentralized structures for them to provide fee waivers for the aged and the indigents. 43. In January 2009, Mali adopted measures for the institutionalization of t he Mandatory Health Insurance (Assurance Maladie Obligatoire or AMO) to be developed for both the formal and informal sectors, and the Health Assistance Scheme (Régime d’Assistance Médicale or RAMED) for the indigents. These measures are not yet effective, but the RAMED aims to cover 600,000 indigents a year i.e. 7 percent of the population living under the national poverty line. 44. Nutrition is a key component of health policies. One PRODESS component is specifically on nutrition, and two divisions were created under the Ministry of Health to deal with nutrition: the Food and Nutrition Monitoring Division (Division du Suivi de la Situation Alimentaire et Nutritionnelle or DSSAN) under the Planning and Statistics Unit; and the Nutrition Division of the National Health Directorate (DNS/DN). The National Food and Nutrition Strategic Plan 2005-2009 (Plan Stratégique National sur l’Alimentation et la Nutrition or PSNAN) is meant to guide all food and nutrition activities. The sub-program V of the PNSA on “health and nutrition” set the following priority activities: nutritional awareness for decision-makers, leaders and populations; reduction of protein-energetic malnutrition prevalence among under 5, in functional areas of two “cercles” (regions); reduction of MPE prevalence among pupils aged 6 to 12; reduction of malnutrition among women of child-bearing age; reduction of micro-nutriment deficiency prevalence; and improvement of sanitary quality of food. The program also plans to expand WFP’s program directed at people infected and affected by HIV -AIDS to all vulnerable areas, and to promote school gardening in the 166 most vulnerable communes. The cost of this PNSA’s sub-program V was estimated to CFAF 11.31 billion, 9.92 percent of the total costs of the PNSA. 45. Food insecurity, low access to drinking water, little revenues, income sources not diversified, lack of access to health services, poor nutritional education, etc. are some of the main reasons of increasing malnutrition. Most vulnerable groups are children under 5 and pregnant and lactating women, with peaks during the lean season. Malnutrition is one of the main causes of a high mortality rate. In March 2008, while the average prevalence of acute malnutrition (6.1 percent) and chronic malnutrition (25.3 percent) among under 5 were within the average WHO levels, the weight-for-age indicator (composite indicator of 131 both long-term and current malnutrition) was above the WHO critical threshold at 23.3 percent [WFP, 2009]. 46. The WFP runs a program to fight malnutrition in food insecure areas of Mali, aiming specifically at: improving the nutritional status of children under 5 and pregnant and lactating women; improving the nutritional status of people living with HIV; increasing treatment of people affected by tuberculosis; and improving nutrition -related practices and knowledge [WFP, 2008b]. People living with HIV and TB patients receive food rations for a period of 6 months, children 6-24 months receive food rations over the 3- month lean season, and moderately malnourished children receive supplementary feeding. In total, the program should assist nearly 900,000 persons over two years (2009-2010). 47. While the WFP assists moderately malnourished children, UNICEF assists severely malnourished children. UNICEF supports the Ministry of Health for activities including: training of health workers, awareness campaigns on exclusive breast feeding, supply of health centers in equipment, consumables and medicines, etc. Other organizations also implement nutritional programs. As mentioned above, the USAID -funded ‘Nema’ project includes an integrated set of community-based activities to fight children malnutrition and illness. In particular, implementing agencies propose establish a screening system at the community level for acute malnutrition in children 6-59 months, provide enriched foodstuffs and complementary food for severely malnourished children, and promot e the use of the positive deviance/hearth approach to rehabilitate moderately malnourished children. Christian Aid and Action Against Hunger also run nutrition programs. 48. Overall, three main social safety net programs are in place with the primary objective to improve access to health for the poorest and the most vulnerable: nutrition programs, fee waivers for the aged, and fee waivers for the indigents. Access to employment 49. In Mali where 46 percent of the population is under 15, and 64 percent of the population is poor, under- and unemployment appears as a critical issue, especially for youth and women. In Mali, “youth” refers to the age bracket 15-40 which represents over 65 percent of the population. And women represent 51 percent of the population. Un der the national policy program 2002-2007, youth employment was a priority and the following actions were conducted, in line with the National Employment Policy: two national directorates respectively responsible for employment and professional training were created in 2002; the APEJ (Agence pour la Promotion de l’Emploi des Jeunes) was established in August 2003 to implement the PEJ (Programme Emploi-Jeunes); the National Fund for Youth Employment (Fonds National pour l’Emploi des Jeunes or FNEJ) was created in 2004; a specific Ministry in charge of employment and professional training was created in 2004; the National Program of Action for Employm ent towards Poverty Reduction (Programme National d’Action pour l’Emploi en vue de Réduire la Pauvreté or PNA/ERP) became operational in October 2005; and apprenticeship tax of 0.5 percent was increased to 2 percent in 2006. Overall, the government invested about CFAF 17 billion in the sector between 2002 and 2007, and reported the creation of nearly 93,000 jobs, either permanent or temporary. The current GPRSP covers issues related to decent employment, PDES also identifies youth and women employment as a key priority, and the third strategy of the PRODESS Social Development’s second component “fight against poverty” is to promote access to employment for specific categories. 132 50. APEJ’s overall objective is to contribute to Mali’s economic and social development by offering youth aged between 15 and 40 maximum job opportunities, either in the salaried employment sector or the independent employment sector. APEJ’s main intervention areas are: youth advice and information; support to qualified and unqualified youth insertion; support to rural youth; support to youth entrepreneurship; support to local authorities; and support to youth access to credit. APEJ’s interventions are done through the FNEJ. 51. Public works are a key component of employment programs. With a large part of public investment dedicated to infrastructure, the objective of such a component is to reorient investment in order to make most benefit by creating a large number of jobs for the poor, as well as realize investments able to stimulate the local economy and offer opportunities for local businesses. The PNA/ERP’s fourth component focuses on public works programs. The PEJ, in its third component “rural employment and public works” takes advantage of decentralization by implementing public works activities which use maximum local material with the objective to generate local employment. 52. The APEJ has been managing two main public works programs: the PROMIIER (Programme Multisectoriel d’Investissements à fort coefficient d’Emploi en milieu Rural) in rural areas of Kayes, Koulikoro and Segou, and the PILE (Projet d’Initiatives Locales pour l’Emploi dans le District de Bamako) in Bamako. PROMIIER activities include: (i) improvement of irrigated areas, (ii) reforestation and improvement of listed windbreaks and forests, and (iii) rehabilitation of rural tracks. And under the PILE, activities includ e: (i) street improvement and paving, (ii) stall construction and improvement of market lines, and (iii) technical training on road improvement and paving, rural track maintenance, etc. Both programs generated 87 daily jobs in 2004. The two programs are now merged into the PEJHIMO (Projet d’Emploi des Jeunes par l’approche HIMO) which was implemented at a pilot scale from July 2005 to July 2007 in rural Segou and the Commune III in Bamako. The State supports investments’ costs through the FNEJ and the Grand Duchy of Luxembourg provides technical assistance through the ILO. 53. The APEJ public work scheme is the only sizeable social safety net program in place with the primary objective to improve access to employment in poor and vulnerable regions of Mali. Access to housing 54. The National Social Housing Program is a flagship program in the president’s PDES. In order to improve access to housing, the government adopted a town planning and housing policy, leading to the formulation of a Town Planning Master Plan (SDU) and the National Housing Program (PNL) as well as the creation of three referral institutions: (i) the Housing Bank of Mali (Banque de l’Habitat du Mali or BHM) specialized in the financing of housing; (ii) the Housing Authority of Mali (Office Malien de l’Habitat” or OMH), a financing mechanism for assisting BHM in its policy to reduce the cost of housing, and (iii) the Mortgage Guarantee Fund of Mali (“Fonds de Garantie Hypothécaire du Mali or FGHM) responsible for granting mortgages and refinancing banks and financial institutions that operate in the housing sector. 55. The President Amadou Toumani Touré launched in 2003 a housing program aimed at facilitating access to decent housing of low income households though the construction of 3,500 houses. The program was launched recognizing that low and medium income 133 households had difficulties to access decent housing, and that the production of local construction materials is low while the price of most imported construction materials increases. The cost of the program (CFAF 41.7 billion) was supported by the State (58.6 percent), the OMH (35.2 percent) and the ACI (Agence de Cessions Immobilières) (6.2 percent). Between 2003 and 2007, a total of 4,066 houses were built, 3,500 by the State and 566 by the private sector. The construction program generated nearly 13,290 job.month paid over CFAF 9 billion throughout the country. 56. The program was expanded in 2007, as stated in the PDES, and over 10,000 houses and flats should be built throughout the country (Bamako, Segou, Gao, Kidal, Tombouctou, Mopti, San, Bandiagara, Kita, Nioro, Goundam, Diré, Ansongo, Ménaka, Kati, Koulikoro, Bougouni, Koutiala, Kayes) over the period 2008-2012. The government is directly committed to build 5,400 units (800 in 2008, 1,700 in 2009, 1,555 in 2010 and 1,345 in 2011) while other units will be build under a public-private partnership (1,584 units by SEMA SA, 1,211 by IFA BACO, 2,000 by METRO IKRAM, 100 by the Venezuela, 150 by SIFMA for a total cost of CFAF 50.4 billion). The total cost was estimated at CFAF 84.396 billion, 48.49 percent (CFAF 40.925 billion) of which will be directly supported by the State, and 51.51 percent will be reimbursed by beneficiaries over a 25-year period. The first 866 units of the 2008-2009 phase were inaugurated in June 2009: 640 units by the State at a cost of CFAF 15.7m per unit; 126 units by private developers at a cost of CFAF 13.4m per unit; and 100 units with the Venezuelan cooperation at a cost of CFAF 17.5m per unit. 57. The program does not target the poorest, but medium income households. Malian citizens, employees, non-employees or Malian living abroad, can apply to the Housing Program if they meet a set of clearly stated eligibility criteria. For non-employees, these criteria in 2008 were: Malian citizenship; monthly income comprised between CFAF 56,920 and 150,000 for a 3-room accommodation and between CFAF 150,001 and 250,000 for a 4-room accommodation; not a beneficiary of similar housing program; not owning an accommodation in the project areas; having permanent guarantee savings account worth at least three monthly installments in the stated bank. Applicants should submit a CFAF 500 - stamped request to the president of the Allocation Committee including: CFAF 5,000, a bank certificate that guarantee savings is available, birth certificate, photocopy of ID card, Malian nationality certificate, residence certificate, and any other certificates on the family status (wedding, divorce, death, children birth certificate, etc.). The Social Ho using Allocation Committee review request forms considering additional sub-criteria (not clearly stated). The list of selected beneficiaries is then publicly announced. As an example, the beneficiary of a basic 2-room accommodation in 2008 would have to pay CFAF 8,228 906 over 25 years (i.e. 38,430 CFAF/month with bank and guarantee fees) and a guarantee of CFAF 115,289. In addition, because contractors did not always respect construction norms, some beneficiaries had to pay substantial amounts to rehabi litate their accommodation right after the lease transfer. Half of the beneficiaries of the first lot of houses built in 2008 are employees, and nearly 10 percent are Malian living abroad, most of them in France and the USA (Table A3.3). 134 Table A3.3: Beneficiaries of the Housing Program Number of request Percentage of Category Number of beneficiaries forms received beneficiaries Phase 2003-2007 30,046 4,066 Employees 15,186 2,165 53.3% Non-employees 12,675 1,635 40.2% Malian living abroad 2,185 266 6.5% Phase 2008-2009 < 14,000 866 Employees n/a 428 49.5% Non-employees n/a 354 40.9% Malian living abroad n/a 83 9.6% Source: Ministry of Houing, Land and Urbanism, 2009. 58. Thus, the social housing program appears as one of the social programs with one of the largest funding envelopes from the government, and at the same time one of the lowest numbers of beneficiaries. The construction program generated nearly 13,290 job.month paid over CFAF 9 billion throughout the country. However, neither house beneficiaries nor workers are among the poorest and most vulnerable Malian. And the design and implementation arrangements of the program raise a few concerns. Box 2: Some Concerns about the National Housing Program Below are some of the concerns raised around the national housing program:- ƒ The coverage of the program is very limited. The Ministry of Housing, Land Issues and Town Planning estimates the need for social housing to 440,000 units by 2015. Considering than less than 5,000 units were built to date, the exclusion error is very high. Providing the required 440,000 units would cost the State over CFAF 3,000 billion, which is clearly unaffordable. This suggests the exclusion error of such a program would remain high. ƒ As per the inclusion error, a low percentage of ministries’ departmental staff and other non-poor persons is believed to be among social housing beneficiaries. Months after the lease transfer, some houses were still vacant suggesting that their beneficiaries did not need this accommodation. Late July 2009, the OMH instituted legal proceedings against some social housing beneficiaries who converted their accommodation into a high standing villa in violation of the contract signed with the OMH. ƒ There are indications that an underground economy has developed around the housing program. Some applicants admitted having bribed city council staff to obtain fal se certificates. And the program may encourage populism and privileges. ƒ Another issue raised relates to houses’ quality. It was reported that because some contractors had not respected construction norms, some beneficiaries have had to pay substantial amounts to rehabilitate their accommodation right after the lease transfer. ƒ The program was launched recognizing that low and medium income households had difficulties to access decent housing, and that the production of local construction materials is low while the price of most imported construction materials increases. It is unclear whether any of the two program objectives – ensuring access to housing to all low/income households, and boosting the production of local construction materials – can be reached. Source: Malijet, Staff’s estimates. 59. Yet, the National Social Housing Program is identified as a priority program in the president’s PDES. And the government committed to allocate an average of CFAF 8.18 135 billion a year (0.22 percent of GDP) to support the construction of an average of 1,080 houses a year benefiting about 6,200 persons. 60. Since the social housing program is targeted to households who have a salary and can afford to pay a rent, it is not a program designed for the poorest and most vulnerable, and therefore it does not qualify as a social safety net program. 136 ANNEX 4: KEY NATIONAL STRATEGIC DOCUMENTS FOR SOCIAL ASSISTANCE 1. Below is a review of main strategic documents adopted by the government that are relevant to social protection and social safety nets in particular. Statement of National Social Protection Policy (PNPS) 2. The Statement of National Social Protection Policy adopted in 2002 aims at providing a comprehensive framework for the development of a coherent social protection system in Mali [MDSSPA, 2002]. The statement (Déclaration de Politique Nationale de Protection Sociale, or PNPS) is to be an expression of the rights of all citizens to social protection, guaranteed by the State. Its overall objective is to progressively build a system of protection against social risks for all citizens and particularly for more marginalized groups. Its specific objectives revolve around four themes, two of which – points b) and d) below – are directly relevant to (non-contributory) social assistance, and thus the development of social safety nets:- i. The extension of the scope of social security, with the objective to ensure a better coverage of social risks by social security institutions; ii. The development of social assistance and action, with the objectives to contribute to: ƒ Better cover of health risks of indigent and persons affected by HIV/AIDS; ƒ Ensure citizens access to education; ƒ Ensure citizens access to justice; ƒ Better access to employment for groups in difficult conditions; and ƒ Reinforce mechanisms of care for victims of difficult circumstances. iii. The development of mutual insurance mechanisms and other grassroots organizations based on principles of solidarity, with the objective to ease the creation and organization of mutual insurance structures and others forms of solidarity-based organizations; iv. Special protection for specific categories (esp. the aged, the disabled, children and women, orphans, the unemployed, and persons affected by HIV/AIDS), with the objectives to contriburre to: ƒ Efficiently address social risks of the aged; ƒ Ease the participation of aged to social cohesion strengthening; ƒ Ensure the disabled enjoy their fundamental rights; ƒ Assist women and children in difficult situations; and ƒ Ensure effective care of Mali’s war orphans. 137 Social Protection Extension Action Plan (PAN) 3. The Social Protection Extension Action Plan (Plan d’Action National pour l’Extension de la Protection Sociale or PAN) identifies priority activities for the extension of social protection in Mali over the period 2005-2009 [MDSSPA 2004a]. The action plan is organized around three issues: social security, social assistance and action, and mutual insurance and other solidarity-based social protection schemes. In this document, PNPS’s objectives 2 (“social assistance and action”) and 4 (“special protection”) are both considered in the activities labeled “social assistance and action”. These activities are intended to contribute to the coverage of about 5 percent of the population (destitute) with the Health Insurance Funds (Fonds d’Assistance Médicale or FAM); the coverage of about 6 percent of the elderly in the health sector (in line with Decree 95-368); and the social protection of the disabled. PRODESS II Social Development Component 4. The PRODESS II (Programme de Développement Sanitaire et Social) Social Development Component sets the base of current social development and social protection programming over the period 2005-2009. The PRODESS II Social Development Component aims at laying the foundations of a social policy intended to relieve the poverty burden of the most vulnerable groups. The PRODESS II’s Social Development Component was developed around five sub-components, which are: I. Strengthening of solidarity and fight against exclusion; II. Poverty reduction; III. Reinforcement of social protection; IV. Institution building; and V. Human resources development. 5. Sub-component I aims at improving and protecting certain social categories living in difficult circumstances through four strategies: promotion of the socioeconomic reintegration of the disabled; promotion of the socioeconomic reintegration of the elderly; promotion of the socioeconomic reintegration of women and children living in difficult circumstances; strengthening of humanitarian action and social assistance. 6. Sub-component II aims at strengthening communities’ institutional development capacities through four strategies: contribute to the improvement of the economic, social and cultural environment of the poorest; ease access of the poorest to income-generating activities; promote employment in favor of specific groups; and ease access of t he poorest to essential basic services and housing. 7. Sub-component III aims at protecting populations in both formal and informal sectors, as well as those who are unemployed or destitute against specific health - and age- related social risks – old age, death, illness, work-related accidents, disability and maternity. The objective is to implement a progressive extension of coverage against social risks to the entire population through four strategies: extension of the scope – in material and personnel terms – of the social security system; improvement of the management capacities of social security institutions; development of specific mechanisms for social protection; and development of mutual health insurance and other organizations formed for the purpose of providing social protection on the basis of solidarity. 138 8. Sub-components IV and V relate to institutional building only. Poverty Reduction Strategy Paper (GPRSP) 9. The PRODESS II informed the third strategic orientation of the current Poverty Reduction Strategy Paper aimed at strengthening the social sector. Poverty reduction is now at the core of Mali’s development priorities, and the 2007–2011 second generation PRSP, the Growth and Poverty Reduction Strategy Paper (Cadre Stratégique pour la Croissance et la Réduction de la Pauvreté or GPRSP) focuses on promoting growth by boosting the productive sector and consolidating the reform process of the public sector. The GPRSP was developed in line with the Ten-year Plan to Reach the MDGs (Plan Décennal d’Atteinte des OMD 2006-2015). Two specific objectives were set: an average annual growth rate of 7 percent and an improvement of the population well-being. The “strengthening of the social sector” is one of its three strategic orientations, along with the development of infrastructure in the productive sector, and the pursuit and consolidation of structural reforms. This third strategic orientation focuses on “better delivery of key basic social services, in particular education, health, drinking water and sani tation, and housing”, with employment-training and HIV/AIDS control as priority areas of intervention [GPRSP, 2006:15]. As defined in the GPRSP, the terminology “social sector” encompasses “education,” “health,” and “other social sectors” which include social development, employment and vocational training. GPRSP’s key activities in the social development sector focus on the disabled, the underprivileged rural communities, and social security. Project for Economic and Social Development (PDES) 10. The president’s Project for Economic and Social Development (Projet pour le Développement Economique et Social or PDES) does not include a social protection component per se, but synergies between identified priority areas and social safety net programs might be possible. While the current horizon of the PRSP process is in 15 years (“Mali 2025”), the PDES identifies activities feasible within the 5-year period 2007-2012 among PRSP II’s priority areas. The development of social sectors is mentioned as one of the six PDES’s priority areas, and the document states that from then on education, health and other social sectors will benefit more than half the national budget. In terms of social sectors, the project clearly focuses on education and health. A social housing program is included under the strategy to “strengthen the program for infrastructures’ expansion”, and the development of rural employment through public works is mentioned under the strategy for the “insertion of women and youth in productive sectors”. 139 ANNEX 5: GOOD PRACTICE DESIGN FEATURES FOR DIRECT SUPPORT DRAWN FROM INTERNATIONAL EXPERIENCE 36 1. Based on good practices in the design of social assistance (direct support) programs, there are four design features that need to be addressed: 2. Selection of households for direct support. It is common knowledge that the more generous the definition of eligibility, the larger will be the pool of applicants for social assistance and the cost of the program. The cost of the program also depends on the level and duration of benefits (discussed in the section below). For example, for the old age social assistance pension program, Nepal defined the cut-off age limit for eligibility as 75. This undoubtedly restricted the pool of beneficiaries and kept the program within the limits set by the available budget, but the program could not reach some of the critical vulnerable groups even slightly below the age 75. On the other hand, some countries set the limit for eligibility low at 60 (or even lower), leading to the opposite effect of too many beneficiaries and a very large budget. To overcome difficulties of this kind, many countries now resort to limiting the cash transfer social assistance to, say, the poorest 10 percent of the population. One such example is the Kalomo District Pilot Social Cash Transfer Program in Zambia, which limited the outreach to the bottom 10 percent of the population. 3. Determining the eligibility and selection of eligible beneficiaries has varied a great deal from one country to another, depending upon (a) administrative feasibility, and (b) the available information. Where both these sets of conditions are weak, countries (such as Rwanda) have resorted to community targeting approaches. However, good practice dictates validation of such selections via a transparent communication system. For example, in Mexico’s Oportunidades program (a conditional cash transfer program), beneficiary lists are presented at community meetings which has given communities a chance to pick both exclusion and inclusion errors. In all cases, a complaints mechanism is critical for ensuring community satisfaction with the targeting approach. 4. Where the information constraint is less severe, countries have adopted a proxy means test (PMT). This is a targeting method by which a score for each applicant is generated based on household characteristics that are fairly easy-to-observe – usually non- income characteristics) such as the location and quality of housing unit, ownership of durable assets, number of children, level of education, etc. A threshold score level is set below which a household becomes eligible for the benefit. When a community targeting approach such as the one described in paragraph 3 above is adopted, it is still possible to move gradually to a PMT method, short-list households for the benefit, and then use community meetings to ensure transparency and avoid exclusion and inclusion errors. Many low income countries are resorting to this combination of a PMT and community validation as a means to select beneficiaries for safety net programs generally. A recent example is Bangladesh, which is now sponsoring a safety net program using a combination of PMT and community validation. 36 Source: See M. Grosh et. al. The Design and Implementation of Effective Safety Nets: For Protection and Promotion. World Bank, 2008 140 5. Determining Benefit Levels. Determining the size of social assistance direct support is a tricky issue in all countries. It is hard to provide clear-cut policy advice based on international experience, but some guiding principles can be offered. Typically, in last resort programs such as the one proposed for Rwanda, which aims to reduce extreme poverty, the benefit levels are set as a fraction of the income gap of target beneficiaries. How high or low that fraction should be depends on the available budget and the number of people in extreme poverty. Using a proxy means test, Armenia and Georgia have used this principle. 6. In this regard, some number crunching might be helpful with the available household level information. For example, information on the number of extremely poor households can be combined with information on their income (poverty) gap and, from both these sets of information, one can derive the financial requirements for a given level of benefit. One can then see the feasibility (affordability) of alternative benefit levels and decide on the level that can be defended within the available budget envelope. 7. Benefit levels need not be fixed at a flat level for all types of households. Instead, the levels can be varied. Variable benefit formulas are often the norm in many countries, mainly because such formulas allow for variation in household circumstances (such as number of children, presence of a disabled child or person, long term sickness of a household head, etc). A very good (successful) example of such a variable benefit formula is that of Brazil’s Bolsa Familia Program. This program provides two types of benefits: a base benefit to all families in extreme poverty, and a variable benefit that depends on family composition and income. 8. Whatever method is adopted to determine the benefit level, it is useful to assess the level of benefit as a percentage of the consumption expenditure of extremely poor households. How generous the program is can be assessed from this proportion. The higher the benefit levels as a percentage of the household’s consumption expenditure, the more generous the program. Maintaining a generous benefit level is likely to impact on labor supply through adverse disincentive effects: i.e., households, even when provided with opportunities to work in the labor market, may opt to stay in the “generous” program. While this concern for the impact of benefit levels on work disincentives is theoretically valid, it does not apply to programs that target extremely poor households with no adult labor to participate in the labor market, or the disabled, or the elderly. 9. Delivery Mechanisms and Payment modalities. Four principles generally guide the delivery mechanism: (a) ensuring reliability and regularity of payments; (b) maintaining accountability (governance issues) and prevention of fraud; (c) reducing transaction costs to the beneficiaries; and (d) minimizing the administrative cost of delivery. While a number of delivery agencies or routes are available – bank branches, mobile banks, post offices, decentralized government agencies, NGOs – the selection of the delivery mode eventually must satisfy the above four principles, and be available and suitable for a given country situation. Not surprisingly, countries have varied a great deal in this regard. If contractors or a specific agency is selected, performance-based incentive contracts can be developed as was done in the Brazil’s Bolsa Familia program. Kenya has tried a pilot program for a cash transfer to orphans and vulnerable children through a bidding process to select a lowest-cost service agency. The advantage of these contract- based service agencies is that the contracts can be revised based on performance. In countries with somewhat developed IT infrastructure, debit cards and smart cards are being 141 used to transfer cash assistance. In the state of Gujarat in India, a pilot program is being tried to use smart cards to transfer in-kind social assistance. It is hard to recommend one specific option or delivery mechanism: the main challenge is to adapt any one reliable mechanism to country circumstances, and avoid any unintended adverse effects. 10. Monitoring and Evaluation of Cash Transfer programs. The Program monitoring is extremely important for any safety net program and especially for cash transfer programs. Systematic monitoring helps one to assess how well the program is being implemented at all levels, and helps mid-course correction in the event of poor implementation. Evaluation complements the monitoring system, inasmuch as it allows an assessment of the distributive effects of cash transfer programs. Despite the critical importance of monitoring and evaluation, unfortunately most safety net programs lack a credible M&E system in place. 11. Monitoring is a continuous activity, and is typically done at all levels – village, district and at the national levels. Its main role is to assess whether or not the program is being implemented in accordance with its design with outcomes as expected. Its annual cost must be factored into the program costs and it must become an integral part of the programmatic framework. A good monitoring system must collect information on the program’s key outcomes. A good practice procedure is that monitoring should be done by an independent agency, outside of the agency or institution implementing the program. A well-documented international experience of good monitoring is from Zambia. The Kalmo District Pilot Social Cash Transfer program (which operated with technical assistance from Germany) implemented third-party monitoring that focused on the quality of program management, the effectiveness of targeting, regularity of transfer payments, and even beneficiaries’ use of the transfers. 12. It is not enough to know the program’s outcomes; it is important also to know the impact of the program on household welfare, which is the ultimate goal of a cash transfer program. Several techniques are available to do an impact evaluation. Two approaches can be distinguished. One is a quantitative approach that collects information on a random sample of households belonging to both the treatment group and the control group, both at the launch of the program and after a given period of time (say, one year). Econometric techniques are then used to assess the impact of the program. 37 A complementary approach is qualitative evaluation, which is based on focus group interviews, key informant interviews, and direct observation. Though qualitative evaluations are not representative, they do offer rich information on the program’s functioning, its merits, and shortcomings. 37 For a good understanding of the techniques and applications, see World Bank website on Impact Evaluation. 142 13. A variant of descriptive evaluation is “process evaluation”, which is probably the most common evaluation technique followed in many countries. Its approach is to assess and document how each of the processes underlying a cash transfer program is being implemented. It helps address the question: what is happening through the program. Process evaluation strongly complements, but does not substitute for, an internal monitoring system and other evaluations mentioned above. For example, the Zambia example is worth repeating: it included a process evaluation by external evaluators in addition to other evaluations which helped improve the monitoring capacity as it revealed specific flaws in specific processes underlying the program’s implementation. 143 ANNEX 6: SOME COUNTRY EXAMPLES OF GOOD PRACTICE IN SAFETY NETS PROGRAMS IN AFRICA 1. Recent financial crises and price hikes have increased policymakers’ interest in finding ways to address persistent, and often deepening, vulnerabilities. The success of cash transfer programs in many parts of the world has led many leaders to ask whether cash transfer programs could be successful in addressing the major challenges present in Sub-Saharan Africa (SSA). This section examines how cash transfers have been used throughout the region and highlights the lessons that have already been learned through existing cash transfer programs. Taking into account the context of Mali, the following selected country case examples could provide valuable lessons in understanding how programs are implemented in other African. Ethiopia’s Productive Safety Net Program (PSNP) 2. In Ethiopia, over 40 percent of the population lives below the national poverty line and over 20 percent of the population is extremely poor (below 1,650 kilocalories per person per day). Since the variability in rainfall is among the highest in the world, and fluctuations in rainfall are inversely related to mean incomes, every year for more than two decades the government of Ethiopia has launched an international emergency appeal for food aid. This annual emergency assistance was designed to meet the consumption needs of both chronically and transitorily food-insecure households. Despite substantial amount of humanitarian assistance, evaluations have shown that emergency assistance was unpredictable for both planners and households, often arriving late relative to need. As a result of the delays and uncertainties, the emergency aid could not be used effectively and did little to protect livelihoods, prevent environmental degradation, generate community assets, or preserve household assets (physical or human capital). 3. Characteristics of the Program: Given these shortcomings of the emergency aid regime, in 2005 the Ethiopian government started implementation of a new program, the Productive Safety Net Program (PSNP). The PSNP replaced the emergency humanitarian appeal system as the chief instrument in the country’s safety net. The program is currently operational in 234 chronically food-insecure districts (of a total of 692 districts), and targeted about 7 million people in 2006. The PSNP provides resources to chronically food - insecure households in two ways: (i) through payments to the able-bodied for participation in labor-intensive public works activities; and (ii) through direct grants to households composed of the elderly or those who cannot work for other reasons. 4. Impact of the PSNP: A 2005 beneficiary survey found that the PSNP had a significant positive effect on beneficiaries’ well-being as calculated by both subjective and objective indicators. The survey found that three in five beneficiaries avoided having to sell assets to buy food in 2005, and according to 90 percent of the households, this was a result of their participation in the PSNP. Moreover, almost half the beneficiaries surveyed stated that they had used health care facilities more and 76 percent of these households credited the PSNP with this enhanced access. More than one-third of surveyed households enrolled more of their children in school and 80 percent of them attributed this to participation in the PSNP. 5. Ongoing reforms: Significant work is planned to further improve implementation capacity and bring systems to a level of functioning not previously possible with 144 fragmented and temporary programs. Work is also beginning on a contingent grant mechanism (conditional cash transfer) to provide resources in the same districts to help transient food-insecure households during periods of drought. The mechanism will use a rainfall-based index that uses 30 years of rainfall data to trigger funding. Moreover, the PSNP is complemented by a larger food security program that tries to help hou seholds raise their incomes by means of resettlement grants, household income-generating packages, and water harvesting. Households that benefit from the PSNP are also entitled to assistance under other parts of the food security program. Food security int erventions financed by donors that fall outside the PSNP are, however, rarely coordinated at local levels, and their links to basic rural services are also weak. 6. Lessons Learned: The PSNP illustrates many of the issues that surround safety nets in very low-income countries, namely: ¾ The program is moving in a clearly beneficial direction by means of a basic design that not only seeks to use resources in ways that save lives, but also assist in livelihoods. The progress in implementation to date suggests that this is possible even in a very low-income setting. ¾ The design process and implementation planning have undergone a fairly harsh triage. Even when fully realized, the program will only provide a safety net in about a third of the country. The districts selected are appropriately the poorest, but many poor people also live in the unserved districts. Moreover, the program has phased its implementation. It is focusing first on consolidating the basic PSNP. It hopes to enrich it eventually in a number of dimensions, but program managers and donors have realized that everything could not be accomplished right away. Thus, for example, the contingent fund for droughts was not implemented until the third year of the PSNP. ¾ Good implementation requires diligent and sustained effort. By 2007, the program had many positive outcomes, and early qualitative assessments of its targeting and impacts are positive, but more remains to be done to consolidate implementation. Good implementation also requires flexibility and innovation. For example, the government was initially having problems with the program’s monitoring system, but in the interim, it deployed so-called rapid response teams to visit districts to identify and solve implementation problems. This gave managers a sense of what was going well and what was not and whether adjustments were needed in individual districts or at a more systemic level. Meanwhile, the design of the monitoring system was simplified and a pilot to computerize it is under way. ¾ An important part of the reform is the shift to a multidonor, multiyear framework rather than an annual emergency appeal system with each donor running a separate initiative. This is complemented by the decision to deliver the program through regular government systems rather than special implementation units common in donor funded programs. The multiyear framework and the reduction in fragmentation should permit the development of much more effective administrative systems. The multidonor framework should also aid in resilience, in that withdrawal or a reduced commitment by a single donor will have a less deleterious effect. 145 Kenya Cash Transfer program for Orphans and Vulnerable Children (CT-OVC) 7. This transfer programs began as a pre-pilot in 2004. It has since gone through a five-year pilot project and scaled up from a very small budget to a projected US$26 million budget for fiscal year 2010 (WB 2009c). Extensively documented, the program has provided valuable experience in advocacy, design, and implementation of conditional cash transfers in SSA settings. It is a key component of Kenya’s broader social protection strategy, as it addresses risks to children in communities where large number of OVCs, exasperated by adult deaths from AIDS, have begun to overwhelm informal safety net systems. In addition to donor interest, the CT-OVC initiatives have received strong domestic political support, including pressures to quickly scale up of the program . 8. Objectives of the pre-pilot program: The goal of the pre-pilot was to generate evidence regarding the applicability of a cash transfer program to support OVCs in Kenya. The pre-pilot phase began in December of 2004, initially reaching 500 children. It was later expanded to reach at least 5,000 children. The pre-pilot was supported through UNICEF and SIDA and administered from the Department of Children Services (WB 2009c). The program’s initial districts- Nairobi, Kwale, and Garissa - were selected because they were areas where UNICEF and SIDA already had ground -level knowledge and experience. The pre-pilot targeted poor households and households with OVCs that did not receive other formal support. Beneficiaries received KSh.500/US$6.25 monthly per child (SCUK et al. 2005). Technically, the pre-pilot transfers had conditions attached, but there were no consequences for non-compliance (WB 2009c). Concerns that children would be separated from their households in order to meet program requirements led the pre-pilot to drop enforcement of conditions (WB 2005). However, communities and some donors requested that the transfers be conditioned, particularly as the program expanded to the west in areas with higher HIV levels. 9. CT-OVC Redesigned for Full Pilot - Drawing on pre-pilot experiences, the official pilot of the CT-OVC program began in 2005 and ran through mid-2009. The program specifically focuses on households with OVCs, with the goal of keeping children within families and encouraging investment in their human capital. The specific program goals are very similar to those seen in other well-known CCT programs in Latin America, including improving health, nutrition, education, and awareness of these issues. The pilot program planning envisaged reaching seven districts, with support from the Government of Kenya, DFID, UNICEF, and SIDA (WB 2009c). Funds from development partners in the pilot reached 17,500 households that are still being covered by benefits. Between 1,000 and 4,600 beneficiary households are covered in each of the districts. By the end of Phase 2 (June 2009), benefits reached 70,000 households. 10. Targeting Takes Complex Five-Step Approach including Community Committees - Targeting in the pilot was refined from pre-pilot methods. The targeting is completed through five steps (WB 2009c). Geographic targeting selects program districts based on poverty and HIV/AIDS levels. The districts are ranked based on the number of extremely poor OVC households in the district. Within the districts, the number of households with OVCs is calculated. Communities are selected to belong to the program provided there are more than 5,000 community members, of which at least 60 percent have to live below the poverty line (Hussein 2006). Community committees (Location OVC Committees) were created to select eligible households. The households must not be able to meet all of their basic needs, and they must have a permanent OVC member under 17 years old in the household who is not receiving benefits from another cash transfer 146 program (GoK 2006). Within this group of eligible households, Location OVC Committees decide which households meet three of a list of over ten items related to poverty (such as whether the household has access to a safe water source, members are in poor health, or members eat one or fewer meals per day). Households meeting at least three of the criteria are considered poor (WB 2009c). 11. Post Office Functions Well for Transfers - The transfer size was set at a level that was believed to cover enough of the needs of OVCs to help keep them within their households. Transfer values vary by the number of OVCs in the household. Ksh 1,000 (US$14) is given in households with one or two OVCs, Ksh 2,000 (US$28) is given to households with 3-4 OVCs, and Ksh 3,000 (US$42) is given to households with 5 or more OVCs (WB 2009c). Using Ksh 1,500 (US$20) as a reference transfer value, the transfer is sizable compared to the average of Ksh 1800 per adult equivalent for consumption. The transfer therefore is approximately equal to 20 percent of poor Kenyan households’ expenditures (WB 2009c). However, the transfers have not been indexed to inflation, so their value has eroded as food prices have grown. Transfers in the pilot districts are delivered using the Postal Cooperation of Kenya, which was found to function well. Payments are awarded once every two months (OVC 2007). The transfers are supplied along with a receipt outlining if the household received the full possible payment, and if not, why (GoK 2006). They are given to the household’s mother or female head/caretaker whenever possible. 12. Soft Enforcement of Conditions - Similar to conditions in cash transfer programs in Latin America, Kenya’s CT-OVC beneficiaries have responsibilities relating to child health and education: beneficiaries under one year old must attend a local clinic six times within their first year to receive immunizations, vitamin A supplements, and to have their growth monitored; beneficiaries between one and three years old must have a growth- monitoring check-up and receive vitamin A supplements twice per year; children between 6 and 17 years old must enroll in school and maintain attendance for 80 percent of all days; and caretakers must attend educational seminars at least once annually (WB 2009c). However, until very recently, these conditions have not been applied in the program; it has essentially been an unconditional transfer. Part of the program’s design was to test a conditional versus an unconditional transfer, but this design component did not begin to be tested until late 2008. Thus far, there has been confusion over how to apply health conditions, and hence only education conditions have been applied. In areas where conditions are applied, the reduction in transfer, for non-compliance, is Ksh 400 per child or adult that does not comply with co-responsibilities (WB 2009c). 13. Program exit occurs if there is no longer an OVC in the household under 18 years old or the household is reassessed and no longer deemed to be poor. Households that migrate from the program area, voluntarily withdraw, or are found to have falsified information are also no longer in the program (WB 2009c). Finally, after three consecutive periods of failing to fulfill co-responsibilities, households are supposed to exit the program. 14. Organization and Management System Requires Inter-Sectoral Coordination - The pilot’s Central Program Unit, comprised of units for operations, monitoring and evaluation, administration/finance, and information systems, was originally situated within the Department of Children Services in Kenya’s Ministry of Home Affairs (GoK 2006). The Vice-President holds ultimate control over the program (Hussein 2006). Enforcement of conditions requires close coordination by line ministries with the program, as the education objectives are to be executed by the Ministry of Education, and the health 147 objectives are executed by the Ministry of Public Health and Sanitation. Other coordination with the Ministry of Medical Services and Ministry of Immigration and Registration of Persons are also being supported (WB 2009c). 15. Analysis of Results Awaited from Experimental Evaluation Design - The pilot has taken significant measures to maintain adequate controls, including the use of an extensive management information system (MIS). The current MIS is centered at the national level but will later be decentralized to the districts (WB 2009c). Teachers and health care workers fill out forms reporting school attendance and health center visits. The central MIS tracks information by district. Conditions are monitored every two months for children ages zero to one, every six months for children ages one through five, every three months for the educational conditions, and once every year for the adult training sessions. Conditionality monitoring also is supposed to work through this system. Application of conditions is supposed to be spot checked, including through visits to beneficiary households to ensure program compliance. Appeals may be submitted to the District Children Office, who also accepts complaints concerning payment quantities and quality of supply side services. 16. Impact evaluation of the program: The pilot program in the original seven districts is subject to an impact evaluation, conducted by Oxford Policy Management, with qualitative and quantitative components. The evaluation design of the program is experimental (although there were significant differences across the treatment and control groups), in which two treatment locations and two control locations are randomly selected within each of the seven districts. The unconditional/conditional design was also randomly assigned (Hurrell, Ward, and Merttens 2008). The baseline sample includes 2,759 households. Its analysis of targeting revealed that most selected households did have an OVC (98 percent), and most of these households were poor. However, the extremely poor were underrepresented in the program (Hurrell, Ward, and Merttens 2008). 17. There is strong Government ownership and funding and expansion is included in Medium Term Plan - The CT for OVCs is included in Kenya’s Medium Term Plan and Vision 2030. The Kenyan government funded the CT-OVC program in 2005-2006 using US$675,000, or KShs. 48,000,000 (Hussein 2006). Due to its expansion, the program is expected to cost US$26 million in FY10. This figure is 0.08 percent of nominal GDP and 0.31 percent of government expenditures. When the program reaches 100,000 households, it is expected to cost between US$32 and 35 million, or approximately 0.07 percent of nominal GDP and 0.28 percent of government expenditures (WB 2009c). Administrative costs in the program are expected to be approximately 25 percent by 2012, and they are expected to continue to drop. This percentage is much lower than the 40 percent administrative costs in the pre-pilot. 18. CT-OVC Adaptations for Phase Three Scaling Up - The political pressures for more rapid expansion of the CT-OVC pilot into additional districts have resulted in two parallel programs running alongside each other. A new (third) program phase now seeks to harmonize the programs and build the capacity for their effective implementation. The goal of the Government of Kenya is to cover 100,000 poor households with OVCs by 2012 (approximately 2,000 households per district), in order to cover approximately half of the 600,000 extremely poor OVCs in the country (WB 2009c). During the third phase the following measures will be introduced: 148 ¾ The targeting mechanism will be adjusted based on results from evaluations, Kenya’s Integrated Household Budget Survey, the MIS, and baseline data. Improvements will be made to the standardized program based on lessons learned in the second phase. ¾ The MIS will be upgraded to enable it to efficiently handle the greatly increased system demands from the rapid scale-up, and an organization will be contracted to provide external monitoring. That external monitoring will spot check the program, conduct community censuses to evaluate the quality of Local OVC Committees, and conduct so-called “citizen report cards” that will determine beneficiary and non-beneficiary opinions and satisfaction with the program. This improved accountability is particularly important in light of concerns over governance and corruption in Kenya (WB 2009c). ¾ Extensive effort will be made to improve communication about the program to both beneficiaries and non-beneficiaries. Implementation and monitoring of the co- responsibilities is expected to improve. ¾ By mid to late 2010, testing regarding the use of penalties resulting from non- compliance with co-responsibilities should be complete (WB 2009c). ¾ Evaluations of supply side capacity will also be conducted. This capacity building is crucial; program officials have made notable achievements in implementing the program and improving capacity already, but more must be done to meet the challenges of continued scaling up (WB 2009c). Malawi cash transfer programs. 19. The Social Cash Transfer program began with UNICEF support as a pilot in Mchinji district in 2006, with goals to scale up eventually to a national program. Its objective is to decrease poverty, hunger, and starvation of the extremely poor and those without an eligible member able to participate in the labor force. This includes many households with Orphans and Vulnerable children (OVCs). 20. Characteristics of the Program: The objective of the Mchinji Social Cash Transfer Pilot was to address extreme poverty. Schubert and Huijbregts (2006) reports that around 10 percent of all Malawian households (250,000) are extremely poor and incapable to work (i.e., labor constrained or labor incapacitated). It was suggested that if that 10 percent of households all received social cash transfers, the country’s extreme poverty rate would decrease from 22 percent to 12 percent, at a cost of US$41 million per year. This analysis contributed to the decision to target 10 percent of extremely poor households in the targeted pilot area of Mchinji, equal to approximately 3,000 households/15,000 individuals (Chipeta and Mwamlima 2007). In addition to its poverty-reduction related objective, the program sought to improve beneficiary children’s enrollment and attendance at schools, to provide information about how well a cash transfer program could fit into Malawi’s social protection agenda (Chipeta and Mwamlima 2007), and to test whether District Assemblies could implement cash transfer programs that were both cost -effective and able to reach targeted household groups (Schubert and Huijbregts 2006). Mchinji was chosen for the pilot due to its strong District Team, average poverty levels, and relatively close location to the capital of Lilongwe. 149 21. Targeting of the Mchinji Pilot Includes Elected Village Committees - Targeting criteria classified the extremely poor as those who reside in the bottom expenditure quintile and below the national extreme poverty line. Based on this definition, beneficiary households should be unable to purchase needed non-food goods. Labor constrained households are those with a dependency ratio of over three (Schubert and Huijbregts 2006). To select these households, local committees known as Community Social Protection Committees first create a list of all households they think may fulfill the program’s requirement that they be “ultra poor” or “labor constrained.” These committees are selected through community elections during the initial program meeting (Schubert 2007b). Village headmen are not allowed to be on the committees. The committees must then call on and interview all potential beneficiary households; the village headman must verify this information, and the committees rank identified households according to their level of neediness. The ranking is discussed and approved or changed in a community meeting. The information is passed to the Secretariat and a Social Protection Sub - Committee, who must approve or disapprove of the list. The lists are supposed to contain the 10 percent of households in the community agreed to be most needy. 22. Design and Delivery of Transfers - Monthly transfers in Mchinji, all unconditional, were graduated by household size and number of children in school. One - person households received MK 600 (about US$4), two-person households received MK 1,000 (US$6.67), three-person households receive MK 1,400 (US$9.33), and four person households or larger received MK 1,800 (US$12) (Schubert and Huijbregts 2006). Households with children in primary school received MK 200 (US$1.33) additionally per child, and households with children in secondary school earned an additional MK 400 (US$2.67) per child. This bonus was not tied to school attendance. It was simply given when school aged children were in the household. The average transfer value was MK 1,700 (US$11.33)38 per household monthly, which was deemed large enough to fill the extreme poverty gap in targeted households (Schubert and Huijbregts 2006). There were 3,000 household beneficiaries by the beginning of 2008, and expenditures were US$43,000 monthly (Miller et al. 2008). The pilot scale up was postponed due to funding delays; however, it was able to reach seven districts by the end of 2008 (Horvath et al. 2008). As of April 2009, the scheme reached 92,786 beneficiaries in 23,561 households in seven districts (UNICEF/GOM 2009). 23. Implementation mechanisms and financing: Social Cash Transfer Program was implemented locally. The Ministry of Women and Child Development and the Department of Poverty and Disaster Management coordinated the pilot with help from UNICEF (Chipeta and Mwamlima 2007). The Mchinji pilot was implemented by the Local Assembly, whose District Executive Committee had a Sub-Committee on Social Protection with line ministry representatives. This sub-committee approved applications to the program. The Malawi district structure has officers that come from various departments and are able to support the program. Capacity is limited at the district level, but not as constrained as in some other countries (e.g., Zambia) implementing a similar program (Schubert and Huijbregts 2006). Below the Sub-Committee is the Social Cash Transfer Scheme Secretariat with personnel who implement the program, control the budget and perform periodic monitoring. Below this, the Village Development Committee is in charge of the Community Social Protection Committee, which both targets and tracks 38 Standardizing exchange rate to that reported previously; this is slightly different from Schubert and Huijbregts’ 2006 report. 150 beneficiaries (Schubert and Huijbregts 2006). The Community Social Protection Committee teams receive remuneration to compensate them for some activities performed (Schubert 2007b). 24. For the pilot, UNICEF provided technical assistance, supported program set-up, funded the transfers until December of 2006, and supported advocacy and capacity building in Malawi. This included funding visits of government representatives to Brazil and Zambia, holding workshops, and conducting field trips to Mchinji. Additional funding to scale up the program in 2008 and 2009 came from the National AIDS Commission through The Global Fund to Fight AIDS, Tuberculosis and Malaria. The Global Fund’s contributions to the scale up were around US$8.8 million, and National AIDS Commission funds were used since approximately 70 percent of beneficiary households have been affected by HIV/AIDS (Schubert 2007a). The EU planned to fund external M&E. The country has expressed interest in obtaining further financing from development partners through a basket fund after the Social Cash Transfer has been incorporated into the National Social Protection Strategy and received full Cabinet support (Schubert and Huijbregts 2006). Other donors in a pool fund were expected to be the World Bank, DFID, CIDA, and NORAD (Horvath et al. 2008). 25. Challenges in Evaluation Design - Internal monitoring is completed through the production of monthly reports on costs, activities, outputs, and more. UNICEF and USAID support a joint external program evaluation conducted by Boston University and the Center for Social Research in Malawi (Miller et al. 2008). Targeting evaluations were completed in March and June of 2007, and a systems evaluation was conducted in October of 2007. The baseline household survey was conducted in treatment and comparison village groups in March of 2007 before treatment households received a grant. Follow -up surveys were carried out in August-September 2007 and March 2008, and qualitative data was collected from October-November 2007. However, it appears that experimental methods were compromised in the evaluation. The Mchinji District Secretariat chose which village groups were treatment and comparison groups, both treatment and comparison households were selected using the community targeting methods, and comparison households did not understand that the research was unrelated to their grant receipt. 26. Lessons learned. The targeting evaluation of the Mchinji program found much need for improvement. ¾ Almost one-third of community members in program areas thought targeting was not fair. The evaluation suggested that less subjective indicators be used to determine program beneficiaries: targeting should be more objective, standardized, and transparent (Miller et al. 2008). Depending on their definition of eligibility, the exclusion errors in communities ranged from 37 percent through 68 percent. ¾ Beneficiaries’ food consumption and diversity had improved over that of the comparison group. In addition, children’s and adults’ health had improved, and children’s self-reported school attendance and capacity to study increased. Child labor had also decreased significantly in the treatment group, while the comparison group’s labor did not change. The evaluation also concluded that household productivity had increased since they received the transfers. 151 ¾ The expected cost of scaling up the program nationally to 273,000 households (1.2 million individuals, of which 60 percent are expected to be OVCs), is around US55 million annually, or 1.4 percent of GDP (Schubert 2009). In June of 2007, delivery of the transfers cost less than 2.5 percent of program costs, and administrative costs were less than 15 percent of the program costs (Horvath et al. 2008). ¾ The program has faced significant challenges, including (i) the need for more, better trained district level staff; (ii) on-going concerns over household dependency and corruption in the program (Chipeta and Mwamlima 2007); (iii) the program has also dealt with high turnover of government employees; (iv) the need for improved financial mechanisms to transfer funds at high levels, and improved MIS system that connected district and national level data; (v) the need to put a complaints/appeals procedure in place (UNICEF/GOM 2009); and (vi) to scale up the program it is necessary for increased government commitment, particularly from the Ministry of Finance, and additional capacity building at all levels of government. 152 ANNEX 7: SOCIAL SAFETY NET SPENDING (STATISTICAL TABLES) Table A7.1: Total Spending on SSNs by Programs: Government and Donors (CFAF million) 2006 2007 2008 2009 1. CASH TRANSFERS - CONDITIONAL n.a. n.a. n.a. n.a. 2.1 TARGETED FOOD DISTRIBUTION 4,795 8,141 5,473 5,680 2.2 NUTRITION 1,985 3,063 7,790 7,536 2.3 SCHOOL FEEDING 1,964 1,284 4,623 4,232 3. GENERAL FOOD SUBSIDIES 0 685 7,822 0 4. PUBLIC WORKS 2,174 2,555 3,759 1,671 5. FEE WAIVERS HEALTH n.a. n.a. n.a. n.a. TOTAL 10,918 15,728 29,468 19,118 Percent financed by Gov 48.7% 59.7% 54.9% 41.7% Percent of GDP 0.30% 0.50% 0.80% 0.50% Percent of GDP (excluding the General food subsidies) 0.30% 0.48% 0.59% 0.50% Source: Ministry of Finance, donors and staff estimates. 153 Table A7.2: Social Safety Nets Spending 2006-2009: Government Financing (Current CFA million) 2006 2007 2008 2009 1. CASH TRANSFERS - CONDITIONAL 2.1 TARGETED FOOD DISTRIBUTION 4,522 7,894 5,434 5,641 2.1.1 In-kind distribution Contribution Gov PAM (4-631-10, CSA & CP 10205, act. 4) 586 591 60 62 Distribution of state national stock 3,393 5,700 3,323 4,561 2.1.3. cereal banks 543 1,603 2,051 1,018 2.2 NUTRITION 179 204 591 0 Nutrition programs Ministry of Health - totals 0 42 591 0 Government counterpart funds to PAM 10205 (act.2) 179 162 0 0 2.3 SCHOOL FEEDING 121 114 1,800 1,814 Government contribution to PAM 10205 act.1 & CP10583 act 1 99 90 86 86 Government school feeding (MOE) 3-621-18 22 24 24 25 Government complement school feeding (MOE) 0 0 73 0 Government Intitiative 166 school feeding (MOE) 0 0 1,617 1,700 contribution of local collectivities to CRS/PAM school feeding 0 0 0 3 3. GENERAL FOOD SUBSIDIES 0 685 7,822 0 4. PUBLIC WORKS 500 500 521 521 APEJ 500 500 500 500 Counterpart 10583.0 act. 2 (PAM) Food for work 0 0 21 21 5. FEE WAIVERS HEALTH Exemptions health care for the old and the indigents n.a. n.a. n.a. n.a. Exemptions health care malaria for the less than 5 yrs n.a. n.a. n.a. n.a. Total Government-financed SSN programs 5,321 9,397 16,168 7,975 As percentage GDP 0.15% 0.30% 0.44% 0.21% Source: Ministry of Finance, donors and staff estimates. 154 Table A7.3: Social Safety Nets Spending 2006-2009: External Financing (Current CFAF million) 2006 2007 2008 2009 1. CASH TRANSFERS - CONDITIONAL Bourses Maman UNICEF n.a. n.a. n.a. n.a. Girls scholarships n..a. n..a. n..a. n..a. 2.1 TARGETED FOOD DISTRIBUTION 273 247 39 39 2.1.1 In-kind distribution PAM (CP 10205, act. 4 & CP10583, act 3) 273 247 39 39 2.2 NUTRITION 1,806 2,859 7,199 7,536 PAM CP 10205.0 (act. 2)+PRRO 10452.0+PRRO 10610 1,806 2,590 3,610 3,696 UNICEF 0 0 2,039 2,459 USAID & NGOs (CA, CRS, ACF,NEMA ) 0 269 1,550 1,381 2.3 SCHOOL FEEDING 1,843 1,170 2,823 2,418 School feeding (PAM CP 10583 act. 1& CP 10205) 1,843 1,170 1,962 1,458 Food for education (USAID) 861 861 CRS/PAM/local communities 0 100 4. PUBLIC WORKS 1,674 2,055 3,239 1,150 APEJ (Luxembourg) 286 259 259 0 4.1 Food for Fork/ Food for Skills PAM (CP 10205.0,act. 3, PRRO10452, CP10583, act.2) 1,389 1,797 2,186 358 USAID Food for Peace (NEMA project) 795 792 Total externally-financed SSN programs 5,597 6,332 13,300 11,143 As percentage GDP 0.15% 0.20% 0.36% 0.29% Source: Ministry of Finance, donors and staff estimates. 155 ANNEX 8: POTENTIAL SOURCE OF FINANCING FOR SOCIAL SAFETY NET PROGRAMS: PUBLIC EXPENDITURE R EALLOCATION 1. As discussed in the main report, this Annex concentrates on the “expenditure reallocation” option and attempts to identify and quantify the sources of fiscal room that could support safety net programs in Mali. Several policy options are open to the authorities to tackle poverty, but, in part because of their managerial and financial resource implications, they entail trade-offs. The Government of Mali, while committed to social protection, must ponder the possible trade-offs for long-term growth and poverty reduction involved in financial arbitrages among different programs and policies. This Annex will not discuss the main policy trade-offs per se but it focuses whether fiscal room could be found through reallocation of selected expenditures in the existing programs, namely (i) social sectors expenditures and (ii) the overall fiscal situation. Social Sectors Expenditures 2. In the authorities’ PRSP, “Social Sector” refers to “education,” “health” and “other social sectors.” Total spending in social sectors is around 7.1 percent of GDP, which includes 4.5 percent of GDP on education, 1.8 percent on health and 0.8 percent on other social sectors (Table A8.1). Health and Education Expenditure 3. Looking at social sector spending (specifically health and education) to find fiscal room raises questions. The first question to be asked is what percentage of public resources are going into social safety net programs versus health and education, and how does the level of resources on SSN programs compare to the government’s policy commitments and the increased need to protect the poor and vulnerable, particularly in the context of the economic crisis? 4. If the government has an overall hard constraint on social sectors spending (including health and education) in the context of the PRSP, should the government – and its financial and technical partners – spend more on social safety net programs at the expense of health and education? Framing the question that way then can help identify the constraints to spending less for health and education and more for SSNs. Specifically the questions related to these constraints are: x What are the policy choices the government has made in health, education and in protecting the poor, and the resulting commitments in terms of spending? x What are the financial needs in health and education for attaining their long-term objectives, and the advocated responses for these sectors to the economic crisis? x Even if efficiency gains could be found in health and education (at current level of services), what would be the priority for freed-up amounts towards alleviating poverty? 156 Table A8.1: Functional Composition of Public Expenditure, Using PRSP Methodology (% of GDP) 2002 2003 2004 2005 2006 2007 2008 actual As percentage of GDP actual actual actual actual actual actual (prov) SOCIAL SECTORS EXPENDITURES 5.8 5.8 7.0 6.8 7.5 7.8 7.1 Basic education 2.4 2.5 3.2 2.9 3.5 3.8 3.4 Secondary higher education & scientific 1.2 1.2 1.1 1.1 1.2 1.2 1.1 Health 1.6 1.4 1.6 1.7 2.0 1.8 1.8 Other social sectors 0.6 0.7 1.1 1.1 0.8 1.0 0.8 OTHER EXPENDITURES 21.0 19.5 18.1 21.0 19.3 18.7 18.5 Public authorities & general administration 2.4 2.7 2.6 3.2 3.3 3.2 3.2 Diplomacy and foreign affairs 0.5 0.5 0.5 0.5 0.5 1.1 0.5 National defense and internal security 2.1 2.1 2.1 2.2 2.1 2.2 1.9 Culture, youth and sports 0.3 0.3 0.4 0.4 0.4 0.4 0.4 Employment 0.0 0.1 0.1 0.2 0.2 0.2 0.2 Agriculture 3.9 2.7 2.8 4.1 3.0 2.8 3.3 Mining, water resources and industry 1.0 0.8 0.6 1.0 1.3 1.3 1.8 Town planning and public works 3.0 3.3 2.4 3.1 2.9 2.5 3.0 Transport 0.5 0.2 0.7 0.3 0.3 0.3 0.4 Communication 0.2 0.4 0.5 0.3 0.3 0.3 0.3 Domestic debt 0.4 0.3 0.0 0.0 0.0 0.0 0.1 Foreign debt 2.6 1.7 1.4 2.1 1.3 0.7 0.9 Interest foreign debt 0.0 0.0 0.4 0.6 0.4 0.3 0.3 Unallocated funds 4.3 4.4 3.8 3.0 3.1 3.1 2.0 Total 26.8 25.3 25.1 27.8 26.8 26.5 25.6 Source: Government of Mali, Ministry of Finance. i. Health Expenditure 5. Between 2002 and 2009, public expenditures in health have more than doubled in nominal terms. Public share in financing of the health sector is best illustrated based on the evolution of budgetary resources put into the health sector. Even if the data series is incomplete and its reliability needs to be confirmed, a trend is visible confirming the priority given to health by the government. However, as percentage of GDP, the trend is declining after 2006. 6. Health spending is also donor-dependent, but on a declining basis. Numbers indicated a share of health spending. In 2002, external financing was about 40 percent of health expenditure against 21 percent in 2007 and 20 percent in 2008. In reality, not all external financing in health is captured by the budget, so it is safe to assume that in 2008, external financing’s share was in the bracket of 25-30 percent of public expenditures. As a reference, donors financed about 50 percent of SSN spending in 2008. 157 Table A8.2: Public Expenditures in Health in Nominal Terms, 2002-2009 2002 2003 2004 2005 2006 2007 2008(1) Total expenditure, 32.53 33.93 42.13 48.59 65.61 62.87 68.93 in CFAF billion Total expenditure, 1.6% 1.38% 1.60% 1.72% 2.05% 1.84% 1.76% % of GDP Expenditure per 2,947 2,993 3,619 4,064 5,344 4,986 5,323 capita, in CFAF (1) Budget estimate Sources: 2002-2003: PRSP I; 2004-2007: PRSP II; 2008-2009: Ministry of Finance (DGB). 7. At around 1.8 percent of GDP in 2008, public health expenditures were about three times the amount spent on social safety nets.39 Per capita expenditure was an estimated CFAF 5,323 in 2008. However, in the absence of an incidence analysis, it is hard to estimate how much of the public expenditures in health is spent on the poor, and thus, estimate what share of health expenditures subsidize the poor. According to a study by Marek [World Bank, 2008], only 17 percent of the poorest 20 percent of the population in Mali use the public health system (as opposed to other providers). Extrapolating from these numbers would mean that health expenditure would only serve about 240,000 people out of the 1.4 million in the poorest quintile. 8. Commitments to MDG objectives as well as population increases put health expenditure under considerable pressure.40 All projections go towards increased financial needs in the health sector. For example, based on the numbers in the table above, health financing in 2008 would be US$5-6 per capita. Even though the number may be underestimated (as the budget does not capture all donor financing in the health sector), spending per capita is still probably well below the US$15 per capita recommended by the World Bank. Similarly the WHO’s recommended share of health expenditure of 9 percent is not yet achieved. 9. However, public health expenditure could be directed towards explicitly pro- poor programs, such as nutrition programs covered under SSNs. For example, based on costs of nutrition programs discussed in the previous section,41 an increase in nutrition programs to another 500,000 beneficiaries would be of the order of CFAF 6 billion, or about 9 percent of the health budget in 2008. 39 There is double counting: some SSN programs are under the management of the MOH, e.g., nutrition. 40 In the latest MTEF prepared by the Health ministry (April 2009) spending on health (domestic and external financing) should reach CFAF 133.2 billion in 2009, against an actual budget of about CFAF 68 billions. At the same time, a recent population study by the World Bank [2008] developed a model to estimate resource needs based on two assumptions on population growth (slow decline in fertility rate, strong decline in fertility rate). The study shows that even at constant ratios of human resource and infrastructure to population in the health sector, the population growth only would justify significant increases in resources devoted to health. 41 Assuming an average cost of CFAF 12,000/year per beneficiary for nutrition programs of children less than 5 years old and mothers. 158 ii. Education Expenditure 10. Over the past years, public expenditures in education (ministries in charge of education) have grown significantly in nominal terms and as percentage of GDP, up to 5 percent of GDP in 2008, or over eight times the amounts spent on SSNs. The data below (Table A8.3) is drawn from the PRSP and is to be validated by an ongoing study by the World Bank on the status of the Education sector [RSN, World Bank 2009]. Table A8.3: Public Expenditures in Education 2004 2005 2006 2007 2008(1) Current expenditure, CFAF billion (current) 82.97 92.33 107.09 120.15 128 Capital expenditure, CFAF billion (current) 29.62 21.12 42.19 49.25 70.192 Total expenditure, CFAF billion (current) 112.59 113.45 149.28 169.41 197.90 Total expenditure, as percentage of GDP 4.3% 4.0% 4.7% 4.9% 5.1% (1) Numbers for 2008 Budget. Note: The numbers above are from RSN. Source: PRSP, Ministry of Finance (DGB). 11. This trend shows that the government has placed education squarely as a priority, at the heart of its strategy for reducing poverty. The strategy has also benefited from considerable support from the donors who finance about 30 percent of education expenditure. Public expenditures have kept pace with population growth, and has supported increased enrolment as well as lengthening of school attendance. A growing portion of expenditure is financed by external support (overwhelmingly capital expenditure) amounting to about one third of total expenditure over the period 2004 -2008 as opposed to about 13 percent between 2000 and 2002. This is the result of the commitments made by donors (Dakar, 2000) to assist countries with credible plans for improving their education system. 12. Unsurprisingly, public expenditures in the education sector are also highly skewed towards the most educated population. Overall access to education is highly unequal in Mali. Gender, location, and especially living standards explain inequalities. Specifically, the level the gross school attendance rate was 60 percent in 2006 with a significant difference between the poorest and the richest (44 percent and 107 percent respectively): In the first quintile, gross enrolment for boys is 50.3 percent against 37 percent for girls; in the 2nd quintile, these ratios are 53.7 percent and 41.3 percent. The 10 percent most educated children (those who stay the longest at school) absorb 50 percent of public resources. The analysis in the RSN study also shows that for 2007-2008, only 5.8 percent of current public expenditures go to the first cycle of elementary school, constituting 46 percent of the school cohorte. A total of 16.3 percent of public expenditures is spent on the first two cycles, constituting 66.5 percent of the school cohorte. Overall, public expenditurea are highly favorable to the richest quintile as shown in Table A8.4. It also favors the urban over the rural population and boys over girls. 159 Table A8.4: Distribution of Public Expenditures in Education by Quintile, Gender and Location Distribution of publique Percentage of Distribution resources in education population index (%) Gender Female 51.1% 36.8% 1.00 Male 48.9% 63.2% 1.80 Location Rural 69,0% 19,4% 1.00 Urban 31,0% 80,6% 2.60 Quintile of revenue Q1 22.2% 4.3% 1.00 Q2 20.3% 5.4% 1.38 Q3 18.5% 4.9% 1.36 Q4 18.2% 11.0% 3.13 Q5 20.9% 74.5% 18.49 Source: RSN, World Bank, 2009. 13. Based on the recent status report (RSN), efficiency gains could be found in education, yet the numbers above suggest that significant pressure will persist on education spending to attain the MDGs. Again the following example seeks to illustrate the magnitude of the needs in the education sector as a benchmark to appreciate trade -offs between policies. The example illustrative and as a result, it is also simplistic: variables have been kept constant, and a number of very simple assumptions have been made. Based on the calculations, the cost of enrolling all unschooled children in Quintile 1 and Quintile 2 would be roughly around CFAF 24 billion. This would correspond to about 19 percent of the 2008 education budget, or about 0.6 percent of GDP (2008, current prices), which is roughly the equivalent to spending on SSNs in 2008. 14. The analysis of the poverty profile and the RSN suggest that spending in education needs to become pro-poor. But restructuring spending towards improving supply of education is not enough. Demand for education also needs to be supported. To boost demand for education, SSNs raising parents’ income, e.g., through transfers in cash or in kind, and programs supporting school enrolment could be important. Based on recent studies:42 (i) economic situation of parents appear a key determinant to enrolment; and (ii) nutrition support to children can help keeping them in school. This evidence seems to advocate for programs supporting parents’ income and protecting children’s food intake. For instance to illustrate the magnitudes of costs of a SSN program destined to support enrolment in school, we can assume that if parents were to receive a cash transfer of CFAF 3,000/month for each new child enrolled in school (with say a maximum set at two children, or CFAF 6,000/month), the total cost of cash transfers for bringing all children to school in Q1 and Q2 would be of the order of CFAF 5 billion, corresponding to about 35 percent of total spending on SSN programs in 2008 (excluding general food subsidies). 42 See analysis of the poverty and the recent status report on Education. 160 iii. Other social sectors 15. Spending on “Other Social Sectors” includes mainly: (i) the Pension Fund (a contributory scheme); (ii) income generating activities (Solidarity Bank of Mali); (iii) the budget of the MDSSPA (including: community-based development, income generating activities and transfers and subsidies to public and non-public institutions and to individuals), (iv) the National Solidarity Fund (FNS); (v) the budget line called Filet Social. 16. Spending on “other social sectors” was equivalent to about 1 percent of GDP per year over 2002-2008. Table A8.4 above shows the structure of total government spending on a functional basis based on the PRSP methodology. Allocations to “other social sectors” amounted to about CFAF 35 billion in 2007 and CFAF 38 billion in 2008, or around 2-3 percent of the budget. The table below breaks down other social sector spending into its main components. In 2007, the government employees’ pension fund made up the lion’s share of “other social sectors” spending. The other two largest recipients of “Other social spending” are the Filet Social, the MDSSPA budget and the Fonds National de Solidarité (FNS). However, based on the definition used in the report, none of these expenditures can be considered a SSN. Table A8.5: Unbundling Spending in “Other Social Sectors” (% of GDP) 2007(1) 2008(2) Filet Social allocated to: 0.29 0.29 Housing subsidy (Housing Ministry) 0.10 0.10 Fonds National de Solidarite (FNS)(3) 0.03 0.03 Mopti Poverty Alleviation Project (MoH in 2008)(3) 0.01 0.01 Banque Malienne Solidarite – SA 0.01 0.01 MDSSPA (net of delegated credits) 0.05 0.04 Common Expenditure (Charges Communes) 0.09 0.08 Caisse Retraite Mali 0.62 0.28 MDSSPA 0.30 0.41 Fonds National de Sécurité 0.04 0.04 Subsidies to non-public organizations 0.03 0.02 Emergencies o/w 0.01 0.01 Food security 0.01 0.01 Other 0.00 0.00 Total 1.00 0.80 (1) Filet Social: credits; others: budget allocations. (2) Filet Social: credits, others: budget proposals. (3) Credits delegated by the MDSSPA. Source: Staff estimates. 17. The government employees’ pension fund represents about one third of “other social sectors” spending. As mentioned in the previous chapter the pension fund is a contributory scheme for employees in the formal sector. The government’s contribution to the Pension fund amounted to CFAF 21 billion in 2007, equivalent to about 0.6 percent of GDP, or about 60 percent of “other social expenditure.”43 Because the income of most 43 The proposed budget for the Pension Fund was 30 percent lower in 2008 than the budget for 2007. This decline needs to be clarified. 161 government employees does not fall below the poverty line, this implies that a significant portion of “other social sector” expenditure goes to a program that is not targeted to the poor. 18. Transfers to individuals, in kind or in cash, remain insignificant, and it’s unclear they were targeted to the poor. Some calculations on the budget 44 indicate that cash transfers to individuals only (excluding institutions) could have reached in an optimistic scenario around 0.1 percent of GDP in 2008, or about CFAF 200 per year per capita, or less than CFAF 400 per poor, which is slightly over 1 percent of the poverty gap per poor. In other words, assuming all the hand-outs were targeted to the poor, they would amount to about 1 percent of the estimated amount needed to close the poverty gap . However, as discussed in the main report, these types of transfers qualify as “hand-outs” and tend to be allocated on an ad-hoc basis, without any targeting mechanisms, thus it is unclear they reach the poor. Filet Social 19. The Filet Social amounts to about 1 percent of the government budget, and its management is spread between various ministries and unrelated programs. The Filet Social is a budget line under Common Expenditure (Charges Communes). Most of it – about 75 percent – is allocated to different ministries and organizations (through mandates) as shown in Table A.6. The MDSSPA receives a mandate on an amount (e.g., CFAF 2.8 billion in 2008). However, part of this mandate is removed from the responsibility of the MDSSPA (through délégations de crédits) and allocated to budget users, namely, the Fonds de Solidarité and more recently the Ministry of Health for the Mopti poverty project (entirely domestically-financed). As a result, the credits managed by the MDSSPA have decreased continuously since 2006, from CFAF 2.3 billion to about CFAF 1.5 billion in 2008. About 25 percent of the Filet Social remains in “common expenditure” and is unallocated. This sum is then spent on an ad-hoc basis during the year for a wide variety of activities, and expenses most of which are unrelated to support to the poor and vulnerable. 20. One of the largest components of the Filet Social, the housing program, at CFAF 5.1 billion in 2009, is not targeted towards the poor. Because its target beneficiaries are home-buyers with incomes that can support reimbursements of housing costs, the housing program does not target the poor or vulnerable. As a result of the decision by the government to scale up the program, the social housing program absorbs an increasing share of the Filet Social, from 35 percent in 2008 to an estimated 50 percent in 2009. 21. Reallocating expenditure under the Filet Social, with a total remaining unchanged at CFAF 10 billion could support targeted social safety net programs. This could be done for example by reallocating a significant portion of “common expenditure” and freezing allocations in nominal terms to the housing subsidy program, for example at their 2008 levels. Freed-up resources could reach up to CFAF 4.0-5.0 billions, or about 0.1 percent of GDP, equivalent to half the estimated cost of transfers to bring urban children under 14 to the poverty line. 44 These calculations are based on the programs identified by MDSSPA and information provided by the MoF. 162 Table A8.6: Breakdown of Expenditure under Filet Social (in billion FCFA Beneficiaries Credit 2006 Credit 2007 Credit 2008 Credit 2009 Ministry infrastructure et logement (housing subsidy) 3.25 3.50 3.50 5.10 MDSSPA (gross) 2.30 2.80 2.80 2.30 Less credit to Fonds de Solidarite 0.95 1.05 n/a Less credit to MoH (Mopti) 0.29 n/a MDSSPA (Net) 2.30 1.85 1.46 n/a Banque Malienne Solidarite – SA 0.50 0.50 0.50 0 Common expenditures (Charges Communes) 3.95 3.20 3.20 2.60 Total 10.00 10.00 10.00 10.00 Source: MDSSPA. MDSSPA budget resources 22. The total budget resources managed by the MDSSPA, while higher in 2008 than 2007, remain very limited. In fact the budget of the MDSSPA represented respectively 0.9 percent and 1.3 percent of the total government budget in 2007 and 2008. Even including resources under the Filet Social allocated to the MSSDPA, its budget amounted to only about 0.4 percent of GDP in 2008. Table A8.7 shows the resources managed by the MDSSPA for 2007 and 2008, which includes both the budgetary appropriations for the ministry and the resources managed by the ministry under the Filet Social.45, 46 23. Between 30 and 40 percent of the MSSDPA budget is devoted to expenses for the administration. The recurrent budget includes administrative expenses by the Minister’s Office, the Directions, Centre d’Appui Mutuelle and the Inspection’s Office. In 2008, 20 percent of the domestically-financed capital budget was directed towards investments benefiting the central administration. Likewise, about 15 percent of externally- financed capital expenditure under PRODESS was directed to central and local administrations. 45 Numbers for 2008 are on an initial budget authorization basis, not actual spending. 46 Table A8.7 is arranged to show how the resources of the ministry are shared between administration and programs, and between central and local management. Estimates on the allocations of the Filet Social resources have been prepared for this report (based on the Liste Détaillée des Notifications, MoF), and should be treated with some caution as they are subject to a number of assumptions. 163 Table A8.7: Budget and Filet Social Allocated to MDSSPA (Functional and Economic Composition, CFAF million) 2007 2008 ADMINISTRATION 4,784 5,234 Central Administration 4,320 4,770 1) Recurrent Budget 2,860 3,031 2) Capital Budget 1,460 1,409 2.1) Local Financing 147 158 2.2) External Financing PRODESS 1,313 1,251 3) Social Safety Net 0 330 Local Administration 464 464 1) Recurrent Budget Unknown 2) Capital Budget External Financing (PRODESS) 464 464 LUTTE CONTRE LA PAUVRETÉ 414 350 Capital Budget Domestic Financing S’équiper pour vaincre la pauvreté 100 100 Mopti Poverty Project (Including Filet Social 2007) 300 250 Delegation regionales (Filet Social) 14 0 SOLIDARITE/LUTTE CONTRE L’EXCLUSION (FILET SOCIAL) 46 1,120 Mois de la Solidarite 40 120 Programme urgence eau potable bamako 0 250 Activites Spécifiques 0 600 Programme RBC handicappés 6 50 Lutte contre la mendicité et insertion des enfants en situations difficiles 0 100 OTHER 7,013 10,708 1) Subsidies/Transfers A) Subsidies to Non-Public Organizations 268 538 B) Support to Local Collectivities (Filet Social) 1,790 6 C) Centre Appar Ortho 49 0 2) Capital Expenditure a) Projet Appui Développement Econ. Communautaire (BAD) 2,721 3,364 External Financing Domestic Financing 185 216 B) Appui Développement Rural (Banque Mondiale) 2,000 6,584 TOTAL (Budget and Filet Social allocated to MDSSPA excl. Crédits Délégués) 12,257 17,412 Part of Domestic Financing 5,742 5,739 Part of Domestic Financing, as % of Total 47% 33% COMPOSITION (as % of Total Budget and Filet Social Allocated to MDSSPA) Administration 39% 30% Lutte contre la pauvreté 3% 2% Solidarité/Lutte contre l’exclusion 0% 6% Others 57% 61% Source: Ministry of Finance, MDSSPA, and staff estimates. 164 24. About 60-70 percent of the ministry’s resources go to a number of activities, including strengthening local communities, communication, and transfers in cash or in kind to associations and individuals. As a result, the relation between administrative costs and actual benefits to the poor in the MSPPDA’s budget is highly cost ineffective . Based on the 2007 number of beneficiaries of DNDS, administrative cost by beneficiary amounts to about CFAF 2 million. Even if the ministry’s activities were scaled up to a considerable extent—say, a factor of ten in the number of beneficiaries—at unchanged total administrative costs, unit administrative costs per beneficiary would still exceed CFAF 200,000 per year, about 70 percent of per capita income. 25. The MDSSPA is heavily dependent on external financing and spends a significant portion of its allocation under Filet Social on unspecified activities (Table A8.8). On average domestic financing represents only 40 percent of the budget. More than 40 percent of the ministry’s allocation to the Filet Social was allocated in 2008 to activités spécifiques that may include some donations to citizens and some activities under the Mois de la Solidarité (in-kind donations). Finally, about a quarter of the ministry’s Filet Social allocation was used to purchase equipment for the ministry. However, as mentioned above, the Filet Social under MDSSPA is not qualify as social safety nets as defined earlier in this report. Moreover, it appears that there is considerable scope for efficiency gains and improved targeting in the domestic resources managed by the MDSSPA, although the likely yields of these efforts – possibly not much more than 0.01-0.02 percent of GDP – would remain substantially insufficient compared to social spending needs. Table A8.8: Allocation of the Filet Social by the MDSSPA in 2008 CFAF million % of Total Solidarité Nationale et Lutte contre l’Exclusion Mois de la Solidarité 120 8 Programme Urgence Eau Potable Bamako 250 17 Activités Spécifiques 606 41 Programme RBC Handicappés 50 3 Lutte contre Mendicité et Insertion Enfants Situations Difficiles 100 7 Renforcement Capacites Institutionnelles Equipement Ministère Materiel 330 23 Total 1,456 100 Source: DAF, MDSSPA. 26. Overall, a significant proportion of spending classified as social spending does not appear to be targeted at the poor, yet some fiscal space could be created by reorienting part of these expenditures towards poor-targeted safety net programs. The pension fund, while undoubtedly an important and incompressible outlay of a clearly social character, is targeted at a very specific group in the population that does not belong to the large group of poor. The housing subsidy self-targets at people that can afford housing expenses out of the reach of the poor in Mali. Other spending include various items that suggest limited effectiveness, efficiency or equity, as exemplified by highly variable unit benefits across programs, limited reach of beneficiaries (in often unknown numbers), unclear targeting practices or high administrative costs. As mentioned earlier, transfers to the poor by public programs in Mali have not played a significant role in the sources of livelihood of the poor, and, with all caveats for limited informat ion, the evidence reviewed in this section supports this conclusion. 165 27. Some fiscal room could be found in Other Social Spending. Reallocations under the Filet Social such as freezing housing subsidies at 2008 levels in real terms and reallocating charges communes could yield about 0.14 percent of GDP. Assuming efficiency gains of 20 percent in the MDSSPA would yield an additional 0.03 percent of GDP. Still insufficient, these savings amounting to about 0.2 percent of GDP could contribute to targeted social safety net programs. iv. Overall fiscal situation 28. The discussions in the main report have shown that: (i) spending on SSN is very limited; (ii) efficiency gains could be made in other social spending to increase financing of SSN programs; (iii) education and health spending is under considerable pressure given the demographic pressure and the progress needed to achieve better outcomes. This section will focus on the overall fiscal situation with the view of discussing possible options for increased financing to SSNs from the general budget. The recent fiscal developments will be reviewed to help understand the overall fiscal pressure. The review of the economic composition of the budget will focus on identifying and discussing the “discretionary” parts of the budget. Finally trends in domestic and external resources will be looked at with the view of identifying possible increased in overall resources. 29. Mali’s fiscal situation is very sensitive to shocks but the government has always strived to maintain fiscal stability. Despite revenue fluctuations, fiscal stability has remained a key achievement in Mali. Expenditure budgets have been conservative and have contributed to control fiscal deficit. The basic fiscal balance remained overall positive during the 2003-2006 period. This prudent fiscal management has allowed budget execution to remain by and large predictable. 30. As mentioned in the main report, macroeconomic stability was maintained in 2007 and particularly in 2008 despite a difficult international environm ent. Domestic revenue performed better than anticipated in 2008. However, as a result of the global recession, grants reached 3.4 percent of GDP instead of an anticipated 4.6 percent while net external financing stood at 2.1 percent of GDP against a projected 3.3 percent. The government managed expenditure containment to keep the fiscal situation under control. The overall fiscal deficit (excluding grants) was limited to 5.6 percent of GDP. 31. However, the expenditure containment in 2008 has a fiscal cost which is borne by the 2009 budget. Based on the IMF report (October 2009), build-up of budgetary arrears and claims of the mining sector in 2008, put pressure on the 2009 budget . Even with payments scheduled through 2009 (about 3 percent of GDP), the 2009 budg et will be expansionary. With an increase of almost 3 percent in revenue and grants, budgetary expenditure will rise from an estimated 19.3 percent of GDP in 2008 to 23.8 percent, and the deficit on a cash basis will expand from 1 percent of GDP in 2008 to a projected 6.2 percent in 2009. 32. The government has increased borrowing on non-concessional terms. The IMF reports that the government has drawn on significant amounts of bank financing to settle arrears, and finance structural reforms. The government began issuing securities on the regional money market in 2008, raising the equivalent of 1 percent of GDP, and is expect to do the same in 2009. This is raising concerns about domestic indebtedness and its cost . A new debt sustainability analysis is being prepared to assess whether Mali is still at low risk of debt distress. 166 33. The macroeconomic situation stays fragile in 2009, and government remains committed to prudent fiscal policies. While the expenditure level is still much higher than in 2008 and is expected to increase aggregate demand and support economic activity, macroeconomic and fiscal risks persist (Table A8.9). As a result, despite increases to the agriculture budget, in line with the PRSP’s new focus on growth-enhancing sectors, the government has created a reserve by sequestering some non-priority budget allocations (mostly domestically financed investments) and a carefully regulating budget execution. Table A8.9: Central Government Budget (% of GDP) 2005 2006 2007 2008 2009 2010 (est.) (proj.) Total Revenue 17.9 17.3 16.6 15.5 16.7 18.3 Grants 4.1 5.0 4.7 3.4 5.0 4.4 Total expenditure and net lending 25.2 24.9 24.7 21.2 23.8 22.2 Overall balance (payment order basis, excl. grants) -7.3 -7.6 -8.1 -5.6 -9.1 -6.8 External financing (loans, net) 4.2 5.1 2.9 2.1 3.9 3.5 Source: IMF. 34. The fiscal situation is expected to remain tight in 2010. Based on IMF projections, fiscal revenues will be sustained by higher growth and revenue mobilization efforts, and spending policies will stay prudent in order to lower the basic deficit below 1 percent of GDP. 35. With the exception of 2008, the budget has grown slightly over the past six years but growth has been unevenly distributed between economic categories. Current expenditure which amounted to about 13 percent of GDP from 2002 to 2006 declined slowly after 2005 to 11.7 percent in 2008. 36. Within current expenditure, the wage bill has remained stable (until recently) and on the low side compared with the regional average. However, the wage bill is typically not a discretionary expenditure in the short term. The wage bill has hovered around 20 percent (with a rise to 23 percent in 2008) of total budgetary expenditure (excluding net lending and special accounts). In Mali, it is apparent that the wage bill has been restrained and has not crowded out other expenditure. However, (Table A8.10) even in a period of downturn, like in 2008, the wage bill is incompressible. 37. Goods and services (G&S) need careful review to determine the share of discretionary expenditure in the short to medium term but efficiency gains could be found in that budget category. This category covers a numbers of programs, from Operations and Maintenance (O&M) (including, for example, road maintenance), as well as operational expenses for the administration. The following example illustrates some of the possible savings into the O&M budget: the initial budget projections by the government for G&S in 2009 included the following amounts: 1) travelling expenses: CFAF 37.3 billion; 2) communications and energy: CFAF 28.4 billions, and 3) other expenditures: CFAF 69 billions. A 5 percent efficiency gain that is a 5 percent reduction in these expenditures would yield CFAF 6.7 billion, or about 0.17 percent of GDP. This amount is still meaningless compared to the needed amounts to make a significant impact in the life of the poor. It is, however, roughly equivalent to the cost of subsidizing the urban poor children age 0-14. As a reference, it would also result in roughly doubling the 167 nutrition and school feeding programs (together these programs amounted to about CFAF 7 billion in 2008). i. Transfers, subsidies and interest payments offer little room for maneuver. They are largely constituted by contractual obligations, entitlements and subsidies for structural reforms. However, there also are some small subsidies under the control of the ministers and provided at their discretion. ii. The level of investment remains low in Mali when viewed against the massive needs, including infrastructure needs. This is also true for neighboring countries as international comparisons show that the ratio of capital to current expenditure in Mali is more or less in line with other countries in the region. The relatively low level of domestically financed investment expenditure indicates the degree of dependency of Mali on foreign aid for investment. However, there are domestically-financed projects, and these are among the non-priority expenditure the government has decided to postpone in 2009. A careful review of capital expenditure (well beyond the purpose of this review) could perhaps identify low-return projects and programs worth closing and even replacing by another type of expenditure. Table A8.10: Economic Composition of Spending (% of GDP) 2005 2006 2007 2008 2009 2010 (proj) Total expenditure and net lending 25.2 24.9 24.7 3.8 26.3 26.9 Budgetary expenditure 22.8 23.5 24.3 19.3 24.3 25.2 Current expenditure 13.3 12.9 12.8 11.7 13.3 14.0 Wages and salaries 4.9 4.6 4.8 4.8 5.2 5.5 Interest 0.6 0.5 0.4 0.4 0.3 0.4 Goods and services 7.8 4.6 4.7 4.2 4.3 4.5 Transfers and subsidies 3.1 2.9 2.4 3.2 3.1 Capital expenditure 9.5 10.6 11.6 9.7 11.0 11.2 Externally financed (loans+grants) 6.0 7.1 6.6 4.4 7.3 6.1 Domestically financed 3.5 3.5 4.9 3.1 3.1 2.9 Special funds and annexed budgets 1.6 1.6 1.8 1.7 1.7 1.7 Net lending 0.8 -0.2 -1.4 0.2 0.3 -0.1 Source: IMF. 168 IBRD MAP NO. 33443 169 IBRD 33443R MALI SELECTED CITIES AND TOWNS MAIN ROADS PROVINCE CAPITALS RAILROADS NATIONAL CAPITAL REGION BOUNDARIES RIVERS INTERNATIONAL BOUNDARIES 5°W 0° 0 100 200 300 Kilometers To Chenachane 0 50 100 150 300 Miles 25°N MALI To El Mreîti S a h a r a D e s e r t ALGERIA To El Mreîti Taoudenni To Poste Maurice Cortier TOMBOUCTOU To Abalessa 20°N Tessalit 20°N M A U R I TA N I A KIDAL si Araouane du Tilem Kidal llée Va k Tombouctou Gourma ua Rharous o za (Timbuktu) GAO L’A Bourem r Nige de To Vallée To Ayun Lac Niangay Gao Kifa el ’Atrous Niafounke Menaka To Néma Hombori Lac Tondo (1,155 m) Ansongo Nara Nampala Débo Nioro To 15°N 15°N RO du Sahel Douentza Abala MOPTI To Niamey Mopti O Kayes Bandiagara Niono NIGER IK To K AY E S Goudiry Ba SÉGOU UL fin lé Kolokani To Baou Ségou Bani Ouahigouya O r g ge Ni K To San Kédougou Kita To Kéniéba niéba Kéni ba BAMAKO Koulikoro Nouna BURKINA Koutiala FASO To Siguiri Bougouni To DISTRICT Sikasso Bobo GUINEA DE BAMAKO SIKASSO Dioulasso To BENIN Kankan 10°N To 10°N Korhogo GHANA This map was produced by the Map Design Unit of The World Bank. The boundaries, TOGO SIERRA colors, denominations and any other information shown on this map do not imply, on LEONE CÔTE D’IVOIRE the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such 10°W 5°W 0° boundaries. MAY 2009